<PAGE> 1
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 26, 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 1-13740
-------
BORDERS GROUP, INC.
-------------------
(Exact name of registrant as specified in its charter)
MICHIGAN 38-3196915
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) No.)
500 East Washington Street, Ann Arbor, Michigan 48104
--------------------------------------------------------
(Address of principal executive offices)
(zip code)
(313) 913-1100
--------------
(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
-------------- December 5, 1997
Common Stock ------------------------
($.001 par value) 74,603,841
<PAGE> 2
BORDERS GROUP, INC.
INDEX
Part I - Financial Information
Page
Item 1. Financial Statements 1
Item 2. Management's Discussions and Analysis of
Financial Condition and Results of
Operations 8
Part II - Other information
Item 1. Legal Proceedings N/A
Item 2. Changes in Securities N/A
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submission of Matters to a vote of N/A
Securityholders
Item 5. Other Information N/A
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE> 3
BORDERS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS EXCEPT PER COMMON SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
13 WEEKS ENDED
OCTOBER 26, OCTOBER 27,
1997 1996
------------- -------------
<S> <C> <C>
Sales $ 477.3 $ 413.5
Cost of merchandise sold, including occupancy costs 355.1 314.3
------------- -------------
Gross profit 122.2 99.2
Selling, general and administrative expenses 117.9 100.0
Pre-opening expense 1.7 1.8
Goodwill amortization 0.4 0.3
------------- -------------
Operating income (loss) 2.2 (2.9)
Interest expense 1.6 1.8
------------- -------------
Income (loss) before income tax 0.6 (4.7)
Income tax expense (benefit) 0.2 (2.0)
------------- -------------
Net income (loss) $ 0.4 $ (2.7)
============= =============
INCOME (LOSS) PER COMMON SHARE DATA
Income (loss) per common share $ 0.00 $ (0.03)
============= =============
Weighted average common shares
outstanding (in thousands) 82,361 83,710
============= =============
</TABLE>
See Accompanying Notes to Unaudited Condensed Consolidated
Financial Statements.
(1)
<PAGE> 4
BORDERS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS EXCEPT PER COMMON SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
39 WEEKS ENDED
OCTOBER 26, OCTOBER 27,
1997 1996
------------- -------------
<S> <C> <C>
Sales $ 1,407.2 $ 1,231.8
Cost of merchandise sold, including
occupancy costs 1,057.0 941.6
------------- -------------
Gross profit 350.2 290.2
Selling, general and administrative expenses 339.4 294.3
Pre-opening expense 3.6 3.8
Goodwill amortization 0.9 0.8
------------- -------------
Operating income (loss) 6.3 (8.7)
Interest expense 4.0 5.3
------------- -------------
Income (loss) before income tax 2.3 (14.0)
Income tax expense (benefit) 1.0 (5.6)
------------- -------------
Net income (loss) $ 1.3 $ (8.4)
============= =============
INCOME (LOSS) PER COMMON SHARE DATA
Income (loss) per common share $ 0.02 $ (0.10)
============= =============
Weighted average common shares
outstanding (in thousands) 82,294 83,030
============= =============
</TABLE>
See Accompanying Notes to Unaudited Condensed Consolidated
Financial Statements.
(2)
<PAGE> 5
BORDERS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS EXCEPT PER COMMON SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
10/26/97 10/27/96 1/26/97
<S> <C> <C> <C>
ASSETS
Current Assets
Cash $ 76.6 $ 43.2 $ 42.6
Merchandise inventories 987.8 869.8 737.5
Accounts receivable and other current assets 54.2 50.6 66.3
---------- ----------- ---------
Total Current Assets 1,118.6 963.6 846.4
Property and equipment, net of
accumulated depreciation of $276.2,
$229.7 and 235.1, respectively 358.4 279.3 289.2
Other assets and deferred charges 37.5 38.7 36.9
Goodwill, net of accumulated
amortization of $42.3, $41.2, and
$41.5, respectively (Note 3) 107.1 38.8 38.5
---------- ----------- ---------
$ 1,621.6 $ 1,320.4 $ 1,211.0
========== =========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt and capital lease
obligations due within one year $ 270.8 $ 180.5 $ 30.5
Trade accounts payable 594.0 498.8 350.1
Accrued payroll and other liabilities 192.8 137.2 197.8
Taxes, including income taxes 24.1 --- 56.1
---------- ----------- ---------
Total Current Liabilities 1,081.7 816.5 634.5
Long-term debt and capital lease obligations 5.5 6.5 6.2
Other long-term liabilities 27.6 25.6 24.8
Commitments and contingencies (Note 5) -- -- --
---------- ----------- ---------
Total Liabilities 1,114.8 848.6 665.5
---------- ----------- ---------
Shares subject to repurchase -- -- 34.1
---------- ----------- ---------
Preferred Stock, par value $.001 per share;
8,900,000 shares authorized;
no shares issued and outstanding -- -- --
Common stock, par value $.001 per share;
200,000,000 shares authorized;
75,120,255, 75,665,798 and 75,858,016
issued and outstanding at October 26, 1997,
October 27, 1996, and January 26, 1997,
respectively 0.1 0.1 0.1
Additional paid-in capital 654.1 674.8 648.0
Officers receivable and compensation (12.8) (0.8) (0.8)
Accumulated deficit (134.6) (202.3) (135.9)
---------- ----------- ---------
Total stockholders' equity 506.8 471.8 511.4
---------- ----------- ---------
$ 1,621.6 $ 1,320.4 $ 1,211.0
========== =========== =========
</TABLE>
See Accompanying Notes to Unaudited Condensed Consolidated
Financial Statements
(3)
<PAGE> 6
BORDERS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE 39 WEEKS ENDED OCTOBER 26, 1997
(DOLLARS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
OFFICERS
REC. ADD'L RETAINED
COMMON STOCK DEFERRED PAID-IN EARNINGS
SHARES AMOUNT COMP CAPITAL (DEFICIT) TOTAL
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT 1/26/97 75,858,016 $ 0.1 $ (0.8) $ 648.0 $ (135.9) $ 511.4
Net income -- -- -- -- 1.3 1.3
Issuance of common stock 1,781,039 -- (3.5) 28.1 -- 24.6
Cancellation of Put Options:
- -payment of premium -- -- -- (0.8) -- (0.8)
- -Shares subject to repurchase -- -- -- 34.1 -- 34.1
Repurchase and retirement of common
stock (2,518,800) -- -- (61.8) -- (61.8)
Acquisition -- -- -- 6.5 -- 6.5
Change in receivable and deferred
compensation -- -- (8.5) -- -- (8.5)
---------- --------- ------- -------- -------- ---------
BALANCE AT 10/26/97 75,120,255 $ 0.1 $ (12.8) $ 654.1 $ (134.6) $ 506.8
========== ========= ======= ======== ======== =========
</TABLE>
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
(4)
<PAGE> 7
BORDERS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
39 WEEKS ENDED
October 26, October 27,
1997 1996
CASH PROVIDED BY (USED FOR):
OPERATIONS
<S> <C> <C>
Net income (loss) $ 1.3 $ (8.4)
Adjustments to reconcile net loss
to operating cash flows:
Depreciation and goodwill amortization 37.8 30.0
Change in other long-term assets and liabilities 2.3 (12.8)
Cash provided by (used for) current
assets and current liabilities:
Increase in inventories (239.8) (232.3)
Decrease in property held for resale -- 15.4
Increase in accounts payable 234.5 194.0
Other, net (35.7) (31.2)
----------- ----------
Net cash used for operations 0.4 (45.3)
----------- ----------
INVESTING
Proceeds from asset sale - 2.0
Capital expenditures (82.0) (71.9)
Acquisitions (51.0) -
----------- ----------
Net cash used for investing (133.0) (69.9)
----------- ----------
FINANCING
Net funding from credit facility 224.4 120.0
Proceeds from construction funding 7.3 --
Issuance of common stock 10.7 3.9
Repurchase of Put options (0.8) --
Repurchase of common stock (61.8) --
Other, net (13.2) (2.0)
----------- ----------
Net cash provided by financing 166.6 121.9
----------- ----------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS 34.0 6.7
Cash and equivalents at beginning of
year 42.6 36.5
----------- ----------
Cash and equivalents at end of period $ 76.6 $ 43.2
=========== ==========
</TABLE>
(5)
<PAGE> 8
BORDERS GROUP, INC.
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS EXCEPT PER COMMON SHARE DATA)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Borders Group, Inc. (the Company) have been prepared in accordance with Rule
10-01 of Regulation S-X and do not include all the information and notes
required by generally accepted accounting principles for complete financial
statements. All adjustments, consisting only of normal recurring adjustments,
have been made which, in the opinion of management, are necessary for a fair
presentation of the results of the interim periods. The results of operations
for such interim periods are not necessarily indicative of results of
operations for a full year. The unaudited condensed consolidated financial
statements should be read in conjunction with the Company's consolidated
financial statements and notes thereto for the fiscal year ended January 26,
1997 (the 1996 consolidated financial statements).
The Company's fiscal year ends on the Sunday immediately preceding the
last Wednesday in January. At October 26, 1997, the Company operated 927
mall-based bookstores, 189 book superstores, and 2 music stores throughout the
United States, and 22 bookstores in the United Kingdom.
NOTE 2 - COMMITMENTS AND CONTINGENCIES
There are various claims, lawsuits, and actions pending against the
Company and its subsidiaries which are incident to their operations. It is the
opinion of management that the ultimate resolution of these matters will not
have a material effect on the Company's liquidity, financial position or
results of operations.
During 1994, the Company entered into an agreement in which leases with
respect to four Borders' locations serve as collateral for certain mortgage
pass-through certificates. These mortgage pass-through certificates include a
provision requiring the Company to repurchase the underlying mortgage notes in
certain events, including the failure by the Company to make payments of rent
under the related leases, the failure by Kmart to maintain required investment
grade ratings or the termination of the guarantee by Kmart of the Company's
obligations under the related leases (which would require mutual consent of
Kmart and Borders). In the event the Company is required to repurchase all of
the underlying mortgage notes, the Company would be obligated to pay
approximately $36.6. Kmart has failed to maintain investment grade ratings and
therefore these notes are now subject to put by the holder. To date, the
holder has not exercised its rights to put the notes.
The Company does not believe that the note purchase, if required, will
have a material effect on the Company's financial position or earnings.
(6)
<PAGE> 9
BORDERS GROUP, INC.
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS EXCEPT PER COMMON SHARE DATA)
NOTE 3 - FINANCING
Credit Facility: The Company has a multicurrency credit agreement which
provides a $425, five-year working capital facility. Borrowings under the
credit facility bear interest at a base rate or an increment over LIBOR at the
Company's option. The credit agreement contains operating covenants which limit
the Company's ability to incur indebtedness, make acquisitions, dispose of
assets and issue or repurchase its common stock, in excess of $100 million,
plus any proceeds and tax benefits resulting from stock option exercises, pay
dividends on its common stock, and require the Company to meet certain
financial measures regarding fixed charge coverage, leverage and tangible net
worth. The Company had borrowings outstanding under the credit facility of
$260 at October 26, 1997 and $289 at December 5, 1997.
Lease Financing Facility: The Company has a five year, $250 lease financing
facility ("the Facility") to finance new stores and other property
through operating leases. The Facility will provide financing to Lessors
through loans from a third party lender for up to 95% of a project cost. It is
expected that Lessors will make equity contributions approximating 5% of each
project. Independent of its obligations as lessee, the Company will guarantee
payment when due of all amounts required to be paid to the third party lender.
The principal amount guaranteed will be limited to approximately 89% of the
original cost of a project so long as the Company is not in default under the
lease relating to such project. There was $141.8 outstanding under the lease
facility at October 26, 1997 and $146.9 at December 5, 1997.
NOTE 4 - SHARE REPURCHASE
During the 13 week period ended October 26, 1997 the Company repurchased
2,218,800 common shares in the amount of $55.9 under its common stock repurchase
program.
NOTE 5 - ACQUISITIONS
Effective October 20, 1997 the Company purchased 100% of the outstanding stock
of Books, etc., a London-based retailer of books and associated products. Books,
etc. currently operates 22 stores in the United Kingdom. The acquisition will
be accounted for as a purchase. The Company does not expect the transaction to
have a material impact on earnings in 1997 or 1998.
(7)
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company, through its subsidiaries, is the second largest operator of
book superstores and the largest operator of mall-based bookstores in the
United States based upon both sales and number of stores. At October 26, 1997,
the Company operated 189 book superstores under the Borders name, 927
mall-based and other bookstores primarily under the Waldenbooks name, 2
stores under the Planet Music name, and 22 bookstores in the United Kingdom
under the Books, Etc. name.
The Company's third quarters of 1997 and 1996 consisted of the 13 weeks
ended October 26, 1997 and October 27, 1996, respectively.
RESULTS OF OPERATIONS
The following table presents the Company's statement of operations data,
as a percentage of sales, for the periods indicated:
<TABLE>
<CAPTION>
13 WEEKS ENDED 39 WEEKS ENDED
OCTOBER 26, OCTOBER 27, OCTOBER 26, OCTOBER 27,
1997 1996 1997 1996
------ ----- ------ -----
<S> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0%
Cost of merchandise sold, including
occupancy costs 74.4 76.0 75.1 76.4
------ ----- ------ -----
Gross margin 25.6 24.0 24.9 23.6
Selling, general and administrative
expenses 24.7 24.2 24.1 23.9
Pre-opening expense 0.4 0.4 0.3 0.3
Goodwill amortization 0.1 0.1 0.1 0.1
------ ----- ------ -----
Operating income (loss) 0.5 (0.7) 0.4 (0.7)
Interest expense 0.3 0.4 0.3 0.4
------ ----- ------ -----
Income (loss) before income taxes 0.1 (1.1) 0.2 (1.1)
Income tax expense (benefit) - (0.5) 0.1 (0.5)
------ ----- ------ -----
Net income (loss) 0.1% (0.7%) 0.1% (0.7)%
====== ===== ====== =====
</TABLE>
(8)
<PAGE> 11
STORE ACTIVITY
The Company's store activity is summarized below:
QUARTER ENDED YEAR ENDED
OCTOBER 26, OCTOBER 27, JANUARY 26,
1997 1996 1997
------------ ------- -----------
Borders Superstores
Beginning number of stores 171 127 116
Openings 18 15 41
------------ ------- -----------
Ending number of stores 189 142 157
============ ======= ===========
Walden Mall Bookstores
Beginning number of stores 929 966 992
Openings 2 5 9
Closings (4) (5) (40)
------------ ------- -----------
Ending number of stores 927 966 961
============ ======= ===========
13 WEEKS ENDED OCTOBER 26, 1997 AND OCTOBER 27, 1996
Sales in the third quarter of 1997 were $477.3 million, a $63.8 million,
or 15.4%, increase over third quarter 1996 sales of $413.5 million. This
increase reflects a $67.6 million, or 31.4%, increase in Borders' sales
resulting from new store openings and a comparable store sales increase of
7.3%. This increase was offset in part by a decline in Waldenbooks sales of
$3.8 million due to store closings and a 0.1% decrease in comparable store
sales.
Cost of merchandise sold, including occupancy costs, was $355.1 million in
the third quarter of 1997, as compared with $314.3 million in the third quarter
of 1996. Gross margin as a percentage of sales was 25.6% in 1997 versus 24.0%
in 1996. Management attributed the 1.6% increase in gross margin to a number
of factors, including continued improvements in distribution and inventory
shrinkage results, improved merchandise mix management, and a decline in
occupancy expense as a percentage of sales due to both the continued maturation
of the Borders stores and the continued shift in sales base from mall stores to
superstores.
Selling, general and administrative ("SG&A") expenses in the third quarter
of 1997 were up $17.9 million, or 17.9% over SG&A expenses in the third quarter
of 1996 ($117.9 million versus $100.0 million). As a percentage of sales, SG&A
expenses were 24.7% in 1997 versus 24.2% in the third quarter of 1996 due to
increased spending on strategic initiatives, offset by the ongoing leveraging
of corporate overhead over the Company's expanding sales base.
(9)
<PAGE> 12
Pre-opening expense in the third quarter of 1997 was $1.7 million versus
$1.8 million from the same period in 1996. Pre-opening expense consists
principally of grand-opening advertising expense and store payroll related to
the opening, and is expensed in the first full fiscal month of a store's
operations. Pre-opening expense per store varies primarily as a result of
differing levels of grand opening advertising, depending on the presence of the
Company and its competitors in the market and differing levels of labor costs
associated with merchandising the store. The Company opened 18 Borders
superstores and 2 Waldenbooks mall-based stores in the third quarter of 1997 as
compared to 15 Borders superstores and 5 Waldenbooks stores in the third
quarter of 1996.
Goodwill amortization was $0.4 million in the third quarter of 1997 versus
$0.3 million in 1996.
Interest expense was $1.6 million in the third quarter of 1997 as compared
to $1.8 million in 1996.
Income tax expense in the third quarter of 1997 was $0.2 million as
compared to a benefit of $2.0 million in 1996.
39 WEEKS ENDED OCTOBER 26, 1997 AND OCTOBER 27, 1996
Sales in the 39 weeks ended October 26, 1997 were $1,407.2 million, a
$175.4 million, or 14.2%, increase over 39 weeks ended October 27, 1996 sales
of $1,231.8 million. This increase reflects a $188.9 million, or 29.8%,
increase in Borders' sales resulting from new store openings and a comparable
store sales increase of 8.1%. This increase was offset in part by a decline in
Waldenbooks sales of $13.5 million due to store closings and a 0.3% decrease in
comparable store sales.
Cost of merchandise sold, including occupancy costs, was $1,057.0 million
in the 39 weeks ended October 26, 1997, as compared with $941.6 million in the
same 1996 period. Gross margin as a percentage of sales was 24.9% in 1997
versus 23.6% in 1996. Management attributed the 1.3% increase in gross margin
to a number of factors, including continued improvements in distribution and
inventory shrinkage results, improved merchandise mix management, and a decline
in occupancy expense as a percentage of sales due to both the continued
maturation of the Borders stores and the continued shift in sales base from
mall stores to superstores.
Selling, general and administrative ("SG&A") expenses in the 39 weeks
ended October 26, 1997 were up $45.1 million, or 15.3% over SG&A expenses in
the same period in 1996 ($339.4 million versus $294.3 million). As a
percentage of sales, SG&A expenses were 24.1% in 1997 versus 23.9% in 1996 due
to increased spending on strategic initiatives, offset by the ongoing
leveraging of corporate overhead over the Company's expanding sales base.
(10)
<PAGE> 13
Pre-opening expense in the 39 week period ended October 27, 1997 was $3.6
million compared to $3.8 in the same 1996 period. The Company opened 32
Borders superstores and 7 Waldenbooks mall-based stores in 1997 as compared to
26 Borders superstores and 8 Waldenbooks stores in 1996.
Goodwill amortization was $0.9 million in the 39 week period ended October
26, 1997 versus $0.8 in the same 1996 period.
Interest expense was $4.0 million in the first 39 weeks of 1997 as
compared to $5.3 million in 1996.
Income tax expense in the 39 week period ended October 26, 1997 was $1.0
million as compared to a benefit of $5.6 million in 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are to fund working capital
needs, the opening of new stores and the refurbishment and expansion of
existing stores.
Net cash provided by operations for the 39 weeks ended October 26, 1997 was
$0.4 million as compared to cash used of $45.3 million in the corresponding
period in the prior year. The current year operating cash inflows primarily
reflects net income and non-cash depreciation and amortization expense of $37.8
million combined with increasing inventory purchases for the holiday season.
Operating cash outflows for the period were the result of an increase in
accounts payable and a decrease in taxes payable during the period.
Net cash used for investing for the first 39 weeks of 1997 was $133.0
million as compared to $69.9 million in the first 39 weeks of 1996. The
Company opened 32 new superstores and 7 new Waldenbooks stores in the first 39
weeks of 1997 versus 26 new superstores and 8 new Waldenbooks in the first 39
weeks of 1996. Cash used for investing also includes $51.0 million cash paid
in connection with the Books, etc., purchase.
Net cash provided by financing in the first 39 weeks of 1997 was $166.6
million versus $121.9 million in the first 39 weeks of 1996. Net cash provided
by financing resulted primarily from net borrowings under the credit facility
and proceeds from construction funding, offset by stock repurchases of $61.8
million.
The Company anticipates that planned closings of Waldenbooks stores will
decrease Waldenbooks' annual working capital requirements. On a consolidated
basis, the Company expects its working capital requirements to increase as a
result of its expansion program for its Borders books and music superstores.
During the third quarter the Company renegotiated its credit and lease
financing facilities. The new agreements provide increased credit lines, lower
rates and multicurrency borrowing ability. The Company believes funds
generated from operations, borrowings under the credit facility and financing
through the lease facility will be sufficient to fund its anticipated capital
requirements for at least the next two to three years.
The Company has a $425 million, five-year multicurrency working capital
line of credit, with a syndicate of banks. The Company had $260.0 million in
outstanding borrowings under the Credit Facility as of October 26, 1997.
(11)
<PAGE> 14
The Company has a five year, $250 million lease financing facility ("the
Lease Facility") to finance new stores and other property through
operating leases. The Lease Facility will provide financing to lessors through
loans from a third party lender for up to 95% of a project cost. It is
expected that lessors will make equity contributions approximating 5% of each
project. Independent of its obligations as lessee, the Company guarantees
payment when due of all amounts required to be paid to the third party lender.
The principal amount guaranteed will be limited to approximately 89% of the
original cost of a project, so long as the Company is not in default under the
lease relating to such project. There were 36 properties financed through the
lease facility, with a financed value of $141.8 million, at October 26, 1997.
Management believes that the rental payments for properties financed through
the lease facility may be lower than those which the Company could obtain
elsewhere due to, among other factors, (i) the lower borrowing rates available
to the Company's landlords under the facility, and (ii) the fact the rental
payments for properties financed through the facility do not include
amortization of the principal amounts of the landlords' indebtedness related to
the properties. Rental payments relating to such properties will be adjusted
when permanent financing is obtained to reflect the interest rates available at
the time of the refinancing and the amortization of principal.
During 1994, the Company entered into agreements in which leases with
respect to four Borders' locations serve as collateral for certain mortgage
pass-through certificates. The mortgage pass-through certificates include a
provision requiring the Company to repurchase the underlying mortgage notes in
certain events, including the failure by the Company to make payments of rent
under the related leases, the failure by Kmart to maintain required investment
grade ratings or the termination of the guarantee by Kmart of the Company's
obligations under the related leases (which would require mutual consent of
Kmart and Borders). In the event the Company is required to repurchase all of
the underlying mortgage notes, the Company would be obligated to pay
approximately $36.6 million. The Company would expect to fund this obligation
through its line of credit. Kmart has failed to maintain investment grade
ratings, and therefore, these notes are now subject to put by the holder. To
date, the holder has not exercised its right to put the notes.
The Company does not believe that the note purchase, if required, will
have a material effect on the Company's financial position or earnings.
(12)
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits:
(a) Exhibits:
10.38 Amended and Restated Multicurrency Credit Agreement
among Borders Group, Inc., its subsidiaries
and Parties thereto
10.39 Amended and Restated Participation Agreement among
Borders Group, Inc., its subsidiaries and Parties
thereto
10.40 Appendix A to Participation Agreement among Borders
Group, Inc., its subsidiaries and Parties thereto
10.41 Amended and Restated Credit Agreement among Borders
Group, Inc., its subsidiaries and Parties thereto
10.42 Amended and Restated Guarantee Agreement among Borders
Group, Inc., its subsidiaries and Parties thereto
11.1 Statement of Computation of per share earnings
27.0 Financial Data Schedule
(b) Reports on Form 8-K:
During the 13 week period ended October 26, 1997 one report was
filed on Form 8-K under Item 9 - Sales of Equity Securities
Pursuant to Regulation 5 which related to the acquisition of
Books, Etc. This report was dated October 21, 1997 and filed on
November 4, 1997.
(13)
<PAGE> 16
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 thereto duly authorized.
BORDERS GROUP, INC.
-------------------
(REGISTRANT)
Date: December 10, 1997 By: /s/ George R. Mrkonic
--------------------------
George R. Mrkonic
Vice Chairman and Director
(Principal Financial and
Accounting Officer)
(14)
<PAGE> 17
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.38 Amended and Restated Multicurrency Credit Agreement
among Borders Group, Inc., its subsidiaries
and Parties thereto
10.39 Amended and Restated Participation Agreement among
Borders Group, Inc., its subsidiaries and Parties
thereto
10.40 Appendix A to Participation Agreement among Borders
Group, Inc., its subsidiaries and Parties thereto
10.41 Amended and Restated Credit Agreement among Borders
Group, Inc., its subsidiaries and Parties thereto
10.42 Amended and Restated Guarantee Agreement among Borders
Group, Inc., its subsidiaries and Parties thereto
11.1 Statement of Computation of per share earnings
27.0 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.38
EXECUTION COPY
--------------
================================================================================
AMENDED AND RESTATED
MULTICURRENCY
CREDIT AGREEMENT
by and among
BORDERS GROUP, INC., BORDERS, INC.,
WALDEN BOOK COMPANY, INC. and BGP (UK) LIMITED
and
THE LENDERS PARTY HERETO,
and
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent,
THE FIRST NATIONAL BANK OF CHICAGO, as Syndication Agent
and
BANKERS TRUST COMPANY, as Real Estate Administrative Agent
================================================================================
Dated as of October 17, 1997
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ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.03 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE II
REVOLVING CREDIT AND SWING LOAN FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.01 (a) Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Prior Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Increase in Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(d) Swing Loan Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.02 Nature of Lenders' Obligations with Respect to Revolving Credit Loans . . . . . . . . . . . . . . . . . 31
2.03 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Revolving Credit Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Calculation of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.04 Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.05 (a) Revolving Credit Loan Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Swing Loan Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.06 (a) Making Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Making Swing Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.07 (a) Borrowings to Repay Swing Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Irrevocable Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.08 (a) Evidence of Revolving Credit Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Evidence of Swing Loan Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(c) Promissory Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.09 Utilization of Commitments in Optional Currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) Periodic Computations of Dollar Equivalent Amounts
of Loans and Letters of Credit Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Notices from Lenders That Optional Currencies Are
Unavailable to Fund New Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) Notices From Lenders That Optional Currencies Are
Unavailable to Fund Renewals of the Euro-Rate Option . . . . . . . . . . . . . . . . . . . . . . . . 36
(d) Requests for Additional Optional Currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.10 Letter of Credit Subfacility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(b) Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(c) Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(d) Disbursements, Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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(e) Repayment of Participation Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(f) Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(g) Determinations to Honor Drawing Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(h) Nature of Participation and Reimbursement Obligations . . . . . . . . . . . . . . . . . . . . . . . 39
(i) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(j) Liability for Acts and Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(k) Termination of Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(l) Transitional Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(m) Resignation of Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.11 Currency Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.12 Optional Currency Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE III
BID LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.01 Bid Loan Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.02 Bidding for, Accepting and Making Bid Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(a) Bidding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(b) Accepting Bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(c) Funding Bid Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(d) Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.03 Evidence of Bid Loan Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE IV
INTEREST RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.01 Interest Rate Options on Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) Selection of Interest Rate Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(b) Interest Rate Options Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.02 Rate Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.03 Euro-Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.04 Selection of Interest Rate Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.05 Interest Rates Payable on Swing Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.06 Interest Rates Payable on Bid Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.07 Interest After Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.08 Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE V
PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.02 Pro Rata Treatment of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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5.03 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.04 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.05 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(a) Currency Fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(b) Application Among Interest Rate Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.06 Additional Compensation in Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(a) Increased Costs or Reduced Return Resulting From
Taxes, Reserves, Capital Adequacy Requirements,
Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(b) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(c) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(d) Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.07 Interbank Market Presumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.08 Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(a) Currency Conversion Procedures for Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(b) Indemnity in Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.01 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(a) Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(b) Capitalization and Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(c) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(d) Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(e) Validity and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(f) No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(h) Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(i) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(j) Use of Proceeds; Margin Stock; Section 20 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 60
(k) Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(l) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(m) Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(n) No Event of Default; Compliance with Instruments . . . . . . . . . . . . . . . . . . . . . . . . . 62
(o) Patents, Trademarks, Copyrights, Licenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 62
(p) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(q) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(r) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(s) Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(t) Plans and Benefit Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
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(u) Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(v) Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(w) Senior Debt Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(x) Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.02 Updates to Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE VII
CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.01 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.02 Each Additional Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.03 Subsequent Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE VIII
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.01 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(a) Preservation of Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(b) Payment of Liabilities, Including Taxes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(c) Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(d) Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(e) Maintenance of Patents, Trademarks, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(f) Visitation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(g) Keeping of Records and Books of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(h) Plans and Benefit Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(i) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(j) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(k) Subsequent Credit Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
(l) Subsidiary Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.02 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
(a) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
(b) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
(c) Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
(d) Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(e) Dividends and Related Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
(f) Liquidations, Mergers, Consolidations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
(g) Dispositions of Assets or Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
(h) Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(i) Subsidiaries, Partnerships and Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(j) Continuation of or Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(k) Plans and Benefit Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(l) Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
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(m) Issuance of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(n) Changes in Organizational Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(o) Minimum Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(p) Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(q) Minimum Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(r) Modifications of Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(s) Prepayment of Note Put Agreement Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(t) Lease Financing Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(u) Foreign Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
(v) Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
8.03 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
(a) Quarterly Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
(b) Annual Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
(c) Certificates of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
(d) Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
(e) Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
(f) Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
(g) Other Reports and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
(h) Notices Regarding Benefit Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
(i) Access to the Company's Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
(j) Notices Regarding Lease Financing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 86
(k) Notices Regarding Repurchases of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
ARTICLE IX
GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
9.01 Guaranty of Payment and Performance of Guaranteed Obligations . . . . . . . . . . . . . . . . . . . . . 87
9.02 Certain Waivers of the Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
9.03 Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
9.04 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.05 Actions with Respect to Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.06 Effect of Bankruptcy; Revival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.07 Survival of Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
9.08 Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
9.09 Limitation on Amount of Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
9.10 Limitation on Scope of Certain Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE X
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
10.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
10.02 Consequences of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
</TABLE>
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ARTICLE XI
THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.03 Nature of Duties; Independent Credit Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
11.04 Actions in Discretion of Agents; Instructions from the Lenders . . . . . . . . . . . . . . . . . . . . . . . 97
11.05 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
11.06 Reimbursement and Indemnification of Agents by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
11.07 Reliance by Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
11.08 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
11.09 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
11.10 Lenders in Their Individual Capacities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
11.11 [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
11.12 Equalization of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
11.13 Successor Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
11.14 Availability of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
11.15 Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
11.16 Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
12.01 Modifications, Amendments or Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
12.02 No Implied Waivers; Cumulative Remedies; Writing Required . . . . . . . . . . . . . . . . . . . . . . . . 103
12.03 Reimbursement and Indemnification by the Borrowers; Taxes . . . . . . . . . . . . . . . . . . . . . . . . 103
(a) Reimbursement and Indemnification of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
(b) Reimbursement and Indemnification of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
12.04 Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
12.05 Funding by Branch, Subsidiary or Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
(a) Notional Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
(b) Actual Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
12.06 Notices; Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
12.07 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
12.08 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
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12.09 Prior Understanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
12.10 Duration; Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
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12.11 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
(a) Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
(b) Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
(c) Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
(d) Federal Reserve Bank Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
12.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
(b) Sharing Information With Affiliates of the Lenders . . . . . . . . . . . . . . . . . . . . . 108
12.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
12.14 Agent's or Lender's Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
12.15 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
12.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
12.17 Waivers by Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
12.18 Tax Withholding Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
12.19 Effective Date Transition Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
</TABLE>
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LIST OF SCHEDULES AND EXHIBITS
<TABLE>
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SCHEDULE 1.01(A) - EURO-RATE MARGIN/LETTER OF CREDIT FEE, BASE RATE MARGIN, FACILITY FEE RATE
SCHEDULE 1.01(B) - COMMITMENTS OF LENDERS
SCHEDULE 1.01(C) - EXISTING LIENS
SCHEDULE 2.01(b) - CARRYOVER REVOLVING CREDIT LOANS
SCHEDULE 2.10(l) - CARRYOVER LETTERS OF CREDIT
SCHEDULE 6.01(a) - QUALIFICATIONS TO DO BUSINESS
SCHEDULE 6.01(b) - OPTIONS ON COMPANY STOCK
SCHEDULE 6.01(c) - SUBSIDIARIES; RIGHTS TO PURCHASE SUBSIDIARY SHARES
SCHEDULE 6.01(h) - OWNED AND LEASED REAL PROPERTY
SCHEDULE 6.01(l) - TAX ARRANGEMENTS WITH KMART
SCHEDULE 6.01(m) - CONSENTS AND APPROVALS
SCHEDULE 6.01(p) - INSURANCE POLICIES
SCHEDULE 6.01(t) - EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 6.01(v) - ENVIRONMENTAL DISCLOSURES
SCHEDULE 8.02(a) - EXISTING INDEBTEDNESS
EXHIBIT 1.01(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 2.05(a) - REVOLVING CREDIT LOAN REQUEST
EXHIBIT 2.05(b) - SWING LOAN REQUEST
EXHIBIT 3.01 - BID LOAN REQUEST
EXHIBIT 3.02 - FORM OF DESIGNATION AGREEMENT
EXHIBIT 7.01(e)(i) - OPINIONS OF COUNSEL
EXHIBIT 8.03(c) - COMPLIANCE CERTIFICATE
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CREDIT AGREEMENT
THIS AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT is dated as of
March 28, 1995, and amended and restated as of October 17, 1997, is made by and
among BORDERS GROUP, INC. (the "Company"), Borders, Inc. ("Borders"), Walden
Book Company, Inc. ("Walden") and BGP (UK) Limited ("Books Holding") (the
Company, Borders, Walden and Books Holding hereinafter referred to individually
as a "Borrower" or jointly as the "Borrowers"), the LENDERS (as hereinafter
defined), PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative
agent for the Lenders under this Agreement (hereinafter referred to in such
capacity as the "Administrative Agent"), THE FIRST NATIONAL BANK OF CHICAGO, in
its capacity as syndication agent for the Lenders under this Agreement
(hereinafter referred to in such capacity as the "Syndication Agent") and
BANKERS TRUST COMPANY, in its capacity as real estate administrative agent for
the Lenders under this Agreement (hereinafter referred to in such capacity as
the "Real Estate Administrative Agent").
WITNESSETH:
WHEREAS, the Company, Borders, Walden, Planet Music, Inc. ("Planet"), the
Lenders, the Administrative Agent and the Syndication Agent (collectively, the
"Prior Agreement Parties") are parties to that certain Credit Agreement dated as
of March 28, 1995 (as heretofore amended, the "Prior Agreement"); and
WHEREAS, the Prior Agreement Parties desire to amend and restate the Prior
Agreement to (i) increase the aggregate amount of Commitments, (ii) eliminate
Planet as a Borrower, (iii) add Books Holding as a Borrower, (iv) eliminate and
add certain financial institutions as Lenders, and (v) amend certain other terms
and conditions of the Prior Agreement.
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. In addition to words and terms defined
elsewhere in this Agreement, the following words and terms shall have the
following meanings, respectively, unless the context hereof clearly requires
otherwise:
Administrative Agent shall mean PNC Bank, National Association,
and its successors and assigns.
Affiliate as to any Person shall mean any other Person (i) which
directly or indirectly controls, is controlled by, or is under common control
with such Person, (ii) which beneficially owns or holds 5% or more of any class
of the voting or other equity interests of such Person, or (iii) 5% or more of
any class of voting interests or other equity interests of which is
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beneficially owned or held, directly or indirectly, by such Person. Control,
as used in this definition, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise, including the power to elect a majority of the directors or trustees
of a corporation or trust, as the case may be.
Agents shall mean the Administrative Agent, Syndication Agent and
the Real Estate Administrative Agent.
Agreement shall mean this Credit Agreement as the same may be
supplemented or amended from time to time including all schedules and exhibits.
Assignee Lender shall mean a financial institution which becomes
a party to this Agreement by executing an Assignment and Assumption Agreement.
Assignment and Assumption Agreement shall mean an Assignment and
Assumption Agreement by and among a Purchasing Lender, the Transferor Lender and
the Administrative Agent, as Administrative Agent and on behalf of the remaining
Lenders, substantially in the form of Exhibit 1.01(A) or in such other form as
may be acceptable to the Administrative Agent.
Assignor Lender shall mean the selling Lender pursuant to an
Assignment and Assumption Agreement.
Authorized Officer shall mean the Chief Executive Officer,
President, Chief Operating Officer, Chief Financial Officer, Vice
President-Finance, Vice President, Group Planning and Resource Management, Vice
President, Planning or Treasurer of any Borrower.
Base Rate shall mean the greater of (i) the interest rate per
annum announced from time to time by the Administrative Agent at its Principal
Office as its then prime rate, which rate may not be the lowest rate then being
charged commercial borrowers by the Administrative Agent, or (ii) the Federal
Funds Effective Rate plus 1/2% per annum. Such interest rate shall change
automatically from time to time effective as of the effective date of each
change, as determined by the Administrative Agent in its sole discretion.
Base Rate Borrowing Tranche shall mean a Borrowing Tranche
consisting of all Revolving Credit Loans to which a Base Rate Option applies.
Base Rate Option shall mean the option of the Borrowers to have
Revolving Credit Loans bear interest at the rate and under the terms and
conditions set forth in Section 4.01(a)(i).
BBA shall have the meaning assigned to that term in the
definition of Euro-Rate.
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Benefit Arrangement shall mean at any time an "employee benefit
plan," within the meaning of Section 3(3) of ERISA, which is neither a Plan nor
a Multiemployer Plan and which is maintained, sponsored or otherwise contributed
to, by the Company or any of its Subsidiaries.
Bid shall have the meaning assigned to such term in Section 3.02.
Bid Loan Borrowing Date shall mean, with respect to any Bid Loan,
the date for the making thereof which shall be a Business Day.
Bid Loan Euro-Rate Option shall mean the option of the Borrowers
to request that the Lenders submit Bids to make Bid Loans bearing interest at a
rate per annum quoted by such Lenders at the Euro-Rate in effect two Business
Days before the Borrowing Date of such Bid Loan plus a Euro-Rate Bid Loan
Spread.
Bid Loan Fixed Rate Option shall mean the option of the Borrowers
to request that the Lenders submit Bids to make Bid Loans bearing interest at a
fixed rate per annum quoted by such Lenders as a numerical percentage (and not
as a spread over the Euro-Rate).
Bid Loan Period shall have the meaning assigned to such term in
Section 3.01.
Bid Loan Request shall have the meaning assigned to such term in
Section 3.01.
Bid Loans shall mean collectively and Bid Loan shall mean
separately all of the Bid Loans or any Bid Loan made by any of the Lenders to
the Borrowers pursuant to Sections 3.01 and 3.02.
Books Etc. shall mean Books Etc. Limited, company number
1580771, organized and existing under the laws of the United Kingdom, and its
permitted successors and assigns.
Books Holding shall mean BGP (UK) Limited, company number
3434045, organized and existing under the laws of the United Kingdom, and its
permitted successors and assigns.
Borders shall mean Borders, Inc., a corporation organized and
existing under the laws of the State of Colorado, and its permitted successors
and assigns.
Borders' Note shall mean that certain promissory note in the
original principal amount of $192,114,261, dated May 23, 1995, executed by
Borders and payable to Walden and which has been assigned to WPI.
Borrowers shall mean collectively and Borrower shall mean
separately the Company, Borders, Walden and Books Holding and, after the
Subsequent Effective Date, Books Etc..
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Borrowing Date shall mean, with respect to any Loan, the date for
the making thereof or the renewal or conversion thereof to the same or a
different Interest Rate Option, which shall be a Business Day.
Borrowing Tranche shall mean specified portions of Loans
outstanding to each Borrower as follows: (i) any Loans to one Borrower to which
a Euro-Rate Option or a Bid Loan Fixed Rate Option applies and which have the
same Interest Period and which are denominated in the same currency shall
constitute one Borrowing Tranche and (ii) all Loans to which a Base Rate Option
applies shall constitute one Borrowing Tranche.
BPI shall mean Borders Properties, Inc., a corporation organized
and existing under the laws of the State of Delaware, and its permitted
successors and assigns.
Business Day shall mean any day other than a Saturday or Sunday
or a legal holiday on which commercial banks are authorized or required to be
closed for business in Pittsburgh, Pennsylvania or Chicago, Illinois, and (i) if
the applicable Business Day relates to any Loan to which the Euro-Rate Option
applies, such day must also be a day on which dealings are carried on in the
London Interbank market, and (ii) with respect to advances or payments of Loans
or any other matters relating to Loans denominated in an Optional Currency, such
day also shall be a day on which (a) deposits in the relevant Optional Currency
are carried on in the applicable interbank market, and (b) all applicable banks
into which Loan proceeds may be deposited are open for business and foreign
exchange markets are open for business in the principal financial center of the
country of such Optional Currency.
Capitalized Lease of a Person means any lease of property by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with GAAP.
Capitalized Lease Obligations of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
Capitalized Rent Expense shall mean an amount equal to four times
the sum of Rent Expense and Lease Financing Rent Expense.
Change in Control shall mean (a) the direct or indirect
acquisition or ownership by any Person or any syndicate or other group formed or
existing for the purpose of acquiring, holding or disposing of securities of the
Company within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934 of stock of the Company having in the aggregate more than 30% of the voting
power in the general election of directors (including securities convertible by
their terms into stock having such voting power) or (b) during any period of 12
consecutive calendar months, commencing on the date of this Agreement, an event
or circumstance as a result of which those individuals (the "Continuing
Directors") who (i) were directors of the Company on the first day of each such
period or (ii) subsequently became directors of the Company and whose initial
election or initial nomination for election subsequent to that date was approved
by a majority of the
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Continuing Directors then on the Board of Directors of the Company, cease to
constitute a majority of the Board of Directors of the Company.
Commitment shall mean as to any Lender at any date, the
obligation of such Lender at such date to (a) make Revolving Credit Loans and
(b) participate in Swing Loans, in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite its name on Schedule
1.01(B) in the column labeled "Amount of Commitment," as such Schedule may be
amended or supplemented from time to time in accordance with the provisions of
Sections 2.01(c) and 12.11 hereof, and Commitments shall mean the aggregate
Commitments of all of the Lenders, in either case as such amounts may be reduced
or terminated pursuant to Section 2.04 hereof or cancelled pursuant to Section
10.02 hereof.
Company shall mean Borders Group, Inc., a corporation organized
and existing under the laws of the State of Michigan, and its permitted
successors and assigns.
Computation Date shall have the meaning assigned to that term in
Section 2.09(a).
Consolidated Cash Flow from Operations for any period of
determination shall mean the sum of Consolidated Net Income (excluding (i)
extraordinary gains, but not losses and (ii) income or loss of any Person in
which the Company owns less than 50% of the shares of capital stock, partnership
interests or membership interests), depreciation, amortization, interest
expense, Rent Expense, Lease Financing Rent Expense and income tax expense, in
each case of the Company and its Subsidiaries for such period determined and
consolidated in accordance with GAAP; provided, however, that there shall be
excluded in calculating Consolidated Net Income any losses attributable to the
use of a fair value methodology for recognition and measurement of impairment of
goodwill not identified with impaired assets in accordance with Accounting
Principles Board Opinion No. 17.
Consolidated Funded Indebtedness shall mean as of any date of
determination, the aggregate of the Indebtedness for borrowed money (including
any Capitalized Lease Obligations and any Contingent Obligations in respect of
borrowed money or Capitalized Lease Obligations of third Persons) of the Company
and its Subsidiaries, all as determined and consolidated in accordance with
GAAP, plus the amount of the Contingent Obligations arising under the Lease
Financing Guarantee.
Consolidated Net Income shall mean for any period the aggregate
of the net income of the Company and its Subsidiaries for such period determined
and consolidated in accordance with GAAP.
Consolidated Tangible Net Worth shall mean as of any date of
determination total stockholders' equity less intangible assets of the Company
and its Subsidiaries as of such date determined and consolidated in accordance
with GAAP.
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Consolidated Total Capital shall mean as of any date of
determination the sum of (a) total stockholders' equity of the Company and its
Subsidiaries as of such date determined and consolidated in accordance with
GAAP, plus (b) Consolidated Funded Indebtedness.
Contingent Obligation of any Person shall mean any obligation of
such Person guaranteeing or in effect guaranteeing any liability or obligation
of any other Person (other than, if the first Person is a Borrower, another
Borrower) in any manner, whether directly or indirectly, including any
agreement, undertaking or arrangement to indemnify or hold harmless any other
Person (other than, if the first Person is a Borrower, another Borrower), any
performance bond or other suretyship arrangement, any contingent agreement to
purchase or provide funds for such liability or obligation, any comfort letter,
any take-or-pay contract, and any other form of assurance against loss, except
endorsements of negotiable or other instruments for deposit or collection in the
ordinary course of business.
Designated Lender shall mean a special purpose corporation that
is engaged in making, purchasing or otherwise investing in commercial loans in
the ordinary course of its business, that issues (or the parent of which issues)
commercial paper rated at least "Prime- 2" (or the then equivalent grade) by
Moody's Investor Service, Inc. ("Moody's") or "A-2" (or the then equivalent
grade) by Standard and Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. ("S&P"), that is organized under the laws of the United States
or any state thereof, and that is not otherwise a Lender, but has been
designated by a Lender to fund Bid Loans pursuant to a Designation Agreement.
Designating Lender shall have the meaning assigned to such term
in Section 3.02(c).
Designation Agreement shall mean a designation agreement entered
into by a Lender (other than a Designated Lender), a Designated Lender and the
Company (on its behalf and on behalf of the Borrowers), and accepted by the
Administrative Agent, in substantially the form of Exhibit 3.02(c) hereto.
Distributions shall have the meaning assigned to such term in
Section 8.02(e).
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful
money of the United States of America.
Dollar Equivalent shall mean, with respect to any amount of any
currency, the Equivalent Amount of such currency expressed in Dollars.
Domestic Joint Venture shall mean individually and Domestic Joint
Ventures shall mean collectively any corporation, partnership, limited liability
company, joint venture or other entity (i) organized under the laws of any state
of the United States of America for the purpose of doing business primarily in
the United States of America and (ii) in which the Company and its Subsidiaries
own less than 50% of the capital stock, partnership interests, membership
interests or other ownership interests.
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Domestic Purchase means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Company or any of its Subsidiaries (a) acquires (i) any ongoing business
organized under the laws of any state of the United States of America for the
purpose of doing business primarily in the United States of America or (ii) all
or substantially all of the assets of any Person or division thereof which
assets are located primarily in the United States of America, whether through
purchase of assets, merger or otherwise, or (b) directly or indirectly acquires
(in one transaction or as the most recent transaction in a series of
transactions) all or substantially all of the securities of a corporation
organized under the laws of any state of the United States of America for the
purpose of doing business primarily in the United States of America, which
securities have ordinary voting power for the election of directors (other than
securities having such power only by reason of the happening of a contingency)
or all or substantially all (by percentage and voting power) of the outstanding
partnership interests of a partnership or membership interests of a limited
liability company, in either case which partnership or limited liability company
is organized under the laws of any state of the United States of America for the
purpose of doing business primarily in the United States of America.
Domestic Subsidiary shall mean individually and Domestic
Subsidiaries shall mean collectively any Subsidiary of any Borrower organized
under the laws of any state of the United States of America for the purpose of
doing business primarily in the United States of America.
Effective Date shall mean the effective date of the amendment and
restatement of the Prior Agreement, which shall occur on October 17, 1997 or, if
all the conditions specified in Sections 7.01 and 7.02 have not been satisfied
or waived by such date, not later than November 30, 1997, as designated by the
Company by at least three (3) Business Days' advance notice to the
Administrative Agent, or such other date as the Company and the Lenders agree.
The closing on the Effective Date shall take place at 10:00 A.M., Chicago time,
on the Effective Date at the offices of Schiff Hardin & Waite, 7200 Sears Tower,
Chicago, Illinois 60606, or at such other time and place as the parties agree.
Environmental Complaint shall mean any written complaint
(including but not limited to any complaint alleging a cause of action for
personal injury or property damage or natural resource damage or equitable
relief), order, notice of violation, citation, request for information issued
pursuant to any Environmental Laws by an Official Body, subpoena or other
written notice of any type relating to, arising out of, or issued pursuant to
any of the Environmental Laws or any Environmental Conditions, as the case may
be.
Environmental Conditions shall mean any conditions of the
environment, including the work place, the ocean, natural resources (including
flora or fauna), soil, surface water, ground water, any actual or potential
drinking water supply sources, substrata or the ambient air, relating to or
arising out of, or caused by the use, handling, storage, treatment, recycling,
generation, transportation, release, spilling, leaking, pumping, emptying,
discharging, injecting, escaping, leaching, disposal, dumping, threatened
release or other management or mismanagement of Regulated Substances.
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Environmental Laws shall mean all federal, state, local and
foreign Laws and regulations, including permits, licenses, authorizations,
bonds, orders, judgments, consent decrees issued, or entered into, pursuant
thereto, relating to pollution or protection of human health or the environment
or employee safety in the work place.
Equivalent Amount shall mean, at any time, as determined by the
Administrative Agent (which determination shall be conclusive absent manifest
error), with respect to an amount of any currency (the "Reference Currency")
which is to be computed as an equivalent amount of another currency (the
"Equivalent Currency"): (i) if the Reference Currency and the Equivalent
Currency are the same, the amount of such Reference Currency, or (ii) if the
Reference Currency and the Equivalent Currency are not the same, the amount of
such Equivalent Currency converted from such Reference Currency at the
Administrative Agent's spot selling rate (based on the market rates then
prevailing and available to the Administrative Agent) for the sale of such
Equivalent Currency for such Reference Currency at a time determined by the
Administrative Agent on the second Business Day immediately preceding the event
for which such calculation is made.
Equivalent Currency shall have the meaning assigned to that term
in the definition of Equivalent Amount.
ERISA shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations thereunder,
as from time to time in effect.
ERISA Group shall mean, at any time, the Borrowers and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control and all other entities which,
together with the Borrowers, are treated as a single employer under Section 414
of the Internal Revenue Code.
Euro-Rate shall mean the following:
(A) with respect to the Dollar Loans comprising any
Euro-Rate Borrowing Tranche for any Interest Period, the interest rate per annum
determined by the Administrative Agent by dividing (the resulting quotient
rounded upward to the nearest 1/100th of 1% per annum) (i) the rate of interest
determined by the Administrative Agent in accordance with its usual procedures
(which determination shall be conclusive absent manifest error) to be the
average of the London interbank offered rates for Dollars quoted by British
Bankers' Association ("BBA") as set forth on Dow Jones Market Service display
page 3750 (or appropriate successor or, if BBA or its successor ceases to
provide such quotes, a comparable replacement) at approximately 11:00 a.m.
London time two (2) Business Days prior to the first day of such Interest Period
for an amount comparable to such Borrowing Tranche and having a Borrowing Date
and a maturity comparable to such Interest Period by (ii) a number equal to 1.00
minus the Euro-Rate Reserve Percentage. Such Euro-Rate may also be expressed by
the following formula:
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Average of London interbank offered rates
on Dow Jones Market Service display page 3750 quoted
Euro-Rate = by BBA or appropriate successor
-------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Borrowing Tranche
outstanding on the effective date of any change in the Euro- Rate Reserve
Percentage as of such effective date. The Administrative Agent shall give
prompt notice to the Borrowers of the Euro-Rate as determined or adjusted in
accordance herewith, which determination shall be conclusive absent manifest
error.
(B) with respect to Optional Currency Loans comprising any
Euro-Rate Borrowing Tranche for any Interest Period, the interest rate per annum
determined by the Administrative Agent by dividing (the resulting quotient
rounded upward to the nearest 1/100th of 1 percent per annum) (i) the rate of
interest per annum ("LIBO Rate") determined by the Administrative Agent in
accordance with its usual procedures (which determination shall be conclusive
absent manifest error) to be the rate of interest per annum for deposits in the
relevant Optional Currency quoted by BBA as set forth on the relevant Dow Jones
Market Service display page (or, if no such quotation is available on such Dow
Jones Market Service display page, on the appropriate Reuters Screen) at
approximately 9:00 a.m., Eastern time, two (2) Business Days prior to the first
day of such Interest Period for an amount comparable to such Borrowing Tranche
and having a Borrowing Date and a maturity comparable to such Interest Period by
(ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. Such
Euro-Rate may also be expressed by the following formula:
Euro-Rate = LIBO Rate
-------------------------------
1 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option
outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The Administrative Agent shall give
prompt notice to the Borrower of the Euro-Rate as determined or adjusted in
accordance herewith, which determination shall be conclusive absent manifest
error. The Euro-Rate for any Loans shall be based upon the Euro-Rate for the
currency in which such Loans are requested.
Euro-Rate Bid Loan shall mean any Bid Loan that bears interest
under the Bid Loan Euro-Rate Option.
Euro-Rate Bid Loan Spread shall mean the spread quoted by a
Lender in its Bid to apply to such Lender's Bid Loan if such Lender's Bid is
accepted. The Euro-Rate Bid Loan Spread shall be quoted as a percentage rate
per annum and expressed in multiples of 1/100th of one percentage point to be
either added to (if it is positive) or subtracted from (if it is negative) the
Euro-Rate in effect two (2) Business Days before the Borrowing Date with respect
to such Bid Loan. Interest on Euro-Rate Bid Loans shall be computed based on a
year of 360 days and actual days elapsed.
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Euro-Rate Borrowing Tranche shall mean a Borrowing Tranche
consisting of all Revolving Credit Loans to one Borrower to which the Euro-Rate
Option applies and which have the same Interest Period.
Euro-Rate Margin shall mean, at any time, for any Revolving
Credit Loans accruing interest at the Euro-Rate Option, a percentage equal to
the "Euro-Rate Margin" set forth in Schedule 1.01(A) opposite the then-current
Fixed Charge Coverage Ratio.
Euro-Rate Option shall mean the option of the Borrowers to have
Revolving Credit Loans bear interest at the rate and under the terms and
conditions set forth in Section 4.01(a)(ii) or to have Bid Loans made at a Bid
Loan Euro-Rate Option.
Euro-Rate Reserve Percentage shall mean the maximum percentage
(expressed as a decimal rounded upward to the nearest 1/100 of 1%) as determined
by the Administrative Agent which is in effect during any relevant period, (i)
as prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental,
marginal and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities") of a member bank
in such System; or (ii) to be maintained by a Lender as required for reserve
liquidity, special deposit, or a similar purpose by any governmental or monetary
authority of any country or political subdivision thereof (including any central
bank), against (A) any category of liabilities that includes deposits by
reference to which a Euro-Rate is to be determined, or (B) any category of
extension of credit or other assets that includes Loans or Borrowing Tranches to
which a Euro-Rate applies.
Event of Default shall mean any of the Events of Default
described in Section 10.01.
Expiration Date shall mean, with respect to the Commitments,
October 16, 2002, or such earlier date as of which the Commitments shall have
been terminated pursuant to Section 2.04 hereof or cancelled pursuant to Section
10.02 hereof.
Facility Fee shall mean the fee referred to in Section 2.03(b).
Facility Fee Rate shall mean at any time a rate per annum equal
to the greater of (i) the "Facility Fee Rate" set forth on Schedule 1.01(A)
opposite the then-current Fixed Charge Coverage Ratio or (ii) the "Facility Fee
Rate" as defined in, and as then in effect under, the Lease Credit Agreement.
Federal Funds Effective Rate for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed and rounded upward to
the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or
any successor) on such day as being the weighted average of the rates on
overnight Federal funds transactions arranged by Federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of
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this Agreement; provided, if such Federal Reserve Bank (or its successor) does
not announce such rate on any day, the "Federal Funds Effective Rate" for such
day shall be the Federal Funds Effective Rate for the last day on which such
rate was announced.
Fee Letters shall mean those certain letter agreements dated
September, 1997, between the Company and any or all of the Agents, and all other
letter agreements between the Company and any party hereto under which the
parties thereto designate that such letter agreement is a fee letter for
purposes of this Agreement, as the same may be supplemented or amended from time
to time in accordance therewith.
Fees shall mean the Facility Fee, and the fees payable under the
Fee Letters.
Financed Lease shall mean a lease of real property, improvements
on real property or real property and improvements thereon by the Company or any
of its Subsidiaries entered into pursuant to the Participation Agreement.
Financial Projections shall have the meaning assigned to that
term in Section 6.01(i)(B).
Fiscal Quarter shall mean the 13/14 week period commencing on the
day after the last day of the preceding Fiscal Quarter and ending on the Sunday
preceding the last Wednesday in each of April (first), July (second), October
(third) and January (fourth) of each Fiscal Year.
Fiscal Year shall mean the 52/53 week period commencing on the
day after the last day of the preceding Fiscal Year and ending on the Sunday
preceding the last Wednesday in January. By way of illustration, the Company's
1996 Fiscal Year ended January 26, 1997.
Fixed Charge Coverage Ratio shall mean the ratio of Consolidated
Cash Flow from Operations to Fixed Charges.
Fixed Charges shall mean for any period of determination the sum
of interest expense, Rent Expense, Lease Financing Rent Expense and scheduled
principal installments on Indebtedness (as adjusted for prepayments, and
including amortization payments under Capitalized Leases), in each case of the
Company and its Subsidiaries for such period determined and consolidated in
accordance with GAAP.
Fixed Rate shall mean a fixed interest rate quoted by a Lender in
its Bid to apply such Lender's Bid Loan over the term of such Bid Loan if such
Lender's Bid Loan is accepted.
Fixed Rate Bid Loan shall mean a Bid Loan that bears interest
under the Bid Loan Fixed Rate Option.
Foreign Joint Venture shall mean individually and Foreign Joint
Ventures shall mean collectively any corporation, partnership, limited liability
company, joint venture or other
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<PAGE> 21
entity (i) organized under the laws of any jurisdiction other than a state of
the United States of America or formed primarily for the purpose of doing
business outside of the United States of America and (ii) in which the Company
and its Subsidiaries own less than 50% of the capital stock, partnership
interests, membership interests or other ownership interests.
Foreign Purchase means any transaction, or any series of related
transactions, consummated on or after the Effective Date, by which the Company
or any of its Subsidiaries (a) acquires (i) any ongoing business organized under
the laws of any jurisdiction other than a state of the United States of America
or formed primarily for the purpose of doing business outside the United States
of America or (ii) all or substantially all of the assets of any Person or
division thereof are located outside the United States of America, whether
through purchase of assets, merger or otherwise, or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) all or substantially all of the securities of a corporation
organized under the laws of any jurisdiction other than a state of the United
States of America or formed primarily for the purpose of doing business outside
the United States of America, which securities have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or all or substantially all (by
percentage and voting power) of the outstanding partnership interests of a
partnership or membership interests of a limited liability company, in either
case which partnership or limited liability company is organized under the laws
of any jurisdiction other than a state of the United States of America or formed
primarily for the purpose of doing business outside the United States of
America.
Foreign Subsidiary shall mean individually and Foreign
Subsidiaries shall mean collectively any Subsidiary of the Company organized
under the laws of any jurisdiction other than a state of the United States of
America or formed primarily for the purpose of doing business outside the United
States of America.
Fulfillment shall mean Borders Fulfillment, Inc., a corporation
organized and existing under the laws of the State of Delaware, and its
permitted successors and assigns.
Funding Office shall mean, with respect to Loans denominated in
Dollars, the main lending office of the Administrative Agent in Pittsburgh,
Pennsylvania and, with respect to Loans denominated in Optional Currencies, such
lending office, affiliate or correspondent bank of the Administrative Agent as
may be designated by the Administrative Agent with respect to any Optional
Currency.
GAAP shall mean generally accepted accounting principles as are
in effect in the United States of America from time to time, subject to the
provisions of Section 1.03, and applied on a basis consistent with the
Historical Statements both as to classification of items and amounts.
Governmental Acts shall have the meaning assigned to that term in
Section 2.10(i).
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<PAGE> 22
Guaranteed Obligations shall have the meaning assigned to that
term in Section 9.01.
Guarantors shall mean collectively and Guarantor shall mean
separately the Company, Borders, Walden, Books Holding, Planet, BPI, WPI,
OnLine, Outlet, Fulfillment, Library, and any new Subsidiary which executes a
letter agreement pursuant to the provisions of this Agreement.
Historical Statements shall have the meaning assigned to that
term in Section 6.01(i)(i).
Indebtedness shall mean as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (i) borrowed money, (ii)
amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement or repurchase obligations under
any letter of credit, note or accounts receivable financing arrangement,
currency swap agreement, interest rate swap, cap, collar or floor agreement or
other interest rate management device, (iv) Capitalized Lease Obligations, (v)
obligations, whether or not assumed, secured by Liens on or payable out of the
proceeds or production from Property now or hereafter owned or acquired by such
Person, (vi) any other transaction (including forward sale or purchase
agreements and conditional sales agreements) having the commercial effect of a
borrowing of money entered into by such Person to finance its operations or
capital requirements (but not including trade payables and accrued expenses
incurred in the ordinary course of business which are not represented by a
promissory note or other evidence of indebtedness and which are not more than
thirty (30) days past due), or (vii) any Contingent Obligation in respect of
borrowed money or Capitalized Lease Obligations of another Person.
Ineligible Security shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
Insolvency Proceeding shall mean, with respect to any Person, (a)
a case, action or proceeding with respect to such Person (i) before any court or
any other Official Body under any bankruptcy, insolvency, reorganization or
other similar Law now or hereafter in effect, or (ii) for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of the Company or any of its Subsidiaries or otherwise
relating to the liquidation, dissolution, winding-up or relief of such Person,
or (b) any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other similar arrangement in respect of
such Person's creditors generally or any substantial portion of its creditors
undertaken under any Law.
Interest Payment Date shall mean each date specified for the
payment of interest in Section 5.03.
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<PAGE> 23
Interest Period shall mean with respect to a Euro-Rate Borrowing
Tranche, a period of one, two, three or six months commencing on a Business Day
selected by the Company pursuant to this Agreement. Such Interest Period shall
end on (but exclude) the day which corresponds numerically to such date one,
two, three or six months thereafter; provided, however, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding
month, such Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If an Interest Period would otherwise
end on a day which is not a Business Day, such Interest Period shall end on the
next succeeding Business Day; provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
Interest Rate Option shall mean any Euro-Rate Option or Base Rate
Option.
Interim Statements shall have the meaning assigned to that term
in Section 6.01(i)(i).
Internal Revenue Code shall mean the Internal Revenue Code of
1986, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations thereunder,
as from time to time in effect.
Investments shall have the meaning assigned to such term in
Section 8.02(d).
Issuing Bank shall mean PNC Bank, National Association, and its
successors and assigns.
Joint Venture shall mean any Foreign Joint Venture or Domestic
Joint Venture, and Joint Ventures shall mean all Foreign Joint Ventures and
Domestic Joint Ventures.
Kmart shall mean Kmart Corporation, a corporation organized and
existing under the laws of the State of Michigan.
Kmart Agreements shall mean the Kmart Indemnity, the Kmart
Intercompany Agreement, the Kmart Registration Rights Agreement and the Kmart
Tax Agreement.
Kmart Indemnity shall mean that certain Lease Guaranty,
Indemnification and Reimbursement Agreement, dated May 24, 1995, entered into by
the Company and/or one or more of the other Borrowers, on the one hand, and
Kmart, on the other hand, as such document may be from time to time amended,
supplemented, restated or otherwise modified subject to Section 8.02(r).
Kmart Intercompany Agreement shall mean that certain Intercompany
Agreement, dated May 24, 1995, entered into by the Company, on the one hand, and
Kmart, on the other hand, as such document may be from time to time amended,
supplemented, restated or otherwise modified subject to Section 8.02(r).
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<PAGE> 24
Kmart Registration Rights Agreement shall mean that certain
Registration Rights Agreement, dated May 24, 1995, entered into by the Company,
on the one hand, and Kmart, on the other hand, as such document may be from time
to time amended, supplemented, restated or otherwise modified subject to Section
8.02(r).
Kmart Tax Agreement shall mean that certain Tax Allocation and
Indemnification Agreement, dated May 24, 1995, entered into by the Company, on
the one hand, and Kmart, on the other hand, as such document may be from time to
time amended, supplemented, restated or otherwise modified subject to Section
8.02(r).
Labor Contracts shall mean all employment agreements, employment
contracts, collective bargaining agreements and other agreements between the
Company or Subsidiary of the Company and its employees.
Law shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Official Body.
Lease Credit Agreement shall mean the Amended and Restated Credit
Agreement, dated as of November 22, 1995 and amended and restated as of the
Effective Date, among Wilmington Trust Company (not in its individual capacity,
except as expressly stated therein, but solely as owner trustee) as borrower,
the Lenders parties thereto, PNC Bank, National Association in its capacity as
Administrative Agent for such Lenders from time to time parties thereto, The
First National Bank of Chicago in its capacity as Syndication Agent thereunder
and Bankers Trust Company, as Real Estate Administrative Agent thereunder, as
the same may be amended, modified or supplemented from time to time.
Lease Financing Guarantee shall mean the Amended and Restated
Guarantee Agreement, dated as of November 22, 1995 and amended and restated as
of the Effective Date, by and among Borders, Walden, the Company, Planet, BPI,
WPI, Books Holding, OnLine, Outlet, Fulfillment, and Library executed in favor
of PNC Bank, National Association, as Administrative Agent for the several
lenders from time to time parties to the Lease Credit Agreement, as the same may
be amended, modified or supplemented from time to time.
Lease Financing Payment shall mean any payment by the Company or
any of its Subsidiaries (i) under the Lease Financing Guarantee in respect of
Contingent Obligations described in Section 8.02(c)(viii) (other than in respect
of Basic Rent (as defined in the Lease Credit Agreement, (ii) to purchase or
otherwise acquire all or any portion of any Property subject to any Financed
Lease, including, without limitation, all payments pursuant to the exercise by
the Company or any of its Subsidiaries of any Purchase Option (as defined in a
Financed Lease) or (iii) that constitutes a payment of the Termination Value or
the Maximum Residual Guarantee Amount (as each such term is defined in the Lease
Credit Agreement).
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<PAGE> 25
Lease Financing Rent Expense shall mean all Basic Rent (as
defined in the Lease Credit Agreement) payable by the Company and its
Subsidiaries, as lessee or sublessee under a Financed Lease.
Lenders shall mean the banks and financial institutions named on
Schedule 1.01(B) and their respective successors and assigns as permitted
hereunder, each of which is referred to herein as a Lender, and when used in
reference to a Bid Loan or a related term, shall also mean any or all Designated
Lender(s).
Lending Office shall mean, with respect to each Lender, the
office(s) specified for such Lender in Schedule 1.01(B) or such other office(s)
as such Lender may specify in writing to the Administrative Agent.
Letter of Credit shall have the meaning assigned to that term in
Section 2.10(a).
Letter of Credit Borrowing shall mean an extension of credit
resulting from a drawing under any Letter of Credit which shall not have been
reimbursed on the date when made and shall not have been converted into a
Revolving Credit Loan under Section 2.10(d).
Letter of Credit Fee shall mean at any time a percentage fee
equal to the "Euro-Rate Margin" set forth in Schedule 1.01(A) opposite the
then-current Fixed Charge Coverage Ratio.
Letter of Credit Outstandings shall mean at any time the sum of
(i) the aggregate undrawn face amount of outstanding Letters of Credit and (ii)
the aggregate amount of all unpaid and outstanding reimbursement obligations of
the Borrowers in respect of Letters of Credit.
Leverage Ratio shall mean the ratio (expressed as a percentage)
of Consolidated Funded Indebtedness to Consolidated Total Capital.
Library shall mean The Library, Ltd., a corporation organized and
existing under the laws of the State of Missouri, and its permitted successors
and assigns.
Lien shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement of any
nature whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security.
Loan Documents shall mean this Agreement, all applications and
agreements in respect of Letters of Credit, the Fee Letters, and any other
instruments, certificates or documents delivered or contemplated to be delivered
hereunder or thereunder or in connection herewith or therewith, as the same may
be supplemented or amended from time to time in accordance herewith or
therewith, and Loan Document shall mean any of the Loan Documents.
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Loans shall mean collectively and Loan shall mean separately all
Revolving Credit Loans, Swing Loans and Bid Loans or any Revolving Credit Loan,
Swing Loan or Bid Loan.
Material Adverse Effect shall mean (a) a material adverse effect
upon the validity or enforceability of this Agreement or any other Loan
Document, (b) a material adverse effect on the business, properties, assets,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole, (c) a material impairment of the ability of any Borrower or
the Company and its Subsidiaries taken as a whole to duly and punctually pay or
perform its or their Indebtedness, or (d) a material impairment of the ability
of any of the Agents or any of the Lenders, to the extent permitted, to enforce
its legal remedies pursuant to this Agreement or any other Loan Document.
Multiemployer Plan shall mean any employee benefit plan that is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which the Company or any member of the ERISA Group is then making or accruing an
obligation to make contributions or at any time in the past has made or had an
obligation to make such contributions.
Multiple Employer Plan shall mean a Plan which has two or more
contributing sponsors (including the Company or any member of the ERISA Group)
at least two of whom are not under common control, as such a plan is described
in Sections 4063 and 4064 of ERISA.
Note Put Agreements shall mean those certain Note Put Agreements
dated as of November 10, 1994, by and among Kmart, Borders and National Tenant
Finance Corporation, as such documents may be from time to time amended,
supplemented, restated or otherwise modified subject to Section 8.02(r).
Notices shall have the meaning assigned to that term in Section
12.06.
Obligation shall mean any obligation or liability of any of the
Borrowers to any of the Agents or any of the Lenders, howsoever created, arising
or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, under or in connection with this
Agreement or any other Loan Document.
Offered Amount shall have the meaning assigned to such term in
Section 3.02.
Official Body shall mean any national, federal, state, local or
other government or political subdivision or any agency, authority, bureau,
central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
OnLine shall mean Borders OnLine, Inc., a corporation organized
and existing under the laws of the State of Delaware, and its permitted
successors and assigns.
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Optional Currency shall mean, subject to availability, any of the
following currencies: Australian Dollars ("AUD"), British Pounds Sterling
("GBP"), Canadian Dollars ("CAD"), Deutsche Mark ("DEM"), French Francs
("FRF"), Italian Lira ("ITL"), Spanish Pesetas ("ESP"), Japanese Yen ("JPY"),
Singapore Dollar ("SGD"), and any other currency approved pursuant to Section
2.09(d).
Original Currency shall have the meaning assigned to such term in
Section 5.08(a).
Outlet shall mean Borders Outlet, Inc., a corporation organized
and existing under the laws of the State of Colorado, and its permitted
successors and assigns.
Overnight Rate shall mean for any day with respect to any Loans
in an Optional Currency, the rate of interest per annum as determined by the
Administrative Agent at which overnight deposits in such currency, in an amount
approximately equal to the amount with respect to which such rate is being
determined, would be offered for such day in the offshore interbank market.
Participation Advance shall mean, with respect to any Lender,
such Lender's payment in respect of its participation in a Letter of Credit
Borrowing according to its Ratable Share pursuant to Section 2.10(e).
Participation Agreement shall mean the Amended and Restated
Participation Agreement dated as of November 22, 1995 and amended and restated
as of the Effective Date, among Wilmington Trust Company (not in its individual
capacity, except as expressly stated therein, but solely as owner trustee), PNC
Bank, National Association, as Administrative Agent for the several lenders from
time to time parties to the Lease Credit Agreement, The First National Bank of
Chicago in its capacity as Syndication Agent thereunder, Bankers Trust Company
in its capacity as Real Estate Administrative Agent thereunder, and Sam Project
Funding Corp. I, as the same may be amended, modified or supplemented from time
to time.
Partnership Interests shall have the meaning given to such term
in Section 6.01(c).
PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any successor.
Permitted Investments shall mean:
(i) direct obligations of the United States of America or
any agency or instrumentality thereof or obligations backed by the full faith
and credit of the United States of America maturing in twelve (12) months or
less from the date of acquisition;
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(ii) commercial paper maturing in 180 days or less rated
not lower than A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors
Service, Inc. on the date of acquisition;
(iii) demand deposits, time deposits or certificates of
deposit maturing within one year in any Lender or any commercial bank whose
commercial paper (or that of its parent corporation) is rated not lower than A-1
by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc. on
the date of acquisition;
(iv) adjustable rate preferred stock with an express (or
implied) rating not lower than A by Standard & Poor's Corporation or A by
Moody's Investors Service, Inc. on the date of acquisition; and
(v) investments in any investment company registered under
the Investment Company Act of 1940, as amended (or any series thereof) (A) that
prices its shares in accordance with Rule 2a-7 under such Act, (B) which holds
at least ninety percent (90%) of its assets in the investments itemized in (i)
through (iv) above, and (C) which has net asset value exceeding $100,000,000 on
the date of acquisition.
Permitted Joint Venture Activity shall mean (i) any Investment by
the Company or any Unrestricted Subsidiary which is a Domestic Subsidiary in any
Joint Venture or any Contingent Obligations of the Company or any Unrestricted
Subsidiary which is a Domestic Subsidiary in respect of any Indebtedness of any
Joint Venture, provided that the aggregate amount of all such Investments and
Contingent Obligations does not at any time exceed 15% of Consolidated Tangible
Net Worth, determined as of the last day of the Fiscal Quarter most recently
ended, and (ii) any Contingent Obligations of the Company or any Unrestricted
Subsidiary which is a Domestic Subsidiary, or Indebtedness of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary constituting
reimbursement obligations under letters of credit, relating to leases executed,
as lessee, by a Joint Venture, provided, that the portion of such Contingent
Obligations and Indebtedness which constitute current liabilities determined and
consolidated in accordance with GAAP is limited to lease payments (whether such
amounts are fixed or percentage rent, fees, costs, accelerated payment
requirements or otherwise) not in excess of an aggregate of $15,000,000 in any
Fiscal Year with respect to all Joint Ventures.
Permitted Lease Contingent Obligations shall mean all guarantees,
sureties or other forms of secondary liability in respect of real property
leases which have been assigned (which term shall also include new leases
entered into between the landlord and a third Person in respect of real property
being vacated by any of the Borrowers) by any of the Borrowers or any Subsidiary
of any of the Borrowers to any Person (other than any of the Borrowers or any
such Subsidiary), the terms of which assignment, or the landlord's consent
therefor, or of any such guarantee, surety or other agreement or instrument,
require any of the Borrowers or such Subsidiary to remain liable for rent and
other performance in respect of the assigned lease.
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Permitted Liens shall mean:
(i) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business and which are not yet due and
payable;
(ii) pledges or deposits made in the ordinary course of
business to secure payment of worker's compensation, or to participate in any
fund in connection with worker's compensation, unemployment insurance, old-age
pensions or other social security programs;
(iii) Liens of mechanics, materialmen, warehousemen,
carriers, or other like Liens, securing obligations incurred in the ordinary
course of business that are not yet due and payable and Liens of landlords
securing obligations to pay lease payments that are not yet due and payable or
in default;
(iv) pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of Indebtedness) or leases, not in excess of the aggregate amount due
thereunder, or to secure statutory obligations, or surety, appeal, indemnity,
performance or other similar bonds required in the ordinary course of business;
(v) encumbrances consisting of zoning restrictions,
easements or other restrictions on the use of real Property, none of which
materially impairs the use of such Property or the value thereof, and none of
which is violated in any material respect by existing or proposed structures or
land use;
(vi) Liens on Property leased by the Company or any
Subsidiary of the Company under Capital Leases permitted under this Agreement
securing obligations of the Company or any such Subsidiary to the lessor under
such Capital Leases;
(vii) any Lien existing on the date of this Agreement and
described on Schedule 1.01(C); provided that the principal amount secured
thereby is not hereafter increased and no additional assets become subject to
such Lien;
(viii) Purchase Money Security Interests;
(ix) the following, (A) if the validity or amount thereof
is being contested in good faith by appropriate and lawful proceedings
diligently conducted so long as levy and execution thereon have been stayed and
continue to be stayed or (B) if a final judgment is entered and such judgment is
discharged within thirty (30) days of entry, and in either case individually or
in the aggregate, they could not reasonably be expected to have a Material
Adverse Effect;
(1) Liens for taxes, assessments or similar charges due and
payable and subject to interest or penalty, provided that the Borrower maintains
such reserves or other appropriate
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provisions as shall be required by GAAP and pays all such taxes, assessments or
charges forthwith upon the commencement of proceedings to foreclose any such
Lien;
(2) Liens upon, and defects of title to, Property,
including any attachment of Property or other legal process prior to
adjudication of a dispute on the merits; or
(3) Liens of mechanics, materialmen, warehousemen,
carriers, or other statutory nonconsensual Liens;
(x) Liens on assets of the Borrowers securing
indebtedness of the Company and its Subsidiaries incurred to refinance the
Contingent Obligations arising under the Lease Financing Guarantee as permitted
by Section 8.02 (c)(vii); provided, however that such Liens may only attach to
the property previously subject to the Financed Lease being refinanced; and
(xi) Liens on assets of the Company and its Subsidiaries
not otherwise permitted by clauses (i) through (x) above, so long as any
Indebtedness secured thereby is permitted under the terms of Section 8.02(a),
and the aggregate fair market value of all property secured by such Liens does
not at any time exceed 5% of Consolidated Tangible Net Worth (determined as of
the last day of the Fiscal Quarter most recently ended).
Permitted Restricted Subsidiary Activity shall mean (i) any
Investment by the Company or any Unrestricted Subsidiary which is a Domestic
Subsidiary in any Restricted Subsidiary or any Contingent Obligations of the
Company or any Unrestricted Subsidiary which is a Domestic Subsidiary in respect
of any Indebtedness of any Restricted Subsidiary, provided that (a) the
aggregate amount of all such Investments and Contingent Obligations does not at
any time exceed 20% of Consolidated Tangible Net Worth, determined as of the
last day of the Fiscal Quarter most recently ended, and (b) the aggregate amount
of all such Investments and Contingent Obligations made by the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary with respect to any
Restricted Subsidiary which is a Foreign Subsidiary does not exceed 15% of
Consolidated Tangible Net Worth, determined as of the last day of the Fiscal
Quarter most recently ended, and (ii) any Contingent Obligations of the Company
or any Unrestricted Subsidiary which is a Domestic Subsidiary, or Indebtedness
of the Company or any Unrestricted Subsidiary which is a Domestic Subsidiary
constituting reimbursement obligations under letters of credit, relating to
leases executed, as lessee, by a Restricted Subsidiary, provided, that, the
portion of such Contingent Obligations and Indebtedness which constitute current
liabilities determined and consolidated in accordance with GAAP is limited to
lease payments (whether such amounts are fixed or percentage rent, fees, costs,
accelerated payment requirements or otherwise) not in excess of an aggregate of
$15,000,000 in any Fiscal Year with respect to all Restricted Subsidiaries.
Permitted Sutro Refinancing Indebtedness shall mean Indebtedness
of the Company or any other Borrower which is incurred solely to pay obligations
of Borders under Section 2.2 of any of the Note Put Agreements.
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Person shall mean any individual, corporation, partnership,
limited liability company, association, joint-stock company, trust,
unincorporated organization, joint venture, government or political subdivision
or agency thereof, or any other entity.
Plan shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees or former employees of any member of
the ERISA Group or (ii) has at any time within the preceding five years been
maintained by any entity which was at such time a member of the ERISA Group for
employees or former employees of any entity which was at such time a member of
the ERISA Group.
Planet shall mean Planet Music, Inc., a corporation organized and
existing under the laws of the State of North Carolina, and its permitted
successors and assigns.
Potential Default shall mean any event or condition which with
notice, passage of time or a determination by the Administrative Agent or the
Required Lenders, or any combination of the foregoing, would constitute an Event
of Default.
Principal Office shall mean the main lending office of the
Administrative Agent in Pittsburgh, Pennsylvania.
Prior Agreement shall have the meaning assigned to that term in
the preamble to this Agreement.
Prior Lenders shall mean the lenders which are party to the Prior
Agreement.
Prior Revolving Credit Loans shall have the meaning assigned to
that term in Section 2.01(b).
Prohibited Transaction shall mean any prohibited transaction as
defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA for
which neither an individual nor a class exemption has been issued by the United
States Department of Labor.
Property shall mean any and all property, whether real, personal,
tangible, intangible or mixed, both owned and leased pursuant to Capital Leases,
of any Person.
Purchase means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Company or any of its Subsidiaries (a) acquires any ongoing business or all or
substantially all of the assets of any Person or division thereof, whether
through purchase of assets, merger or otherwise, or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) all or substantially all of the securities of a corporation, which
securities have ordinary voting power for the election of directors (other than
securities having such power only by reason of the happening
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of a contingency) or all or substantially all (by percentage and voting power)
of the outstanding partnership interests of a partnership or membership
interests of a limited liability company.
Purchase Money Security Interest shall mean Liens upon tangible
personal Property securing loans to any Borrower or Subsidiary of a Borrower or
deferred payments by such Borrower or Subsidiary for the purchase of such
tangible personal Property.
Ratable Share shall mean the proportion that a Lender's
Commitment bears to the Commitments of all of the Lenders.
Real Estate Administrative Agent shall mean Bankers Trust
Company, and its successors and assigns.
Reference Currency shall have the meaning assigned to that term
in the definition of Equivalent Amount.
Register shall have the meaning assigned to that term in Section
12.11.
Regulated Substances shall mean any substance, including any
solid, liquid, semisolid, gaseous, thermal, thoriated or radioactive material,
refuse, garbage, wastes, chemicals, petroleum products, by-products, coproducts,
impurities, dust, scrap, heavy metals, any substance defined as a "hazardous
substance," "pollutant," "pollution," "contaminant," "hazardous or toxic
substance," "extremely hazardous substance," "toxic chemical," "toxic waste,"
"hazardous waste," "industrial waste," "residual waste," "solid waste,"
"municipal waste," "mixed waste," "infectious waste," "chemotherapeutic waste,"
"medical waste," "regulated substance" or any related materials, substances or
wastes as now or hereafter defined pursuant to any Environmental Laws, the
generation, manufacture, extraction, processing, distribution, treatment,
storage, disposal, transport, recycling, reclamation, use, reuse, spilling,
leaking, dumping, injection, pumping, leaching, emptying, discharge, escape,
release or other management or mismanagement of which is regulated by the
Environmental Laws.
Regulation U shall mean Regulation U, T, G or X as promulgated by
the Board of Governors of the Federal Reserve System, as amended from time to
time.
Rent Expense shall mean all fixed rents payable by the Company
and its Subsidiaries, as lessee or sublessee under a lease of Property (other
than rents payable under Financed Leases), but shall be exclusive of any amounts
required to be paid by the Company and its Subsidiaries (whether or not
designated as rents or additional rents) on account of maintenance, repairs,
insurance, taxes, assessments, utilities, operating and labor costs, and similar
charges. Fixed rents under any so-called "percentage leases" shall be computed
based on the actual amount of rent paid, and not on the basis of the minimum
rents, if any, required to be paid by the lessee regardless of sales volume or
gross revenues. The term Rent Expense shall exclude any payments made in
respect of any Capitalized Lease.
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Reportable Event shall mean a reportable event described in
Section 4043 of ERISA and regulations thereunder with respect to a Plan or
Multiemployer Plan.
Repurchase Amount shall mean (a) $100,000,000 plus (b) the
aggregate amount paid to the Company (whether in cash or in shares of the
Company's stock), from time to time and at any time since the Effective Date, by
officers, employees or directors of the Company or any of its Subsidiaries in
connection with the exercise of options to purchase shares of the Company's
stock, plus (c) the realized tax benefit (as calculated by the Company in a
manner satisfactory to the Administrative Agent), for tax periods after the
Effective Date resulting from the exercise of such options or resulting from the
lapse of restrictions on (and vesting of rights in) certain shares of the
Company's stock subject to the Management Stock Purchase Plan from time to time
and at any time since May 1, 1995. For purposes of calculating the Repurchase
Amount, to the extent shares of the Company's stock are delivered to the Company
in payment of the exercise price of options, or in payment of taxes associated
with the exercise of options or the vesting of restricted shares, such delivered
shares are deemed to be repurchased by the Company at fair market value (as
defined in the Company's stock option plan) on the date of delivery to the
Company. Such delivered share repurchases will serve to reduce the available
Repurchase Amount.
Requested Amount shall have the meaning assigned to such term in
Section 3.01.
Required Lenders shall mean (i) Lenders whose Commitments
aggregate at least 51% of the Commitments of all of the Lenders, or (ii) if the
Commitments shall have been terminated, Lenders whose outstanding Loans
aggregate at least 51% of the total principal amount of the outstanding Loans
hereunder. For purposes of this definition, in addition to outstanding Loans,
each Lender shall be deemed to have outstanding Loans in an amount equal to its
Ratable Share of any Letter of Credit Outstandings and, as provided in Section
10.02(c), after the occurrence and during the continuation of an Event of
Default, and after termination of the Commitments, each Lender shall have voting
rights hereunder in the proportion the outstanding balance of all of its Loans
(including Bid Loans) and Letters of Credit Outstanding hereunder bears to the
total outstanding amount of all Loans (including Bid Loans) and Letters of
Credit Outstanding hereunder.
Restricted Subsidiary shall mean individually and Restricted
Subsidiaries shall mean collectively any Subsidiary of the Company (other than
Unrestricted Subsidiaries).
Revolving Credit Loan Request shall mean a request for Revolving
Credit Loans made in accordance with Section 2.05(a).
Revolving Credit Loans shall mean collectively and Revolving
Credit Loan shall mean separately all Revolving Credit Loans or any Revolving
Credit Loan made by the Lenders or one of the Lenders to the Borrowers pursuant
to Section 2.01 or 2.10(d). A Bid Loan is not a Revolving Credit Loan, except
that it will be treated as a Revolving Credit Loan following a termination of
the Commitments hereunder pursuant to Section 10.02(a) or 10.02(b).
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Revolving Facility Usage shall mean at any time the sum of the
Dollar Equivalent amount of the Revolving Credit Loans outstanding and the
Dollar Equivalent amount of the Letter of Credit Outstandings.
Section 20 Subsidiary shall mean the Subsidiary of the bank
holding company controlling any Lender, which Subsidiary has been granted
authority by the Federal Reserve Board to underwrite and deal in certain
Ineligible Securities.
Shares shall have the meaning assigned to that term in Section
6.01(b).
Solvent shall mean, with respect to any Person on a particular
date, that on such date (i) the fair value of the Property of such Person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (ii) the present fair saleable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (iii) such Person is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business, (iv) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (v) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
Sterling Swing Loans shall have the meaning assigned to that term
in Section 2.01(d)(ii).
Subsequent Effective Date shall mean the date on which (i) Books
Etc. becomes an Unrestricted Subsidiary, (ii) the Administrative Agent has
received all deliveries from Books Etc. required by Section 7.03 in a form
reasonably satisfactory to the Administrative Agent and its counsel and (iii)
all of the conditions in Section 7.03 have been satisfied.
Subsidiary of any Person at any time shall mean (i) any
corporation or trust of which 50% or more (by number of shares or number of
votes) of the outstanding capital stock or shares of beneficial interest
normally entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such Person or one or
more of such Person's Subsidiaries, or any partnership of which such Person is a
general partner or of which 50% or more of the partnership interests is at the
time directly or indirectly owned by such Person or one or more of such Person's
Subsidiaries, or any limited liability company of which 50% or more of the
membership interests is at the time directly or indirectly owned by such Person
or one or more of such Person's Subsidiaries or (ii) any corporation, trust,
partnership, limited liability company or other entity which
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is controlled or capable of being controlled by such Person or one or more of
such Person's Subsidiaries.
Subsidiary Shares shall have the meaning assigned to that term in
Section 6.01(c).
Swing Lenders shall mean PNC Bank, National Association and The
First National Bank of Chicago, in their capacity as Lenders of Swing Loans, and
their permitted successors and assigns.
Swing Loan Facility shall mean a discretionary line of credit,
available in Dollars, offered to the Borrowers by the Swing Lenders in equal
shares in an aggregate principal amount not to exceed $25,000,000; provided,
however, that for the first ten (10) Business Days after the Effective Date,
Sterling Swing Loans (made in British Pounds Sterling) may be offered to Books
Holding by the Swing Lenders in such shares as may be determined by the Swing
Lenders in an aggregate principal Dollar Equivalent Amount not to exceed
$75,000,000.
Swing Loan Request shall mean a request for Swing Loans made in
accordance with Section 2.05(b) hereof.
Swing Loans shall mean collectively and Swing Loan shall mean
separately all Swing Loans or any Swing Loan (including any Sterling Swing
Loans) made by the Swing Lenders to the Borrowers pursuant to Section 2.01(d)
hereof.
Syndication Agent shall mean The First National Bank of Chicago,
and its successors and assigns.
Total Facility Usage shall mean at any time the sum of Revolving
Facility Usage, the Swing Loans outstanding and the Bid Loans outstanding.
Unrestricted Subsidiary shall mean individually and Unrestricted
Subsidiaries shall mean collectively any Subsidiary of the Company (i) of which
80% or more of the outstanding shares of capital stock, partnership interests or
membership interests are owned by the Company (whether directly or through one
or more Subsidiaries of the Company) and (ii) that has executed and delivered
this Agreement as a Guarantor or has executed and delivered a letter agreement
in form and substance satisfactory to the Administrative Agent under which such
Subsidiary agrees to be bound by the provisions of Article IX hereof, together
with such legal opinions and other documents and instruments as the
Administrative Agent may request.
Walden shall mean Walden Book Company, Inc., a corporation
organized and existing under the laws of the State of Colorado, and its
permitted successors and assigns.
Wholly-owned Subsidiary shall mean individually and Wholly-owned
Subsidiaries shall mean collectively any Subsidiary of the Company of which all
of the outstanding
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shares of capital stock or other equity interests are owned by the Company
(whether directly or through one or more Wholly-owned Subsidiaries of the
Company).
WPI shall mean Waldenbooks Properties, Inc., a corporation
organized and existing under the laws of the State of Delaware, and its
permitted successors and assigns.
1.02 Construction. Unless the context of this Agreement
otherwise clearly requires, the following rules of construction shall apply to
this Agreement and each of the other Loan Documents:
(a) references to the plural include the singular, the
plural, the part and the whole; "or" has the inclusive meaning represented by
the phrase "and/or," and "including" has the meaning represented by the phrase
"including without limitation";
(b) references to "determination" of or by the
Administrative Agent or the Lenders shall be deemed to include good faith
estimates by the Administrative Agent or the Lenders (in the case of
quantitative determinations) and good faith beliefs by the Administrative Agent
or the Lenders (in the case of qualitative determinations) and such
determination shall be conclusive absent manifest error;
(c) the words "hereof," "herein," "hereunder," "hereto"
and similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole and not to any particular
provision of this Agreement or such other Loan Document;
(d) the section and other headings contained in this
Agreement or such other Loan Document and the Table of Contents (if any)
preceding this Agreement or such other Loan Document are for reference purposes
only and shall not control or affect the construction of this Agreement or such
other Loan Document or the interpretation thereof in any respect;
(e) article, section, subsection, clause, schedule and
exhibit references are to this Agreement or other Loan Document, as the case may
be, unless otherwise specified;
(f) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and assigns
are permitted by this Agreement or other Loan Document, as the case may be, and
reference to a Person in a particular capacity excludes such Person in any other
capacity;
(g) reference to any agreement (including this
Agreement and any other Loan Document together with the schedules and exhibits
hereto or thereto), document or instrument means such agreement, document or
instrument as amended, modified, replaced, substituted for, superseded or
restated;
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(h) relative to the determination of any period of
time, "from" means "from and including," "to" means "to but excluding" and
"through" means "through and including"; and
(i) references to "shall" and "will" are intended
to have the same meaning.
1.03 Accounting Principles. Except as otherwise provided in
this Agreement, all computations and determinations as to accounting or
financial matters and all financial statements to be delivered pursuant to this
Agreement shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP; provided, however,
that if any change in GAAP or the application thereof occurs hereafter, or if
the Company adopts a change to its accounting principles or methods with the
agreement of its independent certified public accountants, and such change
results in a change in the calculation of any financial covenant or restriction
set forth herein, then the parties hereto agree to enter into and diligently
pursue negotiations in order to amend such financial covenant or restriction so
as to equitably reflect such change, with the desired result that the criteria
for evaluating the financial condition and results of operations of the Company
and its Subsidiaries shall be the same after such change as if such change had
not been made. Pending the resolution of any such negotiations, the Borrowers
agree to provide to each of the Lenders such unaudited financial information and
pro forma statements using the accounting methods and principles used in the
preparation of the audited financial statements for the fiscal year ended
January 26, 1997, as are necessary to enable the Lenders to test the financial
covenants contained herein.
ARTICLE II
REVOLVING CREDIT AND SWING LOAN FACILITIES
2.01 (a) Commitments. Subject to the terms and
conditions hereof and relying upon the representations and warranties herein set
forth, each Lender severally agrees to make Revolving Credit Loans in either
Dollars or one or more Optional Currencies to the Borrowers at any time or from
time to time on or after the Effective Date to, but not including, the
Expiration Date in an aggregate Dollar Equivalent principal amount not to exceed
at any one time such Lender's Commitment minus (i) such Lender's Ratable Share
of the Dollar Equivalent amount of the Letter of Credit Outstandings and (ii) in
the case of each Swing Lender, such Swing Lender's Swing Loans outstanding;
provided, however, that in no event shall Revolving Credit Loans (or Sterling
Swing Loans) be made to Books Holding prior to the funding of the Purchase of
Books Etc. and its Subsidiaries (including Books Etc. Properties Limited), and
thereafter in no event shall the Dollar Equivalent amount of all Revolving
Credit Loans and Sterling Swing Loans made to Books Holding exceed the purchase
price payable in cash for Books Etc. and its Subsidiaries (including Books Etc.
Properties Limited, and including escrowed and deferred purchase price payments
and debt of Books Etc. and its Subsidiaries refinanced in conjunction with or
after such Purchase) plus from time to time after the funding of the Purchase of
Books Etc. and its Subsidiaries (including Books Etc. Properties Limited), an
amount equal to the interest payable on the amounts borrowed by Books
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Holding; provided, further, that after the Subsequent Effective Date in no
event shall the Dollar Equivalent amount of all Revolving Credit Loans made to
Books Etc. exceed 5% of Consolidated Tangible Net Worth (determined as of the
last day of the Fiscal Quarter most recently ended). After giving effect to
any such Revolving Credit Loans and any other Loans made on or before the
Borrowing Date of such Revolving Credit Loans, the aggregate amount of the
Total Facility Usage shall not exceed the aggregate amount of the Commitments.
Within such limits of time and amount and subject to the other provisions of
this Agreement, the Borrowers may borrow, repay and reborrow pursuant to this
Section 2.01.
(b) Prior Revolving Credit Loans. Schedule 2.01
(b) lists the Revolving Credit Loans outstanding for each Lender under the Prior
Agreement prior to the Effective Date (the "Prior Revolving Credit Loans") and
the Revolving Credit Loans to be outstanding for each Lender hereunder as of the
Effective Date. On the Effective Date, any such Prior Revolving Credit Loans
which are held by a Prior Lender which will continue to be a Lender on and after
the Effective Date shall be deemed to continue as Revolving Credit Loans made
hereunder. Any Prior Lender which has determined not to continue to be a Lender
after the Effective Date will be repaid its Revolving Credit Loans in full and
the Borrower will pay such Prior Lender up to but not including the Effective
Date the amount of all interest, Fees and additional costs described in Section
5.06(b) owing to any such Prior Lender. Any Lender hereunder which was not a
Prior Lender or any Prior Lender that has increased its Commitment as of the
Effective Date shall purchase from Prior Lenders or other Lenders hereunder or
shall otherwise fund Revolving Credit Loans in an amount such that, after the
Effective Date, the amount of outstanding Revolving Credit Loans from each
Lender shall equal such Lender's respective Ratable Share, as modified to give
effect to the Effective Date, of outstanding Revolving Credit Loans. To the
extent that any Prior Revolving Credit Loans bear interest at the Euro-Rate
Option, the Borrowers shall pay any additional costs described in Section
5.06(b) incurred by any Lender, and the Borrowers shall pay any similar
additional costs incurred by any Lender which becomes or continues to be a
Lender on and after the Effective Date and assumes or funds a portion of any
Revolving Credit Loan for the remainder of an Interest Period which is
outstanding on the Effective Date.
(c) Increase in Commitments. Following the
Effective Date at any time the Syndication Agent (in consultation with the other
Agents and the Company) shall have the right to solicit additional financial
institutions to become Lenders for purposes of this Agreement, or to encourage
any Lender to increase its Commitment, provided that (i) each financial
institution that becomes a Lender shall agree to become party to, and shall
assume and agree to be bound by, this Agreement, subject to all terms and
conditions hereof; (ii) neither the Administrative Agent nor the Real Estate
Administrative Agent shall have any obligation to the Borrowers or to any Lender
to solicit additional financial institutions or any increase in the Commitment
of any Lender pursuant to this Section 2.01(c); (iii) no Lender shall have an
obligation to the Borrowers, the Agents or any other Lender to increase its
Commitment or its Ratable Share; and (iv) in no event shall the addition of any
Lender or Lenders or the increase in the Commitment of any Lender increase the
Commitments to an amount greater than $500,000,000. Upon the addition of any
Lender, or the increase in the Commitment of any Lender, Schedule 1.01(B) shall
be amended by the Administrative Agent and the Borrowers to reflect such
addition or such increase, and the Administrative Agent shall deliver to the
Lenders and the Company a copy of revised Schedule
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1.01(B). If, at any time that the Commitments are increased pursuant to this
Section 2.01(c), there are Revolving Credit Loans then outstanding or Letters
of Credit Outstanding, each new Lender, and each existing Lender that has
increased its Commitment, shall purchase Revolving Credit Loans and Letters of
Credit Outstandings from each other Lender in an amount such that, after such
purchase or purchases, the amount of outstanding Revolving Credit Loans and
Letters of Credit Outstandings from each Lender shall equal such Lender's
respective Ratable Share, as modified to give effect to such increase,
multiplied by the aggregate amount of Revolving Credit Loans outstanding and
Letters of Credit Outstandings from all Lenders. To the extent that any
outstanding Revolving Credit Loans bear interest at the Euro-Rate Option, the
Borrowers shall pay any additional costs described in Section 5.06(b) incurred
by any Lender.
(d) Swing Loan Facility. (i) Subject to the terms
and conditions hereof (including fulfillment of those conditions set forth in
Article VII, as applicable) and relying upon the representations and warranties
herein set forth, and in order to facilitate loans and repayments, each of the
Swing Lenders may, at its option, cancelable at any time for any reason
whatsoever, make Swing Loans to the Borrowers at any time or from time to time
after the Effective Date to, but not including, the Expiration Date, in an
aggregate principal amount not to exceed $12,500,000, subject to reduction as
provided herein, to be made in accordance with the following provisions, and
provided, that, except with respect to Sterling Swing Loans, no Swing Lender's
Swing Loans outstanding hereunder shall exceed its Commitment minus (i) the
Dollar Equivalent amount of its Ratable Share of the Letter of Credit
Outstandings and (ii) the Dollar Equivalent amount of its outstanding Revolving
Credit Loans. Within such limits of time and amount and subject to the other
provisions of this Agreement, the Borrowers may borrow, repay and reborrow
pursuant to this Section 2.01(d).
(ii) Subject to the terms and conditions hereof
(including fulfillment of those conditions set forth in Article VII, as
applicable) and relying upon the representations and warranties herein set
forth, and in order to facilitate loans and repayments, each of the Swing
Lenders may, at its option, cancellable at any time for any reason whatsoever,
make Swing Loans to Books Holding at any time or from time to time after the
Effective Date to, but not including, the tenth Business Day following the
Effective Date, in British Pounds Sterling (the "Sterling Swing Loans") in an
aggregate principal Dollar Equivalent amount not to exceed $75,000,000, subject
to reduction as provided herein, to be made in accordance with the following
provisions. For the period during which Sterling Swing Loans are outstanding,
PNC Bank, National Association's Swing Loans outstanding may exceed its
Commitment minus (i) the Dollar Equivalent amount of its Ratable Share of the
Letter of Credit Outstandings and (ii) the Dollar Equivalent amount of its
outstanding Revolving Credit Loans. Within such limits of time and amount and
subject to the other provisions of this Agreement, the Borrowers may borrow,
repay and reborrow pursuant to this Section 2.01(d)(ii).
2.02 Nature of Lenders' Obligations with Respect to
Revolving Credit Loans. Each Lender shall be obligated to participate in each
request for Revolving Credit Loans in accordance with its Ratable Share. The
aggregate Dollar Equivalent amount of each Lender's Revolving Credit Loans
outstanding hereunder to the Borrowers at any time shall never exceed its
Commitment, minus its Ratable Share of the Dollar Equivalent amount of Letters
of Credit
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Outstanding, minus for any Swing Lender its Swing Loans outstanding, subject to
Section 5.05(a). The obligations of each Lender hereunder are several. The
failure of any Lender to perform its obligations hereunder shall not affect the
Obligations of the Borrowers to any other party nor shall any other party be
liable for the failure of such Lender to perform its obligations hereunder.
The Lenders shall have no obligation to make Revolving Credit Loans hereunder
on or after the Expiration Date.
2.03 Fees.
(a) Revolving Credit Facility Fee. The Borrowers
agree to pay to the Administrative Agent in Dollars for the account of each
Lender, as consideration for such Lender's Commitment, a nonrefundable facility
fee calculated on a daily basis by multiplying the Facility Fee Rate by such
Lender's Commitment (whether used or unused). All Facility Fees shall be
payable in arrears on the last Business Day of each March, June, September and
December after the Effective Date and on the Expiration Date or upon
acceleration of the Obligations. The Facility Fee Rate shall be subject to
adjustment quarterly to the highest percentage, based on the Fixed Charge
Coverage Ratio, as set forth on Schedule 1.01(A) or on Schedule I to the Lease
Credit Agreement. Each adjustment in the Facility Fee Rate shall be effective
on the second Business Day next following delivery to the Administrative Agent
of the financial statements or certificate required to be delivered by the
Company pursuant to Section 8.03(a) showing the basis for such adjustment. In
the event that such financial statements or certificate shall not have been
delivered to the Administrative Agent on the date required for such delivery
pursuant to Section 8.03(a), then on the second Business Day following such
date, the Facility Fee Rate shall be increased to the highest Facility Fee Rate
set forth on Schedule 1.01(A) or Schedule I to the Lease Credit Agreement,
provided that after delivery of such financial statements or certificate
(effective two Business Days following delivery) the Facility Fee Rate shall be
adjusted to the Facility Fee Rate that would have been effective had such
financial statements or certificate been timely delivered.
(b) Calculation of Fees. All Fees shall be
calculated on the basis of a year of 360 days and the actual number of days
elapsed.
2.04 Reduction of Commitment. The Company shall have the
right at any time and from time to time upon five (5) Business Days' prior
written notice to the Administrative Agent to permanently reduce, in whole
multiples of $5,000,000 of principal, or to terminate (provided no Letters of
Credit are outstanding) the Commitments without penalty or premium, except as
set forth in Section 5.06(b)(i), provided that any such reduction or termination
shall be accompanied by (a) the payment in full of any Fees then accrued on the
amount of such reduction or termination, (b) prepayment of the Revolving Credit
Loans, Swing Loans and/or Bid Loans, together with the full amount of interest
and Fees accrued on the principal sum to be prepaid (and all amounts referred to
in Section 5.06 hereof), to the extent that the Total Facility Usage exceeds the
Commitments as so reduced or terminated. The Borrowers may not reduce the
Commitments below the amount of any Letter of Credit Outstandings. If at any
time the Commitments are reduced to an amount which is less than the Swing Loan
Facility then in effect, the Swing Loan Facility shall automatically, without
notice of any kind, be reduced to the amount of the Commitments then in effect.
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2.05 (a) Revolving Credit Loan Requests. Except as
otherwise provided herein, the Company may from time to time prior to the
Expiration Date request the Lenders to make Revolving Credit Loans, or to renew
or convert the Interest Rate Option applicable to existing Revolving Credit
Loans, by delivering to the Administrative Agent, not later than 10:00 A.M.
Eastern time (i) three (3) Business Days prior to the proposed Borrowing Date
with respect to the making of Revolving Credit Loans in Dollars to which the
Euro-Rate Option applies or the date of conversion to or the renewal of the
Euro-Rate Option for any such Loans, (ii) four (4) Business Days prior to the
proposed Borrowing Date with respect to making of Revolving Credit Loans in an
Optional Currency or the date of conversion to or renewal of the Euro-Rate
Option for Revolving Credit Loans in an Optional Currency; and (iii) one (1)
Business Day prior to the proposed Borrowing Date with respect to the making of
Revolving Credit Loans to which the Base Rate Option applies of a duly completed
request therefor substantially in the form of Exhibit 2.05(a) or a request by
telephone immediately confirmed in writing by letter, facsimile or telex in such
form (each, a "Revolving Credit Loan Request"), it being understood that the
Administrative Agent may rely on the authority of any individual making such a
telephonic request without the necessity of receipt of such written
confirmation. Each Revolving Credit Loan Request shall be irrevocable and shall
specify (i) the proposed Borrowing Date; (ii) the currency in which such
Revolving Credit Loans shall be funded; (iii) the aggregate amount of the
proposed Revolving Credit Loans (expressed in the currency in which such
Revolving Credit Loans shall be funded and also as a Dollar Equivalent if such
Revolving Credit Loans shall be funded in an Optional Currency) comprising each
Borrowing Tranche, (A) the amount of which for each Euro-Rate Borrowing Tranche
(I) in the case of Revolving Credit Loans denominated in Dollars, shall be in
integral multiples of $1,000,000 and not less than $15,000,000, and (II) in the
case of Revolving Credit Loans denominated in Optional Currencies, shall be in
an amount of such Optional Currency reasonably comparable to the minimum amount
specified for Revolving Credit Loans denominated in Dollars in the foregoing
clause (I) as shall be advised by the Administrative Agent in light of the
prevailing market conditions and conventions at the time of such Borrowing and
(B) for each Base Rate Borrowing Tranche, shall not be less than the lesser of
$2,000,000 (and in integral multiples of $1,000,000 in excess thereof) or the
maximum amount available for borrowing; (iv) the Borrower which is to receive
the proceeds of the Revolving Credit Loans; (v) whether the Euro-Rate Option or
Base Rate Option shall apply to the proposed Revolving Credit Loans comprising
the Borrowing Tranche; and (vi) in the case of a Euro-Rate Borrowing Tranche, an
appropriate Interest Period for the proposed Revolving Credit Loans comprising
such Borrowing Tranche.
(b) Swing Loan Requests. Except as otherwise
provided herein, the Company may from time to time prior to the Expiration Date
request the Swing Lenders to make Swing Loans by delivery to the Administrative
Agent not later than 11:00 A.M. Eastern time on the proposed Borrowing Date of a
duly completed request therefor substantially in the form of Exhibit 2.05(b)
hereto or a request by telephone immediately confirmed in writing by letter,
facsimile or telex (each, a "Swing Loan Request"), it being understood that the
Administrative Agent may rely on the authority of any individual making such a
telephonic request without the necessity of receipt of such written
confirmation. Each Swing Loan Request shall be irrevocable and shall specify
the proposed Borrowing Date, the aggregate amount of the proposed Swing Loans
and the Borrower which is to receive the proceeds of such Swing Loans. The
aggregate amount of Swing Loans requested shall not be less than $1,000,000 and
shall be in integral multiples of $500,000.
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2.06 (a) Making Revolving Credit Loans. The
Administrative Agent shall, promptly after receipt by it of a Revolving Credit
Loan Request pursuant to Section 2.05(a), notify the Lenders of its receipt of
such Revolving Credit Loan Request specifying: (i) the proposed Borrowing Date
and the time and method of disbursement of such Revolving Credit Loans; (ii) the
aggregate amount, type and currency of such Revolving Credit Loans and the
applicable Interest Period (if any); (iii) if the Revolving Credit Loan will be
denominated in an Optional Currency, the designated Funding Office for such
Revolving Credit Loans, (iv) the apportionment among the Lenders of the
Revolving Credit Loans as determined by the Administrative Agent in accordance
with each Lender's Ratable Share and (iv) the Borrower which is to receive the
proceeds of the Revolving Credit Loans. Each Lender shall remit the principal
amount of each Revolving Credit Loan to be made by it to the Administrative
Agent at the designated Funding Office such that the Administrative Agent is
able to, and the Administrative Agent shall, to the extent the Lenders have made
funds available to it for such purpose, fund such Revolving Credit Loans to the
designated Borrower in immediately available funds at the designated Funding
Office prior to 2:00 P.M. local time on the Borrowing Date, provided that if any
Lender fails to remit such funds to the Administrative Agent in a timely manner
the Administrative Agent may elect in its sole discretion to fund with its own
funds the Revolving Credit Loan of such Lender on the Borrowing Date and such
Lender shall be subject to the repayment obligation in Section 11.14.
(b) Making Swing Loans. So long as the Swing
Lenders elect to make Swing Loans, the Administrative Agent shall, promptly
after receipt by it of a Swing Loan Request pursuant to Section 2.05(b), notify
the Swing Lenders of its receipt of such Swing Loan Request specifying: (i) the
proposed Borrowing Date and the time and method of disbursement of such Swing
Loans; (ii) the aggregate amount of such Swing Loans; (iii) the apportionment
among the Swing Lenders of the Swing Loans as determined by the Administrative
Agent and (iv) the Borrower which is to receive the proceeds of the Swing Loans.
Each Swing Lender shall remit its Swing Loan to the Administrative Agent such
that the Administrative Agent is able to, and the Administrative Agent shall, to
the extent the Swing Lenders have made funds available to it for such purpose,
fund such Swing Loans to the designated Borrower in Dollars and immediately
available funds at the Principal Office prior to 2:00 P.M. Eastern time on the
Borrowing Date, provided that pursuant to Section 2.01(d)(ii), the Sterling
Swing Loans shall be made available to Books Holdling in British Pounds Sterling
at the Funding Office of the Administrative Agent prior to 5:00 P.M. London time
on the Borrowing Date.
2.07 (a) Borrowings to Repay Swing Loans. The
Swing Lenders may at their option, exercisable at any time, demand repayment of
the Swing Loans and each Lender shall make a Revolving Credit Loan in an amount
equal to such Lender's Ratable Share of the aggregate principal amount of the
outstanding Swing Loans, plus, if the Swing Lenders so request, accrued interest
thereon, provided that no Lender shall be obligated in any event to make
Revolving Credit Loans in excess of its Commitment minus its Ratable Share of
the Dollar Equivalent amount of the Letter of Credit Outstandings. In the event
any Swing Loans shall be repaid with Revolving Credit Loans, such Revolving
Credit Loans shall bear interest at the Base Rate Option and shall be deemed to
have been properly requested in accordance with Section 2.05(a) without regard
to any of the requirements of that provision; provided, however, that Sterling
Swing Loans shall be repaid in British Pounds Sterling if and to the extent that
Revolving Credit Loans are requested for such
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purpose in accordance with the requirements of Section 2.05(a). The
Administrative Agent shall provide notice to the Lenders (which may be a
telephonic or written notice by letter, facsimile or telex) that such Revolving
Credit Loans are to be made under this Section 2.07 and of the apportionment
among the Lenders, and the Lenders shall be unconditionally obligated to fund
such Revolving Credit Loans (whether or not the conditions specified in Section
7.02 are then satisfied) by the time the Administrative Agent so requests,
which shall not be earlier than 12:00 noon Eastern time on the Business Day
next succeeding the date the Administrative Agent gives the demand notice to
the Lenders or, with respect to Sterling Swing Loans made pursuant to Section
2.01(d)(ii), four (4) Business Days after the Administrative Agent gives the
demand notice to the Lenders. Demand notice in respect of all outstanding
Sterling Swing Loans shall be given no later than the tenth Business Day
following the Effective Date. If for any reason a Lender is prohibited from
funding its Ratable Share of Revolving Credit Loans to repay the principal
amount of the Swing Loans outstanding, such Lender shall purchase a
participation in the Swing Loans equal to its Ratable Share of the principal
amount of Swing Loans outstanding.
(b) Irrevocable Obligation. Each Lender's
obligation to make its Ratable Share of Revolving Credit Loans to repay the
principal amount of the Swing Loans outstanding or to purchase its Ratable Share
of the principal amount of the Swing Loans shall be irrevocable and shall not be
subject to any qualification or exception whatsoever and shall be made under all
circumstances, including without limitation any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any of the Loan
Documents; (ii) the existence of any claim, setoff, defense or other right which
the Borrowers may have at any time against any Agent, any Swing Lender, any
Lender or any other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between the Company or any
of its Subsidiaries and the beneficiary named in any Letter of Credit); or (iii)
the occurrence of any Event of Default, Potential Default, or termination of the
Commitments or this Agreement.
2.08 (a) Evidence of Revolving Credit Obligations.
The Obligations of the Borrowers to repay the aggregate unpaid principal amount
of the Revolving Credit Loans made to them by each Lender, together with
interest thereon, shall be recorded by each such Lender from time to time on a
ledger or other record of such Lender, or such Lender shall record such
information in its computer systems; provided that any failure to make any such
record shall in no way detract from the Borrowers' Obligations. The aggregate
unpaid amount of the Revolving Credit Loans shown on the records of such Lender
shall be rebuttably presumptive evidence of the principal amount owing and
unpaid.
(b) Evidence of Swing Loan Obligations. The
Obligations of the Borrowers to repay the aggregate unpaid principal amount of
the Swing Loans made to them by each Swing Lender, together with interest
thereon, shall be recorded by each such Swing Lender from time to time on a
ledger or other record of such Swing Lender, or such Swing Lender shall record
such information in its computer systems; provided that any failure to make any
such record shall in no way detract from the Borrowers' Obligations. The
aggregate unpaid amount of the Swing Loans shown on the records of such Swing
Lender shall be rebuttably presumptive evidence of the principal amount owing
and unpaid.
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(c) Promissory Notes. Any Lender may request that
any Loans made by it to any Borrower be evidenced by a promissory note. In such
event, such Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to the order of such Lender (or, if requested by such
Lender, to such Lender and its registered assigns) and in a form approved by the
Administrative Agent. Thereafter, the Loans evidenced by such promissory note
and interest thereon shall at all times (including after assignment pursuant to
Section 12.11(a)) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a registered note, to such payee and its registered assigns).
2.09 Utilization of Commitments in Optional Currencies.
(a) Periodic Computations of Dollar Equivalent
Amounts of Loans and Letters of Credit Outstanding. The Administrative Agent
will determine the Dollar Equivalent amount of (i) proposed Revolving Credit
Loans, Sterling Swing Loans made pursuant to Section 2.01(d)(ii) or Letters of
Credit to be denominated in an Optional Currency as of the requested Borrowing
Date or date of issuance, as the case may be, (ii) outstanding Revolving Credit
Loans or Letters of Credit Outstanding denominated in an Optional Currency as of
the last Business Day of each month, and (iii) outstanding Revolving Credit
Loans denominated in an Optional Currency as of the end of each Interest Period
(each such date under clauses (i) through (iii), a "Computation Date").
(b) Notices from Lenders That Optional Currencies
Are Unavailable to Fund New Loans. The Lenders shall be under no obligation to
make the Revolving Credit Loans requested by the Company which are denominated
in an Optional Currency if the Required Lenders notify the Administrative Agent
(or the Administrative Agent determines in its own discretion) by 5:00 p.m.
(Eastern time) four (4) Business Days prior to the Borrowing Date for such
Revolving Credit Loans that the Optional Currency requested by the Company is
not available to fund such Revolving Credit Loans. In the event the Agent timely
receives a notice from the Required Lenders, or if the Administrative Agent
makes such determination, pursuant to the preceding sentence, the Administrative
Agent will notify the Company no later than 12:00 noon (Eastern time) three (3)
Business Days prior to the Borrowing Date for such Revolving Credit Loans that
the Optional Currency is not then available for such Revolving Credit Loans, and
the Administrative Agent shall promptly thereafter notify the Lenders of the
same. If the Company receives a notice described in the preceding sentence, the
Company may, by notice to the Agent not later than 5:00 p.m. (Eastern time)
three (3) Business Days prior to the Borrowing Date for such Revolving Credit
Loans, withdraw the Revolving Credit Loan Request for such Revolving Credit
Loans. If the Company withdraws such Revolving Credit Loan Request, the
Administrative Agent will promptly notify each Lender of the same and the
Lenders shall not make such Revolving Credit Loans. If the Company does not
withdraw such Revolving Credit Loan Request before such time, (i) the Company
shall be deemed to have requested that the Revolving Credit Loans referred to in
its Revolving Credit Loan Request shall be made in Dollars in an amount equal to
the Dollar Equivalent amount of such Revolving Credit Loans and shall bear
interest under the Base Rate Option, and (ii) the Administrative Agent shall
promptly deliver a notice to each Lender stating: (A) that such Revolving
Credit Loans shall be made in Dollars and shall bear interest under the Base
Rate Option,
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(B) the aggregate amount of such Revolving Credit Loans, and (C) such Lender's
Ratable Share of such Revolving Credit Loans.
(c) Notices From Lenders That Optional Currencies
Are Unavailable to Fund Renewals of the Euro-Rate Option. If the Company
delivers a Revolving Credit Loan Request requesting that the Lenders renew the
Euro-Rate Option with respect to an outstanding Borrowing Tranche of Revolving
Credit Loans denominated in an Optional Currency, the Lenders shall be under no
obligation to renew such Euro-Rate Option if the Required Lenders notify the
Administrative Agent (or the Administrative Agent determines in its own
discretion) by 5:00 p.m. (Eastern time) four (4) Business Days prior to
effective date of such renewal that the Optional Currency requested by the
Company is not available to fund Revolving Credit Loans in such Optional
Currency. In the event the Administrative Agent timely receives a notice from
the Required Lenders or if the Administrative Agent makes such determination
pursuant to the preceding sentence, the Administrative Agent will notify the
Company no later than 12:00 noon (Eastern time) three (3) Business Days prior to
the renewal date that the renewal of such Revolving Credit Loans in such
Optional Currency is not then available, and the Administrative Agent shall
promptly thereafter notify the Lenders of the same. If the Administrative Agent
shall have so notified the Company that any such continuation of Optional
Currency Loans is not then available, any notice of renewal with respect thereto
shall be deemed withdrawn, and such Optional Currency Loans shall be
redenominated into Base Rate Loans in Dollars with effect from the last day of
the Interest Period with respect to any such Optional Currency Loans. The Agent
will promptly notify the Company and the Lenders of any such redenomination, and
in such notice, the Administrative Agent will state the aggregate Dollar
Equivalent amount of the redenominated Optional Currency Loans as of the
Computation Date with respect thereto and such Lender's Ratable Share thereof.
(d) Requests for Additional Optional Currencies.
The Company may deliver to the Administrative Agent a written request that
Revolving Credit Loans hereunder also be permitted to be made in any other
lawful currency (other than Dollars), in addition to the currencies specified in
the definition of "Optional Currency" herein provided that such currency must be
freely traded in the offshore interbank foreign exchange markets, freely
transferable, freely convertible into Dollars and available to the Lenders in
the applicable interbank market. The Administrative Agent will promptly notify
the Lenders of any such request promptly after the Administrative Agent receives
such request. The requested currency shall be approved as an Optional Currency
hereunder only if the Administrative Agent and the Required Lenders approve of
the Company's request. The Administrative Agent will promptly notify the
Company of the acceptance or rejection of the Company's request.
2.10 Letter of Credit Subfacility.
(a) Issuance of Letters of Credit. The Company
may request the issuance of a letter of credit (each a "Letter of Credit") on
behalf of itself or another Borrower by delivering to the Issuing Bank a
completed application and agreement for letters of credit in such form as the
Issuing Bank may specify from time to time by no later than 10:00 A.M. Eastern
time at least five (5) Business Days, or such shorter period as may be agreed to
by the Issuing Bank, in advance of the proposed date of issuance. Subject to the
terms and conditions hereof, and provided
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that the applicable conditions set forth in Section 7.02 shall have been
satisfied, and in reliance on the agreements of the other Lenders set forth in
this Section 2.10, the Issuing Bank will issue a Letter of Credit denominated
in either Dollars or an Optional Currency; provided that each Letter of Credit
shall (A) have a maximum maturity of twelve (12) months from the date of
issuance, (B) in no event expire (including without limitation any "evergreen"
provisions providing for renewal absent advance notice by the applicable
Borrower or the Issuing Bank) later than ten (10) Business Days prior to the
Expiration Date; and provided that in no event shall (i) the Dollar Equivalent
Amount of Letter of Credit Outstandings (including the proposed Letter of
Credit) exceed, at any time, $25,000,000, or (ii) the Revolving Facility Usage
(including the proposed Letter of Credit) and the Swing Loans outstanding
exceed, at any time, the Commitments or (iii) the Total Facility Usage
(including the proposed Letter of Credit) exceed, at any time the aggregate
amount of the Commitments. Any amendment of an existing Letter of Credit shall
be deemed to be an issuance of a new Letter of Credit and shall be subject to
the requirements set forth herein pursuant to a form of application acceptable
to the Issuing Bank.
(b) Participations. Immediately upon issuance of
each Letter of Credit, and without further action, each Lender shall be deemed
to, and hereby agrees that it shall, have irrevocably purchased for such
Lender's own account and risk from the Issuing Bank an individual risk
participation interest in such Letter of Credit and drawings thereunder in an
amount equal to such Lender's Ratable Share of the maximum amount which is or at
any time may become available to be drawn thereunder. Promptly after the
Issuing Bank shall have issued any Letter of Credit, the Issuing Bank shall
notify the Lenders of the face amount, the currency, the Dollar Equivalent
amount, the date of issuance and the expiry date thereof. In addition, the
Issuing Bank shall provide to the Lenders within fifteen (15) days after the
close of each calendar quarter prior to the Expiration Date a summary of the
Letters of Credit issued during such calendar quarter setting forth the face
amount, the currency, the Dollar Equivalent amount as of the last Business Day
of such calendar quarter, date of issuance and expiry date of each such Letter
of Credit.
(c) Letter of Credit Fees. The Borrowers shall
pay in Dollars (i) to the Issuing Bank for the ratable account of the Lenders
the Letter of Credit Fee and (ii) to the Issuing Bank for its own account a
fronting fee as agreed to in the Fee Letter, which fees shall be computed on the
daily average Dollar Equivalent amount of Letter of Credit Outstandings and on
the basis of a year of 360 days and the actual number of days elapsed, and shall
be payable in arrears commencing with the last Business Day of each March, June,
September and December following issuance of each Letter of Credit and on the
Expiration Date. The Borrowers shall also pay to the Issuing Bank in Dollars
for the Issuing Bank's sole account the Issuing Bank's then in effect customary
fees and administrative expense payable with respect to the Letters of Credit as
the Issuing Bank may generally charge or incur from time to time in connection
with the issuance, maintenance, modification (if any), assignment or transfer
(if any), negotiation and administration of Letters of Credit.
(d) Disbursements, Reimbursement.
(i) Each Borrower shall be obligated
immediately to reimburse the Issuing Bank in Dollars for the Dollar Equivalent
amount of any drawing under any Letters of
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Credit issued for its account. Such amounts advanced shall become, at the time
the amounts are advanced, Revolving Credit Loans made in Dollars from the
Lenders to such Borrower. Such Revolving Credit Loans shall bear interest at
the rate applicable under the Base Rate Option unless the Company elects to
have a different Interest Rate Option apply to such Revolving Credit Loans
pursuant to and in accordance with the provisions contained in Section 4.01.
(ii) The Issuing Bank will notify (A) the Company of each
demand or presentment for payment or other drawing under each Letter of Credit,
and (B) the Lenders of the aggregate amount of Revolving Credit Loans required
to be made by the Lenders pursuant to such demand, presentment for payment or
other drawing under the Letters of Credit. Before 12:00 noon (Eastern time) on
the date of any such Revolving Credit Loans, each Lender shall remit such
Lender's Ratable Share of such Revolving Credit Loans in Dollars in immediately
available funds to the Administrative Agent for credit to the account of the
Issuing Bank.
(e) Repayment of Participation Advances.
(i) Upon (and only upon) receipt by the Issuing Bank for its
account of immediately available funds from any Borrower (i) in reimbursement of
any payment made by the Issuing Bank under the Letter of Credit with respect to
which any Lender has made a Participation Advance, or (ii) in payment of
interest on such a payment made by the Issuing Bank under such a Letter of
Credit, the Issuing Bank will pay to each Lender, in the same funds as those
received by the Issuing Bank, the amount of such Lender's Ratable Share of such
funds, except the Issuing Bank shall retain the amount of the Ratable Share of
such funds of any Lender that did not make a Participation Advance in respect of
such payment by the Issuing Bank.
(ii) If the Issuing Bank is required at any time to return
to any Borrower, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by any
Borrower to the Issuing Bank pursuant to Section 2.10(e)(i) in reimbursement of
a payment made under the Letter of Credit or interest or fee thereon, each
Lender shall, on demand of the Issuing Bank, forthwith return to the Issuing
Bank the amount of its Ratable Share of any amounts so returned by the Issuing
Bank plus interest thereon from the date such demand is made to the date such
amounts are returned by such Lender to the Issuing Bank, at a rate per annum
equal to the Federal Funds Effective Rate in effect from time to time.
(f) Documentation. Each Borrower agrees to be bound by the
terms of the Issuing Bank's application and agreement for Letters of Credit and
the Issuing Bank's written regulations and customary practices relating to
Letters of Credit, though such interpretation may be different from such
Borrower's own. In the event of a conflict between such application or
agreement and this Agreement, this Agreement shall govern. It is understood and
agreed that, except in the case of gross negligence or willful misconduct, the
Issuing Bank shall not be liable for any error, negligence and/or mistakes,
whether of omission or commission, in following any Borrower's
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instructions or those contained in the Letters of Credit or any modifications,
amendments or supplements thereto.
(g) Determinations to Honor Drawing Requests. In
determining whether to honor any request for drawing under any Letter of Credit
by the beneficiary thereof, the Issuing Bank shall be responsible only to
determine that the documents and certificates required to be delivered under
such Letter of Credit have been delivered and that they comply on their face
with the requirements of such Letter of Credit.
(h) Nature of Participation and Reimbursement
Obligations. The obligation of the Lenders to participate in Letters of Credit
pursuant to Section 2.10(b), the obligation of the Lenders pursuant to Section
2.10(d) to fund Revolving Credit Loans upon a draw under a Letter of Credit and
the Obligations of the Borrowers to reimburse the Issuing Bank upon a draw under
Letter of Credit pursuant to Section 2.10 shall be absolute, unconditional, and
irrevocable and shall be performed strictly in accordance with the terms of such
Sections under all circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against the Issuing Bank, any Agent, any
Borrower or any other Person for any reason whatsoever;
(ii) the failure of any Borrower or any other Person,
in connection with a Letter of Credit Borrowing, to comply with the conditions
set forth in Sections 2.01, 2.05, 2.06 or 7.02 or as otherwise set forth in this
Agreement for the making of a Revolving Credit Loan, it being acknowledged that
such conditions are not required for the making of a Letter of Credit Borrowing
and the obligation of the Lenders to make Participation Advances under Section
2.10(d);
(iii) any lack of validity or enforceability of any
Letter of Credit;
(iv) the existence of any claim, set-off, defense or
other right which any Borrower or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons for whom
any such transferee may be acting), the Issuing Bank, the Administrative Agent,
the Syndication Agent, the Real Estate Administrative Agent or other Lender or
any other Person or, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between any Borrower or Subsidiaries of a Borrower and the
beneficiary for which any Letter of Credit was procured);
(v) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect even if the Issuing Bank has been notified thereof;
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(vi) payment by the Issuing Bank under any Letter of
Credit against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit;
(vii) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of any
Borrower or the Company and its Subsidiaries taken as a whole;
(viii) any breach of this Agreement or any other Loan
Document by any party thereto;
(ix) the occurrence or continuance of an Insolvency
Proceeding with respect to any Borrower;
(x) the fact that an Event of Default or a Potential
Default shall have occurred and be continuing;
(xi) the Expiration Date shall have passed or this
Agreement or the Commitments hereunder shall have been terminated; or
(xii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
(i) Indemnity. In addition to amounts payable as
provided in Section 12.03, the Borrowers hereby agree to protect, indemnify, pay
and save harmless the Issuing Bank from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which the Issuing Bank may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit, other than as a
result of (A) the gross negligence or willful misconduct of the Issuing Bank as
determined by a final judgment of a court of competent jurisdiction or (B)
subject to the following clause (ii), the wrongful dishonor by the Issuing Bank
of a proper demand for payment made under any Letter of Credit or (ii) the
failure of the Issuing Bank to honor a drawing under any such Letter of Credit
as a result of any act or omission, whether rightful or wrongful, of any present
or future de jure or de facto government or governmental authority (all such
acts or omissions herein called "Governmental Acts").
(j) Liability for Acts and Omissions. As between any
Borrower and the Issuing Bank, such Borrower assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation
of the foregoing, the Issuing Bank shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for issuance of any
such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part,
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which may prove to be invalid or ineffective for any reason; (iii) failure of
the beneficiary of any such Letter of Credit to comply fully with any
conditions required in order to draw upon such Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in
cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay
in the transmission or otherwise of any document required in order to make a
drawing under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of the Issuing Bank, including any Governmental
Acts, and none of the above shall affect or impair, or prevent the vesting of,
any of the Issuing Bank's rights or powers hereunder.
In furtherance and extension and not in limitation of the
specific provisions set forth above, any action taken or omitted by the Issuing
Bank under or in connection with the Letters of Credit issued by it or any
documents and certificates delivered thereunder shall not put the Issuing Bank
under any resulting liability to the Borrowers except to the extent such action
was taken or omitted as a result of the Issuing Bank's gross negligence or
willful misconduct.
The Lenders may not commence a proceeding against the
Issuing Bank for wrongful disbursement under a Letter of Credit as a result of
acts or omissions constituting gross negligence or willful misconduct of the
Issuing Bank until the Lenders have made the Revolving Credit Loans described in
Section 2.10(d), and the Borrowers may not commence such a proceeding until such
Revolving Credit Loans have been repaid.
(k) Termination of Letter of Credit Facility. In the
event that (i) any restriction is imposed on the Issuing Bank (including,
without limitation, any legal lending limit imposed by the United States of
America or any political subdivision thereof) which in the judgment of the
Issuing Bank after consultation with the Company would prevent the Issuing Bank
from issuing Letters of Credit or maintaining its commitment to issue Letters of
Credit or (ii) there shall have occurred, at any time during the term of this
Agreement (A) any outbreak of hostilities or other national or international
crisis or change in economic conditions if the effect of such outbreak, crisis
or change would make the issuance of Letters of Credit or the discount or sale
thereof impractical, (B) the enactment, publication, decree or other
promulgation of any Law which would have a Material Adverse Effect, or (C) the
taking of any action by any Official Body in respect of its monetary or fiscal
affairs which would have a material adverse effect on the creation of Letters of
Credit in the United States of America, then the Issuing Bank, in the case of
the occurrence of any event described above, shall give written notice of the
occurrence of such event to the Company and the Lenders, whereupon the
commitment of the Issuing Bank to issue Letters of Credit shall terminate on the
effective date of such notice.
(l) Transitional Letters of Credit. Schedule 2.10(l)
contains a list of certain letters of credit issued for the account of the
Borrowers by the Issuing Bank prior to the Effective Date. On the Effective
Date, (a) such letters of credit shall be deemed to be Letters of Credit issued
pursuant to this Section 2.10, and (b) all liabilities of any Borrower with
respect to such letters of credit shall constitute Obligations of such Borrower
with respect to Letters of Credit in accordance with this Agreement and the Loan
Documents as though such Borrower had executed
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an application with respect thereto under this Agreement. On and after the
Effective Date, the Borrowers shall pay Letter of Credit Fees and such other
fees as provided in the second sentence of Section 2.10(c), in each case when
due pursuant to Section 2.10(c), with respect to each Letter of Credit set
forth on Schedule 2.10(l).
(m) Resignation of Issuing Bank. The Issuing Bank (i)
may resign as Issuing Bank or (ii) shall resign if such resignation is requested
by the Required Lenders (if the Issuing Bank is a Lender, the Issuing Bank's
Loans and its Commitment shall be considered in determining whether the Required
Lenders have requested such resignation) or required by Section 5.04(b), in
either case of (i) or (ii) by giving not less than thirty (30) days' prior
written notice to the Company; provided that the Issuing Bank may only be
replaced if all Letters of Credit have expired or been terminated or replaced.
If the Issuing Bank shall resign under this Agreement, then either (a) the
Required Lenders shall appoint from among the Lenders a successor Issuing Bank,
subject to the consent of the Company (unless and until an Event of Default has
occurred and is continuing after which no consent of the Company shall be
required), such consent not to be unreasonably withheld, or (b) if a successor
Issuing Bank shall not be so appointed and approved within the thirty (30) day
period following such Issuing Bank's notice to the Lenders of its resignation,
then such Issuing Bank shall appoint, with the consent of the Company (unless
and until an Event of Default has occurred and is continuing after which no
consent of the Company shall be required), such consent not to be unreasonably
withheld, a successor Issuing Bank, until such time as the Required Lenders
appoint and the Company consents to the appointment of a successor Issuing Bank.
Upon its appointment pursuant to either clause (a) or (b) above, such successor
Issuing Bank shall succeed to the rights, powers and duties of such Issuing Bank
and the term "Issuing Bank" shall mean such successor Issuing Bank, effective
upon its appointment, and the former Issuing Bank's rights, powers and duties as
Issuing Bank shall be terminated without any other or further act or deed on the
part of such former Issuing Bank or any of the parties to this Agreement. After
the resignation of the Issuing Bank hereunder, the provisions of Sections
2.10(i) and (j) and 12.03 shall inure to the benefit of such former Issuing Bank
and such former Issuing Bank shall not by reason of such resignation be deemed
to be released from liability for any actions taken or not taken by it while it
was an Issuing Bank under this Agreement.
2.11 Currency Repayments.
Notwithstanding anything contained herein to the contrary,
the entire amount of principal of and interest on any Loan made in an Optional
Currency shall be repaid in the same Optional Currency in which such Loan was
made, provided, however, that if it is impossible or illegal for the Borrowers
to effect payment of a Loan in the Optional Currency in which such Loan was
made, or if the Borrowers default on their obligations to do so, the Required
Lenders (or the Swing Lenders with respect to any Sterling Swing Loan) may at
their option permit such payment to be made (i) at and to a different location,
subsidiary, affiliate or correspondent of Agent, or (ii) in the Equivalent
Amount of Dollars or (iii) in an Equivalent Amount of such other currency
(freely convertible into Dollars) as the Required Lenders may solely at their
option designate. Upon any events described in (i) through (iii) of the
preceding sentence, the Borrowers shall make such payment and the Borrowers
agree to hold each Lender harmless from and against any loss incurred by any
Lender arising from the cost to such Lender of any premium, any costs of
exchange, the cost
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of hedging and covering the Optional Currency in which such Loan was originally
made, and from any change in the value of Dollars, or such other currency, in
relation to the Optional Currency that was due and owing. Such loss shall be
calculated for the period commencing with the first day of the Interest Period
for such Loan and continuing through the date of payment thereof. Without
prejudice to the survival of any other agreement of any Borrower hereunder,
such Borrower's obligations under this Section 2.15 shall survive termination
of this Agreement.
2.12 Optional Currency Amounts.
Notwithstanding anything contained herein to the
contrary, the Administrative Agent may, with respect to notices by the Company
for Loans in an Optional Currency or voluntary prepayments of less than the
full amount of an Optional Currency Borrowing Tranche, engage in reasonable
rounding of the Optional Currency amounts requested to be loaned or repaid;
and, in such event, Administrative Agent shall promptly notify the Company and
the Lenders of such rounded amounts and the Company's request or notice shall
thereby be deemed to reflect such rounded amounts.
ARTICLE III
BID LOANS
3.01 Bid Loan Requests. Except as otherwise provided
herein, the Company may from time to time prior to the Expiration Date request
that the Lenders make Bid Loans by delivery to the Administrative Agent not
later than 10:00 A.M. Eastern time of a duly completed request therefor
substantially in the form of Exhibit 3.01 hereto or a request by telephone
immediately confirmed in writing by letter, facsimile or telex (each, a "Bid
Loan Request") at least one (1) Business Day prior to the proposed Bid Loan
Borrowing Date if the Company is requesting Fixed Rate Bid Loans and four (4)
Business Days prior to the proposed Bid Loan Borrowing Date if the Company is
requesting Euro-Rate Bid Loans, it being understood that the Administrative
Agent may rely on the authority of any individual making such a telephonic
request without the necessity of receipt of such written confirmation. Each
Bid Loan Request shall be irrevocable, shall be accompanied by payment of any
Fee provided for in the Fee Letters (which Fee shall be nonrefundable) and
shall specify (a) the proposed Bid Loan Borrowing Date, (b) whether the Company
is electing the Fixed Rate Bid Loan Option or the Euro-Rate Bid Loan Option,
(c) the term of the proposed Bid Loan (the "Bid Loan Period") which may be no
less than seven (7) days and no longer than two hundred and seventy (270) days
if the Company is requesting a Fixed Rate Bid Loan and one, two, three or six
months if the Company is requesting a Euro-Rate Bid Loan and the last day
thereof shall end no later than the Expiration Date, (d) the Borrower which is
to receive such Bid Loan and (e) the maximum principal amount (the "Requested
Amount") of such Bid Loan, which shall be not less than $10,000,000 and shall
be an integral multiple of $1,000,000. After giving effect to such Bid Loan
and any other Loan made on or before the Bid Loan Borrowing Date, the aggregate
amount of Total Facility Usage shall not exceed the aggregate amount of the
Commitments of the Lenders. There shall be at least five (5) Business Days
between Bid Loan Borrowing Dates.
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3.02 Bidding for, Accepting and Making Bid Loans.
(a) Bidding. The Administrative Agent shall
promptly after receipt by it of a Bid Loan Request pursuant to Section 3.01
notify the Lenders of its receipt of such Bid Loan Request specifying (i) the
proposed Bid Loan Borrowing Date, (ii) whether the proposed Bid Loan shall be a
Fixed Rate Bid Loan or a Euro-Rate Bid Loan, (iii) the Bid Loan Period, (iv)
the Borrower which is to receive the proceeds of such Bid Loan, and (v) the
principal amount of the proposed Bid Loan. Each Lender may submit a bid (a
"Bid") to the Administrative Agent substantially in the form attached to
Exhibit 3.01 not later than 10:00 A.M. Eastern time on the proposed Bid Loan
Borrowing Date specified in any Bid Loan Request by telephone (immediately
confirmed in writing by letter, facsimile or telex). Each Bid shall specify:
(A) the principal amount of proposed Bid Loan offered by such Lender (the
"Offered Amount") which (i) may be less than, but shall not exceed, the
Requested Amount, (ii) shall be at least $5,000,000, and shall be an integral
multiple of $1,000,000 and (iii) may exceed such Lender's Commitment, and (B)
the Fixed Rate which shall apply to such proposed Bid Loan if the Company has
requested a Fixed Rate Bid Loan or the Euro- Rate Bid Loan Spread which shall
apply to such proposed Bid Loan if the Company has requested a Euro-Rate Bid
Loan. Interest on Bid Loans shall be quoted and computed on the basis of a
year of 360 days and actual days elapsed. Any Bid Loan may be funded by such
Lender's Designated Lender as provided in Section 3.02(c)(i), however, such
Lender shall not be required to specify in its Bid whether such Bid Loans will
be funded by such Designated Lender. If any Bid omits information required
hereunder or contains other conditions or unrelated incentives or information,
the Administrative Agent shall reject such Bid and may in its sole discretion
attempt to notify the Lender submitting such Bid. If the Administrative Agent
so notifies a Lender, such Lender may resubmit its Bid, provided that it does
so prior to 10:00 A.M. Eastern time on the Bid Loan Borrowing Date. The
Administrative Agent shall promptly notify the Company of the Bids which it
receives from the Lenders at or before 11:00 A.M. Eastern time, on the Bid Loan
Borrowing Date. If the Administrative Agent in its capacity as a Lender shall,
in its sole discretion, make a Bid, it shall notify the Company of such Bid
before 9:30 A.M. Eastern time on the proposed Bid Loan Borrowing Date if the
Company is requesting a Fixed Rate Bid Loan or three (3) Business Days before
the proposed Bid Loan Borrowing Date if the Company is requesting a Euro-Rate
Bid Loan.
(b) Accepting Bids. The Company shall
irrevocably accept or reject Bids by notifying the Administrative Agent of such
acceptance or rejection by telephone (immediately confirmed in writing by
letter, facsimile or telex) by 11:30 A.M. Eastern time on the proposed Bid Loan
Borrowing Date if the Company is requesting a Fixed Rate Bid Loan or three (3)
Business Days before the proposed Bid Loan Borrowing Date if the Company is
requesting a Euro-Rate Bid Loan. If the Borrowers elect to accept any Bids,
their acceptance must meet the following conditions: (i) the total amount which
the Borrowers accept from all Lenders must be at least $10,000,000 and be in
integral multiples of $1,000,000 and may not exceed the Requested Amount; (ii)
the Company must accept Bids based solely on the amount of the Fixed Rates or
Euro-Rate Bid Loan Spreads, as the case may be, which each of the Lenders
quoted in their Bids in ascending order of the amount of Fixed Rates or
Euro-Rate Bid Loan Spreads; (iii) the Borrowers may not borrow Bid Loans from
any Lender on the Bid Loan Borrowing Date in an amount exceeding such Lender's
Offered Amount; and (iv) if two or more Lenders make Bids at the same Fixed
Rate (if the Company requested a Fixed Rate Bid Loan) or Euro-Rate Bid Loan
Spread (if the Company requested a Euro-
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Rate Bid Loan) and the Company desires to accept a portion but not all of the
Bids at such Fixed Rate or Euro-Rate Bid Loan Spread, as the case may be, the
Borrowers shall accept a portion of each Bid equal to the product of the
Offered Amount of such Bid times the fraction obtained by dividing the total
amount of Bids which the Company is accepting at such Fixed Rate or Euro-Rate
Bid Loan Spread, as the case may be, by the sum of the Offered Amounts of the
Bids at such Fixed Rate or Euro-Rate Bid Loan Spread; provided that the Company
shall round the Bid Loans allocated to each such Lender upward or downward as
the Company may select to integral multiples of $500,000. The Administrative
Agent shall (i) promptly notify a Lender that has made a Bid of the amount of
its Bid that was accepted or rejected and (ii) as promptly as practical notify
all of the Lenders of all Bids submitted and those which have been accepted.
(c) Funding Bid Loans.
(i) Any Lender (each a "Designating Lender") may at any
time designate one "Designated Lender" to fund Bid Loans which the Designating
Lender is required to fund subject to the terms of this Section 3.02(c)(i). No
Lender shall be entitled to make more than one such designation. The parties to
each such designation shall execute and deliver to the Administrative Agent, for
its acceptance, a Designation Agreement. Upon receipt of an appropriately
completed Designation Agreement executed by a Designating Lender and a designee
representing that it is a Designated Lender and the Company (on its behalf and
on behalf of the Borrowers), the Administrative Agent will accept such
Designation Agreement and give prompt notice thereof to the Company, whereupon,
from and after the effective date specified in the Designation Agreement, the
Designated Lender shall fund Bid Loans on behalf of its Designating Lender
pursuant to Section 3.02 after the Company has accepted a Bid (or a portion
thereof) of the Designating Lender. Each Designating Lender shall serve as the
agent (in its capacity as a Designating Lender) of the Designated Lender and
shall on behalf of the Designated Lender give and receive all communications and
notices and take all actions hereunder, including without limitation votes,
approvals, waivers, consents and amendments under or relating to this Agreement
or the other Loan Documents. Any such notice, communication, vote approval,
waiver, consent or amendment shall be signed by the Designating Lender as agent
(in its capacity as a Designating Lender) for the Designated Lender and shall
not be signed by the Designated Lender. The Company, the Agents and the Lenders
may rely thereon without any requirement that the Designated Lender sign or
acknowledge the same.
(ii) Each Lender (or its Designated Lender, if
appropriate) whose Bid or portion thereof is accepted shall remit the principal
amount of its Bid Loan to the Administrative Agent by 1:00 P.M. Eastern time on
the Bid Loan Borrowing Date. Any Designated Lender which funds a Bid Loan shall
on and after the time of such funding become the obligee under such Bid Loan and
be entitled to receive payment thereof when due. No Lender shall be relieved of
its obligation to fund a Bid Loan, and no Designated Lender shall assume such
obligation, prior to the time such Bid Loan is funded. The Administrative Agent
shall make such funds available to the designated Borrower in Dollars in
immediately available funds at the Principal Office at or before 3:00 P.M.
Eastern Time on the Bid Loan Borrowing Date provided that the conditions
precedent to the making of such Bid Loan set forth in Section 7.02 have been
satisfied not later than 10:00 A.M. Eastern time on the proposed Borrowing Date.
If such conditions precedent have not been satisfied
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prior to such time, then (i) the Administrative Agent shall not make such funds
available, (ii) the Bid Loan Request shall be deemed to be canceled and (iii)
the Administrative Agent shall return the amount previously funded to the
Administrative Agent by each applicable Lender (or its Designated Lender, if
appropriate) no later than the next following Business Day. The Company shall
immediately notify the Administrative Agent of any failure to satisfy the
conditions precedent to the making of Bid Loans under Section 7.02. The
Administrative Agent may assume that the Borrowers have satisfied such
conditions precedent if the Company (i) has delivered to the Administrative
Agent the documents required to be delivered under Section 7.02, (ii) the
Company has not notified the Administrative Agent that the Borrowers have not
satisfied any other conditions precedent, and (iii) the Administrative Agent
has no actual notice of such a failure.
(d) Several Obligations. The obligations of the
Lenders to make Bid Loans after their Bids have been accepted are several. No
Lender shall be responsible for the failure of any other Lender (or its
Designated Lender, if appropriate) to make any Bid Loan which another Lender has
agreed to make.
3.03 Evidence of Bid Loan Obligations. The Obligation of each
Borrower to repay the aggregate unpaid principal amount of the Bid Loans made to
it by each Lender, together with interest thereon, shall be recorded by each
Lender making a Bid Loan from time to time on a ledger or other record of such
Lender, or such Lender shall record such information in its computer systems;
provided that any failure to make any such record shall in no way detract from
the Borrowers' Obligations. The aggregate unpaid amount of the Bid Loans shown
on the records of any such Lender shall be rebuttably presumptive evidence of
the principal amount owing and unpaid.
ARTICLE IV
INTEREST RATES
4.01 Interest Rate Options on Revolving Credit Loans.
(a) Selection of Interest Rate Options. The Borrowers
shall pay interest in respect of the outstanding unpaid principal amount of the
Revolving Credit Loans as selected by the Company from the Base Rate Option or
the Euro-Rate Option set forth below applicable to the Revolving Credit Loans,
it being understood that, subject to the provisions of this Agreement, the
Company may select different Interest Rate Options and different Interest
Periods to apply simultaneously to the Revolving Credit Loans comprising
different Borrowing Tranches and may convert to or renew one or more Interest
Rate Options with respect to all or any portion of the Revolving Credit Loans
comprising any Borrowing Tranche; provided that there shall not be at any one
time outstanding more than six (6) Euro-Rate Borrowing Tranches, and provided
further that until the earlier of (i) such time as the Commitments shall equal
$500,000,000 or (ii) three months from the Effective Date, Revolving Credit
Loans shall be made only at (A) the Base Rate Option or (B) at the Euro-Rate
Option with an Interest Period of one month. Interest on the principal amount
of each Loan made in an Optional Currency shall be paid by the Borrowers in such
Optional Currency.
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(b) Interest Rate Options Available. The Borrowers shall
have the right to select from the following Interest Rate Options applicable to
the Revolving Credit Loans, except that the Borrowers may not select the Base
Rate to apply to a Loan to be made in an Optional Currency:
(i) Base Rate Option: A fluctuating rate per annum
(computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed) equal to the Base Rate;
(ii) Euro-Rate Option: A rate per annum (computed on
the basis of a year of 360 days and actual days elapsed, provided that, for
Loans made in an Optional Currency for which a 365-day basis is the only market
practice available to the Administrative Agent, such rate shall be calculated on
the basis of a year of 365 or 366 days, as the case may be for the actual days
elapsed) equal to the Euro-Rate plus the Euro-Rate Margin. The Euro-Rate Margin
shall be subject to adjustment quarterly to the percentage, based on the Fixed
Charge Coverage Ratio, as set forth on Schedule 1.01(A). Each adjustment in the
Euro-Rate Margin shall be effective on the second Business Day next following
delivery to the Administrative Agent of the financial statements or certificate
required to be delivered by the Company pursuant to Section 8.03(a) showing the
basis for such adjustment. In the event that such financial statements or
certificate shall not have been delivered to the Administrative Agent on the
date required for such delivery pursuant to Section 8.03(a), then on the second
Business Day following such date, the Euro-Rate Margin shall be increased to the
highest Euro-Rate Margin set forth on Schedule 1.01(A), provided that after
delivery of such financial statements or certificate (effective two Business
Days following delivery) the Euro-Rate Margin shall be adjusted to the Euro-Rate
Margin that would have been effective had such financial statements or
certificate been timely delivered. Each Euro-Rate Borrowing Tranche shall bear
interest from and including the first day of the Interest Period applicable
thereto, but not including, the last day of such Interest Period. No Interest
Period may end after the Expiration Date.
4.02 Rate Quotations. The Company may call the Administrative
Agent on or before the date on which a Revolving Credit Loan Request is to be
delivered to receive an indication of the interest rates and the applicable
currency exchange rates then in effect, but it is acknowledged that such
projection shall not be binding on the Administrative Agent or the Lenders nor
affect the rate of interest or the calculation of Equivalent Amounts which
thereafter are actually in effect when the election is made.
4.03 Euro-Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available.
(a) If on any date on which a Euro-Rate would otherwise
be determined, the Administrative Agent shall have determined that:
(i) adequate and reasonable means do not exist for
ascertaining such Euro-Rate, or
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(ii) a contingency has occurred which materially and
adversely affects the London interbank market or any other applicable interbank
market, the Administrative Agent shall have the rights specified in Section
4.03(c).
(b) if at any time any Lender shall have
determined that:
(i) the making, maintenance or funding of any
Revolving Credit Loan to which a Euro-Rate Option applies has been made
impracticable or unlawful by compliance by such Lender in good faith with any
Law or any interpretation or application thereof by any Official Body or with
any request or directive of any such Official Body (whether or not having the
force of Law), or
(ii) such Euro-Rate Option will not adequately and
fairly reflect the cost to such Lender of the establishment or maintenance of
any such Revolving Credit Loan, or
(iii) after making all reasonable efforts, deposits
of the relevant amount in Dollars or in the Optional Currency(as applicable)for
the relevant Interest Period for a Revolving Credit Loan to which a Euro-Rate
Option applies are not available to such Lender in the London interbank market
at the effective cost of funding of a proposed Euro-Rate Loan, the
Administrative Agent shall have the rights specified in Section 4.03(c).
(c) In the case of any event specified in Section
4.03(a) above, the Administrative Agent shall promptly so notify the Lenders and
the Company thereof and in the case of an event specified in Section 4.03 (b)
above, such Lender shall promptly so notify the Administrative Agent and enclose
a certificate with such notice as to the specific circumstances of such notice
and the Administrative Agent shall promptly send copies of such notice and
certificate to the other Lenders and the Company. Upon such date as shall be
specified in such notice (which shall not be earlier than the date such notice
is given) the obligation of (A) the Lenders in the case of such notice given by
the Administrative Agent or (B) such Lender in the case of such notice given by
such Lender, to allow the Borrowers to select, convert to or renew a Euro-Rate
Option or select an Optional Currency (as applicable) shall be suspended until
the Administrative Agent shall have later notified the Company or such Lender
shall have later notified the Administrative Agent, of the Administrative
Agent's or such Lender's, as the case may be, determination that the
circumstances giving rise to such previous determination no longer exist. If at
any time the Administrative Agent makes a determination under subsection (a) or
(b) of this Section 4.03 and the Company has previously notified the
Administrative Agent of its selection of, conversion to or renewal of a
Euro-Rate Option and such Euro-Rate Option has not yet gone into effect, such
notification shall be deemed to provide for selection of, conversion to or
renewal of the Base Rate Option. If any Lender notifies the Administrative
Agent of a determination under subsection (b) of this Section 4.03, the
Borrowers shall, subject to the Borrowers' indemnification Obligations under
Section 5.06(b), as to any Revolving Credit Loan of the Lender to which a
Euro-Rate Option applies, on the date specified in such notice either (i) as
applicable, convert such Loan to the Base Rate Option or select a different
Optional Currency or Dollars or (ii) prepay such Loan in accordance with Section
5.04. Absent due notice from the Company of conversion or prepayment, such Loan
shall automatically be converted to the Base Rate Option and or into a Dollar
Loan, as appropriate, upon such specified date.
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4.04 Selection of Interest Rate Options. Revolving Credit
Loans for which the Company has selected the Base Rate Option shall continue as
such unless and until the Company chooses to convert such Revolving Credit Loans
to a Euro-Rate Borrowing Tranche. If the Borrowers fail to select a new
Interest Period to apply to any Borrowing Tranche at the expiration of an
existing Interest Period applicable to such Euro-Rate Borrowing Tranche in
accordance with the provisions of Section 2.05(a), the Borrowers shall be deemed
to have converted such Euro-Rate Borrowing Tranche to the Base Rate Option
commencing upon the last day of the existing Interest Period.
4.05 Interest Rates Payable on Swing Loans. The Borrowers
shall pay interest in respect of the outstanding unpaid principal amount of any
Swing Loan at a fluctuating rate per annum (computed on the basis of a year of
365 or 366 days, as the case may be, and actual days elapsed) equal to the Base
Rate ; provided however that the Borrowers shall pay interest in respect of the
outstanding unpaid principal amount of any Sterling Swing Loan at a fluctuating
rate per annum (computed on the basis of a year of 365 or 366 days for actual
days elapsed) equal to the sum of (a)(i) the Euro-Rate for deposits in British
Pound Sterling quoted by BBA as set forth on the relevant Dow Jones Market
Service display page for each day during which such Sterling Swing Loan is
outstanding divided by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage (as defined in clause (B) of the definition of "Euro-Rate" herein)
plus (b) 300 basis points.
4.06 Interest Rates Payable on Bid Loans. The Borrowers
shall pay interest in respect of the outstanding unpaid principal amount of any
Bid Loan at the rate quoted by the Lender making such Bid Loan and accepted by
the Borrowers in accordance with Section 3.02.
4.07 Interest After Default. To the extent permitted by
Law, upon the occurrence of an Event of Default and until such time such Event
of Default shall have been cured or waived:
(a) the Letter of Credit Fees and the rate of
interest for each Loan otherwise applicable pursuant to Section 2.10 or Section
4.01, 4.05 or 4.06 shall be increased by 2.0% per annum; and
(b) each other Obligation hereunder if not paid
when due shall bear interest at a rate per annum equal to the sum of the Base
Rate plus an additional 2.0% per annum from the time such Obligation becomes
due and payable and until it is paid in full.
(c) The Borrowers acknowledge that such
increased rates reflect, among other things, the fact that such Loans or other
amounts have become a substantially greater risk given their default status and
that the Lenders are entitled to additional compensation for such risk; and,
all such interest shall be payable by the Borrowers upon demand by
Administrative Agent.
4.08 Maximum Interest Rate. If at any time the
designated rate applicable to any Loan made by any Lender exceeds such Lender's
highest lawful rate, the rate of interest on such Lender's Loan shall be
limited to such Lender's highest lawful rate.
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ARTICLE V
PAYMENTS
5.01 Payments. All payments and prepayments to be made in
respect of principal, interest, Fees or other amounts due from the Borrowers
hereunder shall be payable prior to 11:00 A.M. (Eastern time) on the date when
due without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived by the Borrowers, and without setoff, counterclaim or
other deduction of any nature, and an action therefor shall immediately accrue.
Such payments shall be made to the Administrative Agent at the Principal Office
in Dollars except that payments as principal or interest on Loans made in
Optional Currencies shall be made in the applicable Optional Currency to the
designated Funding Office, and in immediately available funds, and the
Administrative Agent shall promptly distribute such amounts in immediately
available funds, provided that in the event payments are received by 11:00 A.M.
(Eastern time) by the Administrative Agent and such payments are not distributed
on the same day received by the Administrative Agent, the Administrative Agent
shall pay the Federal Funds Effective Rate in the case of loans or other amounts
due in Dollars, or the Overnight Rate in the case of Loans or other amounts due
in an Optional Currency with respect to the amount of such payments for each day
held by the Administrative Agent and not distributed to the Lenders (or the
Syndication Agent). The Administrative Agent's and each Lender's statement of
account, ledger or other relevant record shall, in the absence of manifest
error, be conclusive as the statement of the amount of principal of and interest
on the Loans and other amounts owing under this Agreement and the Fee Letters
(including the Equivalent Amounts of the applicable currencies where such
computations are required)and shall be deemed an "account stated." Unless the
Interest Period in respect thereof is continued or converted in accordance with
Section 4.02, all Revolving Credit Loans to which a Euro-Rate Option applies
shall be due and payable on the last day of the applicable Interest Period. All
Bid Loans shall be due and payable on the last day of the applicable Bid Loan
Period. All Loans outstanding on the Expiration Date shall be due and payable
in full on the Expiration Date.
5.02 Pro Rata Treatment of Lenders. Each borrowing of Revolving
Credit Loans shall be allocated to each Lender according to its Ratable Share,
and each selection of, conversion to or renewal of any Interest Rate Option and
each payment or prepayment by the Borrowers with respect to principal, interest,
Fees, or other amounts due with respect to the Revolving Credit Loans (except
for Fees payable under the Fee Letters, any payments with respect to the Swing
Loans or Bid Loans, and except as provided in Section 4.03(b), 5.04(b), 5.06 or
12.03) shall be made in proportion to the applicable Revolving Credit Loans
outstanding from each Lender and if no such Loans are then outstanding, in
proportion to the Ratable Share of each Lender.
5.03 Interest Payment Dates. Interest on Loans to which the Base
Rate Option applies shall be due and payable in arrears on the first Business
Day of each month after the Effective Date and on the Expiration Date or upon
acceleration of the Obligations. Interest on Loans (whether Revolving Credit
Loans or Bid Loans) to which the Euro-Rate Option applies shall be due and
payable in the currency in which such loan was made on the last day of each
Interest Period for those Loans and, if any such Interest Period is longer than
three months, also on the last day of every third month during such Interest
Period. Interest on Fixed Rate Bid Loans shall be due and payable on the last
day of each Bid Loan Period and, if any Bid Loan Period is longer than 90 days,
also on the
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90th day (and the 180th day if applicable) during such Interest Period.
Interest on Sterling Swing Loans shall be due and payable in British Pounds
Sterling on the date such Sterling Swing Loans are repaid with Revolving Credit
Loans pursuant to Section 2.07(a). Interest on mandatory prepayments of
principal under Sections 2.04 or 5.05 shall be due on the date such mandatory
prepayment is due. Interest on the principal amount of each Loan or other
Obligation shall be due and payable on demand after such principal amount or
other Obligation becomes due and payable (whether on the stated maturity date,
upon acceleration or otherwise).
5.04 Prepayments.
(a) The Borrowers shall have the right at their option
from time to time to prepay the Loans in whole or part without premium or
penalty (except as provided in subsection (b) below or in Section 5.06) to the
designated Funding Office in the currency in which such Loan was made:
(i) at any time with respect to any Loan to which the
Base Rate Option applies;
(ii) on the last day of the applicable Interest
Period with respect to Revolving Credit Loans to which a Euro-Rate Option
applies,
(iii) on the date specified in a notice by any Lender
pursuant to Section 4.03(b) with respect to any Loan to which a Euro-Rate Option
applies,
(iv) on the date specified in the notice required by
this Section 5.04(a) with respect to any Bid Loan, provided that the Company
shall have received the prior written consent of the holder of such Bid Loan to
such prepayment.
Whenever the Borrowers desire to prepay any part of the Revolving
Credit Loans, the Company shall provide a prepayment notice to the
Administrative Agent at least one (1) Business Day prior to the date of
prepayment of the Revolving Credit Loans setting forth the following
information:
(w) the Borrower which intends to make the proposed
prepayment;
(x) the date, which shall be a Business Day, on which
the proposed prepayment is to be made;
(y) a statement indicating the application of the
prepayment among the Revolving Credit Loans, Swing Loans and Bid
Loans; and
(z) the total principal amount and currency of such
prepayment, the Dollar Equivalent amount of which shall not be less
than $5,000,000 (or $1,000,000 in the case of Swing Loans).
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All prepayment notices shall be irrevocable. The principal amount of
the Loans for which a prepayment notice is given, together with interest on such
principal amount, except with respect to Loans to which the Base Rate Option
applies, shall be due and payable on the date specified in such prepayment
notice as the date on which the proposed prepayment is to be made in the
currency in which such Loan was made. If the Borrowers prepay a Loan but fail
to specify the applicable Borrowing Tranche which is being prepaid, the
prepayment shall be applied (i) first to Swing Loans, next to Revolving Credit
Loans and then to Bid Loans; and (ii) after giving effect to the allocations in
clause (i) above and in the preceding sentence, first to Loans to which the Base
Rate Option applies and then to Loans to which the Euro-Rate Option applies, and
then to Optional Currency Loans. Any prepayment hereunder shall be subject to
the Borrowers' Obligation to indemnify the Lenders under Section 5.06(b).
(b) In the event any Lender (i) gives notice under Section
4.03(b) or Section 5.06(a), (ii) does not fund Revolving Credit Loans because
the making of such Loans would contravene any Law applicable to such Lender,
(iii) does not approve any action as to which consent of the Required Lenders is
requested by the Borrowers and obtained hereunder or (iv) becomes subject to the
control of an Official Body (other than normal and customary supervision), then,
unless an Event of Default shall have occurred and be continuing, the Borrowers
shall have the right at their option, with the consent of the Administrative
Agent, which shall not be unreasonably withheld, to prepay the Loans of such
Lender in whole together with all interest accrued thereon and terminate such
Lender's Commitment, within ninety (90) days after (w) receipt of such Lender's
notice under Section 4.03(b) or 5.06(a), (x) the date such Lender has failed to
fund Revolving Credit Loans because the making of such Loans would contravene a
Law applicable to such Lender, (y) the date of obtaining the consent which such
Lender has not approved or (z) the date such Lender became subject to the
control of an Official Body, as applicable; provided that the Borrowers shall
also pay to such Lender at the time of such prepayment any amounts required
under Section 5.06 and any accrued interest due on such amount and any related
Fees; and provided further, that the Borrowers shall post cash collateral or
other security satisfactory to the Administrative Agent in an amount equal to
such Lender's Ratable Share of any Letter of Credit Outstandings; and provided
further, that the remaining Lenders shall have no obligation hereunder to
increase their Commitments. Notwithstanding the foregoing, the Administrative
Agent may only be replaced subject to the requirements of Section 11.13.
(c) In the event any Lender does not approve any increase in
the aggregate Commitments as to which increase the Company has obtained the
consent of all other Lenders whose Commitments will not otherwise be prepaid and
terminated pursuant to this Section 5.04(c), then, unless an Event of Default
shall have occurred and be continuing, the Borrowers shall have the right at
their option, with the consent of the Administrative Agent, which shall not be
unreasonably withheld, to prepay the Loans of such Lender in whole together with
all interest accrued thereon and terminate such Lender's Commitment (or Lenders'
Commitments) within ninety (90) days after the date the Company has obtained the
consent of all such other Lenders; provided, that the termination of such
Lender's Commitment (or Lenders' Commitments) pursuant to this Section 5.04(c)
shall only be permitted if the Borrowers have identified one or more Assignee
Lenders acceptable to the Administrative Agent which Assignee Lenders have
agreed to the increase in the aggregate Commitments and such termination is
accomplished by means of an assignment
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pursuant to Section 12.11 which does not reduce the aggregate amount of the
Commitments after giving effect to the addition of any such Assignee Lenders;
and provided further, that the remaining Lenders shall have no obligation
hereunder to increase their Commitments.
(d) Each Lender agrees that upon the occurrence of any
event giving rise to increased costs or other special payments under Section
4.03 or 5.06 with respect to such Lender, it will if requested by the Company,
use reasonable efforts (subject to overall policy considerations of such Lender)
to designate another Lending Office for any Loans or Letters of Credit 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, as determined by such Lender, with the object of avoiding the
consequence of the event giving rise to the operation of such Section. Nothing
in this Section 5.04(d) shall affect or postpone any of the Obligations of any
Borrower or the rights of any Agent or any Lender provided in this Agreement.
5.05 Mandatory Prepayments.
(a) Currency Fluctuations. If on any Computation Date
the Total Facility Usage is equal to or greater than 105% of the Commitments as
a result of a change in exchange rates between one (1) or more Optional
Currencies and Dollars, then the Administrative Agent shall notify the Company
of the same. The Company shall pay or prepay Loans (subject to the Company's
indemnity obligations under Sections 5.04 and 5.06) within one (1) Business Day
after receiving such notice such that the Total Facility Usage shall not exceed
the aggregate Commitments after giving effect to such payments or prepayments.
(b) Application Among Interest Rate Options. All
prepayments required pursuant to this Section 5.05 shall first be applied among
the Interest Rate Options to the principal amount of the Loans subject to the
Base Rate Option, then to Dollar Loans subject to a Euro-Rate Option and then to
Optional Currency Loans subject to the Euro-Rate Option. In accordance with
Section 5.06(b), the Company shall indemnify the Lenders and any Lending Office
for any loss or expense, including loss of margin, incurred with respect to any
such prepayments applied against Loans subject to a Euro-Rate Option on any day
other than the last day of the applicable Interest Period.
5.06 Additional Compensation in Certain Circumstances.
(a) Increased Costs or Reduced Return Resulting From
Taxes, Reserves, Capital Adequacy Requirements, Expenses, Etc. If any Law,
guideline or interpretation or any change in any Law, guideline or
interpretation or application thereof by any Official Body charged with the
interpretation or administration thereof or compliance with any request or
directive (whether or not having the force of Law) of any central bank or other
Official Body:
(i) subjects any Agent, the Issuing Bank or any
Lender to any tax or changes the basis of taxation with respect to this
Agreement, the other Loan Documents, the Loans, the Letters of Credit or
payments by the Borrowers of principal, interest, Fees, or other amounts due
from the Borrowers hereunder or under the other Loan Documents (except for taxes
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on the net income of any such Agent, the Issuing Bank, any Lender or any
Lending Office of any Lender),
(ii) imposes, modifies or deems applicable any reserve,
special deposit or similar requirement against credits or commitments to extend
credit extended by, or assets (funded or contingent) of, deposits with or for
the account of, or other acquisitions of funds by, any Agent, the Issuing Bank,
any Lender or any Lending Office of any Lender, or
(iii) imposes, modifies or deems applicable any capital
adequacy or similar requirement (A) against assets (funded or contingent) of, or
letters of credit, other credits or commitments to extend credit extended by,
any Lender, or (B) otherwise applicable to the obligations of any Agent, the
Issuing Bank or any Lender or any Lending Office of any Lender under this
Agreement, and the result of any of the foregoing is to increase the cost to,
reduce the income receivable by, or impose any additional expense (including
loss of margin) upon any Agent, the Issuing Bank or Lender or its Lending Office
with respect to this Agreement, the other Loan Documents or the making,
maintenance or funding of any part of the Loans or maintaining or participating
in the Letters of Credit (or, in the case of any capital adequacy or similar
requirement, to have the effect of reducing the rate of return on any Agent's,
the Issuing Bank's or any Lender's capital, taking into consideration such
Agent's, Issuing Bank's or Lender's customary policies with respect to capital
adequacy) by an amount which such Agent, Issuing Bank or Lender in its sole
discretion deems to be material, such Agent, Issuing Bank or Lender shall from
time to time notify the Company and the Administrative Agent of the amount
determined in good faith (using any averaging and attribution methods employed
in good faith) by such Agent, Issuing Bank or Lender to be necessary to
compensate such Agent, Issuing Bank or Lender for such increase in cost,
reduction of income or additional expense. Such notice shall set forth in
reasonable detail the basis for such determination. Such amount shall be due
and payable by the Borrowers to such Agent, Issuing Bank or Lender ten (10)
Business Days after such notice is given.
(b) Indemnity. In addition to the compensation
required by subsection (a) of this Section 5.06, the Borrowers shall indemnify
each Lender against all liabilities, losses or expenses (including loss of
margin, any loss or expense incurred in liquidating or employing deposits from
third parties and any loss or expense incurred in connection with funds acquired
by a Lender to fund or maintain Loans subject to the Euro-Rate Option or the Bid
Loan Fixed Rate Option) which such Lender sustains or incurs as a consequence of
any:
(i) payment, prepayment, conversion or renewal of
any Loan to which the Euro-Rate Option or any Bid Loan Fixed Rate Option applies
on a day other than the last day of the corresponding Interest Period or Bid
Loan Period, as applicable, (whether or not such payment or prepayment is
mandatory, voluntary or automatic, through acceleration or otherwise, and
whether or not such payment or prepayment is then due),
(ii) attempt by the Borrowers to revoke (expressly,
by later inconsistent notices or otherwise) in whole or part any Revolving
Credit Loan Request under Section 2.05 or, conversion/continuation notice under
Section 2.05 or prepayment notice under Section 5.04, or
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(iii) default by the Borrowers in the performance or
observance of any covenant or condition contained in this Agreement or any other
Loan Document, including any failure of the Borrowers to pay when due (by
acceleration or otherwise) any principal, interest, Fee or any other amount due
hereunder.
If any Lender sustains or incurs any such loss or expense it shall
from time to time notify the Company of the amount determined in good faith by
such Lender (which determination may include such assumptions, allocations of
costs and expenses and averaging or attribution methods as such Lender shall
deem reasonable) to be necessary to indemnify such Lender for such loss or
expense. Such notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrowers to such
Lender ten (10) Business Days after such notice is given.
(c) Taxes. Any and all payments made by the Borrowers
hereunder or under the Loan Documents shall be made, in accordance with the
provisions hereof, free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of each Agent,
the Issuing Bank, each Lender and each Lending Office, taxes on the overall net
income of such entity imposed by the jurisdiction under the Laws of which such
entity is organized or any taxing authority thereof or therein (all of such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrowers shall
be required by Law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Loan Document, (i) the sum payable shall be increased as
may be necessary so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 5.06(c)),
such Lender, the Issuing Bank or such Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrowers shall make such deductions, and (iii) the Borrowers shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable Law. In addition, the Company agrees to pay any
present or future stamp, transfer, recording, filing or documentary taxes, fees
or any other excise or property taxes, charges, or similar levies which arise
from any payment made hereunder or from the execution, delivery, or registration
of, or otherwise with respect to, this Agreement. All such Taxes shall be paid
by the Borrowers prior to the date on which penalties attach thereto or interest
accrues thereon; provided that if any penalties or interest become due, the
Borrowers may make prompt payment thereof to the appropriate governmental
authority. The Borrowers shall indemnify each Lender, the Issuing Bank and each
Agent for the full amount of such Taxes (including any taxes on amounts payable
under this Section 5.06(c)) paid by such Lender, the Issuing Bank or such Agent
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes were correctly or legally
asserted. Any indemnification payment shall be due and payable to such Lender,
the Issuing Bank or such Agent ten (10) Business Days after the date such
Lender, the Issuing Bank or such Agent makes written demand therefor. Within 30
days after the date of any payment of any Taxes by the Company, the Company
shall furnish to such Lender, the Issuing Bank or such Agent, at its address
referred to herein, the original or a certified copy of a receipt evidencing
payment thereof. If no Taxes are payable in respect of any payment by the
Company, the Company shall, if so requested, provide a certificate of an
Authorized Officer of the Company to that effect.
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(d) Survival. The Obligations of the Borrowers under
this Section 5.06 shall survive and continue in full force and effect
notwithstanding (i) the execution and delivery of this Agreement and the other
Loan Documents, (ii) the making of the Loans, (iii) the repayment of the Loans,
(iv) the payment in full of all interest, Fees and all other Obligations and (v)
the termination of all obligations of the Agents, the Issuing Bank and the
Lenders to the Borrowers under all Loan Documents.
5.07 Interbank Market Presumption. For all purposes of this
Agreement with respect to any aspects of the Euro-Rate, any Loan under the
Euro-Rate Option or any Optional Currency, each Lender and the Administrative
Agent shall be presumed to have obtained rates, funding currencies, deposits,
and the like in the applicable interbank market regardless whether it did so or
not; and, each Lender's and the Administrative Agent's determination of amounts
payable under, and actions required or authorized by, Section 4.03 and 5.06
shall be calculated, at each Lender's and the Administrative Agent's option, as
though each Lender and the Administrative Agent funded all Loans under the
Euro-Rate Option through the purchase of deposits of the types and maturities
corresponding to the deposits used as a reference in accordance with the terms
hereof in determining the Euro-Rate applicable to such Loans, whether in fact
that is the case.
5.08 Judgment Currency.
(a) Currency Conversion Procedures for Judgments.
If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in any currency (the "Original
Currency") into another currency (the "Other Currency"), the parties hereby
agree, to the fullest extent permitted by Law, that the rate of exchange used
shall be that at which in accordance with normal banking procedures each Lender
could purchase the Original Currency with the Other Currency after any premium
and costs of exchange on the Business Day preceding that on which final judgment
is given.
(b) Indemnity in Certain Events.
The obligation of the Borrowers in respect of any sum due
from Borrowers to any Lender hereunder shall, notwithstanding any judgment in an
Other Currency, whether pursuant to a judgment or otherwise, be discharged only
to the extent that, on the Business Day following receipt by any Agent, by the
Issuing Bank or by any Lender of any sum adjudged to be so due in such Other
Currency, such Agent, Issuing Bank or Lender may in accordance with normal
banking procedures purchase the Original Currency, with such Other Currency. If
the amount of the Original Currency so purchased is less than the sum originally
due to such Agent, Issuing Bank or Lender in the Original Currency, the
Borrowers agree, as a separate obligation and notwithstanding any such judgment
or payment, to indemnify such Agent, Issuing Bank or Lender against such loss.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties. The Borrowers, jointly and
severally, represent and warrant to the Agents, the Issuing Bank and each of the
Lenders as follows:
(a) Organization and Qualification. The Company and
each of its Subsidiaries is a corporation or partnership, duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. The Company and each of its Subsidiaries has the lawful power to
own or lease its properties and to engage in the business it presently conducts
or proposes to conduct. The Company and each of its Subsidiaries is duly
licensed or qualified and in good standing in each jurisdiction listed on
Schedule 6.01(a) and in all other jurisdictions where the property owned or
leased by it or the nature of the business transacted by it or both makes such
licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing individually or in the aggregate could
not reasonably be expected to have a Material Adverse Effect.
(b) Capitalization and Ownership. All of the issued
and outstanding shares of capital stock of the Company have been validly issued
and are fully paid and nonassessable. There are no options, warrants or other
rights outstanding to purchase any shares of capital stock of the Company except
any options, warrants or other rights issued pursuant to stock purchase or
option programs established by the Board of Directors of the Company for the
benefit of any of its employees, officers or directors or as indicated on
Schedule 6.01(b).
(c) Subsidiaries. Schedule 6.01(c) states the name of
each of the Company's Subsidiaries, its jurisdiction of incorporation, its
authorized capital stock, the issued and outstanding shares (referred to herein
as the "Subsidiary Shares") and the owners thereof if it is a corporation and
its outstanding partnership interests (the "Partnership Interests") if it is a
partnership. The Company and each of its Subsidiaries has good and marketable
title to all of the Subsidiary Shares and Partnership Interests it purports to
own, free and clear in each case of any Lien. All Subsidiary Shares and
Partnership Interests have been validly issued and all Subsidiary Shares are
fully paid and nonassessable. All capital contributions and other consideration
required to be made or paid in connection with the issuance of the Partnership
Interests have been made or paid, as the case may be. There are no options,
warrants or other rights outstanding to purchase any such Subsidiary Shares or
Partnership Interests except as indicated on Schedule 6.01(c).
(d) Power and Authority. Each Borrower has full power
to enter into, execute, deliver and carry out this Agreement and the other Loan
Documents to which it is a party, to incur the Indebtedness contemplated by the
Loan Documents and to perform its Obligations under the Loan Documents to which
it is a party and all such actions have been duly authorized by all necessary
proceedings on its part (including any required consent or authorization of
stockholders).
(e) Validity and Binding Effect. This Agreement has
been duly and validly executed and delivered by each Borrower, and each other
Loan Document which any Borrower is required to execute and deliver on or after
the Effective Date will have been duly
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executed and delivered by such Borrower on the required date of delivery of
such Loan Document. This Agreement and each other Loan Document constitutes or
will constitute the legal, valid and binding obligation of each Borrower which
is or will be a party thereto on and after its date of delivery thereof,
enforceable against such Borrower in accordance with its terms, except to the
extent that enforceability of any of such Loan Document may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors' rights generally or limiting the
right of specific performance.
(f) No Conflict. Neither the execution and delivery of
this Agreement or the other Loan Documents by any Borrower nor the consummation
of the transactions herein or therein contemplated nor the incurrence of the
Indebtedness contemplated by the Loan Documents nor the compliance with the
terms and provisions hereof or thereof will conflict with, constitute a default
under or result in any breach of (i) the terms and conditions of the certificate
of incorporation, by-laws or other organizational documents of any Borrower or
(ii) any Law or any agreement or instrument or order, writ, judgment, injunction
or decree to which any Borrower is a party or by which it or any of its
Properties may be subject or bound, or result in the creation or enforcement of
any Lien, charge or encumbrance whatsoever upon any Property (now or hereafter
acquired) of any Borrower.
(g) Litigation. There are no actions, suits,
proceedings or investigations pending or, to the knowledge of any Borrower,
threatened against the Company or any of its Subsidiaries at law or equity
before any Official Body or arbitrator which individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect. None of the
Company or any of its Subsidiaries is in violation of any order, writ,
injunction or any decree of any Official Body which individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
(h) Title to Properties. The real property owned or
leased by the Company and its Subsidiaries is described on Schedule 6.01(h).
The Company and its Subsidiaries have good and marketable title to or valid
leasehold interests in all Properties and other rights which they purport to own
or lease or which are reflected as owned or leased on their books and records,
free and clear of all Liens and encumbrances except Permitted Liens, and subject
to the terms and conditions of the applicable leases, except to the extent that
the failure to do so individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. All leases of Property of the
Company and its Subsidiaries are in full force and effect without the necessity
for any consent which has not previously been obtained upon consummation of the
transactions contemplated hereby.
(i) Financial Statements.
(i) Historical Statements. The Company has
delivered to each of the Lenders copies of its audited consolidated year-end
financial statements for and as of the end of the Fiscal Year ended January 26,
1997 (the "Annual Statements"). In addition, the Company has delivered to each
of the Lenders copies of its unaudited consolidated interim financial statements
for the Fiscal Quarter ended July 27,1997 (the "Interim Statements") (the Annual
and Interim Statements
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being collectively referred to as the "Historical Statements"). The Historical
Statements were compiled from the books and records maintained by the Company's
management, are correct and complete and fairly represent the consolidated
financial condition of the Company and its Subsidiaries as of their dates and
the results of operations for the fiscal periods then ended and have been
prepared in accordance with GAAP consistently applied (except as disclosed in
such financial statements), subject (in the case of the Interim Statements) to
normal year-end audit adjustments.
(ii) Financial Projections. The Company has
delivered to each of the Lenders financial projections of the Company and its
Subsidiaries for the period from January 27,1997 through January 26, 2003
derived from various assumptions of the Company's management (the "Financial
Projections"). The Financial Projections accurately reflect the liabilities of
the Company and its Subsidiaries upon consummation of the transactions
contemplated hereby as of the Effective Date.
(iii) Absence of Undisclosed Liabilities. Neither
the Company nor any of its Subsidiaries has any material liabilities, contingent
or otherwise, or forward or long-term commitments that are not disclosed in the
audited year-end financial statements delivered to the Lenders pursuant to
subsection (A) above or Section 8.03(b) or in the notes thereto, other than as
incurred in the ordinary course of business after the date of such statements.
Except as disclosed therein or on the Schedules hereto, there are no unrealized
or anticipated losses from any commitments of the Company or any Subsidiary of
the Company which individually or in the aggregate could reasonably be expected
to have a Material Adverse Effect. Since the date of the most recent audited
year-end financial statements delivered to the Lenders pursuant to subsection
(A) above or Section 8.03(b), no circumstances or events have occurred which
could reasonably be expected to have a Material Adverse Effect.
(j) Use of Proceeds; Margin Stock; Section 20
Subsidiaries.
(i) the Borrowers intend to use the proceeds of
the Loans in accordance with Section 8.01(j);
(ii) neither the Company nor any of its
Subsidiaries engages or intends to engage principally, or as one of its
important activities, in the business of extending credit for the purpose,
immediately, incidentally or ultimately, of purchasing or carrying margin stock
(within the meaning of Regulation U). No part of the proceeds of any Loan has
been used, immediately, incidentally or ultimately, to purchase or carry any
margin stock (other than common stock of the Company repurchased in accordance
with Section 8.02(e)) or to extend credit to others for the purpose of
purchasing or carrying any margin stock or to refund Indebtedness originally
incurred for such purpose, or for any purpose which entails a violation of or
which is inconsistent with the provisions of the regulations of the Board of
Governors of the Federal Reserve System. Neither the Company nor any of its
Subsidiaries holds or intends to hold margin stock in such amounts that more
than 25% of the reasonable value of the assets of the Company or any of its
Subsidiaries are or will be represented by margin stock; and
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(iii) the Borrowers do not intend to use any
portion of the proceeds of the Loans, directly or indirectly (i) knowingly to
purchase any Ineligible Securities from a Section 20 Subsidiary during any
period in which such Section 20 Subsidiary makes a market in such Ineligible
Securities, (ii) knowingly to purchase during the underwriting or placement
period Ineligible Securities being underwritten or privately placed by a Section
20 Subsidiary, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by a Section 20 Subsidiary and
issued by or for the benefit of any Borrower or any Affiliate of any Borrower.
(k) Full Disclosure. On the Effective Date, neither
this Agreement nor any other Loan Document, nor any certificate, statement,
agreement or other documents furnished to the Administrative Agent or any Lender
in connection herewith or therewith, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which they
were made, not misleading. On the Effective Date, there is no fact known to any
Borrower which could reasonably be expected to have a Material Adverse Effect
and which has not been set forth in this Agreement or in the certificates,
statements, agreements or other documents furnished in writing to the
Administrative Agent and the Lenders prior to or on the Effective Date in
connection with the transactions contemplated hereby.
(l) Taxes. All federal, state, local and other tax
returns required to have been filed with respect to the Company and each of its
Subsidiaries have been filed and payment or adequate provision has been made for
the payment of all taxes, fees, assessments and other governmental charges which
have or may become due pursuant to said returns or to assessments received
except to the extent that such taxes, fees, assessments and other charges are
being contested in good faith by appropriate proceedings diligently conducted
and for which such reserves or other appropriate provisions, if any, as shall be
required by GAAP shall have been made. There are no agreements or waivers
extending the statutory period of limitations applicable to any federal income
tax return of the Company and its Subsidiaries for any period. No tax liens
have been filed and no claims are pending or, to the knowledge of the Borrowers,
threatened with respect to taxes which could reasonably be expected to have a
Material Adverse Effect. The charges, accruals and reserves on the books of the
Company and its Subsidiaries in respect of any taxes or other governmental
charges are maintained in accordance with GAAP. Except as disclosed on Schedule
6.01(l), there are no agreements or other arrangements with any Person whereby
the Company or any of its Subsidiaries has any obligation to such Person in
respect of the payment of any taxes or other governmental charges. For purposes
of this Section, the Borrowers make no representations with respect to (i) any
tax returns filed by Kmart, (ii) the payment of any fees, assessments or other
governmental charges which have or may become due pursuant to said returns by
Kmart or assessments received by Kmart and (iii) any agreements or waivers
extending the statutory period of limitations applicable to any said returns of
Kmart.
(m) Consents and Approvals. No consent, approval,
exemption, order or authorization of, or a registration or filing with any
Official Body or any other Person is required by Law or any agreement in
connection with the execution and delivery of this Agreement and the other Loan
Documents by any Borrower, the incurrence of the Indebtedness contemplated by
the
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Loan Documents, the consummation of the transactions herein and therein
contemplated and the compliance with the terms and provisions hereof and
thereof, except as listed on Schedule 6.01(m), all of which shall have been
obtained or made on or prior to the Effective Date except as otherwise
indicated on Schedule 6.01(m).
(n) No Event of Default; Compliance with Instruments.
No Event of Default or Potential Default has occurred and is continuing.
Neither the Company nor any of its Subsidiaries is in violation of (i) any term
of its certificate of incorporation, by-laws, or other organizational documents
or (ii) any agreement or instrument or order, writ, judgment, injunction or
decree to which it is a party or by which it or any of its Properties may be
subject or bound where such violation individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.
(o) Patents, Trademarks, Copyrights, Licenses, Etc.
The Company and each of its Subsidiaries owns or possesses all the material
patents, trademarks, service marks, trade names, copyrights, licenses,
registrations, franchises, permits and rights necessary to own and operate its
properties and to carry on its business as presently conducted and planned to be
conducted by the Company or such Subsidiary, without known conflict with the
rights of others.
(p) Insurance. Schedule 6.01(p) describes all
insurance policies and other bonds to which the Company or any of its
Subsidiaries is a party, all of which are valid and in full force and effect. No
notice has been given or claim made and no grounds exist to cancel or avoid any
of such policies or bonds or to reduce the coverage provided thereby. Such
policies and bonds provide adequate coverage from reputable and financially
sound insurers in amounts sufficient to insure the assets and risks of the
Company and each of its Subsidiaries in accordance with prudent business
practice in the industry of the Company and its Subsidiaries.
(q) Compliance with Laws. The Company and its
Subsidiaries are in compliance in all respects with all applicable Laws (other
than Environmental Laws which are specifically addressed in subsection (v)) in
all jurisdictions in which the Company or any of its Subsidiaries is presently
or will be doing business except where the failure to do so individually or in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.
(r) Material Contracts. All contracts which are
material to the business operations of the Company and its Subsidiaries are
valid, binding and enforceable upon the Company and each such Subsidiary and
each of the other parties thereto in accordance with their respective terms, and
there is no default thereunder, to the Borrowers' knowledge, with respect to
parties other than the Company or its Subsidiaries.
(s) Investment Companies. Neither the Company nor any
of its Subsidiaries is an "investment company" registered or required to be
registered under the Investment Company Act of 1940 or under the "control" of an
"investment company" as such terms are defined in the Investment Company Act of
1940 and none of them shall become such an "investment company" or under such
"control." None of the Borrowers or any Subsidiaries of any Borrower is
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subject to any other federal or state statute or regulation limiting its ability
to incur Indebtedness for borrowed money.
(t) Plans and Benefit Arrangements. Except as set
forth on Schedule 6.01(t):
(i) The Company and each of its Subsidiaries is
in compliance in all material respects with any applicable provisions of ERISA
with respect to all Benefit Arrangements. There has been no Prohibited
Transaction with respect to any Benefit Arrangement that individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
(ii) Neither the Company nor any of its
Subsidiaries maintains or contributes to any Plan, Multiemployer Plan or
Multiple Employer Plan.
(iii) To the extent that any Benefit Arrangement
is insured, the Company and all of its Subsidiaries have paid when due all
premiums required to be paid for all periods except where the failure to make
such payment individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect. To the extent that any Benefit Arrangement
is funded other than with insurance, the Company and all of its Subsidiaries
have made when due all contributions required to be paid for all periods except
where the failure to make such contribution individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.
(iv) All Benefit Arrangements have been
administered in accordance with their terms and applicable Law except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
(v) Neither the Company nor any of its
Subsidiaries maintains or contributes to or otherwise has any liability under
any Benefit Arrangement under which benefits are provided to former employees of
the Company or any of its Subsidiaries.
(vi) No claims or lawsuits are pending or, to
the knowledge of the Borrowers, threatened with respect to any Benefit
Arrangement, other than normal claims for benefits.
(vii) As of the Effective Date neither the
Company nor any member of the ERISA Group maintains, sponsors or contributes to
any Plan, Multiemployer Plan or Multiple Employer Plan.
(u) Employment Matters. The Company and each
Subsidiary of the Company is in compliance with the Labor Contracts and all
applicable federal, state and local labor and employment Laws including those
related to equal employment opportunity and affirmative action, labor relations,
minimum wage, overtime, child labor, medical insurance continuation, worker
adjustment and relocation notices, immigration controls and worker and
unemployment compensation, where the failure to comply individually or in the
aggregate could reasonably be
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expected to have a Material Adverse Effect. There are no outstanding
grievances, arbitration awards or appeals therefrom arising out of the Labor
Contracts or current or threatened strikes, picketing, handbilling or other
work stoppages or slowdowns at facilities of any of the Borrowers which, in any
case, individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect.
(v) Environmental Matters. Except as disclosed on
Schedule 6.01(v):
(i) Neither the Company nor any Subsidiary of
the Company has received any Environmental Complaint from any Official Body or
private Person alleging that it or any prior or subsequent owner of its Property
is a potentially responsible party under the Comprehensive Environmental
Response, Cleanup and Liability Act, 42 U.S.C. Section 9601, et seq., and none
of the Borrowers has any reason to believe that such an Environmental Complaint
might be received. There are no pending or, to the Borrowers' knowledge,
threatened Environmental Complaints relating to the Company or any Subsidiary of
the Company or, to the Borrowers' knowledge, any prior or subsequent owner of
their Property pertaining to, or arising out of, any Environmental Conditions.
(ii) Except for conditions, violations or
failures which individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect, there are no circumstances at, on or under
the Company's and its Subsidiaries' Property that constitute a breach of or
non-compliance with any of the Environmental Laws, and there are no past or
present Environmental Conditions at, on or under such Property or, to the
Borrowers' knowledge, at, on or under adjacent property, that prevent compliance
with the Environmental Laws at such Property or that otherwise would require
that any removal, remediation or other corrective action or cleanup be taken
with respect to such Property or any adjacent property.
(iii) Neither the Property of the Company and
its Subsidiaries nor any structures, improvements, equipment, fixtures,
activities or facilities thereon or thereunder contain or use Regulated
Substances except in compliance with Environmental Laws or under circumstances
where any failure to comply with Environmental Laws could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
There are no processes, facilities, operations, equipment or any other
activities at, on or under such Property, or, to the Borrowers' knowledge, at,
on or under adjacent property, that have resulted or are currently resulting in
the release or threatened release of Regulated Substances onto such Property,
except to the extent that such releases or threatened releases are not a breach
of or otherwise not a violation of the Environmental Laws, and except where such
releases or threatened releases individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
(iv) There are no aboveground storage tanks,
underground storage tanks or underground piping associated with such tanks, used
for the management of Regulated Substances at, on or under the Property of the
Company and its Subsidiaries that (a) do not have a full operational secondary
containment system in place, and (b) are not otherwise in compliance with all
Environmental Laws. There are no abandoned underground storage tanks or
underground piping associated with such tanks, previously used for the
management of Regulated Substances at, on or
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under such Property that have not either been closed in place in accordance
with Environmental Laws or removed in compliance with all applicable
Environmental Laws and no contamination associated with the use of such tanks
exists on such Property.
(v) The Company and each Subsidiary of the
Company has obtained all permits, licenses, authorizations, plans and approvals
necessary under the Environmental Laws for the conduct of its business as
presently conducted except where the failure to do so individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
The Company and each Subsidiary of the Company has submitted all notices,
reports and other filings required by the Environmental Laws to be submitted to
an Official Body which pertain to past and current operations on their Property
except where the failure to do so individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
(vi) Except for violations which individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect, all past and present on-site generation, storage, processing, treatment,
recycling, reclamation, disposal or other use or management of Regulated
Substances at, on, or under the Property of the Company and its Subsidiaries and
all off-site transportation, storage, processing, treatment, recycling,
reclamation, disposal or other use or management of Regulated Substances has
been done in accordance with the Environmental Laws.
(w) Senior Debt Status. The Obligations of each
Borrower under this Agreement and each of the other Loan Documents to which it
is a party do rank and will rank at least pari passu in priority of payment with
all other Indebtedness of such Borrower except Indebtedness of such Borrower to
the extent secured by Permitted Liens. There is no Lien upon or with respect to
any of the properties or income of any Borrower or Subsidiary of any Borrower
which secures indebtedness or other obligations of any Person except for
Permitted Liens.
(x) Solvency. After giving effect to each incurrence of
Indebtedness hereunder, and the payment of all Fees, costs and expenses payable
by each of the Borrowers hereunder, each of the Borrowers is Solvent.
6.02 Updates to Schedules. Should any of the information or
disclosures provided on any of the Schedules attached hereto become outdated or
incorrect in any material respect, the Company shall promptly provide the
Administrative Agent in writing with such revisions or updates to such Schedule
as may be necessary or appropriate to update or correct same; provided that,
except for the amendment of Schedule 1.01(B) as contemplated by Section 2.01(c)
and 12.11 and the amendment of Schedule 6.01(c) in connection with any new
Subsidiary of the Company as permitted herein, no Schedule shall be deemed to
have been amended, modified or superseded by any such correction or update, nor
shall any breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule be deemed to have been cured thereby, unless
and until the Required Lenders, in their sole and absolute discretion, shall
have accepted in writing such revisions or updates to such Schedule.
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ARTICLE VII
CONDITIONS OF LENDING
The obligation of each Lender to make Revolving Credit Loans, the
obligation of any Lender to make Bid Loans and the obligation of the Issuing
Bank to issue Letters of Credit hereunder is subject to the performance by each
of the Borrowers of its Obligations to be performed hereunder at or prior to the
making of any such Loans or issuance of such Letters of Credit and to the
satisfaction of the following further conditions:
7.01 Effective Date. On the Effective Date:
(a) The representations and warranties of each of the
Borrowers contained in Article VI shall be true and accurate on and as of the
Effective Date with the same effect as though such representations and
warranties had been made on and as of such date (except representations and
warranties which relate solely to an earlier date or time, which representations
and warranties shall be true and correct on and as of the specific dates or
times referred to therein); no Event of Default or Potential Default under this
Agreement shall have occurred and be continuing or shall exist; and there shall
be delivered to the Administrative Agent for the benefit of each Lender a
certificate of each of the Borrowers, dated the Effective Date and signed by an
Authorized Officer of each of the Borrowers, to each such effect;
(b) There shall be delivered to the Administrative
Agent for the benefit of each Lender a certificate dated the Effective Date and
signed by the Secretary or an Assistant Secretary of each of the Borrowers,
certifying as appropriate as to:
(i) all corporate action taken by such Borrower
in connection with this Agreement and the other Loan Documents (which shall
include copies of all Board of Directors and stockholder resolutions);
(ii) the names of the officer or officers
authorized to sign this Agreement and the other Loan Documents and the true
signatures of such officer or officers and specifying the Authorized Officers
permitted to act on behalf of such Borrower for purposes of this Agreement and
the true signatures of such officers, on which the Administrative Agent and each
Lender may conclusively rely; and
(iii) copies of its organizational documents,
including its certificate of incorporation and bylaws as in effect on the
Effective Date certified by the appropriate state official where such documents
are filed in a state office together with certificates from the appropriate
state officials as to the continued existence and good standing of such Borrower
in each state where organized or where its principal executive office is
located.
(c) There shall have been delivered to the
Administrative Agent for the benefit of each Lender a certificate dated the
Effective Date and signed by an Authorized Officer of the Company containing
calculations in detail satisfactory to the Administrative Agent showing
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the Fixed Charge Coverage Ratio as of the end of the most recently ended Fiscal
Quarter and the Consolidated Tangible Net Worth as of the Effective Date.
(d) The Agreement and the other Loan Documents
shall have been duly executed and delivered to the Administrative Agent for the
benefit of the Lenders.
(e) There shall be delivered to the Administrative
Agent for the benefit of each Lender a written opinion of Dickinson, Wright,
Moon, Van Dusen & Freeman, counsel for the Borrowers and the Guarantors, a
written opinion of Baker & McKenzie, U.K. counsel to the Borrowers and the
Guarantors, and a written opinion of the General Counsel of the Company, dated
the Effective Date and in form and substance satisfactory to the Agents and
their counsel:
(i) as to the matters set forth in Exhibit
7.01(e)(i); and
(ii) as to such other matters incident to the
transactions contemplated herein as the Agents may reasonably request.
(f) All legal details and proceedings in connection
with the transactions contemplated by the Agreement and the other Loan Documents
shall be in form and substance satisfactory to the Administrative Agent and
counsel for the Administrative Agent, and the Administrative Agent shall have
received all such other counterpart originals or certified or other copies of
such documents and proceedings in connection with such transactions, in form and
substance satisfactory to the Administrative Agent and said counsel, as the
Administrative Agent or said counsel may reasonably request.
(g) The Borrowers shall pay or cause to be paid to the
Administrative Agent for itself and for the account of the Lenders (to the
extent not previously paid) the Fees, and all other fees accrued through the
Effective Date and the costs and expenses for which the Agents and the Lenders
are entitled to be reimbursed.
(h) All material consents required to effectuate the
transactions contemplated hereby as set forth on Schedule 6.01(m) shall have
been obtained.
(i) The making of the Loans shall not contravene any
Law applicable to any Borrower, any Agent, the Issuing Bank or any of the
Lenders.
(j) No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of this Agreement or the consummation of the
transactions contemplated hereby or which, in the Administrative Agent's sole
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement or any of the other Loan Documents.
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(k) The Lenders shall have received copies of the
Annual Statements, the Interim Statements and the Financial Projections each in
form and substance satisfactory to the Lenders.
(l) The Administrative Agent shall have received a copy
of a letter to the Company from the independent certified public accountants of
the Borrowers acknowledging that the Company has advised such accountants that
the Agents and the Lenders are relying on the financial statements of the
Company and its Subsidiaries and such accountants' audit reports thereon.
(m) The Administrative Agent shall have received a duly
executed and completed Loan Request for any Loans to be advanced on the
Effective Date.
(n) The Issuing Bank shall have received a duly
executed and completed application for Letter of Credit for any Letter of Credit
to be issued on the Effective Date.
(o) The Administrative Agent shall have received such
other documents as any Lender or its counsel may have reasonably requested.
7.02 Each Additional Loan. At the time of making any Loans or
issuing any Letter of Credit, other than any Loans made or Letters of Credit
issued on the Effective Date hereunder (or the Subsequent Effective Date), and
after giving effect to the proposed borrowings: the representations and
warranties of the Borrowers contained in Article VI shall be true on and as of
the date of such Loan or Letter of Credit with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which expressly relate solely to an earlier date
or time, which representations and warranties shall be true and correct on and
as of the specific dates or times referred to therein); no Event of Default or
Potential Default shall have occurred and be continuing or shall exist; the
making of such Loans or issuance of such Letter of Credit shall not contravene
any Law applicable to the Company or any of its Subsidiaries, any Agent or any
of the Lenders; the Company shall have delivered to the Administrative Agent a
duly executed and completed Loan Request; and the Company shall have delivered
to the Issuing Bank a duly executed and completed application for a Letter of
Credit.
7.03 Subsequent Effective Date. On the Subsequent Effective Date
and prior to the Lenders making any Loans to Books Etc.:
(a) There shall be delivered to the Administrative
Agent for the benefit of each Lender a letter agreement from Books Etc. agreeing
to be bound by this Agreement as a Borrower (but not as a Guarantor) and a
letter agreement from each Subsidiary of Books Etc. agreeing to be bound by this
Agreement as a Guarantor only in respect of the obligations of Books Etc.
(b) The representations and warranties of each of the
Borrowers contained in Article VI shall be true and accurate with respect to
Books Etc. on and as of the Subsequent Effective Date with the same effect as
though such representations and warranties had been made on and as of such date
(except representations and warranties which relate solely to an
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earlier date or time, which representations and warranties shall be true and
correct on and as of the specific dates or times referred to therein); no Event
of Default or Potential Default under this Agreement shall have occurred and be
continuing or shall exist; and there shall be delivered to the Administrative
Agent for the benefit of each Lender a certificate of Books Etc., dated the
Subsequent Effective Date and signed by an Authorized Officer of Books Etc., to
each such effect;
(c) There shall be delivered to the Administrative
Agent for the benefit of each Lender a certificate dated the Subsequent
Effective Date and signed by the Secretary or an Assistant Secretary of Books
Etc., certifying as appropriate as to:
(i) all corporate action taken by Books Etc. in
connection with this Agreement and the other Loan Documents (which shall include
copies of all Board of Directors and stockholder resolutions);
(ii) the names of the officer or officers
authorized to sign this Agreement and the other Loan Documents and the true
signatures of such officer or officers and specifying the Authorized Officers
permitted to act on behalf of Books Etc. for purposes of this Agreement and the
true signatures of such officers, on which the Administrative Agent and each
Lender may conclusively rely; and
(iii) copies of its organizational documents,
including its certificate of incorporation and bylaws (or equivalent thereof)
as in effect on the Subsequent Effective Date certified by the appropriate
government official where such documents are filed in a government office
together with certificates from the appropriate government officials as to the
continued existence and good standing of Books Etc. in the jurisdiction where
organized or where its principal executive office is located.
(d) There shall be delivered to the Administrative
Agent for the benefit of each Lender a written opinion of Dickinson, Wright,
Moon, Van Dusen & Freeman, counsel for the Borrowers and the Guarantors, a
written opinion of Baker & McKenzie, U.K. counsel to the Borrowers and the
Guarantors, and a written opinion of the General Counsel of the Company, dated
the Subsequent Effective Date and in form and substance satisfactory to the
Administrative Agent and its counsel:
(i) as to the matters set forth in Exhibit
7.01(e)(i); and
(ii) as to such other matters incident to the
transactions contemplated herein as the Administrative Agent may reasonably
request.
(e) All legal details and proceedings in connection
with the transactions contemplated by the Agreement and the other Loan Documents
shall be in form and substance satisfactory to the Administrative Agent and its
counsel and the Administrative Agent shall have received all such other
counterpart originals or certified or other copies of such documents and
proceedings in connection with such transactions, in form and substance
satisfactory to the
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Administrative Agent and said counsel, as the Administrative Agent or said
counsel may reasonably request.
(f) The making of the Loans shall not contravene any
Law applicable to Books Etc., any Agent, the Issuing Bank or any of the Lenders.
(g) The Administrative Agent shall have received a duly
executed and completed Loan Request for any Loans to be advanced to Books Etc.
on the Subsequent Effective Date.
(h) The Administrative Agent shall have received such
other documents as any Lender or its counsel may have reasonably requested.
ARTICLE VIII
COVENANTS
8.01 Affirmative Covenants. The Borrowers, jointly and
severally, covenant and agree that until payment in full of the Loans and
interest thereon, expiration or termination of all Letters of Credit,
satisfaction of all of the Borrowers' Obligations under the Loan Documents and
termination of the Commitments, the Borrowers shall comply at all times with the
following affirmative covenants:
(a) Preservation of Existence, etc. Each Borrower
shall, and shall cause each of its Subsidiaries to maintain its corporate
existence and its license or qualification and good standing in each
jurisdiction in which its ownership or lease of property or the nature of its
business makes such license or qualification necessary; provided that (i)
Borrowers may engage in transactions permitted by Section 8.02(f), and (ii) with
respect to Subsidiaries of the Borrowers (other than Borrowers themselves), such
Subsidiaries may fail to do so to the extent that such failure individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect.
(b) Payment of Liabilities, Including Taxes, etc. Each
Borrower shall, and shall cause each of its Subsidiaries to, duly pay and
discharge all liabilities to which it is subject or which are asserted against
it, promptly as and when the same shall become due and payable, including all
taxes, assessments and governmental charges upon it or any of its Properties,
income or profits, prior to the date on which penalties attach thereto, except
to the extent that such liabilities, including taxes, assessments or charges,
are being contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other appropriate provisions,
if any, as shall be required by GAAP shall have been made, and except to the
extent that failure to discharge any such liabilities individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect;
provided that the Borrowers and their Subsidiaries will pay all such liabilities
forthwith upon the commencement of proceedings to foreclose any Lien which may
have attached as security therefor.
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(c) Maintenance of Insurance. Each Borrower shall, and
shall cause each of its Subsidiaries to, insure its Properties against loss or
damage by fire and such other insurable hazards as such assets are commonly
insured (including fire, extended coverage, property damage, worker's
compensation, public liability and business interruption insurance) and against
other risks (including errors and omissions) in such amounts as similar
properties and assets are insured by prudent companies in similar circumstances
carrying on similar businesses, and with reputable and financially sound
insurers, including self-insurance to the extent customary, all as reasonably
determined by the Administrative Agent. At the request of the Administrative
Agent, the Company shall deliver from time to time a summary schedule indicating
all insurance then in force with respect to each of the Borrowers.
(d) Maintenance of Properties. Each Borrower shall,
and shall cause each of its Subsidiaries to, maintain in good repair, working
order and condition (ordinary wear and tear excepted) in accordance with the
general practice of other businesses of similar character and size, all Property
useful or necessary to its business, and from time to time, each such Borrower
will make or cause to be made all appropriate repairs, renewals or replacements
thereof except to the extent that the failure to do so individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
(e) Maintenance of Patents, Trademarks, etc. Each
Borrower shall, and shall cause each of its Subsidiaries to, maintain in full
force and effect all patents, trademarks, trade names, copyrights, licenses,
franchises, permits and other authorizations necessary for the ownership and
operation of its properties and business, except to the extent that the failure
so to maintain the same individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
(f) Visitation Rights. Each Borrower shall, and shall
cause each of its Subsidiaries to, permit any of the officers or authorized
employees or representatives of the Administrative Agent or any of the Lenders
to visit and inspect any of its properties and to examine and make excerpts from
its books and records and discuss its business affairs, finances and accounts
with its officers, all in such detail and at such times and as often as any of
the Lenders may reasonably request. Each Lender shall provide the Company and
the Administrative Agent with reasonable notice prior to any visit or
inspection; provided that no such notice shall be required after the occurrence
and during the continuation of a Potential Default or an Event of Default. In
the event any Lender desires to conduct an audit of any Borrower, such Lender
shall make a reasonable effort to conduct such audit contemporaneously with any
audit to be performed by the Administrative Agent. At the request of either
Agent, but not more frequently than once a year, the Borrowers and their
respective Authorized Officers shall hold a meeting of the Lenders, at which the
Borrowers will present an analysis of the financial performance of the Company
and its Subsidiaries during the previous Fiscal Year and a discussion of the
expected results of operations for the then current Fiscal Year.
(g) Keeping of Records and Books of Account. The
Company shall, and shall cause each Subsidiary of the Company to, maintain and
keep proper books of record and account which enable the Company and its
Subsidiaries to issue financial statements in accordance
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with GAAP and as otherwise required by applicable Laws or any Official Body
having jurisdiction over the Company or any Subsidiary of the Company, and in
which full, true and correct entries shall be made in all material respects of
all its dealings and business and financial affairs.
(h) Plans and Benefit Arrangements. The Company shall,
and shall cause each of its Subsidiaries to, comply with ERISA, the Internal
Revenue Code and other applicable Laws applicable to Benefit Arrangements except
where failure to comply individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. Without limiting the generality of
the foregoing, the Company shall make, and cause each of its Subsidiaries to
make, in a timely manner, all contributions due to Benefit Arrangements.
(i) Compliance with Laws. Each Borrower shall, and
shall cause each of its Subsidiaries to, comply with all applicable Laws,
including all Environmental Laws, in all respects, provided that it shall not be
deemed to be a violation of this Section 8.01(i) if any failure to comply with
any Law would not result in fines, penalties, remediation costs, other similar
liabilities or injunctive relief which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.
(j) Use of Proceeds. The Borrowers will use the
proceeds of the Loans only for working capital and general corporate purposes,
repurchases of the Company's common stock in accordance with Section 8.02(e) and
Purchases and Investments as permitted by this Agreement, and such uses shall
not contravene any applicable Law or any other provision thereof. No part of the
proceeds of any Loan has been or will be used, immediately, incidentally or
ultimately, to purchase or carry any margin stock (other than common stock of
the Company repurchased in accordance with Section 8.02(e)) or to extend credit
to others for the purpose of purchasing or carrying any margin stock or to
refund Indebtedness originally incurred for such purpose, or for any purpose
which entails a violation of or which is inconsistent with the provisions of the
regulations of the Board of Governors of the Federal Reserve System. No more
than 25% of the reasonable value of the assets of the Company or any of its
Subsidiaries will be represented by margin stock. The Borrowers shall not use
any portion of the proceeds of the Loans, directly or indirectly (i) knowingly
to purchase any Ineligible Securities from a Section 20 Subsidiary during any
period in which such Section 20 Subsidiary makes a market in such Ineligible
Securities, (ii) knowingly to purchase during the underwriting or placement
period Ineligible Securities being underwritten or privately placed by a Section
20 Subsidiary, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by as Section 20 Subsidiary and
issued by or for the benefit of any Borrower or any Affiliate of any Borrower.
(k) Subsequent Credit Terms. The Company shall notify
the Administrative Agent in writing not less than ten (10) Business Days prior
to any Borrower entering into any credit agreement or any amendment or
modification to any existing credit agreement in either case as otherwise
permitted hereunder, pursuant to which any Borrower agrees to representations,
warranties or covenants which are more restrictive, as determined in the sole
discretion of the Administrative Agent, than the representations, warranties or
covenants hereof (the "More Restrictive Provisions"). Upon the execution of
such new credit agreement, amendment or modification, the corresponding
covenants, terms and conditions of this Agreement shall be and shall
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be deemed to be automatically and immediately amended to conform with and to
include the applicable More Restrictive Provisions of such new credit
agreement, amendment or modification; provided, that the foregoing shall not be
applicable to or be deemed to affect any provision of this Agreement if any new
credit agreement, amendment or modification is less restrictive. Each of the
Borrowers hereby agrees promptly to execute and deliver any and all such
documents and instruments and to take all such further actions as the
Administrative Agent may, in its sole discretion, deem necessary or appropriate
to effectuate the provisions of this Section 8.01(k).
(l) Subsidiary Guaranties. If (i) any Restricted
Subsidiary's total assets determined in accordance with GAAP at the end of any
Fiscal Quarter constitute more than 10% of Consolidated Tangible Net Worth
determined at the end of such Fiscal Quarter or (ii) any Restricted Subsidiary's
net income determined in accordance with GAAP for any rolling four Fiscal
Quarter period exceeds 10% of Consolidated Net Income for such four Fiscal
Quarters, the Company shall cause such Restricted Subsidiary to agree to be
bound by the provisions of Article IX hereof and to execute a letter agreement
to such effect in form and substance satisfactory to the Administrative Agent
and to deliver such legal opinions and other documents and instruments as the
Administrative Agent may request.
8.02 Negative Covenants. The Borrowers, jointly and severally,
covenant and agree that until payment in full of the Loans and interest thereon,
expiration or termination of all Letters of Credit, satisfaction of all of the
Borrowers' Obligations under the Loan Documents and termination of the
Commitments, the Borrowers shall comply at all times with the following negative
covenants:
(a) Indebtedness. Each of the Borrowers shall not, and
shall not permit any of its Subsidiaries to, at any time create, incur, assume
or suffer to exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Indebtedness existing on the Effective
Date as set forth on Schedule 8.02(a) (including any extensions or renewals
thereof provided there is no increase in the amount thereof or other significant
change in the terms thereof unless otherwise specified on Schedule 8.02(a));
(iii) Capitalized Lease Obligations;
(iv) interest rate swap, cap, collar or floor
agreements or other interest rate management devices with any Lender,
referencing an aggregate notional amount not to exceed, based on the reasonable
business judgment of the Company, the maximum principal amount outstanding at
any time of all Indebtedness of the Company and its Subsidiaries on a
consolidated basis plus an amount equal to 50% of Capitalized Rent Expense, with
such interest rate management devices to be entered into for hedging purposes
only and not for speculation;
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(v) Indebtedness secured by Purchase Money
Security Interests, so long as the amount of such Indebtedness does not exceed
the purchase price of the property which is subject to such Purchase Money
Security Interests;
(vi) Indebtedness of an Unrestricted Subsidiary
which is a Domestic Subsidiary to another Unrestricted Subsidiary which is a
Domestic Subsidiary or to the Company;
(vii) Indebtedness of the Company to an
Unrestricted Subsidiary which is a Domestic Subsidiary so long as such
Indebtedness is unsecured;
(viii) Contingent Obligations as and to the
extent permitted under Section 8.02(c);
(ix) Indebtedness of the Company and its
Domestic Subsidiaries in addition to Indebtedness otherwise permitted by clause
(i) to (viii) above with an aggregate principal Dollar Equivalent amount
outstanding not to exceed 20% of Consolidated Tangible Net Worth (determined as
of the last day of the Fiscal Quarter most recently ended);
(x) unsecured Indebtedness of Foreign
Subsidiaries which are not Borrowers with an aggregate principal Dollar
Equivalent amount outstanding not to exceed $10,000,000 or Indebtedness of one
Foreign Subsidiary to another Foreign Subsidiary;
(xi) Permitted Sutro Refinancing Indebtedness, so
long as (A) the aggregate principal amount of any such Indebtedness outstanding
does not exceed $36,000,000, (B) the aggregate principal amount of any such
Indebtedness incurred, at the date of incurrence, is at least 85% of the face
value of the amount of "Notes" (as defined in the Note Put Agreements) purchased
by Borders as required by Section 2.2 of the Note Purchase Agreements, (C) any
such Indebtedness is incurred no sooner than the relevant "Tenant Purchase Date"
(as defined in the Note Put Agreements), (D) the representations, warranties and
covenants contained in the documentation with respect to any such Indebtedness
are no more restrictive, as determined in the reasonable discretion of the
Administrative Agent, than the representations, warranties or covenants hereof,
(E) the maturity of any such Indebtedness is not less than two years from the
date of incurrence, and (F) on or before the date of incurrence, the Borrowers
shall have delivered to the Lenders proforma financial statements, in form and
substance satisfactory to the Lenders, showing that, during the term of such
Indebtedness, based on reasonable projections of the financial performance of
the Borrowers, the Borrowers will not be in violation of any of the financial
covenants contained in Section 8.02; and
(xii) Indebtedness of the Borrowers under the
Lease Financing Guarantee, so long as the conditions specified in Section
8.02(c)(vii) have been satisfied, or any refinancing of any or all of such
Indebtedness on substantially the terms described in Section 21.1 of the Form of
Lease attached as Exhibit G to the Participation Agreement.
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(b) Liens. Each of the Borrowers shall not, and shall
not permit any of its Subsidiaries to, at any time create, incur, assume or
suffer to exist any Lien on any of its Property now owned or hereafter acquired,
or agree or become liable to do so, except Permitted Liens.
(c) Contingent Obligations. Each of the Borrowers
shall not, and shall not permit any of its Subsidiaries to, at any time,
directly or indirectly, become or be liable in respect of any Contingent
Obligations, except for:
(i) Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in respect of obligations
of the Company or any Unrestricted Subsidiary which is a Domestic Subsidiary;
(ii) Permitted Lease Contingent Obligations,
provided that the portion of all such Permitted Lease Contingent Obligations
which constitute current liabilities determined and consolidated in accordance
with GAAP (whether such amounts are fixed or percentage rent, fees, costs,
accelerated payments or otherwise), shall not exceed Fifteen Million Dollars
($15,000,000) at any one time;
(iii) Contingent Obligations arising by operation
of any applicable law which individually or in the aggregate could not
reasonably be expected to have Material Adverse Effect;
(iv) any Contingent Obligations arising under the
Note Put Agreements;
(v) any Contingent Obligations arising under any
computer leases with respect to which Kmart is the lessee and any of the
Borrowers is the user of such computer equipment;
(vi) any Contingent Obligations arising under any
of the Kmart Agreements;
(vii) Contingent Obligations arising under the
Lease Financing Guarantee, provided, however, that the aggregate amount of
Contingent Obligations permitted thereunder shall not exceed $250,000,000;
(viii) Contingent Obligations constituting a
Permitted Joint Venture Activity, provided no Event of Default or Potential
Default has occurred and is continuing or would result therefrom and subject to
Section 8.02(u);
(ix) Contingent Obligations constituting a
Permitted Restricted Subsidiary Activity, provided no Event of Default or
Potential Default has occurred and is continuing or would result therefrom and
subject to Section 8.02(u);
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(x) Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in respect of all
obligations other than operating lease obligations of any Unrestricted
Subsidiary which is a Foreign Subsidiary, subject to Section 8.02(u); and
(xi) Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in respect of operating
lease obligations of any Unrestricted Subsidiary which is a Foreign Subsidiary
provided that the portion of all such Contingent Obligations which constitute
current liabilities determined and consolidated in accordance with GAAP is
limited to lease payments (whether such amounts are fixed or percentage rent,
fees, costs, accelerated payments of otherwise) not in excess of an aggregate of
$15,000,000 in any Fiscal Year with respect to all Unrestricted Subsidiaries
which are Foreign Subsidiaries; and
(xii) Contingent Obligations of any Unrestricted
Subsidiary which is a Foreign Subsidiary in respect of obligations of another
Unrestricted Subsidiary which is a Foreign Subsidiary.
(d) Loans and Investments. Each of the Borrowers shall
not, and shall not permit any of its Subsidiaries to, at any time make or suffer
to remain outstanding any loan or advance to, or purchase, acquire or own any
stock, bonds, notes or securities of, or any partnership interest (whether
general or limited) in, or any other investment or interest in, or make any
capital contribution to, any other Person, or agree, become or remain liable to
do any of the foregoing (collectively, "Investments"), except:
(i) trade credit extended on usual and customary
terms in the ordinary course of business;
(ii) advances to employees to meet expenses
incurred by such employees in the ordinary course of business;
(iii) Permitted Investments;
(iv) Investments by the Company in any
Unrestricted Subsidiary which is a Domestic Subsidiary or by any Unrestricted
Subsidiary which is a Domestic Subsidiary in the Company or an Unrestricted
Subsidiary which is a Domestic Subsidiary, so long as any loans or advances are
unsecured;
(v) Investments by the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in any Unrestricted
Subsidiary which is a Foreign Subsidiary, so long as any loans or advances are
unsecured; provided, however, that any such Investments permitted by this clause
(v) plus any Foreign Purchases pursuant to clause (viii) below may not exceed in
the aggregate 15% of Consolidated Tangible Net Worth (determined as of the last
day of the Fiscal Quarter most recently ended) and subject to Section 8.02(u);
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(vi) a Purchase of Books Etc. and its
Subsidiaries (including Books Etc. Properties Limited), corporations organized
and existing under the laws of England for a total purchase price (including
Indebtedness assumed) not to exceed $75,000,000, so long as no Potential Default
or Event of Default has occurred and is continuing or would result therefrom;
(vii) Domestic Purchases (a) so long as no
Potential Default or Event of Default has occurred and is continuing or would
result therefrom, (b) so long as the assets or business subject to such Domestic
Purchase is in substantially the same or a similar type of business as the
Company and its Subsidiaries, (c) so long as the Board of Directors of any
Person to be acquired has approved the terms of the Purchase, and (d) so long as
the Company delivers to the Lenders on or before the date on which it or any of
its Subsidiaries agrees to or consummates any Domestic Purchase proforma
financial statements, in form and substance satisfactory to the Administrative
Agent, showing that no Event of Default or Potential Event of Default will occur
under Sections 8.02(o), (p) or (q) over the 12 month period following the
effective date of the Purchase, based on reasonable projections of the financial
performance of the Borrowers;
(viii) Foreign Purchases (a) so long as no
Potential Default or Event of Default has occurred and is continuing or would
result therefrom, (b) so long as the assets or business subject to such Foreign
Purchase is in substantially the same or a similar type of business as the
Company and its Subsidiaries, (c) so long as the Board of Directors of any
Person to be acquired has approved the terms of the Foreign Purchase, (d) so
long as the aggregate purchase amount payable in cash for all Foreign Purchases
permitted by this clause (viii) plus all Investments pursuant to clause (v)
above does not exceed 15% of Consolidated Tangible Net Worth (determined as of
the last day of the Fiscal Quarter most recently ended) and subject to Section
8.02(u); and (e) so long as the Company delivers to the Lenders on or before the
date on which it or any of its Subsidiaries agrees to or consummates any Foreign
Purchase proforma financial statements, in form and substance satisfactory to
the Administrative Agent, showing that no Event of Default or Potential Event of
Default will occur under Sections 8.02(o), (p) or (q) over the 12 month period
following the effective date of the Purchase, based on reasonable projections of
the financial performance of the Borrowers;
(ix) loans and advances, in addition to those
permitted under Section 8.02(d)(ii), to employees in an aggregate principal
amount not to exceed $10,000,000;
(x) Investments constituting Permitted Joint
Venture Activities, provided no Event of Default or Potential Default has
occurred and is continuing or would result therefrom and subject to Section
8.02(u);
(xi) Investments constituting Permitted
Restricted Subsidiary Activities, provided no Event of Default or Potential
Default has occurred and is continuing or would result therefrom and subject to
Section 8.02(u);
(xii) repurchases of the Company's common stock
in accordance with Section 8.02(e); and
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(xiii) Investments by one Foreign Subsidiary in
another Foreign Subsidiary.
(e) Dividends and Related Distributions. The Company
shall not, and shall not permit any of its Subsidiaries to, make or pay, or
agree to become or remain liable to make or pay, any dividend or other
distribution of any nature (whether in cash, property, securities or otherwise)
on account of or in respect of its shares of capital stock or partnership
interests or on account of the purchase, redemption, retirement or acquisition
of its shares of capital stock (or warrants, options or rights therefor)
(collectively, "Distributions"), except:
(i) the Company may make open market
repurchases of shares of its common stock, and it may receive shares of its
common stock as payment of the exercise price of options, or as payment of taxes
associated with the exercise of options or the vesting of restricted shares,
which such delivered shares are deemed to be repurchased by the Company at fair
market value (as defined in the Company's stock option plan) on the date of
delivery to the Company, so long as the aggregate amount paid by the Company
with respect to all such repurchases (including all such deemed repurchases)
does not at any time exceed the Repurchase Amount in effect from time to time
and no Event of Default or Potential Default has occurred and is continuing or
would result therefrom;
(ii) the Company may engage in stock splits
(including reverse stock splits) or pay dividends in stock;
(iii) Wholly-owned Subsidiaries may make
Distributions to the Company or another Wholly-owned Subsidiary;
(iv) Subsidiaries other than Wholly-owned
Subsidiaries may make Distributions so long as (a) the aggregate amount of
Distributions made by any such Subsidiary to any Person other than the Company
or a Subsidiary of the Company in any Fiscal Year does not exceed 50% of such
Person's pro rata share (based on the percentage of stock or other equity
interests owned by such Person) of such Subsidiary's net income for such Fiscal
Year as determined in accordance with GAAP and (b) no later than ten (10) days
prior to any such Distribution, the Company shall have given written notice to
the Lenders and the Agents thereof, together with calculations demonstrating
that such Distribution complies with this clause (iv); and
(v) the Company may pay dividends on its
preferred stock so long as the dividend rate on such preferred stock (after
taking into account all other fees and amounts payable on such preferred stock)
is less than the interest rate payable on the Loans.
(f) Liquidations, Mergers, Consolidations.
Each of the Borrowers shall not, and shall not permit any of its Subsidiaries
to, dissolve, liquidate or wind-up its affairs, or become a party to any merger
or consolidation, provided that any Borrower (other than the Company) may
consolidate or merge into another Borrower and any Subsidiary of a Borrower may
consolidate or merge into any Borrower or any Wholly-owned Subsidiary of a
Borrower so long as
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(i) the Borrower or a Wholly-owned Subsidiary is the surviving corporation of
such consolidation or merger and (ii) no Event of Default shall have occurred
and be continuing or result therefrom.
(g) Dispositions of Assets or Subsidiaries. Each of the
Borrowers shall not, and shall not permit any of its Subsidiaries to, sell,
convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily
or involuntarily, any of its Property (including sale, assignment, discount or
other disposition of accounts, contract rights, chattel paper, equipment or
general intangibles with or without recourse or any shares of capital stock,
shares of beneficial interest or partnership interests of a Subsidiary of such
Borrower), except:
(i) transactions involving the sale of inventory
in the ordinary course of business;
(ii) any sale, transfer or lease of Property,
including without limitation any store closures, in the ordinary course of
business which are no longer necessary or required in the conduct of the
Borrower's or Subsidiary's business;
(iii) any sale or transfer of Property in order
to concurrently or subsequently lease as lessee such Property, so long as such
sale and leaseback occurs in the ordinary course of business;
(iv) any sale, transfer or lease of Property, by
any Subsidiary of an Unrestricted Subsidiary to such Unrestricted Subsidiary or
to another Unrestricted Subsidiary which is a Domestic Subsidiary;
(v) any sale, transfer or lease of Property in
the ordinary course of business which is replaced by substitute Property; and
(vi) any transfers to Kmart of "Premises"
pursuant to the Kmart Indemnity (as such term is defined therein) if and to the
extent that any such transfer does not cause an Event of Default under Section
10.01(f) hereof.
(h) Affiliate Transactions. Each of the Borrowers
shall not, and shall not permit any of its Subsidiaries to, enter into or carry
out any transaction (including purchasing property or services from or selling
property or services to any Affiliate of any Borrower (other than another
Borrower) or other Person) unless such transaction (i) is not otherwise
prohibited by this Agreement, (ii) is entered into in the ordinary course of
business upon fair and reasonable arm's-length terms and conditions which are
fully disclosed to the Administrative Agent and (iii) is in accordance with all
applicable Law.
(i) Subsidiaries, Partnerships and Joint Ventures.
Each of the Borrowers shall not, and shall not permit any of its Subsidiaries
to, become or agree to become a general or limited partner, joint venturer or
member in any partnership, joint venture or limited liability company, as the
case may be, provided that the Company or any of its Wholly-owned Subsidiaries
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may own or create (A) any Wholly-owned Subsidiary, (B) any Unrestricted
Subsidiary, (C) any Restricted Subsidiary so long as (1) the aggregate of all
Purchases by the Company and its Subsidiaries of or Investments in or to such
Restricted Subsidiary is otherwise permitted by this Agreement, and (2) no such
Restricted Subsidiary shall have Indebtedness which is recourse to or
guaranteed by the Company or any of its Subsidiaries except as otherwise
permitted under this Agreement and (D) any Foreign Joint Venture so long as
(1) the aggregate of all Purchases by the Company and its Subsidiaries of or
Investments by the Company and its Subsidiaries in or to any such Joint
Ventures is otherwise permitted by this Agreement, and (2) no such Joint
Venture shall have Indebtedness which is recourse to or guaranteed by the
Company or any of its Subsidiaries except as otherwise permitted by this
Agreement.
(j) Continuation of or Change in Business. Each of the
Borrowers shall not, and shall not permit any of its Subsidiaries to, engage in
any business other than (a) with respect to the Borrowers, substantially as
conducted and operated by such Person during the Fiscal Year 1997 and (b) with
respect to any Subsidiary of a Borrower, substantially as conducted and operated
by a Borrower or in a business reasonably incidental and complementary thereto
or in an education-related retail business.
(k) Plans and Benefit Arrangements. Each of the
Borrowers shall not, and shall not permit any of its Subsidiaries to:
(i) adopt, sponsor, maintain or make
contributions to any Plan, any Multiemployer Plan, any Multiple Employer Plan or
except as set forth on Schedule 6.01(t), any Benefit Arrangement that provides
benefits to retirees; or
(ii) engage in a Prohibited Transaction with any
Benefit Arrangement which, alone or in conjunction with any other circumstances
or set of circumstances resulting in liability under ERISA, would have a
Material Adverse Effect.
(l) Fiscal Year. Each of the Borrowers shall not, and
shall not permit any of its Subsidiaries to, change its Fiscal Quarter or change
its Fiscal Year.
(m) Issuance of Stock. Each of the Borrowers (other
than the Company and any Unrestricted Subsidiary) shall not, and shall not
permit any of its Subsidiaries (other than Unrestricted Subsidiaries) to, issue
any additional shares of its capital stock or any options, warrants or other
rights in respect thereof, except to the Company or any Wholly-owned Subsidiary,
provided, however, that the Company shall not issue any preferred stock unless
the dividend rate thereon is permitted by Section 8.02(e)(v).
(n) Changes in Organizational Documents. Each of the
Borrowers shall not, and shall not permit any of its Subsidiaries to, amend in
any respect its certificate of incorporation (including any provisions or
resolutions relating to capital stock), by- laws or other organizational
documents in the event such change would be adverse to the Lenders.
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(o) Minimum Fixed Charge Coverage Ratio. The Borrowers
shall not permit the Fixed Charge Coverage Ratio, calculated as of the end of
each Fiscal Quarter for the previous four Fiscal Quarters then ended, to be less
than 1.50 to 1.0.
(p) Maximum Leverage Ratio. The Borrowers shall not
permit the Leverage Ratio (i) calculated as of the end of the third and fourth
Fiscal Quarter of Fiscal Year 1997 to exceed 60%, (ii) calculated as of the end
of each Fiscal Quarter of the Fiscal Year 1998 to exceed 60%, (iii) calculated
as of the end of each Fiscal Quarter of the Fiscal Year 1999 to exceed 55%, or
(iv) calculated as of the end of each Fiscal Quarter thereafter to exceed 50%.
(q) Minimum Tangible Net Worth. The Borrowers shall
not at any time permit Consolidated Tangible Net Worth to be less than the sum
of (i) $430,000,000 plus (ii) 50% of the Consolidated Net Income for each Fiscal
Quarter in which net income was earned (with no deduction for a net loss) during
the period from July 28, 1997 through the last day of the Fiscal Quarter
immediately preceding the date of determination, plus (iii) 100% of the net cash
proceeds to the Company of any public or private issuance of equity securities,
minus (iv) the aggregate amount paid by the Company with respect to any
repurchase of its common stock and (v) in any event, without deduction of the
intangible assets arising from the Purchase permitted by Section 8.02(d)(vi).
(r) Modifications of Other Documents. The Borrowers
shall not permit or otherwise consent to any amendment to or modification of any
of the Kmart Agreements, the Lease Credit Agreement, the Lease Financing
Guarantee, the Participation Agreement, any Financed Lease or any other
Operative Agreement (as defined in the Lease Credit Agreement), or any of the
Note Put Agreements which could reasonably be expected to have a Material
Adverse Effect, which would have the effect of materially increasing the
obligations of or burdens on the Borrowers or any of their Subsidiaries
thereunder or which would have the effect of shortening or deleting any notice
or cure period provided for therein.
(s) Prepayment of Note Put Agreement Obligations. Each
of the Borrowers shall not, and shall not permit any of its Subsidiaries to,
make any payment or prepayment in respect of Borders' obligations under any of
the Note Put Agreements at any time before a "Tenant Purchase Date" as defined
in the Note Put Agreements.
(t) Lease Financing Payments. Each of the Borrowers
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, make any Lease Financing Payment, provided, however, that a Borrower
may make a Lease Financing Payment if (i) both before and after giving effect to
such Lease Financing Payment, no Event of Default or Potential Default exists or
would exist and the representations and warranties contained in Article VI are
and will be true and correct, and the Company shall have delivered to the
Administrative Agent an officer's certificate to both such effects, (ii) the
notice required by Section 8.03(j)(i) of this Agreement has been given to the
Administrative Agent and each of the Lenders, (iii) the Company shall have
delivered to the Administrative Agent no later than ten (10) days prior to the
date of any such Lease Financing Payment cash flow projections for the twelve
months following such Lease Financing Payment, in
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form and substance reasonably satisfactory to the Administrative Agent, (a)
showing that the Borrowers' working capital requirements and borrowing needs
are not and will not be adversely affected by such Lease Financing Payment and
(b) containing calculations in sufficient detail to demonstrate on a pro forma
basis compliance as of the end of each Fiscal Quarter within such twelve month
period with all financial covenants contained in Section 8.02, (iv) after
giving effect to such Lease Financing Payment, the aggregate amount of all
Lease Financing Payments made by the Borrowers as permitted by this Section
8.02(t) is less than $20,000,000 and (v) the Lease Financing Payment is
otherwise permitted by this Agreement. For purposes of clause (iv) of this
Section 8.02(t), the amount of any Lease Financing Payment made by the
Borrowers to purchase Property subject to any Financed Lease shall not be
included in determining the aggregate amount of Lease Financing Payments made
by the Borrowers once all of such Property is sold by such Borrower to any
Person that is not an Affiliate of the Company.
(u) Foreign Activities. Notwithstanding anything in
this Section 8.02, the Company shall not, and shall not permit any of its
Subsidiaries to (i) incur any Contingent Obligation permitted under Section
8.02(c)(x), or (ii) make any Investment permitted under Section 8.02(d)(v)
[Foreign Investments], Section 8.02(d)(viii) [Foreign Purchases], Section
8.02(d)(x) in respect of a Foreign Joint Venture [Foreign Joint Venture
Activities], Section 8.02(d)(xi) in respect of a Foreign Restricted Subsidiary
[Foreign Restricted Subsidiary Activities] if immediately after incurring such
Contingent Obligation or making such Investment, the aggregate amount of all
such Contingent Obligations and Investments would exceed 25% of Consolidated
Tangible Net Worth, determined as of the last day of the Fiscal Quarter most
recently ended.
(v) Inconsistent Agreements. Each of the Borrowers
shall not, and shall not permit any of its Subsidiaries to, become or remain
subject to any dividend restriction either in its organizational documents or in
any agreement or contract to which it is a party (other than restrictions in
Section 8.02(e) and in the Lease Financing Guarantee), nor shall any of them
enter into any indenture, agreement, instrument or other arrangement which, (a)
directly or indirectly prohibits or restrains, or has the effect or prohibiting
or restraining, or could reasonably be expected to impose materially adverse
conditions upon, the incurrence of the Obligations under the Loan Documents, any
provisions of this Agreement (including without limitation Article IX hereof) or
the amending of any of the Loan Documents, or (b) contains any provision which
would be violated or breached by the making of Loans to any Borrower, the
incurrence of Indebtedness by any Borrower hereunder, or by the performance by
any Borrower or any of its Subsidiaries of any of its obligations under any Loan
Document.
8.03 Reporting Requirements. The Borrowers, jointly and
severally, covenant and agree that until payment in full of the Loans and
interest thereon, expiration or termination of all Letters of Credit,
satisfaction of all of the Borrowers' Obligations under the Loan Documents and
termination of the Commitments, the Borrowers will furnish or cause to be
furnished to the Administrative Agent and each of the Lenders:
(a) Quarterly Financial Statements. As soon as
available and in any event within forty-five (45) calendar days after the end of
each of the first three Fiscal Quarters in
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each Fiscal Year, consolidated financial statements of the Company and its
Subsidiaries, consisting of a consolidated balance sheet as of the end of such
Fiscal Quarter and related consolidated statements of income, stockholders'
equity and cash flows for the Fiscal Quarter then ended and the Fiscal Year
through that date, all in reasonable detail and certified (subject to normal
year-end audit adjustments) by an Authorized Officer of the Company as having
been prepared in accordance with GAAP, consistently applied, and setting forth
in comparative form the respective financial statements for the corresponding
date and period in the previous Fiscal Year. As soon as available and in any
event within forty-five (45) calendar days after the end of each Fiscal Year of
the Company, a certificate of the Company signed by an Authorized Officer of
the Company setting forth the calculation of the Fixed Charge Coverage Ratio as
of the end of such Fiscal Year.
(b) Annual Financial Statements. As soon as available
and in any event within ninety (90) days after the end of each Fiscal Year of
the Company, consolidated financial statements of the Company and its
Subsidiaries consisting of a consolidated balance sheet as of the end of such
Fiscal Year, and related consolidated statements of income, stockholders' equity
and cash flows for the Fiscal Year then ended, all in reasonable detail and
setting forth in comparative form the financial statements as of the end of and
for the preceding Fiscal Year, and certified by independent certified public
accountants of nationally recognized standing satisfactory to the Administrative
Agent. The certificate or report of accountants shall be free of qualifications
(other than any consistency qualification that may result from a change in the
method used to prepare the financial statements as to which such accountants
concur) and shall not indicate the occurrence or existence of any event,
condition or contingency which would materially impair the prospect of payment
or performance of any covenant, agreement or duty of any of the Borrowers under
any of the Loan Documents.
(c) Certificates of the Company. Concurrently with the
financial statements of the Company furnished to the Administrative Agent and to
the Lenders pursuant to Sections 8.03(a) and 8.03(b), a certificate of the
Company signed by an Authorized Officer of the Company, in the form of Exhibit
8.03(c), (i) to the effect that, the representations and warranties of the
Borrowers contained in Article VI are true on and as of the date of such
certificate with the same effect as though such representations and warranties
had been made on and as of such date (except representations and warranties
which expressly relate solely to an earlier date or time), the Borrowers have
performed and complied with all covenants and conditions hereof, and no Event of
Default or Potential Default exists and is continuing on the date of such
certificate and (ii) containing calculations in sufficient detail to demonstrate
compliance as of the date of the financial statements with all financial
covenants contained in Section 8.02 and (iii) describing any Permitted Joint
Venture Activity or Permitted Restricted Subsidiary Activity engaged in, or any
Purchase made, during the period covered by such financial statements.
(d) Notice of Default. Promptly after any officer of
any Borrower has learned of the occurrence of an Event of Default or Potential
Default, a certificate signed by an Authorized Officer of the Company setting
forth the details of such Event of Default or Potential Default and the action
which the Borrowers propose to take with respect thereto.
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(e) Notice of Litigation. Promptly after the
commencement thereof, notice of all actions, suits, proceedings or
investigations before or by any Official Body, arbitrator or any other Person
against any Borrower or Subsidiary of any Borrower which involve a claim or
series of claims in excess of $10,000,000 or which if adversely determined could
reasonably be expected to have a Material Adverse Effect.
(f) Certain Events. Written notice of:
(i) promptly after the adoption thereof, any
amendment to the organizational documents of any Borrower;
(ii) promptly, the enactment or adoption of any
Law which could reasonably be expected to have a Material Adverse Effect;
(iii) promptly, and in any event within two (2)
Business Days after any Borrower's receipt thereof, a copy of any notice
received by the Borrowers that a default (whether matured or unmatured) has
occurred under the Kmart Indemnity (as distinct from a request for reimbursement
under Section 2(a) thereof); and
(iv) promptly, and in any event within two (2)
Business Days after any Borrower's receipt thereof, a copy of any notice
received by the Borrowers under any of the Note Put Agreements.
(g) Other Reports and Information. Promptly upon their
becoming available to the Company:
(i) any reports including management letters
submitted to the Company by independent accountants in connection with any
annual, interim or special audit;
(ii) any reports, notices or proxy statements
generally distributed by the Company to its stockholders on a date no later than
the date supplied to the stockholders;
(iii) regular or periodic reports, including
Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the
Company with the Securities and Exchange Commission; and
(iv) such other reports and information as the
Lenders may from time to time reasonably request.
(h) Notices Regarding Benefit Arrangements. Promptly
upon becoming aware of the occurrence thereof, notice (including the nature of
the event and, when known, any action taken or threatened by the Internal
Revenue Service or the PBGC with respect thereto) of:
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(i) any Reportable Event with respect to the
Company or any of its Subsidiaries (regardless of whether the obligation to
report said Reportable Event to the PBGC has been waived),
(ii) any Prohibited Transaction that could
subject the Company or any of its Subsidiaries to a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Internal Revenue Code in connection with any Benefit Arrangement or any trust
created thereunder,
(iii) any change in the coverage or terms of any
Benefit Arrangement, where the effect of such change is to materially increase
the unfunded liability of any of the Borrowers or any of their Subsidiaries
under such Benefit Arrangement, or
(iv) any claim or lawsuit is commenced or, to
the knowledge of any of the Borrowers, threatened with respect to any Plan,
Multiemployer Plan or Benefit Arrangement, which, if successful, could result in
a material liability of the Company or any of its Subsidiaries.
(i) Access to the Company's Auditors. The Company
hereby irrevocably authorizes all accountants and third parties to disclose and
deliver to the Lenders, upon the reasonable request of the Administrative Agent
and at the Company's expense, all financial information, books and records, work
papers, management reports and other information in their possession relating to
the financial condition of the Company and its Subsidiaries (other than those
subject to attorney-client privilege or written confidentiality agreements
furnished to the Administrative Agent).
(j) Notices Regarding Lease Financing Agreements.
(i) promptly upon the occurrence of any event
requiring the Company or any Subsidiary of the Company, or any election by the
Company or any Subsidiary of the Company, to make any Lease Financing Payment,
and in any event not less than ten (10) days prior to the date of any such Lease
Financing Payment, written notice thereof setting forth the details thereof; and
(ii) promptly, and in any event within five (5)
days after the occurrence thereof, written notice of any matured or unmatured
default under the Lease Credit Agreement, the Lease Financing Guarantee or any
matured or unmatured default under any Financed Lease.
(k) Notices Regarding Repurchases of Stock. Promptly,
and in any event within five (5) Business Days, after the repurchase by the
Company of any its common stock, written notice thereof (including the number of
shares repurchased, the amount paid by the Company with respect to such
repurchase and the date of such repurchase).
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ARTICLE IX
GUARANTIES
9.01 Guaranty of Payment and Performance of Guaranteed
Obligations. Each Guarantor, jointly and severally, hereby absolutely,
irrevocably and unconditionally guarantees prompt, full and complete payment
when due, whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of (a) the principal of and interest (including any interest
which accrues after the commencement of any Insolvency Proceeding or would
accrue but for the operation of Law, whether or not allowed or allowable as a
claim in such Insolvency Proceeding) on all Loans made by the Lenders to each of
the Borrowers (or, in the case of a Guarantor/Borrower, each of the other
Borrowers) and all other Obligations and (b) all other amounts from time to
time owing to the Lenders, the Swing Lenders, the Issuing Bank or the Agents by
the Borrowers (or, in the case of a Guarantor/Borrower, the other Borrowers)
under this Agreement and the other Loan Documents (the "Guaranteed
Obligations"), it being the intent of each Guarantor that the guaranty set forth
herein shall be a guaranty of payment and not of collection.
9.02 Certain Waivers of the Guarantors. Each Guarantor waives
notice of the acceptance of its guaranty hereunder and of the extension or
incurrence of the Guaranteed Obligations or any part thereof. Each Guarantor
further waives all setoffs and counterclaims and presentment, protest, notice,
filing of claims with a court in the event of receivership, bankruptcy or
reorganization of any Borrower (or, in the case of a Guarantor/Borrower, any
other Borrower), demand or action on delinquency in respect of the Guaranteed
Obligations or any part thereof, including any right to require any of the
Agents, the Swing Lenders, the Issuing Bank or any Lenders to sue or collect any
of the Guaranteed Obligations from any Borrower (or, in the case of a
Guarantor/Borrower, any other Borrower), any other Guarantor or any other person
obligated with respect to the Guaranteed Obligations or any part thereof or
otherwise to enforce payment thereof against any collateral securing the
Guaranteed Obligations or any part thereof.
9.03 Obligations Unconditional. Each Guarantor hereby agrees
that, to the fullest extent permitted by Law, its obligations hereunder shall be
continuing, absolute and unconditional under any and all circumstances and not
subject to any reduction, limitation, impairment, termination, defense (other
than indefeasible payment in full), setoff, counterclaim or recoupment
whatsoever (all of which are hereby expressly waived by it to the fullest extent
permitted by Law), whether by reason of any claim of any character whatsoever,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise. The validity and enforceability of the guaranty of
each Guarantor hereunder shall not be impaired or affected by any of the
following: (a) any extension, modification or renewal of, or indulgence with
respect to, or substitution for, the Guaranteed Obligations or any part thereof
or any agreement relating thereto at any time; (b) any failure or omission to
perfect or maintain any Lien on, or preserve rights to, any security or
collateral or to enforce any right, power or remedy with respect to the
Guaranteed Obligations or any part thereof or any agreement relating thereto, or
any collateral securing the Guaranteed Obligations or any part thereof; (c) any
waiver of any right, power or remedy or of any default with respect to the
Guaranteed Obligations or any part thereof or any agreement relating thereto or
with respect to any collateral securing the Guaranteed Obligations or any part
thereof; (d) any release, surrender,
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compromise, settlement, waiver, subordination or modification, with or without
consideration, of any collateral securing the Guaranteed Obligations or any
part thereof, any other guaranties with respect to the Guaranteed Obligations
or any part thereof, or any other obligations of any Person with respect to the
Guaranteed Obligations or any part thereof; (e) the unenforceability or
invalidity of the Guaranteed Obligations or any part thereof or the lack of
genuineness, unenforceability or invalidity of any agreement relating thereto
or with respect to any collateral securing the Guaranteed Obligations or any
part thereof; (f) the application of payments received from any source to the
payment of Indebtedness other than the Guaranteed Obligations, any part thereof
or amounts which are not covered by the guaranty of each Guarantor hereunder
even though the Agents, the Lenders, the Swing Lenders and the Issuing Bank
might lawfully have elected to apply such payments to any part or all of the
Guaranteed Obligations or to amounts which are not covered by the guaranty of
each Guarantor hereunder; (g) any change of ownership of any Borrower (or, in
the case of a Guarantor/Borrower, any other Borrower) or the insolvency,
bankruptcy or any other change in the legal status of any Borrower (or, in the
case of a Guarantor/Borrower, any other Borrower); (h) any change in, or the
imposition of, any Law, decree, regulation or other governmental act which does
or might impair, delay or in any way affect the validity, enforceability or the
payment when due of the Guaranteed Obligations; (i) the failure of any Borrower
(or, in the case of a Guarantor/Borrower, any other Borrower) to maintain in
full force, validity or effect or to obtain or renew when required all
governmental and other approvals, licenses or consents required in connection
with the Guaranteed Obligations or the guaranty of each Guarantor hereunder, or
to take any other action required in connection with the performance of all
obligations pursuant to the Guaranteed Obligations or the guaranty of each
Guarantor hereunder; (j) the existence of any claim, setoff or other rights
which any Guarantor may have at any time against any Borrower (or, in the case
of a Guarantor/Borrower, any other Borrower) or any other Guarantor in
connection herewith or with any unrelated transaction; (k) the Agents', the
Lenders', the Swing Lenders' or the Issuing Bank's election, in any case or
proceeding instituted under chapter 11 of the United States Bankruptcy Code, of
the application of Section 1111(b)(2) of the United States Bankruptcy Code; (l)
any borrowing, use of cash collateral, or grant of a security interest by any
Borrower (or, in the case of a Guarantor/Borrower, any other Borrower), as
debtor in possession, under Section 363 or 364 of the United States Bankruptcy
Code; (m) the disallowance of all or any portion of any of the Agents', the
Lenders', the Swing Lenders' or the Issuing Bank's claims for repayment of the
Guaranteed Obligations under Section 502 or 506 of the United States Bankruptcy
Code; or (n) any other fact or circumstance which might otherwise constitute
grounds at law or equity for the discharge or release of any Guarantor from its
obligations hereunder, all whether or not such Guarantor shall have had notice
or knowledge of any act or omission referred to in the foregoing clauses (a)
through (n) of this paragraph. It is agreed that each Guarantor's liability
hereunder is independent of any other guaranties or other obligations at any
time in effect with respect to the Guaranteed Obligations or any part thereof
and that each Guarantor's liability hereunder may be enforced regardless of the
existence, validity, enforcement or non-enforcement of any such other
guaranties or other obligations or any provision of any applicable Law
purporting to prohibit payment by any Guarantor of the Guaranteed Obligations
in the manner agreed upon among the Agents, the Lenders, the Swing Lenders, the
Issuing Bank and the Borrowers (or, in the case of a Guarantor/Borrower, any
other Borrower).
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9.04 Waiver of Subrogation. Until payment in full of the
Guaranteed Obligations, expiration or termination of all Letters of Credit,
satisfaction of all of the Borrowers' Obligations under the Loan Documents and
termination of the Commitments, each Guarantor hereby agrees that it shall have
no right of subrogation with respect to the Guaranteed Obligations and hereby
waives any right to enforce any remedy which the Agents or the Lenders or the
Swing Lenders or the Issuing Bank now have or may hereafter have against any of
the Borrowers (or, in the case of a Guarantor/Borrower, any other Borrower), any
endorser or any other Guarantor of all or any part of the Guaranteed
Obligations, and each Guarantor hereby waives any benefit of, and any right to
participate in, any security or collateral given to the Agents or the Lenders or
the Swing Lenders or the Issuing Bank to secure payment of the Guaranteed
Obligations or any part thereof or any other liability of any of the Borrowers
to the Agents or the Lenders or the Swing Lenders or the Issuing Bank.
9.05 Actions with Respect to Collateral. Each Guarantor
authorizes the Agents, the Lenders, the Swing Lenders and the Issuing Bank to
take any action or exercise any remedy with respect to any collateral from time
to time securing the Guaranteed Obligations, which the Agents, the Lenders, the
Swing Lenders and the Issuing Bank in their sole discretion shall determine,
without notice to such Guarantor. Notwithstanding any reference herein to any
collateral securing any of the Guaranteed Obligations, it is acknowledged that,
on the Effective Date, none of the Guarantors nor any of their Subsidiaries has
granted, or has any obligation to grant, any Lien on any of its Property as
security for the Guaranteed Obligations. In the event the Agents, the Lenders,
the Swing Lenders or the Issuing Bank in their sole discretion elect to give
notice of any action with respect to any collateral securing the Guaranteed
Obligations or any part thereof, the Administrative Agent shall give ten (10)
days written notice to each Guarantor in accordance with the provisions of
Section 12.06. Each Guarantor consents and agrees that none of the Agents nor
the Lenders nor the Swing Lenders nor the Issuing Bank shall be under any
obligation to marshall any assets in favor of such Guarantor or against or in
payment of any or all of the Guaranteed Obligations.
9.06 Effect of Bankruptcy; Revival. In the event that
acceleration of the time for payment of any of the Guaranteed Obligations is
stayed upon the insolvency, bankruptcy or reorganization of any Borrower (or, in
the case of a Guarantor/Borrower, any other Borrower), or otherwise, all such
amounts shall nonetheless be payable by any Guarantor forthwith upon demand by
the Administrative Agent to such Guarantor. Each Guarantor further agrees that,
to the extent that any Borrower (or, in the case of a Guarantor/Borrower, any
other Borrower) makes a payment or payments to any of the Lenders on the
Guaranteed Obligations, or the Agents or the Lenders or the Swing Lenders or the
Issuing Bank receive any proceeds of collateral securing the Guaranteed
Obligations, which payment or receipt of proceeds or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be returned or repaid to such Borrower (or, in the case of a
Guarantor/Borrower, any other Borrower), its estate, trustee, receiver, debtor
in possession or any other party (including without limitation any Guarantor)
under any Law or equitable cause, then to the extent of such payment, return or
repayment, the obligation or part thereof which has been paid, reduced or
satisfied by such amount shall be reinstated and continued in full force and
effect as of the date when such initial payment, reduction or satisfaction
occurred.
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9.07 Survival of Guaranty. Subject to provisions of Section
9.06, the guaranty of each Guarantor hereunder shall continue in effect until
payment in full of the Guaranteed Obligations, expiration or termination of all
Letters of Credit, satisfaction of all of the Borrowers' Obligations under the
Loan Documents, termination of the Commitments and the other conditions of the
guaranty of each Guarantor hereunder have been satisfied.
9.08 Right of Set-Off. If an Event of Default shall occur and be
continuing, the Agents, any Lender, Swing Lender or Issuing Bank to whom any
obligation is owed by any Guarantor hereunder or under any other Loan Document
or any participant of such Lender, Swing Lender or Issuing Bank which has agreed
in writing to be bound by the provisions of Section 11.12 and any branch,
Subsidiary or Affiliate of such Lender, Swing Lender or Issuing Bank or
participant anywhere in the world shall have the right, in addition to all other
rights and remedies available to it, without notice to such Guarantor, to
set-off against and apply to the then unpaid balance of all the Guaranteed
Obligations any debt owing to, and any other funds held in any manner for the
account of, any of the Guarantors by such Agent, Lender, Swing Lender or Issuing
Bank or participant or by such branch, Subsidiary or Affiliate, including all
funds in all deposit accounts (whether time or demand, general or special,
provisionally credited or finally credited, or otherwise) now or hereafter
maintained by any of the Guarantors for its own account (but not including funds
held in custodian or trust accounts) with such Agent, Lender, Swing Lender or
Issuing Bank or participant or such branch, Subsidiary or Affiliate. Such right
shall exist whether or not any Agent, Lender, Swing Lender or Issuing Bank shall
have made any demand under this Agreement, whether or not such debt owing to or
funds held for the account of any of the Guarantors is or are matured or
unmatured and regardless of the existence or adequacy of any collateral,
guaranty or any other security, right or remedy available to any Agent, Lender,
Swing Lender or Issuing Bank.
9.09 Limitation on Amount of Guaranty. If in any action or
proceeding involving any state, federal or foreign bankruptcy, insolvency or
other law affecting the rights of creditors generally, the guaranty of any
Guarantor would be held or determined to be void, invalid or unenforceable on
account of the amount of the aggregate liability under such guaranty, then,
notwithstanding any other provision of this Article IX to the contrary, the
aggregate amount of such liability shall, without any further action of the
Agents, the Lenders, the Swing Lenders, the Issuing Bank or any other Person, be
automatically limited and reduced to the highest amount which is valid and
enforceable as determined in such action or proceeding. An acknowledgment of
such limit may be contained in the letter agreement executed after the Effective
Date by any additional Guarantor if required by applicable Law.
9.10 Limitation on Scope of Certain Guarantees. Notwithstanding
anything in this Article IX to the contrary, on and after the Subsequent
Effective Date, the Guaranteed Obligations of the Subsidiaries of Books Etc.
under the letter agreements which they will execute and deliver on such
Subsequent Effective Date, will only be those Obligations of Books Etc. and not
any Obligations of other Borrowers hereunder.
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ARTICLE X
DEFAULT
10.01 Events of Default. An Event of Default shall mean the
occurrence or existence of any one or more of the following events or conditions
(whatever the reason therefor and whether voluntary, involuntary or effected by
operation of Law):
(a) Any of the Borrowers (i) shall fail to pay when due any
principal of any Loan (including scheduled installments, mandatory prepayments
or the payment due at maturity), or (ii) shall fail to pay any interest on any
Loan or any other amount owing hereunder or under the other Loan Documents
within 5 Business Days after such interest or other amount becomes due in
accordance with the terms hereof or thereof;
(b) Any representation or warranty made or deemed made at any
time by any of the Borrowers herein or by any of the Borrowers in any other Loan
Document, or in any certificate, other instrument or statement furnished
pursuant to the provisions hereof or thereof, shall prove to have been false or
misleading in any material respect as of the time it was made, deemed made or
furnished;
(c) Any of the Borrowers shall default in the observance or
performance of any covenant contained in Section 8.01(j), Section 8.02 or
8.03(d);
(d) Any of the Borrowers shall default in the observance or
performance of any other covenant, condition or provision hereof or of any other
Loan Document and such default shall continue unremedied for a period of fifteen
(15) Business Days after any Authorized Officer or the General Counsel of any
Borrower becomes aware of the occurrence thereof (such grace period to be
applicable only in the event such default can be remedied by corrective action
of the Borrowers as determined by the Administrative Agent in its sole
discretion);
(e) A default or event of default shall occur at any time under
the terms of any other agreement involving borrowed money or the extension of
credit or any other Indebtedness under which any Borrower or Subsidiary of any
Borrower may be obligated as a borrower or guarantor in excess of $5,000,000 (or
to Kmart in respect of the Kmart Indemnity in excess of $1,000,000) in the
aggregate, and such breach, default or event of default consists of the failure
to pay (beyond any period of grace permitted with respect thereto, whether
waived or not) any Indebtedness when due (whether at stated maturity, by
acceleration or otherwise) or if such breach or default permits or causes the
acceleration of any Indebtedness (whether or not such right shall have been
waived) or the termination of any commitment to lend;
(f) Any of the following occurs: (i) an Event of Default shall
have occurred under the Kmart Indemnity such that Kmart shall have the right
thereunder to exercise the rights granted to it pursuant to Sections 3(c)(ii) or
3(c)(iii) thereof in respect of more than two (2) Premises (as such term is
defined therein), (ii) a Triggering Event shall have occurred under any of the
Note Put Agreements (other than a Triggering Event which is "a Rating Decline"
or a "Restructuring Event" (as such terms are defined in the Note Put
Agreements)) and such Triggering Event shall continue unremedied for a period of
sixty (60) days or (iii) any of the Borrowers shall receive a "Put Notice" (as
defined in the Note Put Agreements) which states the occurrence of a Triggering
Event that is a "Lease/Lease Guaranty Default" or a "Lease Guaranty Termination"
(as such terms are defined in the Note Put Agreements), or (iv) any of the
Borrowers shall receive a Put Notice which states the occurrence solely of a
Rating Decline or a Restructuring
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Event, and, within five (5) Business Days of receipt of such Put Notice, the
Borrowers shall have failed to deliver to the Lenders documentation
satisfactory to the Required Lenders showing that the Notes as to which the Put
Notice was received will be refinanced on the Tenant Purchase Date with
Permitted Sutro Refinancing Indebtedness on the terms permitted under Section
8.02(a)(xi) hereof;
(g) Any final judgments or orders for the payment of money in
excess of $5,000,000 in the aggregate shall be entered against all or any of the
Borrowers by a court having jurisdiction in the premises (other than a judgment
or order as to which such Borrower's insurance company has accepted full
liability in writing) which judgment is not discharged, satisfied, vacated,
bonded or stayed pending appeal within a period of thirty (30) days from the
date of entry;
(h) Any of the Loan Documents shall cease to be a legal, valid
and binding agreement enforceable against the party executing the same or such
party's successors and assigns (as permitted under the Loan Documents) in
accordance with the respective terms thereof or shall in any way be terminated
(except in accordance with its terms) or become or be declared ineffective or
inoperative in any material respect or shall in any way be challenged or
contested or cease to give or provide the respective rights, titles, interests,
remedies, powers or privileges intended to be created thereby;
(i) Any Borrower or Guarantor ceases to be Solvent or admits in
writing its inability to pay its debts as they mature;
(j) Any of the following occurs: (i) any Reportable Event, which
the Administrative Agent determines in good faith constitutes grounds for the
termination of any Plan by the PBGC or the appointment of a trustee to
administer or liquidate any Plan, shall have occurred and be continuing; (ii)
proceedings shall have been instituted or other action taken to terminate any
Plan, or a termination notice shall have been filed with respect to any Plan;
(iii) a trustee shall be appointed to administer or liquidate any Plan; (iv) the
PBGC shall give notice of its intent to institute proceedings to terminate any
Plan or Plans or to appoint a trustee to administer or liquidate any Plan; (v)
any Borrower or its Subsidiary adopts, sponsors, maintains or makes
contributions to any Plan, any Multiemployer Plan, any Multiple Employer Plan or
any Benefit Arrangement that provides benefits to retirees (other than the
Benefit Arrangement of Walden described on Schedule 6.01(t)); and, in the case
of each occurrence of (i), (ii), (iii), (iv) above or any occurrence under such
Benefit Arrangement of Walden, the Administrative Agent determines in good faith
that the amount of the liability of the Company and its Subsidiaries in respect
thereof could reasonably be expected to individually or in the aggregate have a
Material Adverse Effect;
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(k) Any Borrower or Guarantor ceases to conduct its business as
contemplated or such Borrower or Guarantor is enjoined, restrained or in any way
prevented by court order from conducting all or any material part of its
business and such injunction, restraint or other preventive order is not
dismissed within thirty (30) days after the entry thereof;
(l) Any Change in Control shall occur;
(m) Any circumstances or events shall occur which individually or
in the aggregate could reasonably be expected to have a Material Adverse Effect;
(n) A proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect of
any Borrower or Guarantor in an involuntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator, conservator (or similar official) of any Borrower or
Guarantor for any substantial part of its property, or for the winding-up or
liquidation of its affairs, and such proceeding shall remain undismissed or
unstayed and in effect for a period of thirty (30) consecutive days or such
court shall enter a decree or order granting any of the relief sought in such
proceeding; or
(o) Any Borrower or Guarantor shall commence a voluntary case
under any applicable bankruptcy, insolvency, reorganization or other similar law
now or hereafter in effect, shall consent to the entry of an order for relief in
an involuntary case under any such law, or shall consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or other similar official) of itself or for any
substantial part of its property or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any action in furtherance of any of the foregoing; or
(p) Any matured default shall have occurred under the Lease Credit
Agreement or any Financed Lease, whether or not any obligations thereunder have
been accelerated.
10.02 Consequences of Event of Default.
(a) If an Event of Default specified under subsections (a)
through (m) or subsection (p) of Section 10.01 shall occur and be continuing,
the Lenders, the Issuing Bank and the Agents shall be under no further
obligation to make Loans or issue Letters of Credit, as the case may be, and (i)
the Administrative Agent may, and upon the request of the Required Lenders
shall, by written notice to the Company, cancel the Commitments, (ii) the
Administrative Agent may, and upon the request of the Required Lenders shall, by
written notice to the Company, declare the unpaid principal amount of the
Revolving Credit Loans and Swing Loans then outstanding and all interest
accrued thereon, any unpaid Fees and all other Obligations (other than the Bid
Loans) of the Borrowers to the Lenders, the Swing Lenders and the Issuing Bank
to be forthwith due and payable, and the same shall thereupon become and be
immediately due and payable without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, and (iii) the
Administrative Agent may, and upon the request of the Required Lenders shall,
require the
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Borrowers to, and the Borrowers shall thereupon, deposit in a non-interest
bearing account with the Administrative Agent, as cash collateral for its
Obligations under the Loan Documents, an amount equal to the maximum amount
currently or at any time thereafter available to be drawn on all outstanding
Letters of Credit, and the Borrowers hereby pledge to the Administrative Agent
for the benefit of the Agents, the Lenders, the Swing Lenders and the Issuing
Bank, and grant to the Administrative Agent for the benefit of the Agents, the
Lenders, the Swing Lenders and the Issuing Bank a security interest in, all
such cash as security for such Obligations, provided that, upon the curing of
all existing Events of Default to the satisfaction of the Required Lenders, the
Administrative Agent shall return such cash collateral to the Borrowers, and
provided further that within 14 days after cancellation of the Commitments or
acceleration of the Revolving Credit Loans and all other Obligations of the
Borrowers to the Agents, the Lenders, the Swing Lenders and the Issuing Bank
and before any judgment or decree for the payment therefor shall have been
obtained or entered, the Required Lenders, in their sole discretion, may by
notice to the Company and the Administrative Agent rescind and annul any such
cancellation or acceleration; and
(b) If an Event of Default specified under subsections (i), (n)
or (o) of Section 10.01 shall occur, the Commitments shall automatically
terminate and be of no further force and effect, the Agents, the Lenders, the
Swing Lenders and the Issuing Bank shall be under no further obligations to make
Loans or issue Letters of Credit hereunder and the unpaid principal amount of
the Loans then outstanding and all interest accrued thereon, any unpaid Fees and
all other Obligations of the Borrowers to the Agents, the Lenders, the Swing
Lenders and the Issuing Bank shall be immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived; and
(c) If any Event of Default shall occur and be continuing, the
Lenders which have any Bid Loans then outstanding to the Borrower (the "Bid Loan
Lenders") shall not be entitled to accelerate payment of the Bid Loans or to
exercise any right or remedy related to the collection of the Bid Loans until
the Commitments shall be terminated hereunder pursuant to this Section 10.02.
Upon such a termination of the Commitments: (i) references to Revolving Credit
Loans in Section 10.02 shall be deemed to apply also to the Bid Loans and the
Bid Loan Lenders shall be entitled to all enforcement rights given to a holder
of a Revolving Credit Loan in this Section 10.02, and (ii) the definition of
"Required Lenders" shall be changed as provided in Section 1.01 so that each
Lender shall have voting rights hereunder in proportion to its Ratable Share of
all Loans (including Bid Loans) and Letters of Credit Outstanding hereunder.
(d) If an Event of Default shall occur and be continuing, the
Agents, any Lender, Swing Lender or Issuing Bank to whom any Obligation is owed
by any Borrower hereunder or under any other Loan Document or any participant of
such Lender, Swing Lender or Issuing Bank which has agreed in writing to be
bound by the provisions of Section 11.12 and any branch, Subsidiary or Affiliate
(including any Lending Office) of such Lender, Swing Lender
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or Issuing Bank or participant anywhere in the world shall have the right, in
addition to all other rights and remedies available to it, without notice to
such Borrower, to set-off against and apply to the then unpaid balance of all
the Loans and all other Obligations of the Borrowers under any Loan Document
any debt owing to, and any other funds held in any manner for the account of,
the Borrowers by such Lender, Swing Lender or Issuing Bank or participant or by
such branch, Subsidiary or Affiliate, including all funds in all deposit
accounts (whether time or demand, general or special, provisionally credited or
finally credited, or otherwise) now or hereafter maintained by any of the
Borrowers for its own account (but not including funds held in custodian or
trust accounts) with such Lender, Swing Lender or Issuing Bank or participant
or such branch, Subsidiary or Affiliate. Such right shall exist whether or not
any Agent, Lender, Swing Lender or Issuing Bank shall have made any demand
under this Agreement or any other Loan Document, whether or not such debt owing
to or funds held for the account of any of the Borrowers is or are matured or
unmatured, regardless of any difference between the currency of the Loans or
other Obligations and the currency of such debt owing to or funds held for the
account of the Borrowers, and regardless of the existence or adequacy of any
collateral, guaranty or any other security, right or remedy available to any
Agent, Lender, Swing Lender or Issuing Bank; and
(e) If an Event of Default shall occur and be continuing, and
whether or not the Administrative Agent shall have accelerated the maturity of
Revolving Credit Loans and Swing Loans to the Borrowers pursuant to any of the
foregoing provisions of this Section 10.02, any Agent, or any Lender or any
Swing Lender or the Issuing Bank, if owed any amount with respect to the Loans,
may proceed to protect and enforce its rights by suit in equity, action at law
and/or other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement or any of the Loan Documents,
including as permitted by applicable Law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Agent or such Lender or such Swing Lender or
such Issuing Bank; and
(f) From and after the date on which the Administrative Agent has
taken any action pursuant to this Section 10.02 and until all Obligations of the
Borrowers have been paid in full, any and all proceeds received by the
Administrative Agent from the exercise of any remedy by the Administrative
Agent, shall be applied as follows:
(i) first, to reimburse the Administrative Agent, the
Syndication Agent, the Real Estate Administrative Agent, the Lenders and the
Issuing Bank for out-of-pocket costs, expenses and disbursements, including
reasonable attorneys' and paralegals' fees and legal expenses, incurred by the
Administrative Agent, the Syndication Agent, the Real Estate Administrative
Agent, the Lenders and the Issuing Bank in connection with the collection of any
Obligations of any of the Borrowers under any of the Loan Documents;
(ii) second, to the repayment of all Indebtedness then due
and unpaid of the Borrowers to the Agents, the Lenders, the Swing Lenders and
the Issuing Bank incurred under this Agreement or any of the Loan Documents,
whether of principal, interest, fees, expenses or otherwise, in such manner as
the Administrative Agent may determine in its discretion; and
(iii) the balance, if any, as required by Law.
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(f) In addition to all of the rights and remedies
contained in this Agreement or in any of the other Loan Documents, the
Administrative Agent shall have all of the rights and remedies under applicable
Law, all of which rights and remedies shall be cumulative and non-exclusive, to
the extent permitted by Law. The Administrative Agent may, and upon the request
of the Required Lenders shall, exercise all post-default rights granted to the
Administrative Agent and the Lenders under the Loan Documents or applicable Law.
ARTICLE XI
THE AGENTS
11.01 Appointment. Each Lender hereby irrevocably designates,
appoints and authorizes PNC Bank, National Association to act as Administrative
Agent for such Lender under this Agreement and to execute and deliver or accept
on behalf of each of the Lenders the other Loan Documents. Each Lender hereby
irrevocably designates, appoints and authorizes The First National Bank of
Chicago (or its Affiliate, First Chicago Capital Markets, Inc.) to act as
Syndication Agent and Bankers Trust Company to act as Real Estate Administrative
Agent. Each Lender hereby irrevocably authorizes, and each assignee or
participant of any Lender shall be deemed irrevocably to authorize, the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and any other instruments and
agreements referred to herein, and to exercise such powers and to perform such
duties hereunder as are specifically delegated to or required of the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. Each Lender hereby irrevocably authorizes, and
each assignee or participant of any Lender shall be deemed irrevocably to
authorize, the Syndication Agent and/or the Real Estate Administrative Agent to
take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and any other instruments and agreements referred to
herein, and to exercise such powers and to perform such duties hereunder as are
specifically delegated to or required of the Syndication Agent and/or the Real
Estate Administrative Agent by the terms hereof, together with such powers as
are reasonably incidental thereto. PNC Bank agrees to act as the Administrative
Agent, First Chicago agrees to act as Syndication Agent and Bankers Trust
Company agrees to act as Real Estate Administrative Agent on behalf of the
Lenders to the extent provided in this Agreement.
11.02 Delegation of Duties. Each Agent may perform any of its
duties hereunder by or through agents or employees (provided such delegation
does not constitute a relinquishment of its duties as Agent) and, subject to
Sections 11.05 and 11.06, shall be entitled to engage and pay for the advice or
services of any attorneys, accountants or other experts concerning all matters
pertaining to its duties hereunder and to rely upon any advice so obtained.
11.03 Nature of Duties; Independent Credit Investigation. The
Agents shall have no duties or responsibilities except those expressly set forth
in this Agreement and no implied covenants, functions, responsibilities, duties,
obligations, or liabilities shall be read into this Agreement or otherwise
exist. The duties of the Agents shall be mechanical and administrative in
nature; the Agents shall not have by reason of this Agreement a fiduciary or
trust relationship in
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respect of any Lender; and nothing in this Agreement, expressed or implied, is
intended to or shall be so construed as to impose upon the Agents any
obligations in respect of this Agreement except as expressly set forth herein.
Without limiting the generality of the foregoing, the use of the term "agent"
in this Agreement with the reference to the Agents is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter
of market custom and is intended to create or reflect only an administrative
relationship between independent contracting parties. Each Lender expressly
acknowledges (i) that none of the Agents has made any representations or
warranties to it and that no act by any of the Agents hereafter taken,
including any review of the affairs of any of the Borrowers, shall be deemed to
constitute any representation or warranty by such Agent to any Lender; (ii)
that it has made and will continue to make, without reliance upon any of the
Agents, its own independent investigation of the financial condition and
affairs and its own appraisal of the creditworthiness of each of the Borrowers
in connection with this Agreement and the making and continuance of the Loans
hereunder; and (iii) except as expressly provided herein, that none of the
Agents shall have any duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the making of
any Loan or at any time or times thereafter.
11.04 Actions in Discretion of Agents; Instructions from the
Lenders. Each of the Agents agrees, upon the written request of the Required
Lenders, to take or refrain from taking any action of the type specified as
being within such Agent's rights, powers or discretion herein, provided that
none of the Agents nor any of their directors, officers, employees, agents,
attorneys or Affiliates shall be required to take any action which exposes such
Agent or any such Person to personal liability or which is contrary to this
Agreement or any other Loan Document or applicable Law. In the absence of a
request by the Required Lenders, each Agent shall have authority, in its sole
discretion, to take or not to take any such action, unless this Agreement
specifically requires the consent of the Required Lenders or all of the Lenders.
Any action taken or failure to act pursuant to such instructions or discretion
shall be binding on the Lenders, subject to Section 11.05. Subject to the
provisions of Section 11.05, no Lender shall have any right of action whatsoever
against any of the Agents as a result of such Agent's acting or refraining from
acting hereunder in accordance with the instructions of the Required Lenders, or
in the absence of such instructions, in the absolute discretion of such Agent.
11.05 Exculpatory Provisions. None of the Agents nor any of their
directors, officers, employees, agents, attorneys or Affiliates shall (a) be
liable to any Lender for any action taken or omitted to be taken by it or them
hereunder, or in connection herewith including pursuant to any Loan Document,
unless caused by its or their own gross negligence or willful misconduct, (b) be
responsible in any manner to any of the Lenders for the effectiveness,
enforceability, genuineness, validity or the due execution of this Agreement or
any other Loan Documents or for any recital, representation, warranty, document,
certificate, report or statement herein or made or furnished under or in
connection with this Agreement or any other Loan Documents, or (c) be under any
obligation to any of the Lenders to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions hereof or
thereof on the part of any of the Borrowers, or the financial condition of any
of the Borrowers, or the existence or possible existence of any Event
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of Default or Potential Default. None of the Agents nor any Lender nor any of
their respective directors, officers, employees, agents, attorneys or
Affiliates shall be liable to any of the Borrowers for consequential or
punitive damages resulting from any breach of contract, tort or other wrong in
connection with the negotiation, documentation, administration or collection of
the Loans, the Letters of Credit or any of the Loan Documents.
11.06 Reimbursement and Indemnification of Agents by Lenders. Each
Lender agrees to reimburse and indemnify each of the Agents (to the extent not
reimbursed by the Borrowers and without limiting the Obligation of the Borrowers
to do so) in proportion to its Ratable Share from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, or
reasonable out-of-pocket costs, expenses or disbursements, of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against any of the
Agents, in its capacity as such, in any way relating to or arising out of this
Agreement or any other Loan Documents or any action taken or omitted by any of
the Agents hereunder or thereunder, provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements (a) if the same
results from an Agent's gross negligence or willful misconduct, or (b) if such
Lender was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that such Lender
shall remain liable to the extent such failure to give notice does not result in
a loss to the Lender), or (c) if the same results from a compromise and
settlement agreement entered into without the consent of such Lender, which
shall not be unreasonably withheld. In addition, each Lender agrees promptly
upon demand to reimburse each of the Agents (to the extent not reimbursed by the
Borrowers and without limiting the Obligation of the Borrowers to do so) in
proportion to its Ratable Share for all amounts due and payable by the Borrowers
to such Agent in connection with such Agent's periodic audit of the Borrowers'
books, records and business properties.
11.07 Reliance by Agents. Each of the Agents shall be entitled to
rely upon any writing, telegram, telex or teletype message, resolution, notice,
consent, certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons, and upon
the advice and opinions of counsel and other professional advisers selected by
the Agents. Each of the Agents shall be fully justified in failing or refusing
to take any action hereunder unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
11.08 Notice of Default. An Agent shall not be deemed to have
knowledge or notice of the occurrence of any Potential Default or Event of
Default unless such Agent has received written notice from a Lender or the
Borrowers referring to this Agreement, describing such Potential Default or
Event of Default and stating that such notice is a "notice of default."
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11.09 Notices. The Administrative Agent shall promptly send to
each Lender a copy of all notices received from the Borrowers pursuant to the
provisions of this Agreement or the other Loan Documents promptly upon receipt
thereof. The Administrative Agent shall promptly notify the Company and the
other Lenders of each change in the Base Rate and the effective date thereof.
11.10 Lenders in Their Individual Capacities. With respect to its
Commitments, the Revolving Credit Loans, the Swing Loans and the Bid Loans made
by it, each Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not an Agent, and the term
"Lenders" shall, unless the context otherwise indicates, include the Agents in
their individual capacity. PNC Bank, First Chicago, Bankers Trust Company and
their Affiliates and each of the Lenders and their respective Affiliates may,
without liability, except as prohibited herein, make loans to, accept deposits
from, discount drafts for, act as trustee under indentures of, and generally
engage in any kind of banking or trust business with, the Borrowers and their
Affiliates, in the case of the Agents, as though they were not acting as Agents
hereunder and in the case of each Lender, as though such Lender were not a
Lender hereunder.
11.11 [RESERVED].
11.12 Equalization of Lenders. The Lenders and the holders of any
participations in any Revolving Credit Loans agree among themselves that, with
respect to all amounts received by any Lender or by any participant, whether
received by voluntary payment, by realization upon security, by the exercise of
the right of set-off or banker's lien, by counterclaim or by any other non-pro
rata source, equitable adjustment will be made in the manner stated in the
following sentence so that, in effect, all such excess amounts will be shared
ratably among the Lenders and such participants in proportion to their interests
in payments under the Revolving Credit Loans, except as otherwise provided in
Sections 4.03(b), 5.04(b), 5.06 or 12.03. The Lenders or any such participant
receiving any such amount shall purchase for cash from each of the other Lenders
or participants an interest in such Revolving Credit Loans in such amount as
shall result in a ratable participation by the Lenders and each such participant
in the aggregate unpaid amount under the Revolving Credit Loans, provided that
if all or any portion of such excess amount is thereafter recovered from the
Lender or the participant making such purchase, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, together with
interest or other amounts, if any, required by law (including court order) to be
paid by the Lender or the participant making such purchase.
11.13 Successor Agents. The Administrative Agent (i) may resign as
Administrative Agent or (ii) shall resign if such resignation is requested by
the Required Lenders (if the Administrative Agent is a Lender, the
Administrative Agent's Loans and its Commitment shall be considered in
determining
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whether the Required Lenders have requested such resignation) or required by
Section 5.04(b), in either case of (i) or (ii) by giving not less than thirty
(30) days' prior written notice to the Company. The Syndication Agent (i) may
resign as Syndication Agent or (ii) shall resign if such resignation is
requested by the Required Lenders (if the Syndication Agent is a Lender, the
Syndication Agent's Loans and its Commitment shall be considered in determining
whether the Required Lenders have requested such resignation) or required by
Section 5.04(b), in either case of (i) or (ii), by giving not less than thirty
(30) days' prior written notice to the Company. The Real Estate Administrative
Agent (i) may resign as Real Estate Administrative Agent or (ii) shall resign
if such resignation is requested by the Required Lenders (if the Real Estate
Administrative Agent is a Lender, the Real Estate Administrative Agent's Loans
and its Commitment shall be considered in determining whether the Required
Lenders have requested such resignation) or required by Section 5.04(b), in
either case of (i) or (ii), by giving not less than thirty (30) days' prior
written notice to the Company. If any of the Agents shall resign under this
Agreement, then either (a) the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders, subject to the consent of the
Company (unless and until an Event of Default has occurred and is continuing
after which no consent of the Company shall be required), such consent not to
be unreasonably withheld, or (b) if a successor agent shall not be so appointed
and approved within the thirty (30) day period following such Agent's notice to
the Lenders of its resignation, then such Agent shall appoint, with the consent
of the Company (unless and until an Event of Default has occurred and is
continuing after which no consent of the Company shall be required), such
consent not to be unreasonably withheld, a successor agent who shall serve as
Administrative Agent or Syndication Agent or Real Estate Administrative Agent,
as applicable, until such time as the Required Lenders appoint and the Company
consents to the appointment of a successor agent. Upon its appointment
pursuant to either clause (a) or (b) above, such successor agent shall succeed
to the rights, powers and duties of such Agent and the term "Administrative
Agent" or "Syndication Agent" or "Real Estate Administrative Agent" shall mean
such successor agent, effective upon its appointment, and the former Agent's
rights, powers and duties as Agent shall be terminated without any other or
further act or deed on the part of such former Agent or any of the parties to
this Agreement. After the resignation of any Agent hereunder, the provisions
of this Article XI shall inure to the benefit of such former Agent and such
former Agent shall not by reason of such resignation be deemed to be released
from liability for any actions taken or not taken by it while it was an Agent
under this Agreement.
11.14 Availability of Funds. Unless the Administrative Agent shall
have been notified by a Lender or Swing Lender prior to the date upon which a
Loan is to be made that such Lender or Swing Lender does not intend to make
available to the Administrative Agent in the applicable currency such Lender's
or Swing Lender's portion of such Loan, the Administrative Agent may assume that
such Lender or Swing Lender has made or will make such proceeds available to the
Administrative Agent on such date and the Administrative Agent may, in reliance
upon such assumption (but shall not be required to), make available to the
Borrowers a corresponding amount in the applicable currency. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender or Swing Lender in the applicable currency, the Administrative
Agent shall be entitled to recover such amount on demand from such Lender or
Swing Lender (or, if such Lender or Swing Lender fails to pay such amount
forthwith upon such demand from the Borrowers) together with interest thereon,
in respect of each day during the period commencing on the date such amount was
made available to the Borrowers and ending on the date the Administrative Agent
recovers such amount, at a rate per annum equal to the applicable Federal Funds
Effective Rate if recovered from such Lender or Swing Lender or equal to the
applicable interest rate in respect of the Loan if recovered from the Borrowers.
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11.15 Calculations. In the absence of gross negligence or willful
misconduct, the Administrative Agent shall not be liable for any error in
computing the amount payable to any Agent, Lender, Swing Lender or Issuing Bank
whether in respect of the Loans, Fees or any other amounts due to the Agents,
the Lenders, the Swing Lenders or the Issuing Bank under this Agreement. In the
event an error in computing any amount payable to any Agent, Lender, Swing
Lender or Issuing Bank is made, the Administrative Agent, the Borrowers and each
affected Agent, Lender, Swing Lender and Issuing Bank shall, forthwith upon
discovery of such error, make such adjustments as shall be required to correct
such error, and any compensation therefor will be calculated at the Federal
Funds Effective Rate or the Overnight Rate if such computation relates to a Loan
made or Letter of Credit issued in an Optional Currency.
11.16 Beneficiaries. Except as expressly provided herein, the
provisions of this Article XI are solely for the benefit of the Agents, the
Lenders, the Swing Lenders, the Issuing Bank and the Borrowers shall not have
any rights to rely on or enforce any of the provisions hereof. In performing
their functions and duties under this Agreement, the Agents shall act solely as
agent of the Lenders and do not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for any of the
Borrowers.
ARTICLE XII
MISCELLANEOUS
12.01 Modifications, Amendments or Waivers. With the written
consent of the Required Lenders, the Administrative Agent, acting on behalf of
all the Lenders, and the Company on behalf of the Borrowers may from time to
time enter into written agreements amending or changing any provision of this
Agreement or any other Loan Document or the rights of the Lenders or the
Borrowers hereunder or thereunder, or may grant written waivers or consents to a
departure from the due performance of the Obligations of the Borrowers hereunder
or thereunder. Any such agreement, waiver or consent made with such written
consent shall be effective to bind all the Lenders and the Borrowers; provided,
that, without the written consent of each Lender, no such agreement, waiver or
consent may be made which will:
(a) increase the amount of the Commitment of such Lender
hereunder or extend the Expiration Date with respect to such Lender;
(b) increase the aggregate amount of the Commitments of the
Lenders to an amount greater than $500,000,000;
(c) release any Guarantor the assets of which represent 5% or
more of the consolidated total assets of the Company and its Subsidiaries;
(d) whether or not any Loans are outstanding, extend the time for
payment of principal or interest of any Loan made or to be made by such Lender,
the Facility Fee or any other fee payable to such Lender, or reduce the
principal amount of or the rate of interest borne by any
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Loan made or to be made by such Lender or reduce the Facility Fee or any other
fee payable to such Lender, or otherwise affect the terms of payment of the
principal of or interest of any Loan made or to be made by such Lender, or the
Facility Fee or any other fee payable to such Lender; or
(e) amend Sections 5.02, 11.05 or 11.12, this Section 12.01 or
Section 12.11, alter any provision regarding the pro rata treatment of the
Lenders, change the definition of Required Lenders, or change any requirement
providing for the Lenders or the Required Lenders to authorize the taking of any
action hereunder.
No agreement, waiver or consent which would modify the interests, rights or
obligations of the Administrative Agent in its capacity as Administrative Agent
or as the issuer of Letters of Credit shall be effective without the written
consent of the Administrative Agent. No Agreement, waiver or consent which
would modify the interests, rights or obligations of the Syndication Agent in
its capacity as Syndication Agent shall be effective without the written consent
of the Syndication Agent. Any provision of a Fee Letter may be amended,
supplemented or waived by written consent of the parties thereto. No agreement,
waiver or consent which would modify the interests, rights or obligations of the
Real Estate Administrative Agent in its capacity as Real Estate Administrative
Agent shall be effective without the written consent of the Real Estate
Administrative Agent. No agreement, waiver or consent which would modify the
interests, rights or obligations of the Issuing Bank in its capacity as Issuing
Bank shall be effective without the written consent of the Issuing Bank. No
Agreement, waiver or consent which would modify the interests, rights or
obligations of any Swing Lender in its capacity as Swing Lender shall be
effective without the written consent of such Swing Lender. Notwithstanding the
foregoing: (1) no amendment, waiver, or consent shall, unless in writing and
signed by the Designating Lender on behalf of each Designated Lender affected
thereby, (a) subject such Designated Lender to any additional obligations, (b)
reduce the principal of, interest on, or other amounts due with respect to, the
Bid Loan Note made payable to such Designated Lender, (c) postpone any date
fixed for any payment of principal of, or interest on, or other amounts due with
respect to, the Bid Loan Note made payable to such Designated Lender, or (d)
amend the definition of Required Banks hereunder in a manner which adversely
affects the rights of such Designated Lender.
12.02 No Implied Waivers; Cumulative Remedies; Writing Required.
No course of dealing and no delay or failure of the Administrative Agent, the
Syndication Agent, the Real Estate Administrative Agent, any Swing Lender, any
Lender or the Issuing Bank in exercising any right, power, remedy or privilege
under this Agreement (including without limitation Article IX hereof) or any
other Loan Document shall affect any other or future exercise thereof or
operate as a waiver thereof; nor shall any single or partial exercise thereof
or any abandonment or discontinuance of steps to enforce such a right, power,
remedy or privilege preclude any further exercise thereof or of any other
right, power, remedy or privilege. The rights and remedies of the
Administrative Agent, the Syndication Agent, the Real Estate Administrative
Agent, the Lenders and the Issuing Bank under this Agreement (including without
limitation Article IX hereof) and any other Loan Documents are cumulative and
not exclusive of any rights or remedies which they would otherwise have. Any
waiver, permit, consent or approval of any kind or character on the part of any
Lender or the Issuing Bank of any breach or default under this Agreement
(including without
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limitation Article IX hereof) or any such waiver of any provision or condition
of this Agreement (including without limitation Article IX whereof) must be in
writing and shall be effective only to the extent specifically set forth in
such writing.
12.03 Reimbursement and Indemnification by the Borrowers; Taxes.
(a) Reimbursement and Indemnification of Agents. The Borrowers
unconditionally agree to pay or reimburse each of the Agents and save each of
the Agents harmless against (i) liability for the payment of all reasonable
out-of-pocket costs, expenses and disbursements, including fees and expenses of
counsel and consultants, incurred by each of the Agents (A) in connection with
the development, negotiation, preparation, printing, execution, administration,
syndication, interpretation and performance of this Agreement and the other Loan
Documents (subject to the limitations agreed in the Fee Letters), (B) relating
to any requested amendments, waivers or consents pursuant to the provisions
hereof, (C) in connection with the enforcement of this Agreement (including
without limitation Article IX hereof) or any other Loan Document or collection
of amounts due hereunder or thereunder or the proof and allowability of any
claim arising under this Agreement (including without limitation Article IX
hereof) or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (D) in any workout, restructuring or in connection
with the protection, preservation, exercise or enforcement of any of the terms
hereof or of any rights hereunder or under any other Loan Document or in
connection with any foreclosure, collection or bankruptcy proceedings, and (ii)
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including fees and expenses of counsel and consultants)
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against any of the Agents, in its capacity as such, in
any way relating to or arising out of this Agreement (including without
limitation Article IX hereof) or any other Loan Documents or any action taken or
omitted by any of the Agents hereunder or thereunder, provided that the
Borrowers shall not be liable to an Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (A) if the same results from such Agent's gross
negligence or willful misconduct, or (B) if the Borrowers were not given notice
of the subject claim and the opportunity to participate in the defense thereof,
at their expense (except that the Borrowers shall remain liable to the extent
such failure to give notice does not result in any additional loss to the
Borrowers), or (C) if the same results from a compromise or settlement agreement
entered into without the consent of the Borrowers, which consent shall not be
unreasonably withheld. In addition, the Borrowers agree to reimburse and pay
all reasonable out-of-pocket expenses of each of the Agents' regular employees
and agents engaged periodically to perform audits of the Borrowers' books,
records and business properties.
(b) Reimbursement and Indemnification of Lenders. The
Borrowers agree unconditionally upon demand to pay or reimburse to each Lender
and the Issuing Bank and to save such Lender and the Issuing Bank harmless
against (i) liability for the payment of all reasonable out-of-pocket costs,
expenses and disbursements (including fees and expenses of counsel for each
Lender and the Issuing Bank) incurred by such Lender or the Issuing Bank (A) in
connection with the enforcement of this Agreement (including without limitation
Article IX hereof) or any other Loan Document, or collection of amounts due
hereunder or thereunder or the proof and allowability of any
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claim arising under this Agreement (including without limitation Article IX
hereof) or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (B) in any workout, restructuring or in
connection with the protection, preservation, exercise or enforcement of any of
the terms hereof or of any rights hereunder or under any other Loan Document or
in connection with any foreclosure, collection or bankruptcy proceedings, and
(ii) all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including fees and expenses of counsel) or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against such Lender or the Issuing Bank, in its
capacity as such, in any way relating to or arising out of this Agreement
(including without limitation Article IX and Section 11.06 hereof) or any other
Loan Documents or any action taken or omitted by such Lender or the Issuing
Bank hereunder or thereunder, provided that the Borrowers shall not be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements (A) if the same
results from such Lender's or the Issuing Bank's gross negligence or willful
misconduct, or (B) if the Borrowers were not given notice of the subject claim
and the opportunity to participate in the defense thereof, at their expense
(except that the Borrowers shall remain liable to the extent such failure to
give notice does not result in any additional loss to the Borrowers), or (C) if
the same results from a compromise or settlement agreement entered into without
the consent of the Borrowers, which consent shall not be unreasonably withheld.
The Lenders and the Issuing Bank will attempt to minimize the fees and expenses
of legal counsel for the Lenders and the Issuing Bank which are subject to
reimbursement by the Borrowers hereunder by considering the usage of one law
firm to represent the Lenders, the Issuing Bank and the Agents if appropriate
under the circumstances.
12.04 Holidays. Whenever any payment or action to be made or taken
hereunder shall be stated to be due on a day which is not a Business Day, such
payment or action shall be made or taken on the next following Business Day
(except as provided in the definition of "Interest Period"), and such extension
of time shall be included in computing interest or fees, if any, in connection
with such payment or action.
12.05 Funding by Branch, Subsidiary or Affiliate.
(a) Notional Funding. Each Lender shall have the right from time
to time, without notice to the Borrowers, to deem any branch, Subsidiary or
Affiliate (which for the purposes of this Section 12.05 shall mean any
corporation or association which is directly or indirectly controlled by or is
under direct or indirect common control with any corporation or association
which directly or indirectly controls such Lender) of such Lender to have made,
maintained or funded any Loan in Dollars or in any Optional Currency to which
the Euro-Rate Option applies at any time, provided that immediately following
(on the assumption that a payment was then due from the Borrowers to such other
office) and as a result of such change the Borrowers would not be under any
greater financial obligation pursuant to Sections 4.03 or 5.06 than they would
have been in the absence of such change. Notional funding offices may be
selected by each Lender without regard to the Lender's actual methods of making,
maintaining or funding the Loans or any sources of funding actually used by or
available to such Lender.
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(b) Actual Funding. Each Lender shall have the right from time
to time to make or maintain any Loan by arranging for a branch, Subsidiary or
Affiliate of such Lender to make or maintain such Loan subject to the last
sentence of this Section 12.05(b). If any Lender causes a branch, Subsidiary or
Affiliate to make or maintain any part of the Loans hereunder, all terms and
conditions of this Agreement shall, except where the context clearly requires
otherwise, be applicable to such part of the Loans to the same extent as if such
Loans were made or maintained by such Lender, provided that in no event shall
any Lender's use of such a branch, Subsidiary or Affiliate to make or maintain
any part of the Loans hereunder cause such Lender or such branch, Subsidiary or
Affiliate to incur any cost or expenses payable by the Borrowers hereunder or
require the Borrowers to pay any other compensation to any Lender (including any
expenses incurred or payable pursuant to Sections 4.03 or 5.06) which would
otherwise not be incurred.
12.06 Notices; Lending Offices. All notices, requests, demands,
directions and other communications (as used in this Section 12.06 collectively
referred to as "notices") given to or made upon any party hereto under the
provisions of this Agreement shall be by telephone or in writing (including
telex or facsimile communication) unless otherwise expressly permitted hereunder
and shall be delivered or sent by telex or facsimile to the respective parties
at the addresses and numbers set forth under their respective names on the
signature pages hereto, on Schedule 1.01(B) or in accordance with any subsequent
unrevoked written direction from any party to the others. All notices shall,
except as otherwise expressly herein provided, be effective (a) in the case of
telex or facsimile, when received, (b) in the case of hand- delivered notice,
when hand delivered, (c) in the case of telephone, when telephoned, provided,
however, that in order to be effective, telephonic notices must be confirmed in
writing no later than the next day by letter, facsimile or telex, (d) if given
by mail, four (4) days after such communication is deposited in the United
States mails with first class postage prepaid, return receipt requested, and (e)
if given by any other means (including by air courier), when delivered;
provided, that notices to the Administrative Agent shall not be effective until
received. Any Lender giving any notice to any Borrower shall simultaneously
send a copy thereof to the Administrative Agent, and the Administrative Agent
shall promptly notify the other Lenders of the receipt by it of any such notice.
Schedule 1.01(B) lists the Lending Offices of each Lender. Each Lender may
change its Lending Office by written notice to the other parties hereto.
12.07 Severability. The provisions of this Agreement are intended
to be severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
12.08 Governing Law. Each Letter of Credit and Section 2.10 shall
be subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, as the same
may be revised or amended from time to time, and to the extent not inconsistent
therewith the internal laws of the State of Illinois without regard to its
conflict of laws principles. The balance of this Agreement shall be deemed to
be a contract under the Laws of the State of Illinois and for all purposes shall
be governed by and construed and enforced
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in accordance with the internal laws of the State of Illinois without regard to
its conflict of laws principles.
12.09 Prior Understanding. This Agreement and the Loan Documents
supersede all prior understandings and agreements, whether written or oral,
between the parties hereto and thereto relating to the transactions provided for
herein and therein, including any prior confidentiality agreements and
commitments.
12.10 Duration; Survival. All representations and warranties of
the Borrowers contained herein or made in connection herewith shall survive the
making of Loans and issuance of Letters of Credit and shall not be waived by the
execution and delivery of this Agreement, any investigation by the Agents, the
Lenders or the Issuing Bank, the making of Loans, issuance of Letters of Credit,
or payment in full of the Loans. All covenants and agreements of the Borrowers
contained herein relating to the payment of principal, interest, Fees, premiums,
additional compensation or expenses and indemnification, including those set
forth in Article V and Section 12.03, shall survive payment in full of the
Loans, expiration or termination of the Letters of Credit and termination of the
Commitments.
12.11 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the Lenders, the Agents, the Issuing Bank, the
Borrowers and their respective successors and assigns, except that none of the
Borrowers may assign or transfer any of its rights and Obligations hereunder or
any interest herein. Each Lender may, at its own cost, make assignments of or
sell participations in all or any part of its Commitment and the Loans made by
it to one or more Lenders or other Persons, subject to the terms set forth
herein:
(a) Assignment. In the case of an assignment, (i) without the
consent of any party, any Lender may assign to any of its Affiliates or to any
Person in accordance with the provisions of Sections 2.01(b) or 2.01(c), or to
any other Lender (subject to the further clauses below), all or any portion of
its Commitment or Bid Loans; (ii) any Lender may assign to any other Person
(subject to the further clauses below) with the prior consent of the
Administrative Agent and the Company (unless and until an Event of Default has
occurred and is continuing after which no consent of the Company shall be
required), which consent may not be unreasonably withheld, all or any portion of
its Commitment or Bid Loans; (iii) any partial assignment shall not be less than
$5,000,000 and in multiples of $1,000,000 in excess thereof; (iv) if an
assignment is made of any Lender's Commitment, such Assignor Lender must
simultaneously assign the same proportion of each of its Revolving Credit Loans
then outstanding and the same proportion of its Ratable Share of any Letters of
Credit Outstandings; (v) a Lender (other than a Designated Lender) may assign a
Bid Loan to another Person (other than a Designated Lender) only if it is
simultaneously assigning all or a portion of its Commitment to such Person or
such Person is already a Lender hereunder and a Designated Lender may only
assign a Bid Loan to the Lender which designated the Designated Lender to fund
such Bid Loan; (vi) any assignment must be made pursuant to an Assignment and
Assumption Agreement, and (vii) the Assignor Lender shall pay to the
Administrative Agent a service fee in the amount of $3,500 for each assignment.
Upon acceptance by the Administrative Agent of the Assignment and Assumption
Agreement, the Assignee Lender shall have, to the extent
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of such assignment (unless otherwise provided therein), the same rights,
benefits and obligations as it would have if it had been a signatory Lender
hereunder, the Commitments reflected on Schedule 1.01(B) shall be adjusted
accordingly, and the Administrative Agent shall deliver a revised Schedule
1.01(B) to the Company and the Lenders. The Administrative Agent shall maintain
a copy of each Assignment and Assumption Agreement delivered to it, and a
register for the recordation of the names and addresses of the Lenders, the
Commitments of the Lenders, and the principal amount of the Revolving Credit
Loans and Bid Loans outstanding from time to time (the "Register"). Entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrowers, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender for all purposes
of this Agreement and each other Loan Document. The Register shall be available
for inspection by the Borrowers or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(b) Participations. In the case of a participation, (i) the
participant's rights against such Lender in respect of such participation shall
be those set forth in the agreement executed by such Lender in favor of the
participant relating thereto, and (ii) such agreement shall include an agreement
to be bound by the provisions of Section 11.12, and shall not include any voting
rights except with respect to changes of the type referenced in clauses (a),
(b), (c) or (d) under Section 12.01. All of such Lender's obligations under
this Agreement or any other Loan Document shall remain unchanged and all amounts
payable by any Borrower hereunder or thereunder shall be determined as if such
Lender had not sold such participation. Such Lender shall remain the owner of
any such participated interest for all purposes of this Agreement. The
Borrowers, the Agents 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. All such participants shall be entitled to
the benefit of the provisions of Sections 4.03, 5.06, 9.08, 10.02(c) and
Sections 12.03(b) and (c).
(c) Other Provisions. Any assignee or participant which is not
incorporated under the Laws of the United States of America or a state thereof
shall deliver to the Borrowers and the Administrative Agent the form of
certificate described in Section 12.18 relating to federal income tax
withholding and the Lender who makes an assignment or sells a participation
shall cause the assignee or participant to comply with the provisions of Section
12.18. Each Lender may furnish any publicly available information concerning
the Company or its Subsidiaries and any other information concerning the Company
or its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees or participants),
provided that such assignees and participants agree to be bound by the
provisions of Section 12.12.
(d) Federal Reserve Bank Transfer. Notwithstanding anything to
the contrary, any Lender may at any time assign all or any portion of its rights
under this Agreement and the other Loan Documents to a Federal Reserve Bank, and
no such assignment shall release such assigning Lender from its obligations
hereunder.
12.12 Confidentiality. (a) The Agents and the Lenders each agree
to keep confidential all information obtained from the Company or any of its
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Subsidiaries which is nonpublic and confidential or proprietary in nature
(including any information the Company or any of its Subsidiaries specifically
designates as confidential), except as provided below, and to use such
information only in connection with their respective capacities under this
Agreement and for the purposes contemplated hereby. Any Agent or Lender shall
be permitted to disclose such information (i) to Affiliates, outside legal
counsel, accountants and other professional advisors who need to know such
information in connection with the administration and enforcement of this
Agreement, subject to agreement of such Persons to maintain the
confidentiality, (ii) to assignees and participants (including prospective
assignees and participants) as contemplated by Section 12.11, (iii) to the
extent requested by any bank regulatory authority or, with notice to the
Company, as otherwise required by applicable Law or by any subpoena or similar
legal process, or in connection with any investigation or proceeding arising
out of the transactions contemplated by this Agreement, (iv) if it becomes
publicly available other than as a result of a breach of this Agreement or
becomes available from a source not known to such Agent or Lender to be subject
to confidentiality restrictions, or (v) if the Company shall have consented to
such disclosure.
(b) Sharing Information With Affiliates of the Lenders. Each
Borrower acknowledges that from time to time financial advisory, investment
banking and other services may be offered or provided to the Company or one or
more of its Affiliates (in connection with this Agreement or otherwise) by any
Lender or by one or more Subsidiaries or Affiliates of such Lender and each of
the Borrowers hereby authorizes each Lender to share any information delivered
to such Lender by the Company and its Subsidiaries pursuant to this Agreement,
or in connection with the decision of such Lender to enter into this Agreement,
to any such Subsidiary or Affiliate of such Lender, it being understood that any
such Subsidiary or Affiliate of any Lender receiving such information shall be
bound by the provisions of Section 12.12 as if it were a Lender hereunder. Such
authorization shall survive the repayment of the Loans and other Obligations and
the termination of the Commitments.
12.13 Counterparts. This Agreement may be executed by different
parties hereto on any number of separate counterparts, each of which, when so
executed and delivered, shall be an original, and all such counterparts shall
together constitute one and the same instrument.
12.14 Agent's or Lender's Consent. Whenever any Agent's or any
Lender's or the Issuing Bank's consent is required to be obtained under this
Agreement or any of the other Loan Documents as a condition to any action,
inaction, condition or event, each Agent and each Lender and the Issuing Bank
shall be authorized to give or withhold such consent in its sole and absolute
discretion (unless such consent is not to be unreasonably withheld) and to
condition its consent upon the giving of collateral, the payment of money or any
other matter.
12.15 Exceptions. The representations, warranties and covenants
contained herein shall be independent of each other and no exception to any
representation, warranty or covenant shall be deemed to be an exception to any
other representation, warranty or covenant contained herein unless expressly
provided, nor shall any such exceptions be deemed to permit any action or
omission that would be in contravention of applicable Law.
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12.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL. (a) EACH BORROWER
HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE CIRCUIT
COURT OF COOK COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT
AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED
MAIL DIRECTED TO SUCH BORROWER AT THE ADDRESSES PROVIDED FOR IN SECTION 12.06
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.
EACH BORROWER WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION
INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE
BASED ON LACK OF JURISDICTION OR VENUE.
(b) EACH BORROWER, EACH AGENT, EACH OF THE LENDERS AND THE
ISSUING BANK HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT TO THE FULL EXTENT PERMITTED BY LAW.
12.17 Waivers by Borrowers. Except as otherwise provided for in
this Agreement and the other Loan Documents, each of the Borrowers waives (i)
presentment, demand and protest and notice of presentment, protest, default,
non-payment, maturity, release, compromise, settlement, extension or renewal of
any or all commercial paper, accounts, contract rights, documents, instruments,
chattel paper and guaranties at any time held by any of the Borrowers on which
such Borrower may in any way be liable and hereby ratifies and confirms what the
Administrative Agent may do in this regard; (ii) the benefit of all valuation,
appraisement and exemption laws; and (iii) any right such Borrower may have upon
payment in full of its Obligations to require the Administrative Agent or any
Lender to terminate its security interest in any property of the Borrowers until
termination of this Agreement in accordance with its terms and the execution by
the Administrative Agent and each of the Borrowers, and by any Person whose
loans to the Borrowers are used in whole or in part to satisfy the Obligations,
of an agreement indemnifying the Agents and the Lenders from any loss or damage
the Agents or the Lenders may incur as the result of dishonored checks or other
items of payment received by the Agents from the Borrowers and applied to the
Obligations.
12.18 Tax Withholding Forms. Each Lender or assignee or
participant of a Lender that is not incorporated under the Laws of the United
States of America or a state thereof agrees that it will deliver to each of the
Company and the Administrative Agent two (2) duly completed copies of the
following: (i) Internal Revenue Service Form W-9, 4224 or 1001, or other
applicable form prescribed by the Internal Revenue Service, certifying that such
Lender, assignee or participant is entitled to receive payments under this
Agreement and the other Loan Documents without deduction or withholding of any
United States federal income taxes, or is subject to such tax at a reduced rate
under an applicable tax treaty, or (ii) Internal Revenue Service Form W-8 or
other applicable form
-108-
<PAGE> 117
or a certificate of the Lender, assignee or participant indicating that no such
exemption or reduced rate is allowable with respect to such payments. Each
assignee or participant shall deliver such form or certificate on or before the
effective date of such assignment or participation. Each Lender, assignee or
participant which so delivers a Form W-8, W-9, 4224 or 1001 further undertakes
to deliver to each of the Company and the Administrative Agent two (2)
additional copies of such form (or a successor form) on or before the date that
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Company or the Administrative Agent, either certifying that
such Lender, assignee or participant is entitled to receive payments under this
Agreement and the other Loan Documents without deduction or withholding of any
United States federal income taxes or is subject to such tax at a reduced rate
under an applicable tax treaty or stating that no such exemption or reduced
rate is allowable. The Administrative Agent shall be entitled to withhold
United States federal income taxes at the full withholding rate unless the
Lender, assignee or participant establishes an exemption or that it is subject
to a reduced rate as established pursuant to the above provisions.
12.19 Effective Date Transition Provision. Immediately after the
Effective Date, Wells Fargo Bank, N.A., Credit Lyonnais, NationsBank, N.A.
(Carolinas), U.S. National Bank of Oregon, Mitsubishi Trust and Banking Corp.,
The Fuji Bank, Limited, The Sumitomo Bank, Ltd. and The Tokai Bank, Ltd. shall
cease to be Lenders under, and shall cease to have any rights, benefits or
obligations under, this Agreement or any other Loan Document, except Wells
Fargo Bank, N.A., Credit Lyonnais, NationsBank, N.A. (Carolinas), U.S. National
Bank of Oregon, Mitsubishi Trust and Banking Corp., The Fuji Bank, Limited, The
Sumitomo Bank, Ltd. and The Tokai Bank, Ltd. shall continue to have: (a)
obligations arising under Section 11.06 insofar as such obligations relate to
events occurring prior to the Effective Date; and (b) rights and benefits
arising under Sections 5.06 and 12.03(b) insofar as such rights and benefits
relate to events occurring prior to the Effective Date.
-109-
<PAGE> 118
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Agreement as of the day and year first
above written.
BORDERS GROUP, INC., AS BORROWER AND
AS GUARANTOR UNDER ARTICLE IX
By:_________________________________
Title:______________________________
Address for Notices:
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No. (313) 995-8265
Attention: Thomas D. Carney
Telephone No. (313) 913-1977
BORDERS, INC., AS BORROWER AND
AS GUARANTOR UNDER ARTICLE IX
By:_________________________________
Title:______________________________
Address for Notices:
c/o Borders Group, Inc.
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No. (313) 995-8265
Attention: Thomas D. Carney
Telephone No. (313) 913-1977
<PAGE> 119
WALDEN BOOK COMPANY, INC., AS
BORROWER AND AS GUARANTOR UNDER
ARTICLE IX
By:________________________________
Title:_____________________________
Address for Notices:
c/o Borders Group, Inc.
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No. (313) 995-8265
Attention: Thomas D. Carney
Telephone No. (313) 913-1977
BGP (UK) LIMITED, AS BORROWER AND
AS GUARANTOR UNDER ARTICLE IX
By:________________________________
Title:_____________________________
Address for Notices:
c/o Borders Group, Inc.
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No. (313) 995-8265
Attention: Thomas D. Carney
Telephone No. (313) 913-1977
<PAGE> 120
PLANET MUSIC, INC., AS
GUARANTOR UNDER ARTICLE IX
By:____________________________________
Title:_________________________________
Address for Notices:
c/o Borders Group, Inc.
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No. (313) 995-8265
Attention: Thomas D. Carney
Telephone No. (313) 913-1977
BORDERS PROPERTIES, INC., AS
GUARANTOR UNDER ARTICLE IX
By:____________________________________
Title:_________________________________
Address for Notices:
c/o Borders Group, Inc.
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No. (313) 995-8265
Attention: Thomas D. Carney
Telephone No. (313) 913-1977
<PAGE> 121
WALDENBOOKS PROPERTIES, INC. AS
GUARANTOR UNDER ARTICLE IX
By:____________________________________
Title:_________________________________
Address for Notices:
c/o Borders Group, Inc.
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No. (313) 995-8265
Attention: Thomas D. Carney
Telephone No. (313) 913-1977
BORDERS ONLINE, INC., AS
GUARANTOR UNDER ARTICLE IX
By:____________________________________
Title:_________________________________
Address for Notices:
c/o Borders Group, Inc.
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No. (313) 995-8265
Attention: Thomas D. Carney
Telephone No. (313) 913-1977
<PAGE> 122
BORDERS OUTLET, INC., AS
GUARANTOR UNDER ARTICLE IX
By:____________________________________
Title:_________________________________
Address for Notices:
c/o Borders Group, Inc.
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No. (313) 995-8265
Attention: Thomas D. Carney
Telephone No. (313) 913-1977
<PAGE> 123
BORDERS FULFILLMENT, INC., AS
GUARANTOR UNDER ARTICLE IX
By:____________________________________
Title:_________________________________
Address for Notices:
c/o Borders Group, Inc.
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No. (313) 995-8265
Attention: Thomas D. Carney
Telephone No. (313) 913-1977
THE LIBRARY, LTD., AS
GUARANTOR UNDER ARTICLE IX
By:____________________________________
Title:_________________________________
Address for Notices:
c/o Borders Group, Inc.
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No. (313) 995-8265
Attention: Thomas D. Carney
Telephone No. (313) 913-1977
<PAGE> 124
PNC BANK, NATIONAL ASSOCIATION, AS
ADMINISTRATIVE AGENT
By:____________________________________
Title:_________________________________
THE FIRST NATIONAL BANK OF CHICAGO,
AS SYNDICATION AGENT
By:____________________________________
Title:_________________________________
BANKERS TRUST COMPANY,
AS REAL ESTATE ADMINISTRATIVE AGENT
By:____________________________________
Title:_________________________________
PNC BANK, NATIONAL ASSOCIATION
By:____________________________________
Title:_________________________________
THE FIRST NATIONAL BANK OF CHICAGO
By:____________________________________
Title:_________________________________
BANKERS TRUST COMPANY
By:____________________________________
Title:_________________________________
<PAGE> 125
FIRST UNION NATIONAL BANK
By:____________________________________
Title:_________________________________
FLEET NATIONAL BANK
By:____________________________________
Title:_________________________________
KEYBANK NATIONAL ASSOCIATION
By:____________________________________
Title:_________________________________
COMERICA BANK
By:____________________________________
Title:_________________________________
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:____________________________________
Title:_________________________________
UNION BANK OF CALIFORNIA, N.A.
By:____________________________________
Title:_________________________________
CORESTATES BANK, N.A.
By:____________________________________
Title:_________________________________
<PAGE> 126
BANQUE NATIONALE DE PARIS
By:____________________________________
Title:_________________________________
SUNTRUST BANK, ATLANTA
By:____________________________________
Title:_________________________________
BANK BOSTON, N.A.
By:____________________________________
Title:_________________________________
HIBERNIA NATIONAL BANK
By:____________________________________
Title:_________________________________
THE NORTHERN TRUST COMPANY
By:____________________________________
Title:_________________________________
THE BANK OF NEW YORK
By:____________________________________
Title:_________________________________
<PAGE> 127
MERCANTILE BANK
By:____________________________________
Title:_________________________________
THE DAI-ICHI KANGYO BANK, LTD. -
CHICAGO BRANCH
By:____________________________________
Title:_________________________________
FIRST HAWAIIAN BANK
By:____________________________________
Title:_________________________________
BANK ONE, NATIONAL ASSOCIATION
By:____________________________________
Title:_________________________________
LONG TERM CREDIT BANK OF JAPAN
By:____________________________________
Title:_________________________________
WACHOVIA BANK, N.A.
By:____________________________________
Title:_________________________________
<PAGE> 128
EXHIBIT 1.01(A)
FORM OF
ASSIGNMENT AND ASSUMPTION AGREEMENT
Reference is made to the Amended and Restated Multicurrency
Credit Agreement dated as of October _____, 1997, (the "Credit Agreement")
among Borders Group, Inc. (the "Company"), Borders, Inc. ("Borders"), Walden
Book Company, Inc. ("Walden") and BGP (UK) Limited ("Books Holding") (the
Company, Borders, Walden and Books Holding hereinafter referred to,
individually, as a "Borrower" and, collectively, as the "Borrowers"), the
Lenders (as defined in the Credit Agreement), PNC Bank, National Association,
as Administrative Agent for the Lenders (the "Administrative Agent"), The First
National Bank of Chicago, as Syndication Agent for the Lenders (the
"Syndication Agent") and Bankers Trust Company, as Real Estate Administrative
Agent for the Lenders (the "Real Estate Administrative Agent"). Unless
otherwise defined herein, terms defined in the Credit Agreement are used herein
with the same meanings.
__________ (the "Assignor") and __________ (the "Assignee"),
intending to be legally bound hereby, make this Assignment and Assumption
Agreement (this "Assignment and Assumption") as of the ____ day of __________,
_______, and hereby agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor,
WITHOUT RECOURSE to the Assignor, an interest in and to all of the Assignor's
rights and obligations under the Credit Agreement as of the Effective Date (as
defined below), including without limitation, such percentage interest in the
Assignor's Commitment as in effect on the Effective Date, in the Revolving
Credit Loans [and Bid Loans] owing to the Assignor on the Effective Date, and
in the Assignor's Ratable Share of Letter of Credit Outstandings, such that
after giving effect to the assignment and assumption provided for herein, the
Commitment and Ratable Share of the Assignee shall be as set forth on Schedule
I hereof.(1)
2. The Assignor (i) represents and warrants that it is
the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or any of the Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any of the Loan Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any of the
Borrowers or Guarantors or the performance or observance by any Borrower or
Guarantor of any of its obligations under the Credit Agreement or any of the
Loan Documents or any other instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy
of the Credit Agreement, together with copies of the financial statements (if
any) referred to in Sections 6.01(i) and 8.03(a)
____________________
(1)Assignor must assign the same proportion of its Commitment,
each of its Revolving Credit Loans then outstanding and its
Ratable Share of the Letter of Credit Outstandings
<PAGE> 129
and (b) of the Credit Agreement and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Assumption; (ii) confirms that it is able to fund the
Loans as required by the Credit Agreement; (iii) agrees that it will,
independently and without reliance upon any of the Agents, or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iv) appoints and authorizes each of the Agents to
take such actions on its behalf and to exercise such powers under the Loan
Documents as are delegated to each such Agent by the terms thereof; (v) agrees
that it will become a party to and be bound by the Credit Agreement on the
Effective Date (including without limitation the provisions of Section 12.11)
as if it were an original Lender thereunder and will have the rights and
obligations of a Lender thereunder and will perform in accordance with its
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender; and (vi) specifies as its address
for notices the office set forth beneath its name on the signature pages
hereof.
4. The effective date of this Assignment and Assumption
shall be __________, _______ (the "Effective Date"). Following the execution
of this Assignment and Assumption, it will be delivered to the Administrative
Agent for acceptance and recording by the Administrative Agent, together with
any consents required under Section 12.11 of the Credit Agreement.
5. Upon such acceptance by the Administrative Agent, as
of the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Assumption, have
the rights and obligations of a Lender thereunder and under the Loan Documents
and (ii) the Assignor shall, to the extent provided in this Assignment and
Assumption, relinquish its rights and be released from its obligations under
the Credit Agreement.
6. Upon such acceptance, from and after the Effective
Date, the Administrative Agent shall make all payments under the Credit
Agreement in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest, Fees and Letter of Credit Fees
with respect thereto) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments under the Credit Agreement for periods
prior to the Effective Date directly between themselves.
7. The Assignor makes this assignment to the Assignee in
consideration of the payment by the Assignee to the Assignor of the amount
previously agreed to by the Assignor and the Assignee.
8. This Assignment and Assumption shall be governed by
and construed in accordance with the internal laws of the State of Illinois.
9. [This section is applicable only if the Assignee is
incorporated outside of the United States.] Assignee has delivered to each of
the Administrative Agent and the Company on or prior to the Effective Date two
duly completed copies of Internal Revenue Service Form W-9, 4224 or 1001, or
other applicable form prescribed by the Internal Revenue Service, certifying
that such Assignee is entitled to receive payments under the Credit Agreement
and the other Loan Documents without deduction or withholding of any United
States federal income taxes, or is subject to such tax
-121-
<PAGE> 130
at a reduced rate under an applicable tax treaty. [Alternative: Assignee has
delivered to each of Administrative Agent and the Company on or prior to the
Effective Date two duly completed copies of Internal Revenue Service Form W-8
of Assignee indicating that Assignee is subject to withholding of United States
federal income taxes.]
[NAME OF ASSIGNOR]
By:
_____________________________
Name: ______________________
Title:_______________________
[NAME OF ASSIGNEE]
By:
_____________________________
Name: ______________________
Title:_______________________
Notice of Address:
_________________________________
_________________________________
_________________________________
Telephone No.:
__________________
Telecopier No.:
__________________
Attn:
___________________________
CONSENTED TO [ACCEPTED] this _______
day of ____________, _______.
[ADMINISTRATIVE AGENT]
[COMPANY]*
By: ______________________________
Title: ___________________________
* If applicable
-122-
<PAGE> 131
SCHEDULE I
AMOUNTS ASSIGNED TO ASSIGNEE
<TABLE>
<CAPTION>
Amount of
Ratable Share
of
Amount of Letter of Credit
Amount of Revolving Credit Outstandings [Amount of Bid
Commitment Loans Assigned Assigned as of Loans Assigned as
Assigned as of the as of the the Effective of the Effective
Effective Date Effective Date Date Date
$__________ $__________ $__________ $__________]
<S> <C> <C> <C>
Ratable Share _______%
</TABLE>
(1)Includes undrawn face amount of Letters of Credit Outstandings.
-123-
<PAGE> 132
EXHIBIT 2.05(A)
FORM OF
REVOLVING CREDIT LOAN REQUEST
TO: PNC Bank, National Association as Administrative Agent
One PNC Plaza, 4th Floor Annex
249 5th Avenue
Pittsburgh, PA 15265
Telephone No.: (412) 762-3627
Telecopier No.: (412) 762-8672
Attention: Multi-Bank Loan Administration - Arlene Ohler
FROM: Borders Group, Inc.
RE: Amended and Restated Multicurrency Credit Agreement (the
"Credit Agreement") dated as of October _______, 1997
by and among Borders Group, Inc., Borders, Inc., Walden Book
Company, Inc. and BGP(UK) Limited as Borrowers, the Lenders,
as defined therein, PNC Bank, National Association, as
Administrative Agent, The First National Bank of Chicago, as
Syndication Agent and Bankers Trust Company, as Real Estate
Administrative Agent.
Pursuant to Section 2.05(a) of the Credit Agreement, the
undersigned hereby makes the following Revolving Credit Loan Request:
1. Proposed Borrowing Date
(which must be a Business Day) _____________________
2. Currency _____________________
3. Aggregate principal amount of
Revolving Credit Loans (expressed
in the currency listed in 2 above and
in a Dollar Equivalent Amount)
comprising the new Borrowing Tranche(2) $____________
____________________
(2)Any Euro-Rate Borrowing Tranche, in the case of Revolving Credit Loans
denominated in Dollars, shall be not less than $15,000,000 and in integral
multiples of $1,000,000 in excess thereof and, in the case of Revolving Credit
Loans denominated in an Optional Currency, shall be in an amount reasonably
comparable to the minimum amount for Revolving Credit Loans denominated in
Dollars. Any Base Rate Borrowing Tranche shall be not less than $2,000,000 (and
in integral multiples of $1,000,000) or the maximumamount available.
-124-
<PAGE> 133
4. Borrower to receive proceeds of the
Revolving Credit Loans $_________________
5. Interest Rate Option applicable to the new Borrowing Tranche
(Choose one):
________ a. Base Rate Option
________ b. Euro-Rate Option for an Interest Period of
(choose one):
_________ i. 1 month ________ iii. 3 months
_________ ii. 2 months _________ iv. 6 months
6. As of the date hereof and the date of making of the Revolving
Credit Loans: the representations and warranties contained in
Article VI of the Credit Agreement are and will be true (except
representations and warranties that expressly relate solely to an
earlier date or time, which representations and warranties were
true on and as of the specific date referred to therein), no
Event of Default or Potential Default has occurred and is
continuing or shall exist, and the making of the Revolving Credit
Loans shall not contravene any Law applicable to the Company or
any of its Subsidiaries, any Agent or any of the Lenders.
Capitalized terms used but not defined herein shall have the meanings given
to them in the Credit Agreement.
The undersigned certifies to the accuracy of the foregoing.
BORDERS GROUP, INC.
By
_________________________________
Its
_________________________________
Date
_________________________________
-125-
<PAGE> 134
EXHIBIT 2.05(b)
FORM OF
SWING LOAN LOAN REQUEST
TO: PNC Bank, National Association, as Administrative Agent
One PNC Plaza, 4th Floor Annex
249 5th Avenue
Pittsburgh, PA 15265
Telephone No.: (412) 762-3627
Telecopier No.: (412) 762-8672
Attention: Multi-Bank Loan Administration - Arlene Ohler
FROM: Borders Group, Inc.
RE: Amended and Restated Multicurrency Credit Agreement (the
"Credit Agreement") dated as of October _______, 1997 by and among
Borders Group, Inc., Borders, Inc., Walden Book Company, Inc. and BGP(UK)
Limited as Borrowers, the Lenders, as defined
therein, PNC Bank, National Association, as Administrative Agent, The First
National Bank of Chicago, as Syndication Agent and
Bankers Trust Company, as Real Estate Administrative Agent.
Pursuant to Section 2.05(b) of the Credit Agreement, the
undersigned hereby makes the following Swing Loan Request:
1. Proposed Borrowing Date
(which must be a Business Day)
__________________
2. Aggregate principal amount of
Swing Loans(3) $
__________________
3. Borrower to receive proceeds of
Swing Loans $
__________________
4. As of the date hereof and the date of making of the
Swing Loans: the representations and warranties
contained in Article VI of the Credit Agreement are and
will be true (except representations and warranties that
expressly relate solely to an earlier date or time,
which representations and warranties were true on and as
of the specific date referred to therein), no Event of
Default or Potential Default has occurred and is
continuing or shall exist, and the making of the Swing
Loans shall not contravene any Law
____________________
(3)Not less than $1,000,000 and in integral multiples of $500,000 in excess
thereof.
-126-
<PAGE> 135
applicable to the Company or any of its Subsidiaries, any
Agent or any of the Lenders.
Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement.
-127-
<PAGE> 136
The undersigned certifies to the accuracy of the foregoing.
BORDERS GROUP, INC.
By
______________________________
Its
______________________________
Date
______________________________
-128-
<PAGE> 137
EXHIBIT 3.01
FORM OF
BID LOAN REQUEST
TO: PNC Bank, National Association as Administrative Agent
One PNC Plaza, 4th Floor Annex
249 5th Avenue
Pittsburgh, PA 15265
Telephone No.: (412) 762-3627
Telecopier No.: (412) 762-8672
Attention: Multi-Bank Loan Administration - Arlene Ohler
FROM: Borders Group, Inc.
RE: Amended and Restated Multicurrency Credit Agreement (the
"Credit Agreement") dated as of October _______, 1997 by and
among Borders Group, Inc., Borders, Inc., Walden Book Company,
Inc. and BGP(UK) Limited as Borrowers, the Lenders, as defined
therein, PNC Bank, National Association, as Administrative
Agent, The First National Bank of Chicago, as Syndication
Agent and Bankers Trust Company, as Real Estate Administrative
Agent.
The Company hereby gives you notice pursuant to Section 3.01
of the Credit Agreement that the Borrowers request Bid Loans under the Credit
Agreement, and in that connection set forth below the terms on which such Bid
Loans are requested to be made:
<TABLE>
<S><C>
1. Proposed Bid Loan Borrowing Date
(which must be a Business Day)
_________________
2. Interest Rate Option applicable to the Bid Loan
(Choose one):
______ a. Fixed Rate Bid Loan Option
______ b. Euro-Rate Bid Loan Option for an
Interest Period of (choose one):
_________ i. 1 month ________ iii. 3 months
_________ ii. 2 months _________ iv. 6 months
3. Proposed Bid Loan Period(4)
</TABLE>
____________________
(4)If electing a Fixed Rate Bid Loan Option, the proposed Bid Loan Period
shall be not less than 7 days and not more than 270 days; if electing a
Euro-Rate Bid Loan Option, the proposed Bid
-129-
<PAGE> 138
4. Borrower to receive proceeds
of Bid Loans ____________________
_________________
Loan Period shall be 1, 2, 3 or 6 months and, in any case, shall end no later
than the Expiration Date.
-130-
<PAGE> 139
5. Maximum aggregate principal
amount of Revolving Credit Bid
Loans(5) $
------
6. As of the date hereof and the date of making of the
Bid Loans: the representations and warranties
contained in Article VI of the Credit Agreement are
and will be true (except representations and
warranties that expressly relate solely to an
earlier date or time, which representations and
warranties were true on and as of the specific date
referred to therein), no Event of Default or
Potential Default has occurred and is continuing or
shall exist, and the making of the Bid Loans shall
not contravene any Law applicable to the Company or
any of its Subsidiaries, any Agent or any of the
Lenders.
Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement.
The undersigned certifies to the accuracy of the foregoing.
BORDERS GROUP, INC.
By
--------------------------
Its
--------------------------
Date
--------------------------
____________________
(5)Shall be not less than $10,000,000 and in integral multiples of
$1,000,000.
-131-
<PAGE> 140
FORM OF BID
TO: PNC Bank, National Association as Administrative Agent
One PNC Plaza, 4th Floor Annex
249 5th Avenue
Pittsburgh, PA 15265
Telephone No.: (412) 762-3627
Telecopier No.: (412) 762-8672
Attention: Multi-Bank Loan Administration - Arlene Ohler
FROM: [Name of Lender]
RE: Amended and Restated Multicurrency Credit Agreement (the
"Credit Agreement") dated as of October _______, 1997 by and
among Borders Group, Inc., Borders, Inc., Walden Book Company,
Inc. and BGP(UK) Limited as Borrowers, the Lenders, as defined
therein, PNC Bank, National Association, as Administrative
Agent, The First National Bank of Chicago, as Syndication
Agent and Bankers Trust Company, as Real Estate Administrative
Agent.
The undersigned hereby makes a Bid pursuant to Section 3.02(a)
of the Credit Agreement, in response to the Bid Loan Request made by the
Company on __________, _______ and in that connection sets forth below the
terms on which such Bid is made:
<TABLE>
<CAPTION>
Bid No. 1 Bid No. 2 Bid No. 3
<S> <C> <C> <C>
1. Principal Amount(6)
------- ------- -------
2. Fixed Rate (if applicable)
------- ------- -------
3. Euro-Rate Bid Loan
Spread (if applicable) ------- ------- -------
4. Bid Loan Period and
Last day thereof(7) ------- ------- -------
</TABLE>
______________________
(6)Not less than $5,000,000 or greater than the Requested Amount, and in
integral multiples of $1,000,000 in excess thereof. Multiple bids will be
accepted by the Administrative Agent.
(7)If electing a Fixed Rate Bid Loan Option, the proposed Bid Loan Period
shall not be less than 7 days and not more than 270 days; if electing a
Euro-Rate Bid Loan Option, the proposed Bid Loan Period shall be 1, 2, 3 or 6
months and, in either case, shall end no later than the Expiration Date.
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<PAGE> 141
Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement.
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<PAGE> 142
The undersigned hereby confirms that it is prepared,
subject to the conditions set forth in the Credit Agreement, to extend credit
to the Borrowers upon acceptance by the Company of this Bid in accordance with
Section 3.02(c) of the Agreement.
Very truly yours,
[NAME OF LENDER],
By:________________________
Its:_______________________
Date:______________________
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<PAGE> 143
FORM OF BID ACCEPT/REJECT LETTER
TO: PNC Bank, National Association, as Administrative Agent
One PNC Plaza, 4th Floor Annex
249 5th Avenue
Pittsburgh, PA 15265
Telephone No.: (412) 762-3627
Telecopier No.: (412) 762-8672
Attention: Multi-Bank Loan Administration - Arlene Ohler
FROM: [Name of Lender]
RE: Amended and Restated Multicurrency Credit Agreement (the
"Credit Agreement") dated as of October _______, 1997 by and
among Borders Group, Inc., Borders, Inc., Walden Book Company,
Inc. and BGP (UK) Limited as Borrowers, the Lenders, as
defined therein, PNC Bank, National Association, as
Administrative Agent, The First National Bank of Chicago, as
Syndication Agent and Bankers Trust Company, as Real Estate
Administrative Agent.
In accordance with Section 3.02(a) of the Credit Agreement, we
have received a summary of bids in connection with our Bid Loan Request dated
_____________, _____ and in accordance with Section 3.02(b) of the Credit
Agreement, we hereby accept the following bids for maturity on [date]:
<TABLE>
<CAPTION>
Euro-Rate Bid
Fixed Rate Loan Spread
Principal Amount(8) (if applicable) (if applicable) Lender
<S> <C> <C> <C>
$_________ __________ __________ __________
$_________ __________ __________ __________
</TABLE>
We hereby reject the following bids:
<TABLE>
<CAPTION>
Euro-Rate Bid
Fixed Rate Loan Spread
Principal Amount (if applicable) (if applicable) Lender
<S> <C> <C> <C>
$_________ __________ __________ __________
$_________ __________ __________ __________
</TABLE>
____________________
(8)Aggregate not less than $10,000,000 or greater than the
Requested Amount, and in integral multiples of $1,000,000.
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<PAGE> 144
The amount of $_____________ should be deposited in PNC Bank,
National Association account number [______________________] on the Bid Loan
Borrowing Date.
Very truly yours,
BORDERS GROUP, INC.
By:_________________________
Its:________________________
Date:_______________________
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<PAGE> 145
EXHIBIT 3.02(c)
FORM OF DESIGNATION AGREEMENT
Dated _______________ __, 199_
Reference is made to the Amended and Restated
Multi-Currency Credit Agreement dated as of October 17, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement')
among Borders Group, Inc., Borders, Inc., Walden Book Company, Inc., BGP U.K.
Limited (collectively, the "Borrowers"), the Lenders parties thereto, PNC Bank,
National Association, as Administrative Agent for the Lenders, The First
National Bank of Chicago, as Syndication Agent for the Lenders, and Bankers
Trust Company, as Real Estate Administrative Agent for the Lenders. Terms
defined in the Credit Agreement are used herein with the same meaning.
[NAME OF DESIGNOR] (the "Designor"), [NAME OF
DESIGNEE] (the "Designee"), the Administrative Agent and the Borrowers agree as
follows:
1. The Designor hereby designates the Designee, and the
Designee hereby accepts such designation, to have a right to make Bid Loans
pursuant to Article III of the Credit Agreement. Any assignment by Designor to
Designee of its rights to make a Bid Loan pursuant to such Article III shall be
effective at the time of the funding for such Bid Loan and not before such
time.
2. Except as set forth in Section 7 below, the Designor
makes no representation or warranty and assumes no responsibility pursuant to
this Designation Agreement with respect to (a) any statements, warranties or
representations made in or in connection with any Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of any Loan Document or any other instrument and documents furnished
pursuant thereto and (b) the financial condition of the Company or Subsidiary
of the Company or the performance or observance by the Company or any
Subsidiary of the Company of any of their respective obligations under any Loan
Documents or any other instrument or document furnished pursuant thereto. (It
is acknowledged that the Designor may make representations and warranties of
the type described above in other agreements to which the Designor is a party.)
3. The Designee (a) confirms that it has received a copy
of each Loan Document, together with copies of the financial statements
referred to in Section 6.01(i) of the Credit Agreement and such other
documents and information as it has deemed appropriate to make its own
independent credit analysis and decision to enter into this Designation
Agreement; (b) agrees that it will, independently and without reliance upon any
of the Agents, the Designor or any other Lender and based on such documents and
information as it shall deem appropriate at the time continue to make its own
credit decisions in taking or not taking action under any Loan Document; (c)
confirms that it is a Designated Lender; (d) appoint and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under any Loan Document as are delegated to the
Administrative Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; and (e) agrees that it will
perform in accordance with
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<PAGE> 146
their terms all of the obligations which by the terms of any Loan Document are
required to be performed by it as a Lender.
4. The Designee hereby appoints Designor (in Designor's
capacity as the designating lender and not as the referral bank) as Designee's
agent and attorney in fact, and grants to Designor an irrevocable power of
attorney, to deliver and receive all communications and notices under the
Credit Agreement and other Loan Documents and to exercise on Designee's behalf
all rights to vote and to grant and make approvals, waivers, consents or
amendment to or under the Credit Agreement or other Loan Documents. Any
document executed by the Designor on the Designee's behalf in connection with
the Credit Agreement or other Loan Documents shall be binding on the Designee.
The Borrowers , the Agents and each of the Lenders may rely on and are
beneficiaries of the preceding provisions.
5. Following the execution of this Designation Agreement
by the Designor and its Designee, it will be delivered to the Administrative
Agent for acceptance and recording by the Administrative Agent. The effective
date for this Designation Agreement (the "Effective Date") shall be the date of
acceptance hereof by the Administrative Agent, unless otherwise specified on
the signature page thereto.
6. The Administrative Agent shall not institute or join
any other person in instituting against the Designee any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, for one year
and a day after the Expiration Date of the Credit Agreement.
7. The Company shall not institute or join any other
person in instituting against the Designee any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under
any federal or state bankruptcy or similar law, for one year and a day after
the Expiration Date of the Credit Agreement.
8. The Designor unconditionally agrees to pay or
reimburse the Designee and save the Designee harmless against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
or asserted by any of the parties to the Loan Documents against the Designee,
in its capacity as such, in any way relating to or arising out of this
Designation Agreement or any other Loan Documents or any action taken or
omitted by the Designee hereunder or thereunder, provided that the Designor
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
if the same results from the Designee's gross negligence or willful misconduct.
9. Upon such acceptance and recording by the
Administrative Agent, as of the Effective Date, the Designee shall be a party
to the Credit Agreement with a right to make Bid Loans as a Lender pursuant to
Article III of the Credit Agreement and shall have the rights and obligations
of a Lender related thereto.
10. This Designation Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, without
reference to the provisions thereof regarding conflicts of law.
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<PAGE> 147
11. This Designation Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Designation
Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart of this Designation Agreement.
IN WITNESS WHEREOF, the Designor and the Designee, intending
to be legally bound, have caused this Designation Agreement to be executed by
their officers thereunto duly authorized as of the date first written above.
Effective Date: _____________ __, 199_
[NAME OF DESIGNOR], as Designor
By:
-----------------------------------------
Title:
--------------------------------------
[NAME OF DESIGNEE], as Designee
By:
-----------------------------------------
Title:
--------------------------------------
Applicable Lending Office (and address for notices):
[ADDRESS]
Accepted this ____ day of
___________, 199_
PNC BANK, NATIONAL ASSOCIATION BORDERS GROUP, INC., for itself and for
as Administrative Agent the Borrowers under the Credit Agreement
By: By:
--------------------------- ---------------------------
Title: Title:
------------------------ ------------------------
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<PAGE> 148
EXHIBIT 7.01(e)(i)
FORM OF OPINION OF THE BORROWERS' COUNSEL
The Lenders that are Parties
to the Credit Agreement referred
to below, PNC Bank, National Association
as Administrative Agent, The First National
Bank of Chicago as Syndication Agent,
and Bankers Trust Company, as Real Estate
Administrative Agent,
c/o Schiff Hardin & Waite
7200 Sears Tower
Chicago, Illinois 60606
RE: AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT
WITH BORDERS GROUP, INC. ET AL.
We have acted as counsel to Borders Group, Inc., a
Michigan corporation (the "Company"), Borders, Inc., a Colorado corporation
("Borders"), Walden Book Company, Inc., a Colorado corporation ("Walden") and
BGP (UK) Limited., a corporation organized under the laws of the United Kingdom
("Books Holding"), (the Company, Borders, Walden and Books Holding hereinafter
referred to individually as a "Borrower" and, collectively, as the
"Borrowers"), in connection with the negotiation, execution and delivery of
that certain Amended and Restated Multicurrency Credit Agreement (the "Credit
Agreement") dated as of October ____, 1997, among the Borrowers, the financial
institutions which are parties thereto (the "Lenders"), PNC Bank, National
Association, in its capacity as administrative agent for the Lenders under the
Credit Agreement, The First National Bank of Chicago in its capacity as
syndication agent for the Lenders under the Credit Agreement and Bankers Trust
Company, in its capacity as real estate administrative agent for the Lenders
under the Credit Agreement. This opinion is furnished to you at the request of
the Borrowers as required by Section 7.01(e)(i) of the Credit Agreement.
Capitalized terms not defined in this opinion shall have the meanings given to
them in the Credit Agreement.
In connection with this opinion, we have examined an
original, executed copy of the Credit Agreement, and the other documents,
instruments and agreements executed and delivered in connection with the
transactions contemplated by the Credit Agreement (collectively, the "Loan
Documents").
We have also examined, in addition to the Loan
Documents, originals, or copies certified or otherwise identified to our
satisfaction, of such corporate records, agreements, instruments and documents
of the Borrowers, certificates and other statements of public officials and
corporate officers, and such other documents as we have deemed necessary as a
basis for the opinions expressed below.
In rendering our opinion, we have assumed (i) the
corporate power of all parties to the documents examined by us other than the
Borrowers, (ii) the due authorization, execution and delivery of each document
examined by us by all parties to such documents other than the Borrowers, (iii)
the genuineness of all signatures, (iv) the authenticity of all documents
submitted to us as originals, and (v) the conformity to original documents of
all documents submitted to us as
<PAGE> 149
copies. In rendering our opinion, we have also relied as to certain factual
matters on certificates by officers of the Borrowers and certificates by
governmental officials, copies of which have been delivered to you. Nothing
has come to our attention which causes us to believe that any factual matters
contained in such certificates are untrue in any material respects.
Based on the foregoing and subject to the assumptions
and qualifications set forth in this opinion, we are of the opinion that:
(1) Each of the Borrowers (i) is duly organized and
is validly existing in good standing under the laws of the jurisdiction of its
respective incorporation, and (ii) is duly qualified to do business and is in
good standing as a foreign corporation in each state in which it owns or leases
any property or conducts any business, except to the extent that failure to so
qualify would not individually or in the aggregate have a Material Adverse
Effect.
(2) Each of the Borrowers has the power and
authority to own its property and to carry on its business as now conducted,
and has the power and authority to execute, deliver and perform its obligations
under the Loan Documents to which it is a party.
(3) Each of the Loan Documents to which it is a
party constitutes the legal, valid, and binding obligation of each Borrower
enforceable against such Borrower in accordance with its terms.
(4) The execution, delivery and performance by each
Borrower of the Loan Documents to which it is a party does not require the
consent or approval of, or other action by or filing with, any state or Federal
governmental body or other regulatory authority and will not be in
contravention of or in conflict with any state or Federal law or regulation
having applicability to such Borrower or its Property.
(5) The execution, delivery and performance of the
Loan Documents do not violate any term or provision of any Borrower's
certificate or articles of incorporation or by-laws.
(6) The execution, delivery and performance of the
Loan Documents will not conflict with, breach or constitute a default under, or
constitute grounds for the acceleration of the maturity of, any agreement,
indenture, undertaking or other instrument, known to us after diligent
investigation, to which any Borrower is a party or by which it or any of its
property may be bound or affected.
(7) The execution, delivery and performance of the
Loan Documents will not result in the creation or imposition of (or the
obligation to create or impose) any Lien on any Borrower's Property pursuant to
the provisions of any of the foregoing.
(8) The execution, delivery and performance of the
Loan Documents do not conflict with or result in the violation of any judgment,
order or decree of any court, regulatory agency or arbitrator, known to us
after diligent investigation, to which any Borrower is a party or by which it
or any of its Property may be bound or affected.
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<PAGE> 150
(9) The courts of the State of Michigan and of the
United Kingdom would give effect to the agreement contained in the Loan
Documents that such Loan Documents shall be governed by and construed in
accordance with the internal laws of the State of Illinois.
(10) To our knowledge after diligent investigation,
no judgments are outstanding or administrative orders pending against any
Borrower, nor are there any pending or threatened lawsuits, investigations,
claims against or governmental proceedings affecting any Borrower or its
Property which individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect.
(11) The execution, delivery and performance of the Loan
Documents will not violate Regulations G, T, U, or X of the Board of
Governors of the Federal Reserve System.
(12) None of the Borrowers nor any Subsidiary of any
Borrower is an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended.
(13) All payments by Books Holding under the Credit Agreement
may be made without deduction of any tax imposed by the United
Kingdom. Neither the Credit Agreement nor the arrangements contemplated
thereby give rise to any registration or stamp or other tax or duty in or
imposed by the United Kingdom or any authority or agency thereof.
(14) Books Holding is subject to the jurisdiction of the
courts of the United Kingdom and is not entitled to claim any immunity from
suit or execution of judgment on the ground of sovereignty or otherwise.
(15) The choice of law provisions in the Credit Agreement
(providing for the same to be governed by and construed in accordance
with the laws of the State of Illinois) are valid and binding under the law of
the United Kingdom and would be recognized and upheld by the courts of the
United Kingdom.
(16) The submission by Books Holding to the jurisdiction
of the state and United States federal courts sitting in the State of
Illinois contained in the Credit Agreement is a valid submission and any final
judgment for a sum of money obtained against Books Holding in any such court
will be enforceable against Books Holding in the United Kingdom. We know of no
public policy at the date hereof which would prevent or hinder the enforcement
of such a final judgment in the United Kingdom.
(16) It is not necessary in order to enable the
Administrative Agent, the Syndication Agent, the Real Estate Administrative
Agent or any Lender to claim and enforce in the United Kingdom any right
afforded to the Administrative Agent, the Syndication Agent, the Real Estate
Administrative Agent or such Lender by or in connection with the Credit
Agreement or by reason of the execution, delivery and performance of the
Credit Agreement by the Administrative Agent, the Syndication Agent, the Real
Estate Administrative Agent or any Lender that the Administrative Agent, the
Syndication Agent, the Real Estate Administrative Agent or any Lender be
licensed, qualified or otherwise entitled to carry on business in or otherwise
registered with any authority in the United Kingdom.
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<PAGE> 151
(17) None of the Administrative Agent, the Syndication
Agent, the Real Estate Administrative Agent or any Lender will be
deemed resident, domiciled or carrying on business in or subject to the laws of
the United Kingdom by reason of the execution, delivery, performance or
enforcement by the Administrative Agent, the Syndication Agent, the Real Estate
Administrative Agent or any Lender of the Credit Agreement.
The foregoing opinions are subject to the following
qualifications:
(i) Our opinion expressed in paragraph 3 above
concerning the enforceability of the Loan Documents is subject to (A) the
effect of applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws and court decisions of general application affecting the
enforceability of creditors' rights generally, and (B) general principles of
equity (regardless of whether such enforceability is considered is a proceeding
in equity or law).
Very truly yours,
[LAW FIRM NAME]
By:
------------------------------------
[Partner's Name]
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<PAGE> 152
EXHIBIT 8.03(C)
FORM OF COMPLIANCE CERTIFICATE
[For the quarter ended ____________]
Reference is made to that certain Amended and
Restated Multicurrency Credit Agreement (as amended, the "Credit Agreement")
dated as of October ____, 1997 by and among Borders Group, Inc., Borders, Inc.,
Walden Book Company, Inc. and BGP (UK) Limited, as Borrowers, the Lenders, as
defined therein, PNC Bank, National Association, as Administrative Agent, The
First National Bank of Chicago, as Syndication Agent and Bankers Trust Company,
as Real Estate Administrative Agent.
Capitalized terms used but not defined herein shall
have the meanings given to them in the Credit Agreement. This certificate is
being delivered pursuant to the requirements of Section 8.03(c) of the Credit
Agreement.
The undersigned, an Authorized Officer of the Company, hereby certifies that:
1. The undersigned has reviewed the terms of the
Credit Agreement and the other Loan Documents and has made, or
caused to be made under his supervision, a review of the
transactions and conditions of the Borrowers during the
accounting period covered by the financial statements being
delivered simultaneously herewith;
2. Such review has not disclosed the existence
during such accounting period, and the undersigned does not
have knowledge of the existence as of the date hereof, of any
Event of Default or any Potential Default; and
3. The representations and warranties contained
in Article VI of the Credit Agreement are true on and as of
the date hereof (except representations and warranties that
expressly relate solely to an earlier date or time, which
representations and warranties were true on and as of the
specific date referred to therein).
The undersigned hereby further certifies that the following calculations
demonstrate for the Fiscal Quarter ending ____________, _____ (the "Period"),
which is the [First] [Second] [Third] [Fourth] Fiscal Quarter, compliance by
the Borrowers with the financial covenants contained in Section 8.02 of Credit
Agreement.
<PAGE> 153
<TABLE>
<S> <C> <C>
1. Indebtedness
a. Aggregate outstanding principal amount of
all Indebtedness $__________
b. Capitalized Rent Expense
(i) Rent Expense $__________
(ii) Lease Financing Rent Expense $__________
(iii) 4 x ((I) + (ii)) $__________
c. Maximum aggregate notional amount of all
interest rate management devices permitted
by Section 8.02(a)(iv) [a + (b x 50%)] $__________
d. Actual aggregate notional amount of all
interest rate management devices. $__________
e. Consolidated Tangible Net Worth (see
8(b)(iii) below $__________
f. Maximum aggregate amount of additional
Indebtedness of the Company and its
Domestic Subsidiaries permitted by
Section 8.02(a)(ix) [e x 20%] $__________
g. Actual aggregate amount of additional
Indebtedness of the Company and its Domestic
Subsidiaries $__________
h. Maximum aggregate amount of Indebtedness of
Foreign Subsidiaries to third parties permitted by Section 8.02(a)(x) $10,000,000
i. Actual aggregate amount of Indebtedness of
Foreign Subsidiaries to third parties $__________
2. Permitted Liens
a. Consolidated Tangible Net Worth (See 8(b)(iii) below) $__________
b. Maximum aggregate fairmarket value of all property
secured by Liens permitted under clause (xi) of the definition
of "Permitted Liens" [a x 5%] $__________
c. Actual aggregate fair market value of all property secured
</TABLE>
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<PAGE> 154
<TABLE>
<S> <C> <C>
by Liens permitted under clause (xi) of the definition
of "Permitted Liens" $__________
3. Contingent Obligations
a. Maximum aggregate amount of current portion
of Permitted Lease Contingent Obligations
permitted by Section 8.02(c)(ii) $15,000,000
b. Actual aggregate amount of current portion of
Permitted Lease Contingent Obligations $__________
c. Maximum aggregate amount of current portion
Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary
in respect of operating lease obligations of any
Unrestricted Subsidiary which is a Foreign Subsidiary $15,000,000
d. Actual aggregate amount of Contingent Obligations
of the Company or any Unrestricted Subsidiary which
is a Domestic Subsidiary in respect of operating lease
obligations of any Unrestricted Subsidiary which
is a Foreign Subsidiary $__________
4. Loans and Investments
a. Consolidated Tangible Net Worth (see 8(b)(iii) below) $__________
b. Maximum aggregate amount of all Investments by
Company and Domestic Subsidiaries in Foreign
Unrestricted Subsidiaries permitted by Section 8.02(d)(v)
plus Foreign Purchases [a x 15%] $__________
c. Actual aggregate amount of all Investments
permitted by Section 8.02(d)(v) by Company and Domestic
Subsidiaries in Foreign Unrestricted Subsidiaries $__________
d. Actual aggregate amount of all Foreign Purchases
by Company and Domestic Subsidiaries $__________
e. c + d $__________
f. Maximum aggregate principal amount of all
loans to employees $10,000,000
g. Actual aggregate principal amount of all
loans to employees $__________
</TABLE>
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<PAGE> 155
<TABLE>
<S> <C> <C>
5. Dividends and Distributions
a. Maximum permitted aggregate amount of repurchases
of the Company's stock
i. aggregate amount paid by
officers, employees, and
directors in connection with the
exercise of options $__________
ii. realized tax benefit $__________
iii. ($100,000 + i + ii ) $__________
b. Actual aggregate amounts paid for repurchases of
the Company's stock $__________
c. See Schedule 1 hereto
6. Minimum Fixed Charge Coverage Ratio
a. Minimum Fixed Charge Coverage Ratio 1.50 to 1.0
b. Actual Fixed Charge Coverage Ratio:
(i) Consolidated Cash Flow from Operations:
(A) Consolidated Net income
for the preceding four
Fiscal Quarters $_________
(B) Less Extraordinary gains ($________)
(C) Plus Income (minus loss)
of minority investments $_________
(D) Plus Depreciation and
amortization $_________
(E) Plus Interest expense $_________
(F) Plus Rent Expense $_________
(G) Plus Lease Financing
Rent Expense $_________
</TABLE>
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<PAGE> 156
<TABLE>
<S> <C> <C>
(H) Plus Income Tax expense $_________
(I) Exclude Losses attributable
to use of fair value
methodology for
recognition and
measurement of
impairment of goodwill
in accordance with
Accounting Principles
Board Opinion No. 17 $_________
(J) Consolidated Cash Flow
from Operations [A-B-C+
D+E+F+G+H-I] $_________
(ii) Fixed Charges:
(A) Interest Expense $_________
(B) Rent Expense $_________
(C) Lease Financing
Rent Expense $_________
(D) Scheduled principal
installments on
Indebtedness $_________
(E) Fixed charges
[A+B+C+D] $_________
c. Ratio of (i)(J) to (ii)(E) ______ to 1.0
7. Maximum Leverage Ratio (expressed as a percentage)
a. Required Leverage Ratio
I. third and fourth Fiscal Quarter in
Fiscal Year 1997 60%
ii. each Fiscal Quarter in
Fiscal Year 1998 60%
iii. each Fiscal Quarter in
Fiscal Year 1999 55%
</TABLE>
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<PAGE> 157
<TABLE>
<S> <C> <C>
iv. each Fiscal Quarter after
Fiscal Year 1999 50%
b. Actual Leverage Ratio:
(i) Consolidated Funded
Indebtedness (Indebtedness
for borrowed money, including
Capitalized Lease Obligations
($__________) plus Contingent
Obligations in respect of
borrowed money or Capitalized
Lease Obligations ($__________)
plus Contingent Obligations arising under
the Lease Financing Guarantee ($__________) $__________
(ii) Consolidated Total Capital:
(A) Total stockholders equity $__________
(B) Consolidated Funded
Indebtedness (see (I)
above) $__________
(C) (A) + (B) $__________
(iii) Ratio of (i) to (ii)(C) ____%
8. Minimum Tangible Net Worth
--------------------------
a. Required Consolidated Tangible Net Worth:
(i) $430,000,000
(ii)(A) Consolidated Net Income for
the period from July 28,
1997 through the end of the
Fiscal Quarter immediately
preceding the date hereof $_________
(B) 50% x (A) $_________
(iii) Net cash proceeds of any
issuance of equity
securities $_________
(iv) the aggregate amount paid
</TABLE>
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<PAGE> 158
<TABLE>
<S> <C> <C> <C>
to repurchase stock $_________
(v) (i) + (ii)(B) + (iii) - (iv) $__________
b. Actual Consolidated Tangible Net Worth:
(i) Total stockholders' equity
as of the end of the Period $_________
(ii) Intangible assets of the
Company and its Subsidiaries
on a consolidated basis as
of the end of the Period
(excluding intangible assets from
the Books Etc. Limited Purchase
permitted by Section 8.02(d)(vi)) $_________
(iii) (i) - (ii) $__________
9. Foreign Activities
a. Consolidated Tangible Net Worth
(See 8(b)(iii)above $__________
b. Maximum permitted aggregate amount of
Contingent Obligations permitted under
Section 8.02(c)(x) and Investments permitted under
Section Section 8.02(d)(v), 8.02(d)(viii), 8.02(d)(x) in
respect of a Foreign Joint Venture, and
Section 8.02(d)(xi) in respect of a Foreign Restricted
Subsidiary [a x 25%] $__________
c. Actual aggregate amount of
Contingent Obligations permitted under
Section 8.02(c)(x) and Investments permitted under
Section Section 8.02(d)(v), 8.02(d)(viii), 8.02(d)(x) in
respect of a Foreign Joint Venture, and
Section 8.02(d)(xi) in respect of a Foreign Restricted
Subsidiary $__________
10. Permitted Joint Venture Activity
a. Consolidated Tangible Net Worth
(See 8(b)(iii) above) $__________
b. Maximum permitted aggregate amount of
all Investments in Joint Ventures
</TABLE>
- -150-
<PAGE> 159
<TABLE>
<S> <C> <C>
and Contingent Obligations of the Company or
any Unrestricted Subsidiary which is a
Domestic Subsidiary in respect of
Indebtedness of Joint Ventures
[a x 15%] $__________
c. Actual aggregate amount of all
Investments in Joint Ventures ($________) and
Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic
Subsidiary in respect of Indebtedness of
Joint Ventures($________) $__________
d. Maximum permitted aggregate amount of current
portion Contingent Obligations of the Company or
any Unrestricted Subsidiary which is a Domestic
Subsidiary relating to Leases of Joint Ventures $15,000,000
e. Actual aggregate amount of
Contingent Obligations of the Company or
any Unrestricted Subsidiary which is a
Domestic Subsidiary relating to Leases of Joint Ventures $__________
11. Permitted Restricted Subsidiary Activity
a. Consolidated Tangible Net Worth
(See 8(b)(iii) above) $__________
b. Maximum permitted aggregate amount of all
Investments by the Company or Unrestricted Domestic
Subsidiary in Restricted Subsidiaries
and Contingent Obligations of the Company
or any Unrestricted Subsidiary which is a Domestic
Subsidiary in respect of Indebtedness of Restricted
Subsidiaries [a x 20%] $__________
c. Actual aggregate amount of all Investments
by the Company or Unrestricted Domestic Subsidiary
in Restricted Subsidiaries ($_________)
and Contingent Obligations of the Company
or any Unrestricted Subsidiary which is a
Domestic Subsidiary in respect of Indebtedness of Restricted
Subsidiaries ($________) $__________
d. Maximum permitted aggregate amount of
all Investments by the Company or Unrestricted Domestic
</TABLE>
-151-
<PAGE> 160
<TABLE>
<S> <C> <C>
Subsidiary and Contingent Obligations of the
Company or any Unrestricted Subsidiary which is
a Domestic Subsidiary in respect of Indebtedness
of Restricted Subsidiaries which are Foreign
Subsidiaries [a x 15%] $__________
e. Actual aggregate amount of
all Investments by the Company or Unrestricted Domestic
Subsidiary and Contingent Obligations of the
Company or any Unrestricted Subsidiary which is
a Domestic Subsidiary in respect of Indebtedness
of Restricted Subsidiaries which are Foreign
Subsidiaries $__________
f. Maximum permitted aggregate amount of
Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic
Subsidiary relating to Leases of Restricted Subsidiaries $15,000,000
g. Actual aggregate amount of
Contingent Obligations of the Company or
any Unrestricted Subsidiary which is a
Domestic Subsidiary relating
to Leases of Restricted Subsidiaries $__________
11. Description of any Permitted Joint Venture Activity
or Permitted Restricted Subsidiary Activity engaged
in, or any Purchase Made, During the Period
</TABLE>
[Describe transactions, including amounts involved]
IN WITNESS WHEREOF, the undersigned has caused this Compliance
Certificate to be executed and delivered this _____ day of _____________, _____.
BORDERS GROUP, INC.
By:
------------------------------------
Title:
---------------------------------
[Authorized Officer]
-152-
<PAGE> 161
Schedule 1
<TABLE>
<CAPTION>
Maximum
Distribution
Minority to Minority Actual Distributions
Shareholders pro Shareholders Made to Minority
Minority Net Income rata Share of Net (50% of pro Shareholders
Subsidiary Shareholders Percent Ownership Year to Date Income rata share) During FiscalYear
- ------------ ------------ ----------------- ------------ --------------------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
-153-
<PAGE> 162
SCHEDULE 1.01(A)
EURO-RATE MARGIN/LETTER OF CREDIT FEE
BASE RATE MARGIN, FACILITY FEE RATE (1)
<TABLE>
<CAPTION>
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
- -----------------------------------------------------------------------------------------------------------------
If the
If the Company's Fixed If the
Company's Fixed Charge Coverage Company's Fixed
Charge Coverage Ratio EXCEEDS Charge Coverage If the
If the Ratio EXCEEDS 1.80 : 1.00 AND Ratio EXCEEDS Company's Fixed
Company's Fixed 2.00 : 1.00 AND IS LESS THAN OR 1.60 TO 1.0 AND Charge Coverage
Charge Coverage IS LESS OR EQUAL TO IS LESS THAN OR Ratio IS LESS
Ratio EXCEEDS EQUAL TO 2.00 : 1.00. EQUAL TO THAN OR EQUAL
2.20 : 1.00. 2.20 : 1.00. 1.80 : 1.00. TO 1.60 TO 1.00.
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Euro-Rate
Margin/ Letter
of Credit Fee 14.5 17.5 20.0 22.5 32.5
- -----------------------------------------------------------------------------------------------------------------
Base Rate
Margin 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------
Facility Fee
Rate 8.0 10.0 12.5 15.0 17.5
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All prices are expressed in basis points. A basis point is equal to 1/100
of 1%.
- -154-
<PAGE> 163
SCHEDULE 1.01(B)
COMMITMENTS OF LENDERS
<TABLE>
<CAPTION>
ADDRESS FOR AMOUNT OF RATABLE
NAME OF LENDER NOTICES COMMITMENT SHARE*
<S> <C> <C> <C>
PNC Bank, National National Corporate Banking--Chicago Office $ 45,333,333.33 10.67%
Association 500 West Monroe Street
Chicago, IL 60661
FAX # (312) 906-3420
Phone # (312) 906-3426
Attn: Mr. Peter F.Stack
The First National Bank of 14th Floor, Suite 0086 $ 45,018,518.52 10.59%
Chicago One First National Plaza
Chicago, IL 60670
FAX # (312) 732-8587
Phone # (312) 732-6132
Attn: Mr. Paul E. Rigby
Bankers Trust Company 130 Liberty Street, 34th Floor $ 45,018,518.52 10.59%
New York, NY 10006
FAX # (212) 250-7218
Phone # (212) 250-5175
Attn: Ms. Patricia Hogan
First Union National Bank One First Union Center, DC5 $ 25,185,185.19 5.92%
Charlotte, NC 28288-0745
FAX # (704) 374-2802
Phone # (704) 374-2641
Attn: Ms. Mary Amatore
</TABLE>
* Ratable Shares used for calculating Required Lenders, but not for loan
operation purposes, such as fundings and payments.
155
<PAGE> 164
<TABLE>
<CAPTION>
ADDRESS FOR AMOUNT OF RATABLE
NAME OF LENDER NOTICES COMMITMENT SHARE*
<S> <C> <C> <C>
Fleet National Bank One Federal Street, OF0320 $ 25,185,185.19 5.92%
Boston, MA 02110-2010
FAX # (617) 346-0689
Phone # (617) 346-0611
Attn: Mr. Richard M. Seufert
127 Public Square $ 25,185,185.19 5.92%
KeyBank National Cleveland, OH 44114-1306
Association FAX # (216) 689-4981
Phone # (216) 689-3589
Attn: Mr. Thomas Crandell
Comerica Bank One Detroit Center $ 25,185,185.19 5.92%
500 Woodward Ave.
Mail Code 3268-9th Floor
Detroit, MI 48226-3289
FAX # (313) 222-9514
Phone # (313) 222-5060
Attn: Mr. David C. Bird
Morgan Guaranty Trust c/o J.P. Morgan & Company, Inc. $ 18,888,888.89 4.44%
Company of New York 22nd Floor
60 Wall Street
New York, NY 10260
FAX # (212) 648-5018
Phone # (212) 648-8063
Attn: Ms. Deborah Broadheim
</TABLE>
* Ratable Shares used for calculating Required Lenders, but not for loan
operation purposes, such as fundings and payments.
156
<PAGE> 165
<TABLE>
<CAPTION>
ADDRESS FOR AMOUNT OF RATABLE
NAME OF LENDER NOTICES COMMITMENT SHARE*
<S> <C> <C> <C>
Union Bank of California, 350 California Street $ 18,888,888.89 4.44%
N.A. 6th Floor
San Francisco, CA 94104-1402
FAX # (415) 705-7085
Phone # (415) 705-7021
Attn: Mr. Timothy P. Streb
CoreStates Bank, N.A. 1345 Chestnut Street, FC 1-8-8-14 $ 15,740,740.74 3.70%
Philadelphia, PA 19101-7618
FAX # (215) 973-7671
Phone # (215) 973-2318
Attn: Ms. Anne Marie Fitzsimmons
Banque Nationale de Paris Suite 500 $ 15,740,740.74 3.70%
209 South LaSalle Street
Chicago, IL 60604
FAX # (312) 977-1380
Phone # (312) 977-2211
Attn: Mr. Frederick Moryl
SunTrust Bank, Atlanta 24th Floor $ 15,740,740.74 3.70%
25 Park Place
Atlanta, GA 30303
FAX # (404) 588-8505
Phone # (404) 724-3457
Attn: Mr. Roger P. Shreero
</TABLE>
*Ratable Shares used for calculating Required Lenders, but not for loan
operation purposes, such as fundings and payments.
157
<PAGE> 166
<TABLE>
<CAPTION>
ADDRESS FOR AMOUNT OF RATABLE
NAME OF LENDER NOTICES COMMITMENT SHARE*
<S> <C> <C> <C>
Bank Boston, N.A. 100 Federal Street $ 15,740,740.74 3.70%
Boston, MA 02110
FAX # (617) 434-6685
Phone # (617) 434-5280
Attn: Ms. Judith Kelly
Hibernia National Bank 12th Floor $ 12,592,592.59 2.96%
313 Carondelet Street
New Orleans, LA 70130
FAX # (504) 533-5344
Phone # (504) 533-2911
Attn: Mr. Jeffrey Peck
The Northern Trust Company Floor B-11 $ 9,444,444.44 2.22%
50 South LaSalle Street
Chicago, IL 60675
FAX # (312) 444-5055
Phone # (312) 557-8205
Attn: Ms. Nicole R. Kidder
The Bank of New York One Wall Street, 8th Floor $ 9,444,444.44 2.22%
New York, NY 10286
FAX # (212) 635-1483, 1481
Phone # (212) 635-7885
Attn: Mr. Michael V. Flannery
Mercantile Bank 12th Floor $ 9,444,444.44 2.22%
721 Locust Street
St. Louis, MO 63101
FAX # (314) 425-2203
Phone # (314) 425-2459
Attn: Mr. Steve Reese
</TABLE>
*Ratable Shares used for calculating Required Lenders, but not for loan
operation purposes, such as fundings and payments.
158
<PAGE> 167
<TABLE>
ADDRESS FOR AMOUNT OF RATABLE
NAME OF LENDER NOTICES COMMITMENT SHARE*
<S> <C> <C> <C>
The Dai-Ichi Kangyo Bank, 10 S. Wacker Drive $ 9,444,444.44 2.22%
Ltd.--Chicago Branch 26th Floor
Chicago, IL 60606
FAX # (312) 876-2011
Phone # (312) 715-6361
Attn: Mr. Michael Pleasants
First Hawaiian Bank 999 Bishop Street $ 9,444,444.44 2.22%
11th Floor
Honolulu, HI 96813
FAX # (808) 525-6372
Phone # (808) 525-6289
Attn: Mr. Charles Jenkins
Bank One, National 7th Floor $ 9,444,444.44 2.22%
Association 100 East Broad Street
Columbus, OH 43215
FAX # (614) 248-5518
Phone # (614) 248-6390
Attn: Mr. Larry Christ
Long Term Credit Bank of Suite 800 $ 9,444,444.44 2.22%
Japan 190 South LaSalle Street
Chicago, IL 60670
FAX # (312) 704-8505
Phone # (312) 704-5482
Attn: Mr. Curtis Flammini
</TABLE>
*Ratable Shares used for calculating Required Lenders, but not for loan
operation purposes, such as fundings and payments.
159
<PAGE> 168
<TABLE>
ADDRESS FOR AMOUNT OF RATABLE
NAME OF LENDER NOTICES COMMITMENT SHARE*
<S> <C> <C> <C>
Wachovia Bank 28th Floor $ 9,444,444.44 2.22%
191 Peachtree Street
Atlanta, GA 30303
FAX # (404) 332-6898
Phone # (404) 332-4036
Attn: Ms. Katie S. Proctor
TOTAL $425,000,000 100%
</TABLE>
*Ratable Shares used for calculating Required Lenders, but not for loan
operation purposes, such as fundings and payments.
160
<PAGE> 1
EXHIBIT 10.39
EXECUTION COPY
================================================================================
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
AMONG
BORDERS GROUP, INC.,
BORDERS, INC.,
WALDEN BOOK COMPANY, INC.,
WALDENBOOKS PROPERTIES, INC.,
BORDERS PROPERTIES, INC.,
WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY,
EXCEPT AS EXPRESSLY STATED HEREIN,
BUT SOLELY AS OWNER TRUSTEE,
SAM PROJECT FUNDING CORP. I
AS INVESTOR,
PNC BANK, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT,
THE FIRST NATIONAL BANK OF CHICAGO, AS SYNDICATION AGENT,
BANKERS TRUST COMPANY, AS REAL ESTATE ADMINISTRATIVE AGENT
AND
THE LENDERS PARTY HERETO
______________________________
DATED AS OF NOVEMBER 22, 1995
AMENDED AND RESTATED AS OF OCTOBER 17, 1997
================================================================================
<PAGE> 2
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT is dated as
of November 22, 1995 and amended and restated as of October 17, 1997 (this
"Agreement"), among BORDERS GROUP, INC., a Michigan corporation ("BGI" or the
"Company"); BORDERS, INC., a Colorado corporation ("Borders"); WALDEN BOOK
COMPANY, INC., a Colorado corporation ("Walden"); WALDENBOOKS PROPERTIES, INC.,
a Delaware corporation ("WPI"), BORDERS PROPERTIES, INC. a Delaware corporation
("BPI"; and together with BGI, Borders, Walden and WPI, individually, a
"Lessee" and collectively, the "Lessees"); WILMINGTON TRUST COMPANY, not in its
individual capacity (in its individual capacity, the "Trust Company"), except
as expressly stated herein, but solely as Owner Trustee (the "Owner Trustee" or
the "Trust"); PNC BANK, NATIONAL ASSOCIATION, as administrative agent for
Lenders (in such capacity, the "Administrative Agent"); THE FIRST NATIONAL BANK
OF CHICAGO, as Syndication Agent (in such capacity, the "Syndication Agent");
BANKERS TRUST COMPANY, as real estate administrative agent for the Lenders (in
such capacity, the "Real Estate Administrative Agent"); SAM PROJECT FUNDING
CORP. I, a Delaware corporation, as the Investor (the "Investor"); and each of
the financial institutions listed on the signature pages hereof (each, a
"Lender"; collectively, the "Lenders").
WITNESSETH:
WHEREAS, the Lessees, the Owner Trustee, the Real Estate
Administrative Agent, as agent, the Investor and the Lenders (collectively, the
"Prior Agreement Parties") are parties to that certain Participation Agreement
dated as of November 22, 1995 (as heretofore amended, the "Prior Agreement");
WHEREAS, the Prior Agreement Parties, the Administrative Agent
and the Real Estate Administrative Agent desire to amend and restate the Prior
Agreement to (i) increase the aggregate amount of Commitments, (ii) change the
agency role of Bankers Trust Company from Agent to Real Estate Administrative
Agent, (iii) change the agency role of PNC Bank, National Association from
Co-Agent to Administrative Agent and add The First National Bank of Chicago, as
Syndication Agent, (iv) eliminate and add certain financial institutions as
Lenders, and (v) amend certain other terms and conditions of the Prior
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Capitalized terms used but not otherwise defined in this
Agreement shall have the meanings set forth in Appendix A hereto.
<PAGE> 3
ARTICLE II.
STRUCTURE OF THE TRANSACTION; THE LOANS
2.01. General Structure of the Transaction. The Lessees,
the Owner Trustee, the Investor, the Administrative Agent, the Syndication
Agent, the Real Estate Administrative Agent and the Lenders participate in a
transaction pursuant to which: (a) the Lenders will agree, as more particularly
described below, to make Loans to the Owner Trustee from time to time in an
aggregate principal amount not to exceed $250,000,000, (b) the Owner Trustee is
acting as an agent for the Lessees, the Lessors and the Agree SPCs to obtain
financing on behalf of the Lessors and Agree SPCs, (c) the Guarantors will
unconditionally guarantee certain of the obligations of the Owner Trustee to
the Lenders, (d) the Owner Trustee will use the proceeds of the Loans solely to
make Project Loans to (i) certain special purpose entities acceptable to the
Real Estate Administrative Agent and formed solely for the purpose of paying
the costs of owning, developing and constructing the Properties (each a
"Lessor" and collectively the "Lessors") or (ii) to an Agree SPC as more
particularly described in Article XIV, (e) the Lessors (other than an Agree
Lessor), in turn, will use the proceeds of each Project Loan solely for the
purpose of acquiring, leasing and/or constructing properties to be used by the
Lessees as stores or other facilities, and, with respect to an Agree Project
Loan, the Agree SPC's will use the proceeds of each Project Loan solely for the
purpose of making a capital contribution to the applicable Agree Lessor who
will use such contribution solely for the purpose of acquiring, leasing and/or
constructing properties to be used by the Lessees as stores or other
facilities, (f) the applicable Lessee will unconditionally guarantee to the
Owner Trustee the completion of each Property and (g) upon the acquisition of
each Property, the applicable Lessee will enter into a Lease with respect to
such Property. As security for each Project Loan which is not an Agree Project
Loan, each Lessor will deliver to the Owner Trustee a Mortgage, encumbering the
Lessor's interest in the Property, an Assignment of Development Agency
Agreement and an Assignment of Lease. As security for each Agree Project Loan,
(A) the Agree Lessor will deliver to the Owner Trustee (i) an Assignment of
Leases (in the form attached to the Agree Project Loan Agreement) and (ii) an
Assignment of Development Agency Agreement (in the form attached to the Agree
Project Loan Agreement) and (B) the Agree SPC will deliver to the Owner Trustee
the Agree LLC Pledge, pledging all of the Agree SPC's right, title and interest
in and to the Agree Preferred Return to the Owner Trustee. As security for each
Loan, the Owner Trustee will deliver to the Real Estate Administrative Agent
for the benefit of the Lenders: (i) a security interest in certain assets of
the Owner Trustee as described in the Security Agreement, (ii) a re-assignment
of the Development Agency Agreement, (iii) an assignment of the Completion
Guarantee, (iv) an assignment of all of the Owner Trustee's rights under each
Project Loan Agreement and (v) a re-assignment of each Lease.
2.02. The Loans; General. Pursuant to the terms of the
Credit Agreement, the Lenders have agreed to make loans to the Owner Trustee
from time to time in an aggregate principal amount of up to $250,000,000 in
order for the Owner Trustee to make Project Loans to the Lessors or to the
Agree SPC's, as the case may be, and in consideration of the receipt of the
proceeds of such Loans, the Owner Trustee will issue the Tranche A Notes, the
Tranche B Notes and a Swing Note (together with any note or notes issued in
exchange or substitution therefor in accordance with the Credit Agreement, the
"Notes"). The Loans shall be made and the Notes shall be issued pursuant
<PAGE> 4
to the Credit Agreement. Subject to Section 5.02, the Loans will be made to
the Owner Trustee from time to time at the request of the Owner Trustee with
the consent of the applicable Lessee.
2.03. The Project Loans, Developer Equity; General. (a)
Subject to the terms of the Operative Agreements, and simultaneously with the
making of Loans to the Owner Trustee, the proceeds of the Loans will be used by
the Owner Trustee solely to make Project Loans to the Lessors or to Agree SPCs.
At no time shall the aggregate principal amount of the Project Loan to any one
Lessor or to any one Agree SPC be greater than $15,000,000 and at no time shall
the Project Loan with respect to any Property be greater than 95% of Total
Property Costs of such Property nor shall any Agree Project Loan with respect
to any Property be greater than 89% of the Total Property Costs of such
Property. Each Project Loan shall be advanced to the applicable Lessor
pursuant to a Project Loan Agreement and each Agree Project Loan shall be
advanced to the applicable Agree SPC pursuant to an Agree Project Loan
Agreement. In consideration of the receipt of the proceeds of such Project
Loan, each such Lessor or Agree SPC, as the case may be, will issue a Project
Loan Note to the Owner Trustee.
(b) Pursuant to each Project Loan Agreement, each Lessor
shall contribute the Developer's Equity simultaneously and pro rata with each
Project Loan Advance by the Owner Trustee.
(c) Pursuant to each Agree Project Loan Agreement, each
Agree LLC shall contribute the Developer's Equity simultaneously and pro rata
with each Project Loan Advance by the Owner Trustee of an Agree Project Loan.
2.04. Collateral for the Project Loans; General. (a) As
security for each Project Loan which is not an Agree Project Loan, each Lessor
shall deliver to the Owner Trustee, (i) a Mortgage on the applicable Property;
(ii) an Assignment of Lease and Consent to Assignment; and (iii) with respect
to Construction Projects, an Assignment of Development Agency Agreement from
such Lessor to the Owner Trustee, and a Consent to Assignment of Development
Agency Agreement. As further support for each Project Loan which relates to a
Construction Project, the applicable Lessee shall deliver to the Owner Trustee
a Completion Guarantee to guaranty the completion of the particular
Improvements.
(b) As security for each Agree Project Loan, (i) each
Agree Lessor shall deliver to the Owner Trustee, (X) an Assignment of Lease and
Consent to Assignment; and (Y) with respect to Construction Projects, an
Assignment of Development Agency Agreement from such Lessor to the Owner
Trustee, and a Consent to Assignment of Development Agency Agreement and (ii)
each Agree SPC shall deliver to the Owner Trustee the Agree LLC Pledge. As
further support for each Agree Project Loan which relates to a Construction
Project, the applicable Lessee shall deliver to the Owner Trustee a Completion
Guarantee to guaranty the completion of the particular Improvements.
2.05. Collateral for the Loans; General. The Loans and the
obligations of the Owner Trustee under the Credit Agreement shall be secured by
(a) a re-assignment of each Assignment of Leases and Rents delivered by each
Lessor, and consented to by the applicable Lessee, in each case in the
respective forms set forth on Exhibit H to the Credit Agreement (each,
<PAGE> 5
a "Reassignment of Leases"), (b) a security interest in certain of the assets
of the Owner Trustee, including the right to receive any amount received by the
Owner Trustee pursuant to any Mortgages held by the Owner Trustee granted
pursuant to a Security Agreement in the form set forth on Exhibit G to the
Credit Agreement (the "Security Agreement") which Security Agreement shall be
duly executed by the Owner Trustee and the applicable Lessor, (c)(i) a
re-assignment of all of the right, title and interest of the Owner Trustee in
and to the Assignment of Development Agency Agreement, (ii) an assignment of
all of the Owner Trustee's rights under the Project Loan Agreement and (iii) an
assignment of all of the Owner Trustee's rights under the Completion Guaranty,
if applicable, each of the rights granted in clauses (i), (ii) or (iii) above
shall be granted pursuant to an Assignment of Contracts in the form of Exhibit
I to the Credit Agreement (the "Assignment of Contracts"), which Assignment of
Contracts shall be duly executed by the Owner Trustee and the applicable
Lessor.
2.06. The Guarantee. Certain of the obligations of the
Owner Trustee under the Credit Agreement shall be guaranteed as provided in the
Guarantee made by the Guarantors in favor of the Administrative Agent for the
benefit of the Lenders.
2.07. Property Purchase and Lease. (a) With respect to any
Property other than an Agree Project, on each Property Closing Date and subject
to the terms and conditions of this Agreement, including, Section 5.02 which
sets forth the procedures for funding of the Loans and Project Loans, (i) the
Lenders will make Loans to the Owner Trustee in accordance with Article V and
the terms and provisions of the Credit Agreement, (ii) the Owner Trustee will
lend such funds to the applicable Lessor in accordance with the terms of the
applicable Project Loan Agreement for the purchase and related costs of the
applicable Property (or, if applicable, the Lessor will lease from a Ground
Lessor pursuant to a Ground Lease all right, title and interest in and to each
Property), and (iii) such Lessor will simultaneously lease (or sublease, as the
case may be) all of its right, title and interest in the Property to the
applicable Lessee by executing and delivering a Lease.
(b) With respect to any Agree Project, on each Property
Closing Date and subject to the terms and conditions of this Agreement,
including, Section 5.02 which sets forth the procedures for funding of the
Loans and Project Loans, (i) the Lenders will make Loans to the Owner Trustee
in accordance with Article V and the terms and provisions of the Credit
Agreement, (ii) upon receipt of the proceeds of the Loans, the Owner Trustee
will lend such funds to the applicable Agree SPC in accordance with the terms
of the applicable Agree Project Loan Agreement for the contribution by such
Agree SPC of capital to the applicable Agree Lessor who will use such capital
contribution for the purchase and related costs of the applicable Property (or,
if applicable, the Agree Lessor will lease from a Ground Lessor pursuant to a
Ground Lease all right, title and interest in and to each Property), and (iii)
such Agree Lessor will simultaneously lease (or sublease, as the case may be)
all of its right, title and interest in the Property to the applicable Lessee
by executing and delivering a Lease.
(c) Each Property shall be located in the continental
United States and if the Real Estate Administrative Agent determines in its
sole discretion that satisfactory legal documentation may be created, in the
territories of the United States and Canada.
<PAGE> 6
2.08. Construction of Improvements; Lease of Improvements.
On each Property Closing Date or on the Construction Commencement Date, if
later, for which proceeds of the Project Loan will be used either to construct
Improvements or with respect to an Agree Project Loan, to make a contribution
of capital to an Agree Lessor who will use such capital contribution to
construct Improvements (each, a "Construction Project"), the applicable Lessor
and the applicable Lessee will execute and deliver a Development Agreement
pursuant to which the Lessor will agree to construct such Improvements in
accordance with the Plans and Specifications. On each Property Closing Date or
on the Construction Commencement Date, if later, with respect to a Construction
Project, the applicable Lessor and the applicable Developer will execute and
deliver a Development Agency Agreement pursuant to which such Developer will
agree to construct such Improvements in accordance with the Development
Agreement as the agent for the Lessor for the benefit of the Lessee and in
accordance with the Plans and Specifications. On each Property Closing Date or
on the Construction Commencement Date, if later, with respect to a Construction
Project, such Lessor shall assign its rights under such Development Agency
Agreement to the Owner Trustee as security for the Project Loans, and the Owner
Trustee shall, in turn, assign such rights under the Development Agency
Agreement to the Real Estate Administrative Agent as security for the Loans
pursuant to the Assignment of Contracts. The Lenders acknowledge the Lessee's
right to complete construction of the Improvements using proceeds of a Project
Loan in accordance with the Development Agreement. Upon the Property Closing
Date, provided that the applicable Property Closing Certificate indicates that
the cost of the Land is greater than or equal to 25% of the Property Cost for
such Property (a "Twenty-Five Percent Property"), the Lessor and the Lessee
shall execute and deliver a Lease Supplement pursuant to which the Lessor will
lease (or sublease, as the case may be) all of its right, title and interest in
such Improvements to the Lessee. Notwithstanding that the Improvements on a
Twenty- Five Percent Property (whether existing on the date of acquisition of
the Land or to be constructed pursuant to the Development Agreement) may be
leased by a Lease Supplement to the Lease of the related Land, the term
"Property" shall include the Land and the Improvements. If the Property
Closing Certificate indicates that the cost of the Land is less than 25% of the
Property Cost, no Lease Supplement will be required to be delivered pursuant to
Section 5.04(g) and the Land and the Improvements will be leased on the
Property Closing Date under one Lease and the term "Property" will be deemed to
mean Land and Improvements.
2.09. Non-Construction Projects. For each Project Loan
that does not relate to a Construction Project, the Project Loan Documents will
be appropriately modified to reflect the fact that there will be one Project
Loan Advance which will be made on the Property Closing Date and that no
further Project Loan Advances will be made or requested, and all references to
the Development Documents and the Completion Guarantee herein and in the other
Operative Agreements shall be deemed deleted as they relate to such Properties.
2.10. The Owner Trustee. The Owner Trustee hereby agrees
to act as agent for the Lessees and the Lessors, as designated by the Lessees,
in accordance with the Operative Agreements.
<PAGE> 7
ARTICLE III.
THE CLOSINGS
3.01. Effective Date. (a) On the Effective Date (the
"Effective Date"), each of the respective parties hereto and thereto shall
execute and deliver this Agreement, the Guarantee, the Credit Agreement and
such other documents, instruments, certificates and opinions of counsel as
agreed to by the parties hereto.
(b) All documents and instruments required to be
delivered on the Effective Date shall be delivered at the offices of Schiff
Hardin & Waite, 7200 Sears Tower, Chicago, Illinois, or at such other location
as may be determined by the Administrative Agent and the Lessees.
3.02. Trust Company Authorization. The Investor agrees
that, with respect to the Effective Date and each subsequent Property Closing
Date, the satisfaction or waiver of the conditions contained in Article VI
hereof shall constitute, without further act, authorization and direction by
the Investor to the Trust Company to take on behalf of the Owner Trustee the
actions specified in Section 2.01 of the Trust Agreement.
ARTICLE IV.
FUNDING OF PROJECT LOANS; CONDITIONS
4.01. Procedures for Selecting Lessors and Agree SPCs. At
least fifteen (15) Business Days prior to the execution and delivery of any
Project Loan Documents with a Lessor or the execution and delivery of a
Development Agency Agreement with any Developer, the applicable Lessee shall
deliver to the Real Estate Administrative Agent a certificate signed by an
Authorized Officer:
(a) stating the name and address of the proposed Lessor
and Agree SPC, if applicable, and with respect to a Construction
Project, the proposed Developer;
(b) stating the location and type of Property to be
acquired, developed and/or constructed (if applicable) by such Lessor
and Developer;
(c) attaching the organizational documents of the Lessor
and the Agree SPC, if applicable; and
(d) with respect to a Construction Project, attaching the
Construction Budget for the Property to be acquired, developed or
constructed by the Lessor and Developer.
Within ten (10) Business Days of receipt by the Real Estate Administrative
Agent of the certificate described above, the Real Estate Administrative Agent
will advise the applicable Lessee whether or not the Real Estate Administrative
Agent requires additional information in order to make a decision regarding
whether the proposed Lessor and Agree SPC, if applicable, are acceptable to the
Real Estate Administrative Agent. Each Lessor and each Agree SPC will be
formed and owned in
<PAGE> 8
accordance with the guidelines and covenants set forth in Exhibit H. If the
Real Estate Administrative Agent requests additional information regarding the
proposed Lessor or Agree SPC, then within ten (10) Business Days of receipt of
such information by the Real Estate Administrative Agent, the Real Estate
Administrative Agent will advise the applicable Lessee whether or not the
proposed Lessor and Agree SPC, if applicable is acceptable to the Real Estate
Administrative Agent, and, if the proposed Lessor or Agree SPC is not
acceptable, a description of the reasons for such decision.
4.02. Execution of Lease and Project Loan Documents. Upon
satisfaction of the requirements described in Section 4.01, (a) the Lessor and
the applicable Lessee shall promptly execute and deliver the Lease and, with
respect to a Construction Project, the Development Agreement with respect to
the proposed Property, (b) the Lessor and the Owner Trustee shall promptly
execute and deliver a Project Loan Agreement, and related Project Loan Note,
with respect to the proposed Property, (c) with respect to a Construction
Project, the Developer and the Lessor shall promptly execute and deliver a
Development Agency Agreement with respect to the proposed Property and (d) with
respect to a Construction Project, the applicable Lessee shall execute and
deliver a Completion Guaranty with respect to the proposed Property.
4.03. Allocations of Available Commitments. Upon the
execution of the Project Loan Documents with any approved Lessor or Agree SPC,
the applicable Lessee shall deliver to the Real Estate Administrative Agent
(and to the Administrative Agent) a written request (an "Allocation Request")
to allocate a portion of the Available Commitments under the Credit Agreement,
in an amount equal to the Project Loan to such Lessor or Agree SPC, to the
Property. Each Allocation Request shall be executed by the applicable Lessee,
specifically identify the Property and be accompanied by any revisions to the
Construction Budget delivered to the Real Estate Administrative Agent in
accordance with Section 4.01. In no event shall 150% of the amount of the
Project Loan in the Allocation Request exceed the amount of the Available
Commitments.
4.04. Conditions to Making of Project Loans to the Lessors.
The obligations of the Owner Trustee to make a Project Loan to a Lessor on any
date are subject to the satisfaction or waiver of the following conditions
precedent:
(a) Conditions of the Owner Trustee's Borrowing. The
Owner Trustee shall simultaneously have satisfied all of the
conditions contained in the Credit Agreement, Article V of this
Agreement and the other Operative Agreements for the making of a Loan
to the Owner Trustee in the amount equal to the requested Project
Loan.
(b) Conditions Precedent in the Project Loan Agreements.
The applicable Lessor shall have satisfied all of the conditions
precedent contained in the applicable Project Loan Agreement for the
making of such Project Loan.
(c) Representations and Warranties. The representations
and warranties of the Owner Trustee, the Lessees and the
Investor contained herein and in each of the other Operative
Agreements shall be true and correct in all material respects.
<PAGE> 9
(d) Performance of Agreements. The parties hereto shall
have performed their respective agreements contained herein and in the
other Operative Agreements on or prior to each such date.
(e) No Default or Event of Default. There shall not have
occurred and be continuing any Default or Event of Default under any
of the Operative Agreements and no Default or Event of Default under
any of the Operative Agreements will have occurred after giving effect
to such Project Loan, other than a Default or an Event of Default
which the Real Estate Administrative Agent has agreed not to declare
pursuant to Section 5.06.
Upon satisfaction of the preceding conditions, the Owner Trustee shall make a
Project Loan to the applicable Lessor in the amount of the requested funds.
ARTICLE V.
MAKING OF LOANS TO THE OWNER TRUSTEE; CONDITIONS
5.01. General. Subject to the terms and conditions of the
Operative Agreements (including Section 5.02), from time to time the Lessees
will request the Lenders to make Revolving Credit Loans to the Owner Trustee
and the Owner Trustee will use the proceeds of such Revolving Credit Loans
solely for the purpose of making Project Loans to the Lessors or to the Agree
SPC's, as the case may be.
5.02. Procedures for Funding. (a) (i) Not less than ten
(10) Business Days prior to the date on which any (A) Acquisition Advance or
(B) any other Project Loan Advance where the Lessee has not waived all of the
conditions precedent to such Project Loan Advance set forth in Schedule 11.02
to the Participation Agreement is to be made and (ii) not less than two (2)
Business Days prior to the date on which any Project Loan Advance (other than
an Acquisition Advance) where the Lessee has waived the conditions precedent to
such Project Loan Advance set forth in Schedule 11.02 to the Participation
Agreement is to be made, the applicable Lessee (i) acting on behalf of the
Lessor pursuant to Section 11.02, shall deliver to the Real Estate
Administrative Agent, as the assignee of the Owner Trustee's rights and
obligations under the applicable Project Loan Agreement pursuant to the
applicable Assignment of Contracts, (with a copy to the Administrative Agent)
the Requisition and (ii) acting on behalf of the Owner Trustee pursuant to
Section 11.01, shall deliver to the Administrative Agent, a Revolving Credit
Loan Request or to the Real Estate Administrative Agent (with a copy to the
Administrative Agent), a Swing Loan Request, as the case may be and as required
pursuant to the Credit Agreement.
(b) Each Requisition and Revolving Credit Loan Request or
Swing Loan Request, as the case may be, shall among other things: (i) be
irrevocable and (ii) request Project Loans and Loans in the same amount, but in
no event (x) less than $50,000 (except if such Loans are made to capitalize
interest) or (y) greater than the lesser of the amount permitted to be drawn
under the applicable Project Loan Agreement or under the Credit Agreement. The
Revolving Credit Loan Request or the Swing Loan Request, as applicable, shall
request that Loans be made for the sole purpose of permitting the Owner Trustee
to make Project Loans and that the funds be transferred
<PAGE> 10
directly to the applicable Lessor, Agree SPC or Developer as so specified in
the Revolving Credit Loan Request or Swing Loan Request, as applicable.
5.03. Conditions to the Lenders' Obligations to Advance
funds in connection with the acquisition of Property. The obligations of the
Lenders to make Loans to the Owner Trustee on any Property Closing Date for the
purpose of providing funds to the Owner Trustee necessary to provide Project
Loans to acquire (for purposes of this Article V, acquisition of a Property
shall mean acquisition by purchasing or ground leasing, as applicable) a
Property (an "Acquisition Advance") are subject to the satisfaction or waiver
of the following conditions precedent:
(a) Representations and Warranties. The representations
and warranties of the Owner Trustee, the Lessees, the Lessors, the
Developers, if applicable and the Investor contained herein and in
each of the other Operative Agreements shall be true and correct in
all material respects; provided, however, with respect to the Lessors
and the Developers, such condition shall only apply to representations
and warranties which relate to the Project Loan for which the
Acquisition Advance is being requested or any other Project Loan as to
which such Developer is involved.
(b) Performance of Obligations. The parties hereto shall
have performed their respective agreements contained herein and in the
other Operative Agreements on or prior to each such Property Closing
Date.
(c) Delivery of the Requisition. The Real Estate
Administrative Agent shall have received a fully executed counterpart
of the Requisition, appropriately completed and the Real Estate
Administrative Agent shall have forwarded a copy to the Administrative
Agent with a certification of receipt and approval by the Real Estate
Administrative Agent of the documents called for in clauses (d)
through (k) below.
(d) Delivery of Property Closing Certificate. The Real
Estate Administrative Agent and the Lessor shall have received a fully
executed counterpart of a certificate (the " Property Closing
Certificate") of an Authorized Officer of the applicable Lessee,
certifying (i) that the value of the Land is or is not greater than
25% of the Total Property Costs, (ii) the amount of the Tranche A
Loans allocated to the particular Property and (iii) the Weighted
Average Maximum Residual Guarantee Percentage for the Properties after
giving effect to the acquisition of the particular Property.
(e) Conditions Precedent contained in the Project Loan
Documents. There shall have been delivered to the Real Estate
Administrative Agent each Project Loan Document, duly executed and
evidence that all of the conditions precedent to making advances
contained in the applicable Project Loan Agreement and other Project
Loan Documents relating to the corresponding Project Loan have been
satisfied.
(f) Lease. There shall have been delivered to the Real
Estate Administrative Agent a true and complete copy of a Lease and
Memorandum of Lease executed by the
<PAGE> 11
applicable Lessee and the Lessor with respect to the Property
being acquired on such Property Closing Date.
(g) Security Agreement Supplement. The Owner Trustee
shall have delivered to the Real Estate Administrative Agent a
supplement to the Security Agreement in the form of Exhibit A to the
Security Agreement executed by the Owner Trustee and the applicable
Lessor with respect to the Property being acquired on such Property
Closing Date.
(h) Reassignment of Leases. The Owner Trustee shall have
delivered to the Real Estate Administrative Agent a Reassignment of
Leases executed by the Owner Trustee, together with the original fully
executed Assignment of Lease to which it relates, with respect to the
Property being acquired on such Property Closing Date.
(i) Assignment of Contracts. The Owner Trustee shall have
delivered to the Real Estate Administrative Agent an Assignment of
Contracts executed by the Owner Trustee with respect to the Property
being acquired on such Property Closing Date.
(j) No Default or Event of Default. There shall not have
occurred and be continuing any Default or Event of Default under any
of the Operative Agreements and no Default or Event of Default under
any of the Operative Agreements will have occurred after giving effect
to the Loan requested by such Requisition, other than a Default or an
Event of Default which the Real Estate Administrative Agent has agreed
not to declare pursuant to Section 5.06.
(k) Weighted Average Maximum Residual Guarantee
Percentage; Maximum Residual Guarantee Amount . (A) The Weighted
Average Maximum Residual Guarantee Percentage after giving effect to
the acquisition and/or construction of such Property and execution of
the Lease, shall be greater than or equal to 85% as of any applicable
Determination Date (as defined in the definition of Weighted Average
Maximum Residual Guarantee Percentage) and (B) the Maximum Residual
Guarantee Amount with respect to such Property shall be greater than
or equal to 80% of the expected Property Costs of such Property upon
the acquisition of such Property.
5.04. Conditions to the Lenders' Obligations to Make
Construction Advances for the Commencement of Construction on any Property.
The obligations of the Lenders to make Loans to the Owner Trustee on any date
for the purpose of providing funds to the Owner Trustee in order to make
Project Loans to a Lessor which will be used to make an Initial Construction
Advance, are subject to the satisfaction or waiver of the following conditions
precedent:
(a) Representations and Warranties. On such
date, the representations and warranties of the Owner Trustee,
the Lessees, the Lessors, the Developers and the Investor contained
herein and in each of the other Operative Agreements shall be true and
correct in all material respects; provided, however, with respect to
the Lessors and the Developers, such condition shall only apply to
representations and warranties which relate to the Project Loan
<PAGE> 12
for which the Initial Construction Advance is being requested
or any other Project Loan as to which such Developer is involved.
(b) Performance of Obligations. The parties hereto shall
have performed their respective agreements contained herein and in the
other Operative Agreements on or prior to such date.
(c) Requisition. The Real Estate Administrative Agent
shall have received a fully executed counterpart of the Requisition,
appropriately completed, and the Real Estate Administrative Agent
shall have delivered a copy thereof to the Administrative Agent with a
certification of receipt and approval by the Real Estate
Administrative Agent of the documents called for in clauses (d)
through (g) below.
(d) Conditions Precedent contained in the Project Loan
Documents. There shall have been delivered to the Real Estate
Administrative Agent evidence that all of the conditions precedent to
making advances contained in the applicable Project Loan Agreement and
other Project Loan Documents relating to the corresponding Project
Loan have been satisfied.
(e) Construction Budget. Based upon the Construction
Budget, the Available Commitments as allocated to such Property
pursuant to Section 4.03 (after taking into consideration the
Developer's Equity for such Property) will be sufficient to complete
the Improvements on such Property.
(f) No Default or Event of Default. There shall not have
occurred and be continuing any Default or Event of Default under any
of the Operative Agreements and no Default or Event of Default under
any of the Operative Agreements will have occurred after giving effect
to the Loans requested by such Requisition, other than a Default or an
Event of Default which the Real Estate Administrative Agent has agreed
not to declare pursuant to Section 5.06.
(g) Lease Supplement. If required pursuant to the terms
of Section 2.08, the Lessor and the Lessee shall have executed and
delivered a Lease Supplement.
5.05. Conditions to the Lenders' Obligations to make
Construction Advances for the Ongoing Construction on any Property. The
obligations of the Lenders to make Loans to the Owner Trustee on any date for
the purpose of providing funds to the Owner Trustee in order to make
Construction Advances to a Lessor which will be used to pay Property Costs with
respect to a Property (other than the Acquisition Advance or the Initial
Construction Advance) are subject to the satisfaction or waiver of the
following conditions precedent:
(a) Representations and Warranties. On such date, the
representations and warranties of the Owner Trustee, the Lessees, the
Lessors, the Developers and the Investor contained herein and in each
of the other Operative Agreements shall be true and correct in all
material respects;provided, however, with respect to the Lessors and
the Developers, such
<PAGE> 13
condition shall only apply to representations and warranties
which relate to the Project Loan for which the Construction Advance is
being requested or any other Project Loan as to which such Developer
is involved.
(b) Performance of Obligations. The parties hereto shall
have performed their respective agreements contained herein and in the
other Operative Agreements on or prior to each such date.
(c) Requisition. The Real Estate Administrative Agent
shall have received a fully executed counterpart of the Requisition,
appropriately completed, and the Real Estate Administrative Agent
shall have delivered a copy thereof to the Administrative Agent with a
certification of receipt and approval by the Real Estate
Administrative Agent of the documents called for in clauses (d)
through (k) below.
(d) Construction Budget. Based upon the Construction
Budget, the Available Commitments as allocated to such Property
pursuant to Section 4.03 (after taking into consideration the
Developer's Equity for such Property) will be sufficient to complete
the Improvements on such Property.
(e) Conditions Precedent contained in the Project Loan
Documents. There shall have been delivered to the Real Estate
Administrative Agent reasonably acceptable evidence that all of the
conditions precedent to making such advance contained in the
applicable Project Loan Agreement and other Project Loan Documents
relating to the corresponding Project Loan have been satisfied.
(f) No Default or Event of Default. There shall not have
occurred and be continuing any Default or Event of Default under any
of the Operative Agreements and no Default or Event of Default under
any of the Operative Agreements will have occurred after giving effect
to the Loan requested by such Requisition, other than a Default or an
Event of Default which the Real Estate Administrative Agent has agreed
not to declare pursuant to Section 5.06.
(g) Property Related Matters. There shall be no defects
to the Improvements constructed to date including, without limitation,
the plumbing, heating, air conditioning and electrical systems thereof
and all water, sewer, electric, gas, telephone and drainage facilities
and all other utilities required to adequately service such
Improvements for its intended use are available pursuant to adequate
permits (including any that may be required under applicable
Environmental Laws). There is no action, suit or proceeding
(including any proceeding in condemnation or eminent domain or under
any Environmental Law) pending or threatened which adversely affects
the title to, or the use, operation or value of, the Properties. No
fire or other casualty with respect to the Properties shall have
occurred which fire or other casualty has had a material adverse
effect on the Lessees' ability to perform their obligations under the
Operative Agreements.
<PAGE> 14
(h) Lease Requirements. The Improvements constructed to
date comply with all requirements and conditions set forth in the
Lease and all other conditions and requirements of the Operative
Agreements.
(i) Construction of the Improvements. Construction of
the Improvements to date has been performed in a good and workmanlike
manner, substantially in accordance with the Plans and Specifications
and in compliance with all Insurance Requirements and Legal
Requirements.
(j) Consents, etc. All consents, licenses and building
permits required by applicable Legal Requirements for construction,
completion, occupancy and operation of the Improvements constructed to
date have been obtained and are in full force and effect.
(k) Encroachments. Except for off-site improvements
provided for in the Construction Budget, the Improvements constructed
to date are located entirely on the related Land and do not encroach
upon or overhang any easement or right-of-way or the land of others
(unless such encroachment or overhang is consented to in writing by
the owner of the affected property). The Improvements are wholly
within any building restriction lines, however established.
5.6. Lessor Defaults. Notwithstanding anything to the
contrary contained in this Agreement or any other Operative Agreement, the
Lenders agree that so long as each Lessee is performing its obligations under
the Leases and no Lease Default or Lease Event of Default has occurred and is
continuing, if a Lessor or an Agree SPC is in default of its obligations under
a Project Loan Agreement, a Lease, a Development Agreement or a Development
Agency Agreement (any of the foregoing defaults, a "Lessor Default"), the
Lenders agree not to declare a Default or an Event of Default pursuant to
Article IX of the Credit Agreement or Article X of a Project Loan Agreement;
provided, however, the Lenders shall not be obligated to refrain from declaring
a Default or an Event of Default with respect to a particular Project Loan
Agreement where a Lessor Default has occurred with respect to such Property if
such Lessor Default (a) is caused by the bankruptcy or similar proceeding being
brought by or against a Lessor or Agree SPC (including the occurrence of the
events described in Section 10.01(e) of each Project Loan Agreement) or (b)
threatens, as determined by the Real Estate Administrative Agent in its sole
discretion, the lien priority of the Mortgage or the right of the Owner Trustee
to receive payments of Project Loan Basic Rent or Supplemental Rent under any
of the Assignment of Leases or the right of the Real Estate Administrative
Agent to receive payments of Project Loan Basic Rent or Supplemental Rent under
a Reassignment of Leases. Upon the occurrence of either of the events
described in clauses (a) or (b) above, the Lessee shall purchase the Project
Loan Note and the Mortgage from the Owner Trustee for the amount of all
outstanding Project Loan Advances relating to such Property plus all accrued
interest and fees. Upon such purchase, the Project Loan Event of Default and
the Credit Agreement Event of Default resulting from such events shall be
deemed cured. In the event of a Lessor Default which is capable of cure by the
related Lessee, the Lessee agrees to attempt diligently to cure such default.
<PAGE> 15
ARTICLE VI.
CONDITIONS TO EFFECTIVENESS
6.1. Conditions to Effectiveness. The agreement of each
Lender to make Loans to the Owner Trustee, and the agreement of the Owner
Trustee to make Project Loans to any Lessor or to any Agree SPC, is subject to
the satisfaction, immediately prior to or concurrently with the Effective Date
of the following conditions precedent:
(a) Operative Agreements. Each of the Operative
Agreements to be entered into on the Effective Date shall have been
duly authorized, executed, acknowledged and delivered by the parties
thereto and shall be in full force and effect, and no default shall
exist thereunder (both before and after giving effect to the
transactions contemplated by the Operative Agreements), and the Agents
shall each have received a fully executed copy of each of the
Operative Agreements (other than the Notes of which the Administrative
Agent shall have received the original Notes).
(b) Project Loan Agreements. Each of the Project Loan
Documents (including the Agree Project Loan Agreements), if any, to be
entered into on the Effective Date shall have been duly authorized,
executed, acknowledged and delivered by the parties thereto and shall
be in full force and effect, and no default shall exist thereunder
(both before and after giving effect to the transactions contemplated
by the Project Loan Documents), and the Real Estate Administrative
Agent shall have received a fully executed copy of such of the Project
Loan Documents.
(c) Conditions Precedent. If any Project Loan is to be
funded on the Effective Date, each of the conditions precedent
contained in Sections 4.04, 5.01 and 5.03 and if the Initial Advance
is for an Agree Project Loan, the additional conditions contained in
Sections 14.03 and 14.04, shall have been satisfied.
(d) Taxes. All taxes, fees and other charges in
connection with the execution, delivery, and, where applicable,
recording, filing and registration of the Operative Agreements shall
have been paid or provisions for such payment shall have been made to
the satisfaction of the Lessor and the Agents.
(e) Governmental Approvals. All necessary (or, in the
reasonable opinion of the Agents and their respective counsel,
advisable) governmental actions in connection with the transactions
contemplated by the Operative Agreements, in each case required by any
law or regulation enacted, imposed or adopted on or after the
Effective Date or by any change in fact or circumstances since the
Effective Date, shall have been obtained or made and be in full force
and effect.
(f) Litigation. No action or proceeding shall have been
instituted, nor shall any action or proceeding be threatened, before
any Governmental Authority, nor shall any order, judgment or decree
have been issued or proposed to be issued by any Governmental
Authority (i) to set aside, restrain or enjoin any Governmental
Action, (ii) to set aside,
<PAGE> 16
restrain, enjoin or prevent the full performance of this Agreement,
any other Operative Agreement or any of the transactions contemplated
hereby or thereby or (iii) which is reasonably likely to have a
Material Adverse Effect.
(g) Legal Requirements. In the reasonable opinion of the
Agents and their respective counsel, the transactions contemplated by
the Operative Agreements and the Project Loan Documents do not and
will not violate any Legal Requirements and do not and will not
subject the Agents or any Lender to any adverse regulatory
prohibitions or constraints, in each case enacted, imposed, adopted or
proposed since the Effective Date.
(h) Corporate Proceedings of the Lessees and the
Guarantors. The Administrative Agent shall have received a copy of
the resolutions, in form and substance satisfactory to the
Administrative Agent and its respective counsel, of the Board of
Directors of each of the Lessees and each of the Guarantors
authorizing the execution, delivery and performance of this Agreement
and the other Operative Agreements to which it is a party, certified
by the Secretary or an Assistant Secretary of each such Lessee or
Guarantor as of the Effective Date, which certificate shall be in form
and substance satisfactory to the Administrative Agent and shall state
that the resolutions thereby certified have not been amended,
modified, revoked or rescinded.
(i) Incumbency Certificates. The Administrative Agent
shall have received a certificate of each of the Lessees and each of
the Guarantors, dated as of the Effective Date, as to the incumbency
and signature of the officers of each of the Lessees and each of the
Guarantors executing any Operative Agreement satisfactory in form and
substance to the Administrative Agent, executed by the President or
any Vice President and the Secretary or any Assistant Secretary of
each of the Lessees and each of the Guarantors.
(j) Corporate Proceedings of the Investor. The
Administrative Agent and the Company shall have received a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent and the Company, of the Board of Directors of the Investor
authorizing the execution, delivery and performance of the Operative
Agreements to which the Investor is a party, certified by the
Secretary or an Assistant Secretary of the Investor as of the
Effective Date, which certificate shall be in form and substance
satisfactory to the Administrative Agent and the Company and shall
state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded.
(k) Investor Incumbency Certificate. The Administrative
Agent and the Lessees shall have received a certificate of the
Investor, dated as of the Effective Date, as to the incumbency and
signature of the officers of the Investor executing any Operative
Agreement satisfactory in form and substance to the Administrative
Agent and the Company, executed by the President or any Vice President
and the Secretary or any Assistant Secretary of the Investor.
(l) Proceedings of Owner Trustee. The Administrative
Agent and the Lessees shall have received a copy of the resolutions,
in form and substance satisfactory to the Administrative Agent and the
Company, of the Board of Directors of the Trust Company authorizing
the execution, delivery and performance of the Trust Agreement,
certified by the Secretary or an Assistant Secretary of the Trust
Company as of the Effective Date, which certificate shall be in form
and substance satisfactory to the
<PAGE> 17
Administrative Agent and the Company and shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(m) Owner Trustee Incumbency Certificates. The
Administrative Agent and the Lessees shall have received a certificate
of the Owner Trustee, dated as of the Effective Date, as to the
incumbency and signature of the officers of the Owner Trustee
executing any Operative Agreement, satisfactory in form and substance
to the Administrative Agent and the Company, executed by the President
or any Vice President and the Secretary or any Assistant Secretary of
the Owner Trustee.
(n) Corporate Documents of the Lessees, the Guarantors
and the Investor. (i) The Administrative Agent shall have received
true and complete copies of the certificate of incorporation and
by-laws of each of the Lessees and each of the Guarantors, certified
as of the Effective Date as complete and correct copies thereof by the
Secretary or an Assistant Secretary.
(ii) The Administrative Agent and the Lessees shall have
received true and complete copies of the certificate of incorporation
and by-laws of the Investor, certified as of the Effective Date as
complete and correct copies thereof by the Secretary or an Assistant
Secretary of the Investor.
(o) Fees. The Agents shall have received the fees to be
paid on the Effective Date.
(p) Legal Opinions. (i) The Administrative Agent shall
have received the executed legal opinion of Dickinson, Wright, Moon,
Van Dusen & Freeman, counsel to each of the Lessees and each of the
Guarantors, addressed to each of the Lenders and the Investor and
substantially in the form of Schedule 1 hereto and the executed legal
opinion of Baker & McKenzie, U.K., counsel to BGP (UK) Limited,
addressed to each of the Lenders and the Investor and substantially in
the form of Schedule 1(a) hereto.
(ii) The Administrative Agent and the Lessees shall have
received the executed legal opinion of Loeb and Loeb, counsel to the
Investor, addressed to each of the Lenders and substantially in the
form of Schedule 2 hereto.
(iii) The Administrative Agent and the Lessees shall have
received the executed legal opinion of Morris, James, Hitchens &
Williams, counsel to the Trust Company and the Owner Trustee,
addressed to each of the Lenders and substantially in the form of
Schedule 3 hereto.
<PAGE> 18
(q) Actions to Perfect Liens. The Real Estate
Administrative Agent shall have received evidence in form and
substance satisfactory to it that all filings, recordings,
registrations and other actions, including, without limitation, the
filing of duly executed financing statements, (including precautionary
financing statements against the applicable Lessee) on form UCC-1,
necessary or, in the opinion of the Real Estate Administrative Agent,
desirable to perfect the Liens created by the Security Documents shall
have been completed.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
ON THE EFFECTIVE DATE
7.1. Representations and Warranties of the Investor. The
Investor hereby represents and warrants to each of the other parties hereto
that:
(a) Due Organization, etc. It is duly organized and
validly existing in good standing under the laws of the jurisdiction
of its organization and has the power and authority to carry on its
business as now conducted and to enter into and perform its
obligations under each Operative Agreement to which it is or is to be
a party and each other agreement, instrument and document to be
executed and delivered by it on or before the Effective Date and each
Property Closing Date in connection with or as contemplated by each
such Operative Agreement to which it is or will be a party.
(b) Authorization; No Conflict. The execution, delivery
and performance of each Operative Agreement to which it is or will be
a party have been duly authorized by all necessary action on its part
and neither the execution and delivery thereof, nor the consummation
of the transactions contemplated thereby, nor compliance by it with
any of the terms and provisions thereof (i) requires or will require
any approval of the shareholders of, or approval or consent of any
trustee or holders of any indebtedness or obligations of such
Investor, (ii) contravenes or will contravene any Legal Requirement
applicable to or binding on it, (iii) does or will contravene or
result in any breach of or constitute any default under, or result in
the creation of any Lien upon any Property or any of the Improvements
(other than Liens created by the Operative Agreements) under its
charter or any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement or other
agreement or instrument to which it is a party or by which it or its
properties is bound or affected or (iv) does or will require any
Governmental Action by any Governmental Authority.
(c) Enforceability, etc. Each Operative Agreement to
which it is or will be a party has been, or will be, duly executed and
delivered by it and constitutes, or upon execution and delivery will
constitute, a legal, valid and binding obligation enforceable against
it in accordance with the terms thereof.
<PAGE> 19
7.02. Representations and Warranties of the Owner Trustee.
The Owner Trustee, in its individual capacity and as the Owner Trustee as
indicated, represents and warrants to each of the other parties hereto as
follows, provided that the representations in the following paragraphs (f),
(g), (h), (i) and (j) are made solely in its capacity as the Owner Trustee:
(a) Due Organization, etc. It is a corporation duly
organized and validly existing and in good standing under the laws of
the State of Delaware and has the power and authority to enter into
and perform its obligations under the Operative Agreements to which
the Owner Trustee is or will be a party and each other agreement,
instrument and document to be executed and delivered by it on or
before such Effective Date in connection with or as contemplated by
each such Operative Agreement to which the Owner Trustee is or will be
a party.
(b) Authorization; No Conflict. The execution, delivery
and performance of each Operative Agreement to which it is or will be
a party has been duly authorized by all necessary action on its part
and neither the execution and delivery thereof, nor the consummation
of the transactions contemplated thereby, nor compliance by it with
any of the terms and provisions thereof (i) does or will require any
approval or consent of any trustee or holders of any of its
indebtedness or obligations, (ii) does or will contravene any current
law, governmental rule or regulation relating to it, (iii) does or
will contravene or result in any breach of or constitute any default
under, or result in the creation of any Lien upon any of its property
under, its organizational documents, or any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement or other agreement or instrument to which it is a
party or by which it or its properties may be bound or affected or
(iv) does or will require any authority, approval or other action by
any Governmental Authority or agency of the state of Delaware or any
federal authority governing the banking or trust powers of the Trust
Company.
(c) Enforceability, etc. Each Operative Agreement to
which it is a party has been, or will be, duly executed and delivered
by it and constitutes, or upon execution and delivery will constitute,
a legal, valid and binding obligation enforceable against it in
accordance with the terms thereof.
(d) Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is
pending or, to the knowledge of the Owner Trustee, threatened by or
against the Owner Trustee (a) with respect to any of the Operative
Agreements or any of the transactions contemplated hereby or thereby,
or (b) which could have a material adverse effect on the business or
financial condition of the Owner Trustee or the validity or
enforceability of any of the Operative Agreements.
(e) Assignment. It has not assigned or transferred, or
granted any lien in respect of, any of its right, title or interest in
or under any Project Loan Agreement, Project Loan Note, Mortgage,
Assignment of Lease or Contract Assignment, except in accordance with
the Operative Agreements.
<PAGE> 20
(f) No Default. The Owner Trustee is not in default
under or with respect to any of its Contractual Obligations in any
respect which could have a material adverse effect on the business or
financial condition of the Owner Trustee or the validity or
enforceability of any of the Operative Agreements. No Default or
Event of Default has occurred and is continuing.
(g) Use of Proceeds. The proceeds of the Loans shall be
applied by the Owner Trustee solely to make Project Loans to Lessors
or to Agree SPCs.
(h) Chief Place of Business. The Owner Trustee's chief
place of business, chief executive office and office where the
documents, accounts and records relating to the transactions
contemplated by this Agreement and each other Operative Agreement are
located at c/o Wilmington Trust Company, Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890.
(i) Federal Reserve Regulations. No part of the proceeds
of any Loans will be used for "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms
under Regulation G or Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in
effect. If requested by any Lender or the Agent, the Owner Trustee
will furnish to the Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form G- 1 or FR Form
U-1 referred to in said Regulation G or Regulation U, as the case may
be.
(j) Investment Company Act. The Owner Trustee is not an
"investment company" or a company controlled by an "investment
company" within the meaning of the Investment Company Act.
7.3. Representations and Warranties of the Company. The
Company hereby represents and warrants to each of the other parties hereto
that:
(a) Organization and Qualification. The Company and each
of its Subsidiaries is a corporation or partnership, duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization. The Company and each of its
Subsidiaries has the lawful power to own or lease its properties and
to engage in the business it presently conducts or proposes to
conduct. The Company and each of its Subsidiaries is duly licensed or
qualified and in good standing in each jurisdiction listed on Schedule
7.03(a) and in all other jurisdictions where the property owned or
leased by it or the nature of the business transacted by it or both
makes such licensing or qualification necessary, except where the
failure to be so licensed, qualified or in good standing individually
or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
(b) Capitalization and Ownership. All of the issued and
outstanding shares of capital stock of the Company have been validly
issued and are fully paid and nonassessable. There are no options,
warrants or other rights outstanding to purchase any shares of capital
stock of the Company except any options, warrants or other rights
issued
<PAGE> 21
pursuant to stock purchase or option programs established by the Board
of Directors of the Company for the benefit of any of its employees,
officers or directors or as indicated on Schedule 7.03(b).
(c) Subsidiaries. Schedule 7.03(c) states the name of
each of the Company's Subsidiaries, its jurisdiction of incorporation,
its authorized capital stock, the issued and outstanding shares
(referred to herein as the "Subsidiary Shares") and the owners thereof
if it is a corporation and its outstanding partnership interests (the
"Partnership Interests") if it is a partnership. The Company and each
of its Subsidiaries has good and marketable title to all of the
Subsidiary Shares and Partnership Interests it purports to own, free
and clear in each case of any Lien. All Subsidiary Shares and
Partnership Interests have been validly issued and all Subsidiary
Shares are fully paid and nonassessable. All capital contributions
and other consideration required to be made or paid in connection with
the issuance of the Partnership Interests have been made or paid, as
the case may be. There are no options, warrants or other rights
outstanding to purchase any such Subsidiary Shares or Partnership
Interests except as indicated on Schedule 7.03(c)
.
(d) Power and Authority. The Company and the other
Guarantors have full power to enter into, execute, deliver and carry
out this Agreement and the other Operative Agreements to which they
are a party and to perform their respective Obligations under the
Operative Agreements to which they are a party and all such actions
have been duly authorized by all necessary proceedings on its part
(including any required consent or authorization of stockholders).
(e) Validity and Binding Effect. This Agreement has been
duly and validly executed and delivered by each of the Lessees, and
each of the other Operative Agreements which any Guarantor is required
to execute and deliver on or after the Effective Date will have been
duly executed and delivered by such Guarantor on the required date of
delivery of such Operative Agreement. This Agreement and each of the
other Operative Agreements constitutes or will constitute the legal,
valid and binding obligation of each Guarantor which is or will be a
party thereto on and after its date of delivery thereof, enforceable
against such Guarantor in accordance with its terms, except to the
extent that enforceability of any of such Operative Agreement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforceability of creditors' rights
generally or limiting the right of specific performance.
(f) No Conflict. Neither the execution and delivery of
this Agreement or the other Operative Agreement by any Guarantor
nor the consummation of the transactions herein or therein contemplated
nor the compliance with the terms and provisions hereof or thereof will
conflict with, constitute a default under or result in any breach of
(i) the terms and conditions of the certificate of incorporation,
by-laws or other organizational documents of any Guarantor or (ii) any
Legal Requirement or any agreement or instrument or order, writ,
judgment, injunction or decree to which any Guarantor is a party or by
which it or any of its properties may be subject or bound, or result in
the creation or enforcement of any
<PAGE> 22
Lien, charge or encumbrance whatsoever upon any property (now or
hereafter acquired) of any Guarantor.
(g) Litigation. There are no actions, suits, proceedings
or investigations pending or, to the knowledge of any Lessee,
threatened against the Company or any of its Subsidiaries at law or
equity before any Governmental Authority or arbitrator which
individually or in the aggregate could reasonably be expected to have
a Material Adverse Effect. None of the Lessees or any of their
Subsidiaries is in violation of any order, writ, injunction or any
decree of any Governmental Authority which individually or in the
aggregate could reasonably be expected to have a Material Adverse
Effect.
(h) Title to Properties. The real property owned or
leased by the Company and its Subsidiaries is described on Schedule
7.03(h) . The Company and its Subsidiaries have good and marketable
title to or valid leasehold interests in all properties and other
rights which they purport to own or lease or which are reflected as
owned or leased on their books and records, free and clear of all
Liens and encumbrances except Permitted Liens, and subject to the
terms and conditions of the applicable leases, except to the extent
that the failure to do so individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. All leases
of property of the Company and its Subsidiaries are in full force and
effect without the necessity for any consent which has not previously
been obtained upon consummation of the transactions contemplated
hereby.
(i) Financial Statements. (i) Historical Statements.
The Company has delivered to each of the Lenders copies of its audited
consolidated year-end financial statements for and as of the end of
the Fiscal Year ended January 26, 1997 (the " Annual Statements"). In
addition, the Company has delivered to each of the Lenders copies of
its unaudited consolidated interim financial statements for the Fiscal
Quarter ended July 27, 1997 (the " Interim Statements") (the Annual
Statements and the Interim Statements being collectively referred to
as the "Historical Statements"). The Historical Statements were
compiled from the books and records maintained by the Company'
management, are correct and complete and fairly represent the
consolidated financial condition of the Company and its Subsidiaries
as of their dates and the results of operations for the fiscal periods
then ended and have been prepared in accordance with GAAP consistently
applied (except as disclosed in such financial statements), subject
(in the case of the Interim Statements) to normal year end audit
adjustments.
(ii) Financial Projections. The Company has delivered to
each of the Lenders financial projections of the Company and its
Subsidiaries for the period from January 27, 1997 through January 26,
2003, derived from various assumptions of the Company's management.
There has been no material adverse change to the Company's balance
sheet since the latest fiscal quarter referenced in Section 7.03(i)(i)
above.
(iii) Absence of Undisclosed Liabilities. Neither the
Company nor any of its Subsidiaries has any material liabilities,
contingent or otherwise, or forward or long-term commitments that are
not disclosed in the audited year-end financial statements delivered
to
<PAGE> 23
the Lenders pursuant to subsection (i) above or in the notes thereto,
other than as incurred in the ordinary course of business after the
date of such statements. Except as disclosed therein or on the
Schedules hereto, there are no unrealized or anticipated losses from
any commitments of the Company or any Subsidiary of the Company which
individually or in the aggregate could reasonably be expected to have
a Material Adverse Effect. Since the date of the audited year-end
financial statements delivered to the Lenders pursuant to subsection
(i) above, no circumstances or events have occurred which could
reasonably be expected to have a Material Adverse Effect.
(j) Use of Proceeds; Margin Stock; Section 20
Subsidiaries.
(i) the proceeds of the Loans will be used in
accordance with Section 7.02(g);
(ii) neither the Company nor any of its
Subsidiaries engages or intends to engage principally, or as one of
its important activities, in the business of extending credit for the
purpose, immediately, incidentally or ultimately, of purchasing or
carrying margin stock (within the meaning of Regulation U). No part
of the proceeds of any Loan has been used, immediately, incidentally
or ultimately, to purchase or carry any margin stock (other than
common stock of the Company repurchased in accordance with Section
12.05 of the Guarantee) or to extend credit to others for the purpose
of purchasing or carrying any margin stock or to refund Indebtedness
originally incurred for such purpose, or for any purpose which entails
a violation of or which is inconsistent with the provisions of the
regulations of the Board of Governors of the Federal Reserve System.
Neither the Company nor any of its Subsidiaries holds or intends to
hold margin stock in such amounts that more than 25% of the reasonable
value of the assets of the Company or any of its Subsidiaries are or
will be represented by margin stock; and
(iii) the Borrower does not intend to use any
portion of the proceeds of the Loans, directly or indirectly (i)
knowingly to purchase any Ineligible Securities from a Section 20
Subsidiary during any period in which such Section 20 Subsidiary makes
a market in such Ineligible Securities, (ii) knowingly to purchase
during the underwriting or placement period Ineligible Securities
being underwritten or privately placed by a Section 20 Subsidiary, or
(iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by as Section 20
Subsidiary and issued by or for the benefit of Borrower or any
Affiliate of the Borrower.
(k) Full Disclosure. On the Effective Date, neither this
Agreement nor any other Operative Agreement, nor any certificate,
statement, agreement or other documents furnished to the Agent or any
Lender in connection herewith or therewith, contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and
therein, in light of the circumstances under which they were made, not
misleading. On the Effective Date, there is no fact known to any
Guarantor which could reasonably be expected to have a Material
Adverse Effect and which has not been set forth in this Agreement or
in the certificates, statements, agreements or other
<PAGE> 24
documents furnished in writing to the Agent and the Lenders prior to
or on the Effective Date in connection with the transactions
contemplated hereby.
(l) Taxes. All federal, state, local and other tax
returns required to have been filed with respect to the Company and
each of its Subsidiaries have been filed and payment or adequate
provision has been made for the payment of all taxes, fees,
assessments and other governmental charges which have or may become
due pursuant to said returns or to assessments received except to the
extent that such taxes, fees, assessments and other charges are being
contested in good faith by appropriate proceedings diligently
conducted and for which such reserves or other appropriate provisions,
if any, as shall be required by GAAP shall have been made. There are
no agreements or waivers extending the statutory period of limitations
applicable to any federal income tax return of the Company and its
Subsidiaries for any period. No tax liens have been filed and no
claims are pending or, to the knowledge of the Guarantors, threatened
with respect to taxes which could reasonably be expected to have a
Material Adverse Effect. The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of any taxes or
other governmental charges are maintained in accordance with GAAP.
Except as disclosed on Schedule 7.03(1), there are no agreements or
other arrangements with any Person whereby the Company or any of its
Subsidiaries has any obligation to such Person in respect of the
payment of any taxes or other governmental charges. For purposes of
this Section, the Guarantor make no representations with respect to
(i) any tax returns filed by Kmart, (ii) the payment of any fees,
assessments or other governmental charges which have or may become due
pursuant to said returns by Kmart or assessments received by Kmart and
(iii) any agreements or waivers extending the statutory period of
limitations applicable to any said returns of Kmart.
(m) Consents and Approvals. No consent, approval,
exemption, order or authorization of, or a registration or filing with
any Governmental Authority or any other Person is required by Law or
any agreement in connection with the execution and delivery of this
Agreement and the other Operative Agreements by any Guarantor, the
consummation of the transactions herein and therein contemplated and
the compliance with the terms and provisions hereof and thereof,
except as listed on Schedule 7.03(m), all of which shall have been
obtained or made on or prior to the Effective Date except as otherwise
indicated on Schedule 7.03(m)
(n) No Event of Default; Compliance with Instruments. No
Event of Default or Default has occurred and is continuing. Neither
the Company nor any of its Subsidiaries is in violation of (i) any
term of its certificate of incorporation, by-laws, or other
organizational documents or (ii) any agreement or instrument or order,
writ, judgment, injunction or decree to which it is a party or by
which it or any of its properties may be subject or bound where such
violation individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect.
(o) Patents, Trademarks, Copyrights, Licenses, Etc., The
Company and each of its Subsidiaries owns or possesses all the
material patents, trademarks, service marks, trade names, copyrights,
licenses, registrations, franchises, permits and rights necessary to
<PAGE> 25
own and operate its properties and to carry on its business as
presently conducted and planned to be conducted by the Company or such
Subsidiary, without known conflict with the rights of others.
(p) Insurance. Schedule 7.03(p) describes all insurance
policies and other bonds to which the Company or any of its
Subsidiaries is a party, all of which are valid and in full force and
effect. No notice has been given or claim made and no grounds exist
to cancel or avoid any of such policies or bonds or to reduce the
coverage provided thereby. Such policies and bonds provide adequate
coverage from reputable and financially sound insurers in amounts
sufficient to insure the assets and risks of the Company and each of
its Subsidiaries in accordance with prudent business practice in the
industry of the Company and its Subsidiaries.
(q) Compliance with Laws. The Company and its
Subsidiaries are in compliance in all respects with all applicable
Laws in all jurisdictions in which the Company or any of its
Subsidiaries is presently or will be doing business except where the
failure to do so individually or in the aggregate could not reasonably
be expected to have a Material Adverse Effect.
(r) Material Contracts. All contracts which are material
to the business operations of the Company and its Subsidiaries are
valid, binding and enforceable upon the Company and each such
Subsidiary and each of the other parties thereto in accordance with
their respective terms, and there is no default thereunder, to the
Guarantors' knowledge, with respect to parties other than the Company
or its Subsidiaries.
(s) Investment Companies. Neither the Company nor any of
its Subsidiaries is an "investment company" registered or required to
be registered under the Investment Company Act of 1940 or under the
"control" of an "investment company" as such terms are defined in the
Investment Company Act of 1940 and none of them shall become such an
"investment company" or under such "control."
(t) Plans and Benefit Arrangements. Except as set forth
on Schedule 7.03(t):
(1) The Company and each of its
Subsidiaries is in compliance in all material respects with
any applicable provisions of ERISA with respect to all
Employee Benefit Plans. There has been no Prohibited
Transaction with respect to any Employee Benefit Plan that
individually or in the aggregate could reasonably be expected
to have a Material Adverse Effect.
(2) Neither the Company nor any of its
Subsidiaries maintains or contributes to any Plan,
Multiemployer Plan or Multiple Employer Plan.
(3) To the extent that any Employee
Benefit Plan is insured, the Company and all of its
Subsidiaries have paid when due all premiums required to be
paid for all periods except where the failure to make such
payment individually or in
<PAGE> 26
the aggregate could not reasonably be expected to have a
Material Adverse Effect. To the extent that any Employee
Benefit Plan is funded other than with insurance, the Company
and all of its Subsidiaries have made when due all
contributions required to be paid for all periods except where
the failure to make such contribution individually or in the
aggregate could not reasonably be expected to have a Material
Adverse Effect.
(4) All Employee Benefit Plans have been
administered in accordance with their terms and applicable
Legal Requirements except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
(5) Neither the Company nor any of its
Subsidiaries maintains or contributes to or otherwise has any
liability under any Employee Benefit Plan under which benefits
are provided to former employees of the Company or any of its
Subsidiaries.
(6) No claims or lawsuits are pending
or, to the knowledge of the Guarantors, threatened with
respect to any Employee Benefit Plan, other than normal claims
for benefits.
(7) As of the Effective Date neither the
Company nor any member of the ERISA Affiliate maintains,
sponsors or contributes to any Plan, Multiemployer Plan or
Multiple Employer Plan.
(u) Employment Matters. The Company and each Subsidiary
of the Company is in compliance with the Labor Contracts and all
applicable federal, state and local labor and employment Laws
including those related to equal employment opportunity and
affirmative action, labor relations, minimum wage, overtime, child
labor, medical insurance continuation, worker adjustment and
relocation notices, immigration controls and worker and unemployment
compensation, where the failure to comply individually or in the
aggregate could reasonably be expected to have a Material Adverse
Effect. There are no outstanding grievances, arbitration awards or
appeals therefrom arising out of the Labor Contracts or current or
threatened strikes, picketing, handbilling or other work stoppages or
slowdowns at facilities of any of the Guarantors which, in any case,
individually or in the aggregate could reasonably be expected to have
a Material Adverse Effect.
(v) Environmental Matters. Except as disclosed on
Schedule 7.03(v):
(1) Neither the Company nor any
Subsidiary of the Company has received any Environmental
Complaint from any Governmental Authority or private Person
alleging that it or any prior or subsequent owner of its
property is a potentially responsible party under CERCLA and
none of the Guarantors has any reason to believe that such an
Environmental Complaint might be received. There are no
pending or, to the Guarantors' knowledge, threatened
Environmental Complaints relating to the Company or any
Subsidiary of the Company or, to the Guarantors'
<PAGE> 27
knowledge, any prior or subsequent owner of their property
pertaining to, or arising out of, any Environmental Violations.
(2) Except for conditions, violations or
failures which individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect,
there are no circumstances at, on or under the Company's and
its Subsidiaries' property that constitute a breach of or
noncompliance with any of the Environmental Laws, and there
are no past or present Environmental Violations at, on or
under such property or, to the Guarantors' knowledge, at, on
or under adjacent property, that prevent compliance with the
Environmental Laws at such property or that otherwise would
require that any removal, remediation or other corrective
action or cleanup be taken with respect to such property or
any adjacent property.
(3) Neither the property of the Company
and its Subsidiaries nor any structures, improvements,
equipment, fixtures, activities or facilities thereon or
thereunder contain or use Hazardous Substances except in
compliance with Environmental Laws or under circumstances
where any failure to comply with Environmental Laws could not
reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. There are no processes,
facilities, operations, equipment or any other activities at,
on or under such property, or, to the Guarantors' knowledge,
at, on or under adjacent property, that have resulted or are
currently resulting in the release or threatened release of
Hazardous Substances onto such property, except to the extent
that such releases or threatened releases are not a breach of
or otherwise not a violation of the Environmental Laws, and
except where such releases or threatened releases individually
or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
(4) There are no aboveground storage
tanks, underground storage tanks or underground piping
associated with such tanks, used for the management of
Hazardous Substances at, on or under the property of the
Company and its Subsidiaries that (a) do not have a full
operational secondary containment system in place, and (b) are
not otherwise in compliance with all Environmental Laws.
There are no abandoned underground storage tanks or
underground piping associated with such tanks, previously used
for the management of Hazardous Substances at, on or under
such property that have not either been closed in place in
accordance with Environmental Laws or removed in compliance
with all applicable Environmental Laws and no contamination
associated with the use of such tanks exists on such property.
(5) The Company and each Subsidiary of
the Company has obtained all permits, licenses,
authorizations, plans and approvals necessary under the
Environmental Laws for the conduct of its business as
presently conducted except where the failure to do so
individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. The Company and
each Subsidiary of the Company has submitted all notices,
reports and other filings required by the
<PAGE> 28
Environmental Laws to be submitted to a Governmental Authority
which pertain to past and current operations on their property
except where the failure to do so individually or in the
aggregate could not reasonably be expected to have a Material
Adverse Effect.
(6) Except for violations which
individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect, all past and
present on-site generation, storage, processing, treatment,
recycling, reclamation, disposal or other use or management of
Hazardous Substances at, on, or under the property of the
Company and its Subsidiaries and all off-site transportation,
storage, processing, treatment, recycling, reclamation,
disposal or other use or management of Hazardous Substances
has been done in accordance with the Environmental Laws.
(w) Senior Debt Status. The Obligations of the Company
under this Agreement and the Guarantors under each of the other
Operative Agreements to which they are a party do rank and will rank
at least pari passu in priority of payment with all other Indebtedness
of such Person except Indebtedness of such Guarantor to the extent
secured by Permitted Liens. There is no Lien upon or with respect to
any of the properties or income of any Guarantor or Subsidiary of any
Guarantor which secures indebtedness or other obligations of any
Person except for Permitted Liens.
(x) Lease. Upon the execution and delivery of each
Lease, (i) each Lessee will have unconditionally accepted the Property
subject to such Lease, (ii) no offset will exist with respect to any
Project Loan Basic Rent or other sums payable under such Lease (other
than Developer Basic Rent or Developer Equity pursuant to Section
24.01(b) of each Lease) and (iii) no Basic Rent or Supplemental Rent
under any Lease will have been prepaid.
7.4. Updates to Schedules. Should any of the information
or disclosures provided on any of the Schedules attached to the Guaranty become
outdated or incorrect in any material respect, the Company shall promptly
provide the Agent in writing with such revisions or updates to such Schedule as
may be necessary or appropriate to update or correct same; provided that,
except for the amendment of Schedule II to the Credit Agreement as contemplated
by, or pursuant to, Sections 2.09 and 12.08(a) of the Credit Agreement, no
Schedule shall be deemed to have been amended, modified or superseded by any
such correction or update, nor shall any breach of warranty or representation
resulting from the inaccuracy or incompleteness of any such Schedule be deemed
to have been cured thereby, unless and until the Required Lenders, in their
sole and absolute discretion, shall have accepted in writing such revisions or
updates to such Schedule.
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES ON FUNDING DATES
8.1. Representations and Warranties on Property Closing
Dates. The Company hereby represents and warrants as of each Property Closing
Date (except to the extent such representations and warranties expressly relate
to an earlier date) as follows:
<PAGE> 29
(a) Representations and Warranties. The representations
and warranties of the Lessees set forth in the Operative Agreements
are true and correct in all material respects. The Lessees are in
compliance with their respective obligations under the Operative
Agreements and there exists no Default or Event of Default by any of
the Lessees under any of the Operative Agreements. No Default or
Event of Default will occur under any of the Operative Agreements as a
result of, or after giving effect to, the Loans requested by the
Requisition on such Property Closing Date.
(b) Authorization by the Lessees. The execution and
delivery of each Lease, each Memorandum of Lease and Consent to the
Assignment of Lease delivered by the applicable Lessee on such
Property Closing Date and the performance of the obligations of the
applicable Lessee under each such Lease, each Memorandum of Lease and
each such Consent to Assignment of Lease has been duly authorized by
all requisite corporate action of the applicable Lessee.
(c) Execution and Delivery by the Lessees. Each Lease,
each Memorandum of Lease and each Consent to Assignment delivered on
such Property Closing Date by the Lessee has been duly executed and
delivered by the applicable Lessee.
(d) Valid and Binding Obligations. Each Lease, each
Memorandum of Lease and each Consent to Assignment of Lease delivered
by the relevant Lessee on such Property Closing Date is a legal, valid
and binding obligation of the Lessee, enforceable against the Lessee
in accordance with its respective terms, subject to the effects of
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
(e) Recording of Documents. Each of the Deed or
Memorandum of Ground Lease, the Lease, the Memorandum of Lease, the
Assignment of Lease, the Reassignment of Leases and the Mortgage
delivered on such Property Closing Date will be recorded with the
appropriate Governmental Authorities in the order set forth in this
paragraph, and the UCC Financing Statements with respect to the
Property being acquired will be filed with the appropriate
Governmental Authorities, and upon such recording or filing, the
Assignment of Lease, Reassignment of Leases, the UCC Financing
Statements and the Mortgage will constitute valid and perfected first
priority security interests in the applicable collateral.
(f) Flood Zone. No portion of any Property being
acquired by any Lessor on such Property Closing Date is located in an
area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, or if any such
Property is located in an area identified as a special flood hazard
area by the Federal Emergency Management Agency or other applicable
agency, then flood insurance has been obtained for such Property in
accordance with Section 15.02(b) of each Lease and in accordance with
the National Flood Insurance Act of 1968, as amended.
<PAGE> 30
(g) Insurance Coverage. The applicable Lessee or
Developer has obtained insurance coverage for each Property being
acquired by any Lessor on such Property Closing Date which meet the
requirements of Article XV of each Lease and all of such coverage is
in full force and effect.
(h) Legal Requirements. Each Property being acquired by
a Lessor on such Property Closing Date (i) complies in all respects
with all Legal Requirements (including, without limitation, all zoning
and land use laws and Environmental Laws); or (ii) does not comply
with certain state and local land use, zoning and related legal
requirements (other than Environmental Laws) which have been
identified in writing to the Agent and which the Agent has deemed
immaterial.
(i) Consents, etc. All consents, licenses and building
permits required by all Legal Requirements for construction,
completion, occupancy and operation of each Property being acquired on
such Property Closing Date (i) have been obtained and are in full
force and effect; or (ii) have not been obtained (such consents,
licenses and building permits having been identified in writing to the
Agent and which the Agent has deemed immaterial).
(j) Utilities. All utility services and facilities
necessary for the construction of the Improvements existing, or to be
constructed, on each Property being acquired on such Property Closing
Date (including, without limitation, gas, electrical, water and sewage
services and facilities) are available at the boundaries of each such
Property.
8.2. Representations and Warranties Upon Initial
Construction Advances. The Lessees hereby represent and warrant as of each
date on which an Initial Construction Advance is made (except to the extent
such representations and warranties expressly relate to an earlier date) as
follows:
(a) Representations and Warranties. The representations
and warranties of the Lessees set forth in the Operative Agreements
are true and correct in all material respects. The Lessees are in
compliance with their respective obligations under the Operative
Agreements and there exists no Default or Event of Default by any of
the Lessees under any of the Operative Agreements. No Default or
Event of Default will occur under any of the Operative Agreements as
a result of, or after giving effect to, the Loans requested by the
Requisition on such date.
(b) Projected Budget. The cost of construction of the
Improvements on each Property shall not exceed an amount equal to one
hundred fifty percent (150%) of the amount reflected in the initial
Construction Budget delivered on the Property Closing Date.
(c) Security for the Advance. The related Project Loan
(which is not an Agree Project Loan) is secured by the Lien of the
Mortgage, and there have been no Liens placed against the applicable
Property since the recordation of the Mortgage other than Permitted
Liens.
<PAGE> 31
8.3. Representations and Warranties Upon the Date of Each
Construction Advance that is not an Initial Construction Advance. The Lessees
hereby represent and warrant as of each date on which a Construction Advance is
made (except to the extent such representations and warranties expressly relate
to an earlier date), when such advance is not an Initial Construction Advance,
as follows:
(a) Representations and Warranties. The representations
and warranties of the Lessees set forth in the Operative Agreements
(including the representations and warranties set forth in Section
8.02) are true and correct in all material respects. The Lessees are
in compliance with their respective obligations under the Operative
Agreements and there exists no Default or Event of Default by any of
the Lessees under any of the Operative Agreements. No Default or
Event of Default will occur under any of the Operative Agreements as a
result of, or after giving effect to, the Loans requested by the
Requisition on such date on which a Construction Advance is made.
(b) Security for the Advance. The related Project Loan
is secured by the Lien of the Mortgage, and there have been no Liens
placed against the applicable Property since the recordation of the
Mortgage other than Permitted Liens.
ARTICLE IX.
PAYMENT OF FEES AND EXPENSES
9.01. Transaction Expenses. (a) The Lessees agree, for the
benefit of the Investor, the Trust Company, the Owner Trustee, the Agents and
the Lenders, to pay, or cause to be paid, on the Effective Date all reasonable
fees, expenses and disbursements of the Trust Company's and the Agents' counsel
and (ii) the Agents, to the terms and conditions of the Fee Letters) in
connection with the transactions contemplated by the Operative Agreements and
incurred in connection with such Effective Date, including all Transaction
Expenses, and all other reasonable expenses in connection with such Effective
Date, including, without limitation, all expenses relating to all fees, taxes
and expenses for the recording, registration and filing of documents.
(b) The Lessees agree, for the benefit of the Investor,
the Trust Company, the Owner Trustee, the Agents and the Lenders to pay, or
cause to be paid, on each Property Closing Date all reasonable fees, expenses
and disbursements of each of the Trust Company's and the Real Estate
Administrative Agent's counsel and the Administrative Agent's counsel in
connection with the transactions contemplated by the Operative Agreements and
incurred in connection with such Property Closing Date, including, without
limitation, all fees, taxes and expenses for the recording, registration and
filing of documents.
9.02. Brokers' Fees and Stamp Taxes. The Lessees agree,
for the benefit of the Investor, the Trust Company, the Owner Trustee, the
Agents and the Lenders to pay or cause to be paid any brokers' fees and any and
all stamp, transfer and other similar taxes, fees and excises, if any,
including any interest and penalties, which are payable in connection with the
transactions
<PAGE> 32
contemplated by this Agreement and the other Operative Agreements; provided
that the foregoing shall not preclude any contribution for such charges by the
Lessors.
9.03. Certain Fees and Expenses. (a) The Lessees agree,
for the benefit of the Investor, the Trust Company, the Owner Trustee, the
Agents and the Lenders to pay or cause to be paid (i) the initial and annual
Trust Company's fee and the initial and annual fee of Lord Securities
Corporation, as manager of the Investor pursuant to a management agreement
between the Investor and Lord Securities Corporation which has been delivered
to the Lessees and all expenses of the Trust Company and any necessary
co-trustees (including reasonable counsel fees and expenses) or any successor
owner trustee, for acting as Owner Trustee, (ii) all costs and expenses
incurred by the Lessees, the Agents, the Investor or the Trust Company in
entering into any future amendments or supplements with respect to any of the
Operative Agreements, whether or not such amendments or supplements are
ultimately entered into, or giving or withholding of waivers of consents hereto
or thereto and (iii) all costs and expenses incurred by the Agents, the
Lenders, the Owner Trustee or the Trust Company in connection with any purchase
of any Property by the Lessees pursuant to any Lease.
9.04. Credit Agreement, Project Loan Agreement and Related
Obligations. (a) The Lessees agree, for the benefit of the Investor, the Trust
Company, the Owner Trustee, the Agents and the Lenders to pay, on or before the
due date thereof, all costs, expenses and other amounts (other than principal
and interest on the Loans and the Project Loans, but including breakage costs,
interest on overdue amounts and all costs payable pursuant to Sections 5.06 and
12.05 of the Credit Agreement, Section 3.04 of each Project Loan Agreement or
otherwise) required to be paid by the Owner Trustee under the Operative
Agreements to which it is a party.
(b) The Lessees agree, for the benefit of the Owner
Trustee, to pay the Administrative Agent and the Real Estate Administrative
Agent annual administrative fees for services as agent under the Credit
Agreement in the amount agreed upon by the Administrative Agent and the Lessees
in the Fee Letter, payable in advance on the Effective Date and on each
anniversary of the such date prior to the Maturity Date.
9.05. Fees. The Lessees agree to pay to the Administrative
Agent for the account of each Lender, on the due date thereof, the Facility Fee
as set forth in the Credit Agreement.
ARTICLE X.
OTHER COVENANTS AND AGREEMENTS
10.01. Cooperation with the Lessees. The Owner Trustee, the
Investor and the Agents shall, to the extent reasonably requested by the
Lessees (but without assuming additional liabilities on account thereof), at
the Lessees' sole cost and expense, cooperate with the Lessees in connection
with its covenants contained herein including, without limitation, at any time
and from time to time, upon the request of the Lessees, to promptly and duly
execute and deliver any and all such further instruments, documents and
financing statements (and continuation statements related thereto) as the
Lessees may reasonably request in order to perform such covenants.
<PAGE> 33
10.02. Covenants of the Owner Trustee and the Investor.
Each of the parties hereby agree that so long as this Agreement is in effect:
(a) Discharge of Liens. Each of the Investor and the
Owner Trustee (both in its individual capacity and as Owner Trustee) will not
create or permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge, or to cause to
be discharged, all Liens on the Trust Estate attributable to it or any of its
Affiliates; provided, however, that the Owner Trustee shall not be required to
so discharge any such Lessor Lien while the same is being contested in good
faith by appropriate proceedings diligently prosecuted so long as such
proceedings shall not involve any material danger of impairment of the Liens of
the Security Documents or of the sale, forfeiture or loss of, and shall not
interfere with the use or disposition of, any Property or title thereto or any
interest therein or the payment of Rent or the Trust Estate.
(b) Trust Agreement. Without prejudice to any right
under the Trust Agreement of the Trust Company to resign, or the Investor's
right under the Trust Agreement to remove the institution acting as owner
trustee, the Investor hereby agrees with the Lessees and the Agents (i) not to
terminate or revoke the trust created by the Trust Agreement, (ii) not to
amend, supplement, terminate or revoke or otherwise modify any provision of the
Trust Agreement in such a manner as to adversely affect the rights of any such
party without the prior written consent of such party, (iii) to comply with all
of the terms of the Trust Agreement, the nonperformance of which would
adversely affect such party and (iv) not to remove the Trust Company as Owner
Trustee.
(c) Successor Trust Company. The Trust Company or any
successor may resign as Owner Trustee, a successor Owner Trustee may be
appointed, and a corporation may become the Owner Trustee under the Trust
Agreement, only with the consent of the Lessees and the Agents which consent
shall not be unreasonably withheld or delayed.
(d) Indebtedness; Other Business. Neither the Owner
Trustee, in its capacity as Owner Trustee and not in its individual capacity,
nor the Investor shall contract for, create, incur or assume any indebtedness,
or enter into any business or other activity, other than pursuant to or under
the Operative Agreements.
(e) No Violation. The Investor will not instruct the
Owner Trustee or the Trust Company to take any action in violation of the terms
of any Operative Agreement.
(f) No Voluntary Bankruptcy. Neither the Owner Trustee
nor the Investor shall (i) commence any case, proceeding or other action under
any existing or future law of any jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, reorganization, arrangement, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (ii) seek appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial benefit of its creditors;
and neither the Investor nor the Owner Trustee shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in this paragraph.
<PAGE> 34
(g) Change of Chief Place of Business. The Owner Trustee
and the Investor shall give prompt notice to the Lessees and the Administrative
Agent if the Owner Trustee's chief place of business or chief executive office,
or the office where the records concerning the accounts or contract rights
relating to the Properties are kept, shall cease to be located at the location
described in Section 7.02, or if it shall change its name, identity or
corporate structure.
(h) Operative Agreements. Neither the Owner Trustee nor
the Investor shall consent to or permit, and the Investor shall not take any
action for the purpose of permitting the Owner Trustee to consent to or permit,
any amendment, supplement or other modification of the terms and provisions of
the Operative Agreements, in each case without the prior written consent of the
Lessees and the Agents.
10.03. Modifications Approved by Real Estate Administrative
Agent. The Real Estate Administrative Agent shall have the authority, without
obtaining the consent of the Lenders, to agree with the Lessees to make
modifications to the forms of Lease and Project Loan Documents or modifications
to the structure of a Project Loan, if, in the reasonable judgment of the Real
Estate Administrative Agent, such modifications do not materially adversely
effect the rights or remedies of the Lenders, taken as a whole, with respect to
such Project Loan. No such modifications shall have the effect of (a)
extending the Maturity Date of any Project Loan, (b) decreasing the Rent under
a Lease or the Interest Rate under a Project Loan Note, (c) releasing any
Lessee or Lessor from its obligations under a Lease or Project Loan Document or
releasing any collateral, without the consent of each Lender affected thereby,
or (d) waiving in any material respect the guidelines set forth in Exhibit H.
ARTICLE XI.
CREDIT AGREEMENT AND PROJECT LOAN AGREEMENT RIGHTS
11.01. Lessee's Credit Agreement Rights. Notwithstanding
anything to the contrary contained in the Credit Agreement, the Agents, the
Lessees, the Investor and the Owner Trustee hereby agree that, unless and until
a Lease Default or a Lease Event of Default shall have occurred and be
continuing, the applicable Lessee, as agent on behalf of the Owner Trustee,
shall have the right to make all decisions on behalf of the Owner Trustee under
the Credit Agreement.
11.02. Lessee's Project Loan Agreement Rights.
Notwithstanding anything to the contrary contained in any Project Loan
Agreement, the Agents and the Owner Trustee hereby agree that, unless and until
a Lease Default or a Lease Event of Default shall have occurred and be
continuing, the applicable Lessee, (a) shall have the right to waive the
provisions of each of the Project Loan Agreements listed on Schedule 11.02 and
(b) shall have the right to make all requests for Project Loan Advances on
behalf of each Lessor.
11.03. Lessee's Operative Agreement Rights. Each of the
parties hereto agree that, unless and until a Lease Default or a Lease Event of
Default shall have occurred and be continuing, it will not enter into any
amendments or modifications of any of the Operative Agreements without the
prior written consent of the Company and otherwise as permitted by under the
Operative Agreements.
<PAGE> 35
11.04. Agent's Project Loan Agreement Rights.
Notwithstanding anything to the contrary contained in any Project Loan
Agreement or Agree Project Loan Agreement, the Agents, the Lessees, the
Investor and the Owner Trustee hereby agree that the Real Estate Administrative
Agent, as agent on behalf of the Owner Trustee, shall have the right to make
all decisions, receive all payments and take all actions on behalf of the Owner
Trustee under each Project Loan Agreement.
ARTICLE XII.
TRANSFER OF INTEREST
12.01. Restrictions on Transfer. The Investor may not,
directly or indirectly, assign, convey or otherwise transfer any of its right,
title or interest in or to the Trust Estate or the Trust Agreement nor shall
there be any change in Control of the Investor without the consent of the Agent
and the Lessees. Any transfer by the Investor as above provided, shall only be
effected pursuant to an agreement in form and substance reasonably satisfactory
to the Administrative Agent, the Owner Trustee, the Lessees and their
respective counsel.
12.02. Effect of Transfer. From and after any transfer
effected in accordance with this Article XII, the transferor shall be released,
to the extent of such transfer, from its liability hereunder and under the
other documents to which it is a party in respect of obligations to be
performed on or after the date of such transfer. Notwithstanding any transfer
of all or a portion of the Investor's interest as provided in this Article XII,
the transferor shall be entitled to all benefits accrued and all rights vested
prior to such transfer including, without limitation, rights to indemnification
under any such document.
ARTICLE XIII.
INDEMNIFICATION
13.01. General Indemnity. The Lessees, jointly and
severally, whether or not any of the transactions contemplated hereby shall be
consummated, hereby assume liability for and agree to defend, indemnify and
hold harmless each Indemnified Person on an After Tax Basis from and against
any Claims, which may be imposed on, incurred by or asserted against an
Indemnified Person (other than to the extent such Claims arise from the gross
negligence, willful misconduct or willful breach of such Indemnified Person) in
any way relating to or arising or alleged to arise out of the execution,
delivery, performance or enforcement of this Agreement, any Lease or any other
Operative Agreement or on or with respect to any Property or Improvements,
including, without limitation, Claims in any way relating to or arising or
alleged to arise out of (a) the financing, refinancing, purchase, acceptance,
rejection, ownership, design, construction, delivery, acceptance, nondelivery,
leasing, subleasing, possession, use, operation, repair, modification,
transportation, condition, sale, return, repossession (whether by summary
proceedings or otherwise), or any other disposition of a Property or any part
thereof; (b) any latent or other defects in any property whether or not
discoverable by an Indemnified Person or the Lessees; (c) a violation of
Environmental Laws, Environmental Claims or other loss of or damage to any
property or the environment relating to any Property, any Lease, any
Development Agency Agreement or the Lessees; (d) the Operative
<PAGE> 36
Agreements, or any transaction contemplated thereby; (e) any breach by any of
the Lessees of any of their representations or warranties under the Operative
Agreements or failure by any of the Lessees to perform or observe any covenant
or agreement to be performed by them under any of the Operative Agreements; (f)
the transactions contemplated hereby or by any other Operative Agreement, in
respect of the application of Parts 4 and 5 of Subtitle B of Title I of ERISA;
and (g) personal injury, death or property damage, including Claims based on
strict liability in tort; but excluding (i) Claims (except Claims against the
Trust Company) to the extent such Claims arise solely out of events occurring
after the expiration of the Terms of all Leases and after a Lessee's discharge
of all its obligations under the Operative Agreements or (ii) any Taxes
including any Claim (or any portion of a Claim) made upon an Indemnified Person
by a third party that at its origin is based upon a Tax (other than amounts
necessary to make any payments hereunder on an After Tax Basis, where the
Lessees are otherwise specifically required to make such payments on an After
Tax Basis). The Lessees shall be entitled to control, and shall assume full
responsibility for the defense of any Claim; provided, however, that the Owner
Trustee and the Trust Company, the Agents and the Investor named in such Claim,
may each retain separate counsel at the expense of the Lessees; provided,
further, that such parties shall use reasonable efforts to share counsel to the
extent practicable and minimize the fees of counsel being reimbursed hereunder.
The Lessees and each Indemnified Person agree to give each other prompt written
notice of any Claim hereby indemnified against but the giving of any such
notice by an Indemnified Person shall not be a condition to the Lessees'
obligations under this Section 13.01, except to the extent failure to give such
notice prejudices such Lessee's rights hereunder. After an Indemnified Person
has been fully indemnified for a Claim pursuant to this Section 13.01, and so
long as no Event of Default under any Lease shall have occurred and be
continuing, the Lessees shall be subrogated to any right of such Indemnified
Person (except against another Indemnified Person) with respect to such Claim.
13.02. General Tax Indemnity. (a) Indemnification. The
Lessees shall pay and assume liability for, and hereby agree to indemnify,
protect and defend each Property and all Tax Indemnitees, and hold them
harmless against, all Impositions on an After Tax Basis. Each Tax Indemnitee
agrees to use good-faith efforts (but not including increasing liability for
Taxes not indemnifiable hereunder) to minimize the amount of Taxes
indemnifiable by the Lessees during any taxable year; provided that this
sentence shall not be construed to limit or impair any right of the Owner
Trustee set forth in the Operative Agreements. Each Tax Indemnitee further
agrees to comply with recommendations made by the Lessees regarding techniques
to minimize Taxes indemnifiable hereunder, provided that (i) the Lessees agree
to make payments to (or otherwise indemnify) such Tax Indemnitee against any
cost or expense arising from instituting the Lessees' recommendations and (ii)
such Tax Indemnitee determines in its sole discretion that such recommendations
will not have an adverse impact on such Tax Indemnitee.
(b) Refunds. Provided that no Default or Event of
Default has occurred and is continuing, if any Tax Indemnitee obtains a refund
or a reduction in a liability (but only if such reduction relates to a Tax not
otherwise indemnifiable hereunder and has not been taken into account in
determining the amount of a payment on an After Tax Basis) as a result of any
Imposition paid or reimbursed by the Lessees (in whole or in part), such Tax
Indemnitee shall promptly pay to the Lessees the lesser of (x) the amount of
such refund or reduction in liability and (y) the amount previously so paid or
advanced by the Lessees, in each case net of reasonable expenses not already
paid or reimbursed by the Lessees.
<PAGE> 37
(c) Payments. (i) Subject to the terms of Section
13.02(g), the Lessees shall pay or cause to be paid all Impositions directly to
the taxing authorities where feasible and otherwise to the Tax Indemnitee, as
appropriate, and the Lessees shall at their own expense, upon such Tax
Indemnitee's reasonable request, furnish to such Tax Indemnitee copies of
official receipts or other satisfactory proof evidencing such payment.
(ii) In the case of Impositions for which no contest is
conducted pursuant to Section 13.02(g) and which the Lessees pay directly to
the taxing authorities, the Lessees shall pay such Impositions prior to the
latest time permitted by the relevant taxing authority for timely payment. In
the case of Impositions for which the Lessees reimburse a Tax Indemnitee, the
Lessees shall do so within twenty (20) days after receipt by the Lessees of
demand by such Tax Indemnitee describing in reasonable detail the nature of the
Imposition and the basis for the demand (including the computation of the
amount payable), but in no event shall the Lessees be required to pay such
reimbursement prior to thirty (30) days before the latest time permitted by the
relevant taxing authority for timely payment. In the case of Impositions for
which a contest is conducted pursuant to Section 13.02(g), the Lessees shall
pay such Impositions or reimburse such Tax Indemnitee for such Impositions, to
the extent not previously paid or reimbursed pursuant to subsection (a), prior
to the latest time permitted by the relevant taxing authority for timely
payment after conclusion of all contests under Section 13.02(g).
(iii) Impositions imposed with respect to a Property for a
billing period during which a Lease expires or terminates with respect to such
Property (unless the applicable Lessee has exercised the Purchase Option with
respect to such Property) shall be adjusted and prorated on a daily basis
between the applicable Lessee and the applicable Lessor, whether or not such
Imposition is imposed before or after such expiration or termination and each
party shall pay or reimburse the other for each party's pro rata share thereof.
(iv) At the Lessees' request, the amount of any
indemnification payment by the Lessees pursuant to subsection (a) shall be
verified and certified by an independent public accounting firm mutually
acceptable to the Lessees and the Tax Indemnitee. The fees and expenses of
such independent public accounting firm shall be paid by the Lessees unless
such verification shall result in an adjustment in the Lessees' favor of 5% or
more of the payment as computed by the Tax Indemnitee, in which case such fee
shall be paid by the Tax Indemnitee.
(d) Reports and Returns. (i) The Lessees shall be
responsible for preparing and filing any real and personal property or ad
valorem tax returns in respect of each Property. In case any other report or
tax return shall be required to be made with respect to any obligations of the
Lessees under or arising out of Section 13.02(a) and of which the Lessees have
knowledge or should have knowledge, the Lessees, at their sole cost and
expense, shall notify the relevant Tax Indemnitee of such requirement and
(except if such Tax Indemnitee notifies the Lessees that such Person intends to
file such report or return) (A) to the extent required or permitted by and
consistent with Legal Requirements, make and file in its own name such return,
statement or report; and (B) in the case of any other such return, statement or
report required to be made in the name of such Tax Indemnitee, advise such Tax
Indemnitee of such fact and prepare such return, statement or report for filing
by such Tax Indemnitee or, where such return, statement or report shall be
required to reflect items in addition to any obligations of the Lessees under
or arising out of Section 13.02(a), provide
<PAGE> 38
such Tax Indemnitee at the Lessees' expense with information sufficient to
permit such return, statement or report to be properly made with respect to any
obligations of the Lessees under or arising out of subsection (a). Such Tax
Indemnitee shall, upon the Lessees' request and at the Lessees' expense,
provide any data maintained by such Tax Indemnitee (and not otherwise within
the control of the Lessees) with respect to each Property which the Lessees may
reasonably require to prepare any required tax returns or reports;
(e) Income Inclusions. If as a result of the payment or
reimbursement by the Lessees of any expenses of the Owner Trustee or the
payment of any Transaction Expenses incurred in connection with the
transactions contemplated by the Operative Agreements, the Owner Trustee, the
Investor or any of their respective Affiliates, shall suffer a net increase in
any federal, state or local income tax liability, the Lessees shall indemnify
the Owner Trustee, the Investor or their Affiliates (without duplication of any
indemnification required by Section 13.02(a)) on an After Tax Basis for the
amount of such increase. The calculation of any such net increase shall take
into account any current or future tax savings realized or reasonably expected
to be realized by the Owner Trustee, or the Investor or such Affiliate, in
respect thereof, as well as any interest, penalties and additions to tax
payable by the Owner Trustee, the Investor or such Affiliate, in respect
thereof;
(f) Withholding Taxes. As between the Lessees and the
Owner Trustee, the Lessees shall be responsible for, and the Lessees shall
indemnify and hold harmless the Owner Trustee (without duplication of any
indemnification required by Section 13.02(a)) on an After Tax Basis against,
any obligation for United States withholding taxes imposed in respect of the
interest payable on the Notes to the extent, but only to the extent, the Owner
Trustee has actually paid funds to a taxing authority with respect to such
withholding taxes (and, if the Owner Trustee receives a demand for such payment
from any taxing authority, the Lessees shall discharge such demand on behalf of
the Owner Trustee);
(g) Contests of Impositions. (i) If a written claim is
made against any Impositions Indemnitee or if any proceeding shall be commenced
against such Impositions Indemnitee (including a written notice of such
proceeding), for any Impositions, such Impositions Indemnitee shall promptly
notify the Lessees in writing and shall not take action with respect to such
claim or proceeding without the consent of the Lessees for thirty (30) days
after the receipt of such notice by the Lessees; provided, however, that, in
the case of any such claim or proceeding, if action shall be required by law or
regulation to be taken prior to the end of such 30-day period, such Impositions
Indemnitee shall, in such notice to the Lessees, inform the Lessees, and no
action shall be taken with respect to such claim or proceeding without the
consent of the Lessees before the termination of such shorter period; provided,
further, that the failure of such Impositions Indemnitee to give the notices
referred to this sentence shall not diminish the Lessees' obligation hereunder
except to the extent such failure precludes the Lessees from contesting all or
part of such claim.
(ii) If, within thirty (30) days of receipt of such notice
from the Impositions Indemnitee (or such shorter period as the Impositions
Indemnitee is required by law or regulation for the Impositions Indemnitee to
commence such contest), the Lessees shall request in writing that such
Impositions Indemnitee contest such Imposition, the Impositions Indemnitee
shall, at the expense of the Lessees, in good faith conduct and control such
contest (including, without limitation, by pursuit of appeals) relating to the
validity, applicability or amount of such Impositions (provided,
<PAGE> 39
however, that (A) if such contest can be pursued independently from any other
proceeding involving a tax liability of such Impositions Indemnitee, the
Impositions Indemnitee, at the Lessees' request, shall allow the Lessees to
conduct and control such contest and (B) in the case of any contest, the
Impositions Indemnitee may request the Lessees to conduct and control such
contest) by, in the sole discretion of the Person conducting and controlling
such contest, (1) resisting payment thereof, (2) not paying the same except
under protest, if protest is necessary and proper, (3) if the payment be made,
using reasonable efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings, or (4) taking such other action as is
reasonably requested by the Lessees from time to time.
(iii) The party controlling any contest shall consult in
good faith with the non-controlling party and shall keep the non- controlling
party reasonably informed as to the conduct of such contest; provided that all
decisions ultimately shall be made in the sole discretion of the controlling
party. The parties agree that an Impositions Indemnitee may at any time
decline to take further action with respect to the contest of any Imposition
and may settle such contest if such Impositions Indemnitee shall waive its
rights to any indemnity from the Lessees that otherwise would be payable in
respect of such claim (and any future claim by any taxing authority with
respect to other taxable periods that are based, in whole or in part, upon the
resolution of such claim) and shall pay to the Lessees any amount previously
paid or advanced by the Lessees pursuant to this Section 13.02 by way of
indemnification or advance for the payment of an Imposition.
(iv) Notwithstanding the foregoing provisions of this
Section 13.02, an Impositions Indemnitee shall not be required to take any
action and the Lessees shall not be permitted to contest any Impositions in its
own name or that of the Impositions Indemnitee unless (A) the Lessees shall
have agreed to pay and shall pay to such Impositions Indemnitee on demand and
on an After Tax Basis all reasonable costs, losses and expenses that such
Impositions Indemnitee actually incurs in connection with contesting such
Impositions, including, without limitation, all reasonable legal, accounting
and investigatory fees and disbursements, (B) in the case of a claim that must
be pursued in the name of an Impositions Indemnitee (or an Affiliate thereof),
the amount of the potential indemnity (taking into account all similar or
logically related claims that have been or could be raised in any audit
involving such Impositions Indemnitee) for which the Lessees may be liable to
pay an indemnity under this Section 13.02 exceeds $1,000,000, (C) the
Impositions Indemnitee shall have reasonably determined that the action to be
taken will not result in any material danger of sale, forfeiture or loss of any
Property, or any part thereof or interest therein, will not interfere with the
payment of Rent, and will not result in risk of criminal liability, (D) if such
contest shall involve the payment of the Imposition prior to the contest, the
Lessees shall provide to the Impositions Indemnitee an interest-free advance in
an amount equal to the Imposition that the Impositions Indemnitee is required
to pay (with no additional net after-tax cost to such Impositions Indemnitee),
(E) in the case of a claim that must be pursued in the name of an Impositions
Indemnitee (or an Affiliate thereof), the Lessees shall have provided to such
Impositions Indemnitee an opinion of independent tax counsel selected by the
Impositions Indemnitee and reasonably satisfactory to the Lessees stating that
a reasonable basis exists to contest such claim (or, in the case of an appeal
of an adverse determination, an opinion of such counsel to the effect that
there is substantial authority for the position asserted in such appeal) and
(F) no Event of Default shall have occurred and be continuing. In no event
shall an Impositions Indemnitee be required to appeal an adverse judicial
determination to the United State Supreme Court. In addition, an Impositions
<PAGE> 40
Indemnitee shall not be required to contest any claim in its name (or
that of an Affiliate) if the subject matter thereof shall be of a continuing
nature and shall have previously been decided adversely by a court of competent
jurisdiction pursuant to the contest provisions of this Section 13.02, unless
there shall have been a change in law (or interpretation thereof) and the
Impositions Indemnitee shall have received, at the Lessees' expense, an opinion
of independent tax counsel selected by the Impositions Indemnitee and reasonably
acceptable to the Lessees stating that as a result of such change in law (or
interpretation thereof), it is more likely than not that the Impositions
Indemnitee will prevail in such contest.
ARTICLE XIV.
AGREE PROJECTS
14.01. Agree Projects Generally. The Agents and the Lenders
agree that from time to time, any Lessee shall be permitted to enter into a
transaction for the acquisition and leasing of certain properties with
affiliates of The Agree Realty Trust, a Delaware corporation ("Agree") as
follows (each, an "Agree Project"): (a) the Lenders will make Loans to the
Owner Trustee from time to time as described in this Agreement and in the
Credit Agreement, (b) the Guarantors will unconditionally guarantee certain of
the obligations of the Owner Trustee to the Lenders, (c) the Owner Trustee will
use the proceeds of the Loans solely to make Project Loans (each, an "Agree
Project Loan") to special purpose entities, the entire beneficial interest of
which entity shall be owned by another special purpose entity controlled by an
affiliate of Lord Securities, Inc. and which entity otherwise meets the
guidelines and performs the covenants contained in Exhibit H (an "Agree SPC"),
(d) the Agree SPC's will use the proceeds of each Agree Project Loan solely for
the purpose of making a capital contribution to a special purpose entity which
will be a limited liability company and which otherwise meets all of the
requirements of a Lessor under this Agreement and the other Operative
Agreements (an "Agree Lessor") who will use such capital contribution solely
for the purpose of acquiring, leasing and/or constructing properties to be used
by the applicable Lessee as stores or other facilities, (e) the applicable
Lessee will unconditionally guarantee to the Owner Trustee the completion of
each Property and (f) upon the acquisition of each Property, the applicable
Lessee will enter into a Lease with respect to such Property. The aggregate
amount of Agree Project Loans may not exceed $75,000,000 without the prior
consent of each Lender.
14.02. Execution of Lease and Agree Project Loan Documents.
On each Property Closing Date with respect to an Agree Project and upon
satisfaction of the requirements described in Section 4.01, the Agree Lessor
and the applicable Lessee shall promptly execute and deliver a Lease and, with
respect to a Construction Project, the Development Agreement with respect to
the proposed Property, (a) the Agree SPC and the Owner Trustee shall promptly
execute and deliver a Project Loan Agreement in the form of Exhibit B-2 (an
"Agree Project Loan Agreement"), and related Project Loan Note, with respect to
the proposed Property, (b) with respect to a Construction Project, the
Developer and the Agree Lessor shall promptly execute and deliver a Development
Agency Agreement with respect to the proposed Property and (c) with respect to
a Construction Project, the applicable Lessee shall execute and deliver a
Completion Guaranty with respect to the proposed Property.
<PAGE> 41
14.03. Additional Conditions to Making of Agree Project
Loans to Agree SPCs. The obligations of the Owner Trustee to make an Agree
Project Loan to an Agree SPC on any date are subject to the satisfaction or
waiver of the conditions precedent set forth in Section 4.04 as well as the
following conditions precedent:
(a) Representations and Warranties. The representations
and warranties of the Agree SPC and the Agree Lessor contained in the
Agree Project Loan Agreement, the Agree LLC Agreement or in any other
Operative Agreement or certificate delivered by the Agree SPC or the
Agree Lessor shall be true and correct in all material respects.
(b) Conditions Precedent in the Agree Project Loan
Agreements. The applicable Agree SPC shall have satisfied all of the
conditions precedent contained in the applicable Agree Project Loan
Agreement for the making of such Agree Project Loan.
Upon the satisfaction of the preceding conditions precedent
and the conditions precedent contained in Section 4.04., the Owner Trustee
shall, subject to the limitation contained in Section 14.01, make an Agree
Project Loan to the applicable Agree SPC in the amount of the requested funds.
14.04. Additional Conditions to the Lenders' Obligations to
Advance funds in connection with the Acquisition of an Agree Property. The
obligations of the Lenders to make Loans to the Owner Trustee on any Property
Closing Date for the purpose of providing funds to the Owner Trustee necessary
to provide Agree Project Loans to an Agree SPC which shall contribute such
funds to an Agree Lessor to acquire (for purposes of this Section 14.04,
acquisition of a Property shall mean acquisition by purchasing or ground
leasing, as applicable) a Property are subject to the satisfaction or waiver of
the conditions precedent contained in Section 5.03 as well as the following
conditions precedent:
(a) Representations and Warranties. The representations
and warranties of the Agree SPC and the Agree Lessor contained in the
Agree Project Loan Agreement, the Agree LLC Agreement and in any other
Operative Agreement or certificate delivered by the Agree SPC or the
Agree Lessor shall be true and correct in all material respects.
(b) Conditions Precedent contained in the Project Loan
Documents. There shall have been delivered to the Real Estate
Administrative Agent (with a copy to the Administrative Agent)
evidence that all of the conditions precedent to making advances
contained in the applicable Agree Project Loan Agreement and other
Project Loan Documents relating to the corresponding Agree Project
Loan have been satisfied.
(c) Delivery of Agree LLC Pledge. The Agree SPC shall
have delivered to the Owner Trustee a pledge of all of its right,
title and interest in and to the Agree Preferred Return pursuant to
the Pledge Agreement in a form satisfactory to the Real Estate
Administrative Agent (the " Agree LLC Pledge").
(d) Delivery of Agree LLC Agreement. The Real Estate
Administrative Agent shall have received the Limited Liability Company
Agreement of the applicable Agree Lessor
<PAGE> 42
in a form which complies with the requirements for such
Agreement as contained in the Agree Project Loan Agreements and is
otherwise satisfactory to the Real Estate Administrative Agent (the "
Agree LLC Agreement").
Upon the satisfaction of the preceding conditions precedent
and the conditions precedent contained in Section 5.03., the Owner Trustee
shall, subject to the limitation contained in Section 14.01, make an Agree
Project Loan to the applicable Agree SPC in the amount of the requested funds.
14.05. Additional Conditions to the Lenders' Obligations to
Make Construction Advances for the Commencement of Construction on any Agree
Property. The obligations of the Lenders to make Loans to the Owner Trustee on
any date for the purpose of providing funds to the Owner Trustee in order to
make Agree Project Loans to an Agree SPC which shall contribute such funds to
an Agree Lessor to make an Initial Construction Advance, are subject to the
satisfaction or waiver of the conditions precedent contained in Section 5.04 as
well as the following conditions precedent:
(a) Representations and Warranties. On such date, the
representations and warranties of the Agree SPC contained in the Agree
Project Loan Agreement, the Agree LLC Agreement and in any other
Operative Agreement or certificate delivered by the Agree SPC or the
Agree Lessor shall be true and correct in all material respects.
(b) Conditions Precedent contained in the Agree Project
Loan Documents. There shall have been delivered to the Real Estate
Administrative Agent (with a copy to the Administrative Agent)
evidence that all of the conditions precedent to making advances
contained in the applicable Agree Project Loan Agreement and other
Agree Project Loan Documents relating to the corresponding Agree
Project Loan have been satisfied.
Upon the satisfaction of the preceding conditions precedent
and the conditions precedent contained in Section 5.04., the Owner Trustee
shall, subject to the limitation contained in Section 14.01, make an Agree
Project Loan to the applicable Agree SPC in the amount of the requested funds.
14.06. Additional Conditions to the Lenders' Obligations to
Make Construction Advances for the Ongoing Construction on any Agree Property.
The obligations of the Lenders to make Loans to the Owner Trustee on any date
for the purpose of providing funds to the Owner Trustee in order to make Agree
Project Loans to an Agree SPC which shall contribute such funds to an Agree
Lessor to make a Construction Advance other than an Initial Construction
Advance, are subject to the satisfaction or waiver of the conditions precedent
contained in Section 5.05 as well as the following conditions precedent:
(a) Representations and Warranties. On such date, the
representations and warranties of the Agree SPC and the Agree Lessor
contained in the Agree Project Loan Agreement, the Agree LLC Agreement
and in any other Operative Agreement or certificate delivered by the
Agree SPC or the Agree Lessor shall be true and correct in all
material respects.
<PAGE> 43
(b) Conditions Precedent contained in the Agree Project
Loan Documents. There shall have been delivered to the Real Estate
Administrative Agent (with a copy to the Administrative Agent)
evidence that all of the conditions precedent to making advances
contained in the applicable Agree Project Loan Agreement and other
Agree Project Loan Documents relating to the corresponding Agree
Project Loan have been satisfied.
Upon the satisfaction of the preceding conditions precedent
and the conditions precedent contained in Section 5.05., the Owner Trustee
shall, subject to the limitation contained in Section 14.01, make an Agree
Project Loan to the applicable Agree SPC in the amount of the requested funds.
ARTICLE XV.
MISCELLANEOUS
15.01. Survival of Agreements. The representations,
warranties, covenants, indemnities and agreements of the parties provided for
in the Operative Agreements and the parties' obligations thereunder, shall
survive the execution and delivery of this Agreement, the transfer of any
Property to a Lessor, the construction of any Improvements, any disposition of
any interest of a Lessor in any Property or any Improvements or any interest of
the Investor in the Trust Estate, the payment of the Notes and the Project Loan
Notes and any disposition thereof and shall be and continue in effect
notwithstanding any investigation made by any party and the fact that any party
may waive compliance with any of the other terms, provisions or conditions of
any of the Operative Agreements. Except as otherwise expressly set forth
herein or in other Operative Agreements, the indemnities of the parties
provided for in the Operative Agreements shall survive the expiration or
termination of any thereof.
15.02. No Broker, etc. Each of the parties hereto
represents to the others that it has not retained or employed any
broker, finder or financial adviser to act on its behalf in connection with this
Agreement, nor has it authorized any broker, finder or financial adviser
retained or employed by any other Person so to act. Any party who is in breach
of this representation shall indemnify and hold the other parties harmless from
and against any liability arising out of such breach of this representation.
15.03. Notices. Unless otherwise specifically provided
herein, all notices, consents, directions, approvals, instructions, requests
and other communications required or permitted by the terms hereof to be given
to any Person shall be given in writing by United States mail, by nationally
recognized courier service or by hand and any such notice shall become
effective five (5) Business Days after being deposited in the mails, certified
or registered with appropriate postage prepaid or one (1) Business Day after
delivery to a nationally recognized courier service specifying overnight
delivery or, if delivered by hand, when received, and shall be directed to the
address of such Person as indicated:
<PAGE> 44
If to the Lessees, to them at:
Borders, Inc.
311 Maynard Street
Ann Arbor, Michigan
Attention: Edward W. Wilhelm
Telecopy: (313) 913-2324
If to the Owner Trustee, to it at:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Department
Telecopy: (302) 651-8882
If to the Investor, to it at:
c/o Lord Securities
Two Wall Street
New York, New York 10005
Attention: Paul Sorenson
Telecopy: (212) 346-9012
If to the Administrative Agent, to it at:
PNC Bank, National Association
One PNC Plaza, 4th Floor Annex
5th Avenue & Wood Street
Pittsburgh, Pennsylvania 15265
Attention: Multi-Bank Loan Administration - Arlene Ohler
Telecopy: (412) 762-8672
<PAGE> 45
If to the Real Estate Administrative Agent, to it at:
Bankers Trust Company
280 Park Avenue
New York, New York 10017
Attention: Jeffrey Baevsky
Telecopy: (212) 454-1733
If to any of the Lenders, to them at the addresses specified in
Section 12.02 of the Credit Agreement.
From time to time any party may designate a new address for purposes of notice
hereunder by notice to each of the other parties hereto.
15.04. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
15.05. Amendments and Termination. Neither this Agreement
nor any of the terms hereof may be terminated, amended, supplemented, waived or
modified except by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification shall be sought; provided that, in the case of the Lenders or the
Agents, the action or direction of the Required Lenders shall control, except
as otherwise provided in Section 12.01 of the Credit Agreement or Section 10.03
hereof. This Agreement may be terminated by an agreement signed in writing by
the Owner Trustee, the Investor, the Lessees, the Agents and the Lenders.
15.06. Table of Contents and Headings, etc. The table of
contents and headings of the various Articles and Sections of this Agreement
are for convenience of reference only and shall not modify, define, expand or
limit any of the terms or provisions hereof.
15.07. Parties in Interest. Except as expressly provided
herein, none of the provisions of this Agreement are intended for the benefit
of any Person except the parties hereto.
15.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
15.09. Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
15.10. Liability Limited. The Lessees and the Investor each
acknowledge and agree that the Trust Company is (except as otherwise expressly
provided herein or therein) entering
<PAGE> 46
into this Agreement and the other Operative Agreements to which it is a party
(other than the Trust Agreement), solely in its capacity as trustee under the
Trust Agreement and not in its individual capacity and that Trust Company shall
not be liable or accountable under any circumstances whatsoever in its
individual capacity for or on account of any statements, representations,
warranties, covenants or obligations stated to be those of the Owner Trustee,
except for its own gross negligence or willful misconduct and as otherwise
expressly provided herein or in the other Operative Agreements.
15.11. Further Assurances. The parties hereto shall
promptly cause to be taken, executed, acknowledged or delivered, at the sole
expense of the Lessees, all such further acts, conveyances, documents and
assurances as the other parties may from time to time reasonably request in
order to carry out and effectuate the intent and purposes of this Agreement,
the other Operative Agreements and the transactions contemplated hereby and
thereby (including, without limitation, the preparation, execution and filing
of any and all Uniform Commercial Code financing statements and other filings
or registrations which the parties hereto may from time to time request to be
filed or effected). The Lessees, at their own expense and without need of any
prior request from the any other party, shall take such action as may be
necessary (including any action specified in the preceding sentence), or (if
the Owner Trustee shall so request) as so requested, in order to maintain and
protect all security interests provided for hereunder or under any other
Operative Agreement.
15.12. Recordkeeping. (a) On each date on which a Project
Loan is funded or prepaid, the Company shall notify the Real Estate
Administrative Agent and the Administrative Agent of the amount of such
increase or decrease and the identity of the affected Property, (b) on each
Completion Date, the Company shall notify the Real Estate Administrative Agent
and the Administrative Agent of the Completion of the Improvements, identify
the Property on which such Improvements are located and the amount of the
Project Loan with respect to such Property (c) on each Property Closing Date,
the Company shall notify the Real Estate Administrative Agent and the
Administrative Agent of the Modified Tranche A Percentage and the Modified
Tranche B Percentage with respect to each affected Property and (d) on each
Test Date (as defined in the definition of Weighted Average Maximum Residual
Guarantee Amount) the Company shall notify the Real Estate Administrative Agent
and the Administrative Agent of the Weighted Average Maximum Residual Guarantee
Amount as of each Determination Date (as defined in said definition). The
parties acknowledge that as of the Effective Date, the outstanding amount of
Tranche A Loans is $125,313,572.46 and Tranche B Loans is $6,855,014.87.
15.13. Confidentiality. The Agents and the Lenders each
agree to keep confidential all information obtained from the Company or any of
its Subsidiaries which is nonpublic and confidential or proprietary in nature
(including any information the Company or any of its Subsidiaries specifically
designates as confidential), except as provided below, and to use such
information only in connection with their respective capacities under this
Agreement and for the purposes contemplated hereby. Any Agent or any Lender
shall be permitted to disclose such information (i) to Affiliates, outside
legal counsel, accountants and other professional advisors who need to know
such information in connection with the administration and enforcement of this
Agreement or the other Operative Agreements, subject to agreement of such
Persons to maintain the confidentiality, (ii) to Purchasing Lenders and
Participants (including prospective Purchasing
<PAGE> 47
Lenders and Participants) as contemplated by Section 12.08 of the Credit
Agreement, subject to agreement of such Persons to maintain the
confidentiality, (iii) to the extent requested by any bank regulatory authority
or, with notice to the Company, as otherwise required by applicable Law or by
any subpoena or similar legal process, or in connection with any investigation
or proceeding arising out of the transactions contemplated by the Operative
Agreements, (iv) if it becomes publicly available other than as a result of a
breach of this Agreement or becomes available from a source not known to such
Agent or such Lender to be subject to confidentiality restrictions, or (v) if
the Company shall have consented to such disclosure.
15.14. Investor Exculpation. Notwithstanding any other
provision herein, no recourse under any obligation, covenant, agreement or
instrument of the Investor contained in any Operative Agreement or with respect
hereto shall be had against any incorporator, member, manager, employee or
partner of the Investor or its stockholders (each a "Related Person") whether
arising by breach of contract, otherwise at law or in equity (including any
claim or tort, whether express or implied; it being expressly understood that
the agreements and other obligations of the Investor herein and with respect
hereto are solely its corporate obligations. Any and all personal liability of
any Related Person for breaches of any such obligation, covenant, agreement or
instrument as aforesaid are hereby expressly waived as a condition of and in
consideration of the Investor's execution of this Agreement.
Notwithstanding any other provision herein, the provisions of
this Section 15.14 shall survive the termination of this Agreement.
15.15. Extension of Lease Maturity Dates. In the event that
the definition of Maturity Date in any Lease (other than the Lease between
Borders and CS Atlantic Properties, Ltd. dated May 24, 1996, with respect to
property in Coral Springs, Florida) provides for the extension of such Maturity
Date by agreement of the Lessee under such Lease and the Owner Trustee, Lessees
and the Owner Trustee agree that such Maturity Date is extended to October 16,
2002 and to such further date or dates to which it may subsequently be extended
by the Credit Agreement.
ARTICLE XVI.
PROPERTY PURCHASE OBLIGATIONS
16.01. Lessee's Right to Purchase. Notwithstanding any
provision contained in any Lease or any other Operative Agreement, if a Lease
Default or a Lease Event of Default has occurred and is continuing with respect
to any Lease, the applicable Lessees shall have the right to exercise either:
(a) their respective Purchase Options with respect to all (but not less than
all) of the Properties at any time prior to such time as a foreclosure upon any
of the Properties has been completed or (b) to the extent no Lease Default or
Lease Event of Default will exist following a purchase of one or more
Properties, their respective Purchase Options with respect to such Properties.
16.02. Obligation to Purchase All Properties .
Notwithstanding any provision contained in any Lease or any other Operative
Agreement, if on the date which is two months prior to the Maturity Date the
then Termination Value of all the Properties (other than Properties with
<PAGE> 48
respect to which a Lessee has given notice of its intention to exercise its
Purchase Option) is less than the Maximum Purchase Option Amount, then on the
Maturity Date the Lessees shall be required to exercise their respective
Purchase Options on the Maturity Date with respect to all remaining Properties.
16.03. Weighted Average Maximum Residual Guarantee
Percentage. Notwithstanding any other provision of any Lease or any of the
other Operative Agreements, (i) the applicable Lessee shall not be permitted to
terminate its Lease pursuant to Article XVII thereof or exercise its Purchase
Option with respect to a particular Property pursuant to Section 21.01 of such
Lease and (ii) the applicable Lessee shall not permit a particular Property to
be sold pursuant to Section 22.01(b) of such Lease, and the applicable Lessor
shall not be obligated to accept a bid and sell the Property pursuant to
Section 22.01(b) of a Lease, if, in the case of either clause (i) or (ii)
above, the Weighted Average Maximum Residual Guarantee Percentage, after giving
effect to the termination of such Lease, would be less than 85% as of any
applicable Determination Date (as defined in the definition of Weighted Average
Maximum Residual Guarantee Percentage).
<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
BORDERS GROUP, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
BORDERS, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
WALDEN BOOK COMPANY, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
WALDENBOOKS PROPERTIES, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
BORDERS PROPERTIES, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 50
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
expressly stated herein,
but solely as Owner Trustee
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
SAM PROJECT FUNDING CORP. I, as Investor
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 51
PNC BANK, NATIONAL ASSOCIATION
as Administrative Agent
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
as Syndication Agent
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
BANKERS TRUST COMPANY,
as Real Estate Administrative Agent
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
PNC BANK, NATIONAL ASSOCIATION, as a Lender
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO, as a Lender
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
BANKERS TRUST COMPANY, as a Lender
<PAGE> 52
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
FIRST UNION NATIONAL BANK, as a Lender
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
FLEET NATIONAL BANK
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
KEYBANK NATIONAL ASSOCIATION
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
COMERICA BANK, as a Lender
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
<PAGE> 53
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
UNION BANK OF CALIFORNIA, N.A., as a Lender
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
CORESTATES BANK, N.A.
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
BANQUE NATIONALE DE PARIS
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SUNTRUST BANK, ATLANTA
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
<PAGE> 54
BANK BOSTON, N.A.
By:
-------------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
HIBERNIA NATIONAL BANK
By:
-------------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
THE NORTHERN TRUST COMPANY
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
BANK OF NEW YORK
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
MERCANTILE BANK
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
<PAGE> 55
THE DAI-ICHI KANGYO BANK, LTD. -
CHICAGO BRANCH
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
FIRST HAWAIIAN BANK
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
BANK ONE, NATIONAL ASSOCIATION
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
LONG TERM CREDIT BANK OF JAPAN
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
WACHOVIA BANK, N.A.
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
<PAGE> 56
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I.
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II.
STRUCTURE OF THE TRANSACTION; THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.01. General Structure of the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.02. The Loans; General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.03. The Project Loans, Developer Equity; General. . . . . . . . . . . . . . . . . . . . . . . . . 3
2.04. Collateral for the Project Loans; General . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.05. Collateral for the Loans; General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.06. The Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.07. Property Purchase and Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.08. Construction of Improvements; Lease of Improvements. . . . . . . . . . . . . . . . . . . . . . 5
2.09. Non-Construction Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.10. The Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III.
THE CLOSINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.01. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.02. Trust Company Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV.
FUNDING OF PROJECT LOANS; CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.01. Procedures for Selecting Lessors and Agree SPCs . . . . . . . . . . . . . . . . . . . . . . . 6
4.02. Execution of Lease and Project Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . 7
4.03. Allocations of Available Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.04. Conditions to Making of Project Loans to the Lessors . . . . . . . . . . . . . . . . . . . . . 7
(a) Conditions of the Owner Trustee's Borrowing . . . . . . . . . . . . . . . . . . . . . . 7
(b) Conditions Precedent in the Project Loan Agreements . . . . . . . . . . . . . . . . . . 7
(c) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) No Default or Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE V.
MAKING OF LOANS TO THE OWNER TRUSTEE; CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.01. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.02. Procedures for Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.03. Conditions to the Lenders' Obligations to Advance funds in
connection with the acquisition of Property . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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(c) Delivery of the Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Conditions Precedent contained in the Project Loan Documents . . . . . . . . . . . . . 9
(f) Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(g) Security Agreement Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(h) Reassignment of Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(i) Assignment of Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(j) No Default or Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(k) Weighted Average Maximum Residual Guarantee Percentage;
Maximum Residual Guarantee Amount . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.04. Conditions to the Lenders' Obligations to Make Construction Advances
for the Commencement of Construction on any Property . . . . . . . . . . . . . . . . . . . . . 10
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Conditions Precedent contained in the Project Loan Documents . . . . . . . . . . . . . 11
5.05. Conditions to the Lenders' Obligations to make Construction Advances
for the Ongoing Construction on any Property . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) Construction Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(e) Conditions Precedent contained in the Project Loan Documents . . . . . . . . . . . . . 12
(f) No Default or Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI.
CONDITIONS TO EFFECTIVENESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.01. Conditions to Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Operative Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Project Loan Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(e) Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(f) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(g) Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(h) Corporate Proceedings of the Lessees and the Guarantors . . . . . . . . . . . . . . . . 15
(i) Incumbency Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(j) Corporate Proceedings of the Investor . . . . . . . . . . . . . . . . . . . . . . . 15
(k) Investor Incumbency Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(l) Proceedings of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(m) Owner Trustee Incumbency Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 16
(n) Corporate Documents of the Lessees, the Guarantors and the Investor . . . . . . . . . . 16
(o) Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(p) Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(q) Actions to Perfect Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
ON THE EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.01. Representations and Warranties of the Investor . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Due Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Enforceability, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.02. Representations and Warranties of the Owner Trustee . . . . . . . . . . . . . . . . . . . . . 18
(a) Due Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Enforceability, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(d) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(e) Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(f) No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(g) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(h) Chief Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(i) Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(j) Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.03. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Capitalization and Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(d) Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(e) Validity and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(f) No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i) Historical Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(ii) Financial Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(iii) Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . 21
(j) Use of Proceeds; Margin Stock; Section 20 Subsidiaries . . . . . . . . . . . . . . . . 22
(k) Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(l) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(m) Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(n) No Event of Default; Compliance with Instruments . . . . . . . . . . . . . . . . . . . 23
(o) Patents, Trademarks, Copyrights, Licenses, Etc. . . . . . . . . . . . . . . . . . . . . 23
(p) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(q) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(r) Material Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(s) Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(t) Plans and Benefit Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(u) Employment Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(v) Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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(w) Senior Debt Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(x) Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.04. Updates to Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES ON FUNDING DATES . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.01. Representations and Warranties on Property Closing Dates . . . . . . . . . . . . . . . . . . . 27
8.02. Representations and Warranties Upon Initial Construction Advances . . . . . . . . . . . . . . 29
8.03. Representations and Warranties Upon the Date of Each Construction
Advance that is not an Initial Construction Advance . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE IX.
PAYMENT OF FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.01. Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.02. Brokers' Fees and Stamp Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.03. Certain Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.04. Credit Agreement, Project Loan Agreement and Related Obligations . . . . . . . . . . . . . . . 31
9.05. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE X.
OTHER COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.01. Cooperation with the Lessees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.02. Covenants of the Owner Trustee and the Investor . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Discharge of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Successor Trust Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) Indebtedness; Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(e) No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(f) No Voluntary Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(g) Change of Chief Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(h) Operative Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.03. Modifications Approved by Real Estate Administrative Agent . . . . . . . . . . . . . . . . . . 33
ARTICLE XI.
CREDIT AGREEMENT AND PROJECT LOAN AGREEMENT RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.01. Lessee's Credit Agreement Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.02. Lessee's Project Loan Agreement Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.03. Lessee's Operative Agreement Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.04. Agent's Project Loan Agreement Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XII.
TRANSFER OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.01. Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.02. Effect of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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ARTICLE XIII.
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.01. General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.02. General Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(c) Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(d) Reports and Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(e) Income Inclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(f) Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(g) Contests of Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XIV.
AGREE PROJECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.01. Agree Projects Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.02. Execution of Lease and Agree Project Loan Documents . . . . . . . . . . . . . . . . . . . . . 39
14.03. Additional Conditions to Making of Agree Project Loans to Agree SPCs . . . . . . . . . . . . . 40
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Conditions Precedent in the Agree Project Loan Agreements . . . . . . . . . . . . . . . 40
14.04. Additional Conditions to the Lenders' Obligations to Advance funds
in connection with the Acquisition of an Agree Property . . . . . . . . . . . . . . . . . . . 40
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Conditions Precedent contained in the Project Loan Documents . . . . . . . . . . . . . 40
(c) Delivery of Agree LLC Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(d) Delivery of Agree LLC Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.05. Additional Conditions to the Lenders' Obligations to Make Construction
Advances for the Commencement of Construction on any Agree Property . . . . . . . . . . . . . 41
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(b) Conditions Precedent contained in the Agree Project Loan Documents . . . . . . . . . . 41
14.06. Additional Conditions to the Lenders' Obligations to Make Construction
Advances for the Ongoing Construction on any Agree Property . . . . . . . . . . . . . . . . . 41
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(b) Conditions Precedent contained in the Agree Project Loan Documents . . . . . . . . . . 42
ARTICLE XV.
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.01. Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.02. No Broker, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.04. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.05. Amendments and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.06. Table of Contents and Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.07. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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15.08. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.09. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.10. Liability Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
15.11. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
15.12. Recordkeeping. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
15.13. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
15.14. Investor Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
15.15. Extension of Lease Maturity Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XVI.
PROPERTY PURCHASE OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.01. Lessee's Right to Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.02. Obligation to Purchase All Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16.03. Weighted Average Maximum Residual Guarantee Percentage. . . . . . . . . . . . . . . . . . . . 47
Appendix A Definitions and Rules of Usage
Schedules
Schedule 1 Opinion of Dickinson, Wright, Moon, Van Dusen & Freeman,
counsel to Lessee
Schedule 1(a) Opinon of Baker & McKenzie, U.K., counsel to BGP (UK) Limited
Schedule 2 Opinion of Loeb & Loeb, counsel to Investor
Schedule 3 Opinion of Morris, James, Hitchens & Williams, counsel to Owner Trustee
and Trust Company
Schedule 7.03(a) Jurisdictions where Lessee does Business
Schedule 7.03(b) Stock options or warrants
Schedule 7.03(c) Subsidiaries
Schedule 7.03(h) Real Properties Owned or Leased
Schedule 7.03(m) Consents and Approvals
Schedule 7.03(p) Insurance Policies
Schedule 7.03(t) Non-Compliance with Employee Benefit Plans
Schedule 7.03(v) Environmental Conditions
Schedule 11.02 Waivable Project Loan Agreement Conditions
</TABLE>
-vi-
<PAGE> 62
Exhibits
Exhibit A Form of Credit Agreement
Exhibit B-1 Form of Project Loan Agreement
Exhibit B-2 Form of Agree Project Loan Agreement
Exhibit C Form of Reassignment of Leases
Exhibit D Form of Trust Agreement
Exhibit E Form of Development Agreement
Exhibit F Form of Development Agency Agreement
Exhibit G Form of Lease
Exhibit H Guidelines for Lessor and Agree SPC
-vii-
<PAGE> 1
EXHIBIT 10.40
Appendix A
RULES OF USAGE AND DEFINITIONS
The following rules of usage shall apply to this Appendix A and the
Operative Agreements (and each appendix, schedule, exhibit and annex to the
foregoing) unless otherwise required by the context or unless otherwise defined
therein:
(a) Except as otherwise expressly provided, any definitions set forth
herein or in any other document shall be equally applicable to the singular
and plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any document to
articles, sections, paragraphs, clauses, annexes, appendices, schedules or
exhibits are references to articles, sections, paragraphs, clauses, annexes,
appendices, schedules or exhibits in or to such document.
(c) The headings, subheadings and table of contents used in any document
are solely for convenience of reference and shall not constitute a part of
any such document nor shall they affect the meaning, construction or effect
of any provision thereof.
(d) References to any Person shall include such Person, its
successors and permitted assigns and transferees.
(e) Except as otherwise expressly provided, reference to any agreement
means such agreement as amended, modified, extended or supplemented from time
to time in accordance with the applicable provisions thereof.
(f) Except as otherwise expressly provided, references to any law includes
any amendment or modification to such law and any rules or regulations issued
thereunder or any law enacted in substitution or replacement therefor.
(g) When used in any document, words such as "hereunder", "hereto",
"hereof" and "herein" and other words of like import shall, unless the
context clearly indicates to the contrary, refer to the whole of the
applicable document and not to any particular article, section, subsection,
paragraph or clause thereof.
(h) References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.
(i) Each of the parties to the Operative Agreements and their
counsel have reviewed and revised, or requested revisions to, the Operative
Agreements, and the usual rule
<PAGE> 2
of construction that any ambiguities are to be resolved against the
drafting party shall be inapplicable in the construing and interpretation of
the Operative Agreements and any amendments or exhibits thereto.
Definitions
"Acceleration" shall have the meaning assigned to such term in Article IX of
the Credit Agreement.
"Acquisition Advance" shall have the meaning assigned to such term in
Section 5.03 of the Participation Agreement.
"Advance" shall mean a Construction Advance or an Acquisition Advance.
"Affiliate" with respect to any Person, any other Person (i) which directly
or indirectly controls, is controlled by, or is under common control with such
Person, (ii) which beneficially owns or holds 5% or more of any class of the
voting or other equity interests of such Person, or (iii) 5% or more of any
class of voting interests or other equity interests of which is beneficially
owned or held, directly or indirectly, by such Person. Control, as used in
this definition, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, including the power to elect a majority of the directors or trustees
of a corporation or trust, as the case may be.
"Administrative Agent" shall mean PNC Bank, National Association, and its
permitted successors and assigns, together with its affiliates, as the arranger
of the Commitments and as the administrative agent for the Lenders under this
Agreement and the other Operative Agreements.
"Agents" shall mean the Administrative Agent, the Syndication Agent and the
Real Estate Administrative Agent and "Agent" shall mean any one of the
foregoing; provided, however, that for purposes of receiving and giving all
notices, making all decisions, exercising all remedies and in any other manner
relating to the Project Loan Documents, the Security Documents, the Development
Documents and the Leases and Lease Supplements, all references to the "Agent"
shall be to the Real Estate Administrative Agent, and for purposes of all other
Operative Agreements, all references to the "Agent" shall be to the
Administrative Agent.
"Agree" shall have the meaning assigned to such term in Section 14.01 of the
Participation Agreement.
"Agree Lessor" shall have the meaning assigned to such term in Section 14.01 of
the Participation Agreement.
<PAGE> 3
"Agree LLC Agreement" shall have the meaning assigned to such term in
Section 14.04 of the Participation Agreement.
"Agree LLC Pledge" shall have the meaning assigned to such term in Section
14.04 of the Participation Agreement.
"Agree LLC Preferred Return" shall have the meaning assigned to such term in
Section 1.1 of each Agree Project Loan Agreement.
"Agree Project" shall have the meaning assigned to such term in Section 14.01
of the Participation Agreement.
"Agree Project Loan" shall have the meaning assigned to such term in Section
14.01 of the Participation Agreement.
"Agree Project Loan Agreement" shall have the meaning assigned to such term
in Section 14.02 of the Participation Agreement.
"Agree SPC" shall have the meaning assigned to such term in Section 14.01 of
the Participation Agreement.
"Aggregate Commitment Amount" shall mean $250,000,000, as such amount may be
increased or decreased pursuant to the Credit Agreement.
"After Tax Basis" shall mean, with respect to any payment to be received,
the amount of such payment increased so that, after deduction of the amount of
all taxes required to be paid by the recipient (less any tax savings realized
and the present value of any tax savings projected to be realized by the
recipient as a result of the payment) with respect to the receipt by the
recipient of such amounts, such increased payment (as so reduced) is equal to
the payment otherwise required to be made.
"Allocation Request" shall have the meaning assigned to such term in Section
4.03 of the Participation Agreement.
"Annual Lease Financing Rent Expense" shall mean on any date the aggregate
of all Lease Financing Rent Expense for the immediately preceding four
consecutive Fiscal Quarters.
"Annual Rent Expense" shall mean on any date the aggregate of all Rent
Expense for the immediately preceding four consecutive Fiscal Quarters.
"Annual Statements" shall have the meaning assigned to such term in Section
7.03(i) of the Participation Agreement.
<PAGE> 4
"Appraisal Procedure" shall have the meaning given such term in Section 22.3
of a Lease.
"Appurtenant Rights" shall mean (i) all agreements, easements, rights of way
or use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to the Land or the Improvements, including, without limitation, the use of any
streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent
or contiguous to the Land and (ii) all permits, licenses and rights, whether or
not of record, appurtenant to the Land.
"Assignment of Contracts" shall mean, collectively, the Assignment of
Contracts, dated as of each Property Closing Date, by the Owner Trustee in
favor of the Real Estate Administrative Agent, substantially in the form of
Exhibit I to the Credit Agreement.
"Assignment of Development Agency Agreement" shall have the meaning assigned
to such term in Section 1.1 of each Project Loan Agreement.
"Assignment of Lease" shall have the meaning assigned to such term in Section
1.1 of each Project Loan Agreement.
"Authorized Officer" shall mean the Chief Executive Officer, President,
Chief Operating Officer, Chief Financial Officer, Vice President-Finance, Vice
President, Group Planning and Resource Management, Vice President, Planning or
Treasurer of any Guarantor.
"Available Commitments" shall mean, at any particular time, an amount equal
to the difference between (a) the amount of the Commitments and (b) the sum of
(i) the aggregate amount of all Loans made pursuant to the Credit Agreement and
(ii) the aggregate amount of all Project Loans not yet advanced multiplied by
150%.
"BBA shall have the meaning assigned to that term in the definition of
Euro-Rate.
"BPI" shall mean Borders Properties, Inc., a corporation organized and
existing under the laws of the State of Delaware, and its permitted successors
and assigns.
"Bankers Trust" shall mean Bankers Trust Company, a banking corporation
organized and existing under the laws of the State of New York, and its
permitted successors and assigns.
"Bankruptcy Code" shall mean Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto.
"Base Rate" shall mean the greater of (i) the interest rate per annum
announced from time to time by the Administrative Agent at its Principal Office
as its then prime rate, which rate may not be the lowest rate then being
charged to commercial borrowers by the Administrative Agent, or
<PAGE> 5
(ii) the Federal Funds Effective Rate plus 1/2% per annum. Such
interest rate shall change automatically from time to time effective as of the
effective date of each change, as determined by the Administrative Agent in its
sole discretion.
"Base Rate Borrowing Tranche" shall mean a Borrowing Tranche consisting of
all Revolving Credit Loans to which a Base Rate Option applies.
"Base Rate Option" shall mean the option of the Borrower to have Revolving
Credit Loans bear interest at the rate and under the terms and conditions set
forth in Section 4.01(a)(i) of the Credit Agreement.
"Basic Rent" shall mean, the sum of (i) the Project Loan Basic Rent and (ii)
the Developer Basic Rent, calculated as of the applicable date on which Basic
Rent is due.
"Basic Term" shall have the meaning assigned to such term in Section 2.2 of
each Lease.
"Basic Term Expiration Date" shall mean the Maturity Date.
"Benefit Arrangement" shall mean at any time an "employee benefit plan,"
within the meaning of Section 3(3) of ERISA, which is neither a Plan nor a
Multiemployer Plan and which is maintained, sponsored or otherwise contributed
to, by the Company or any of its Subsidiaries.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"Books, Etc." shall mean Books Etc. Limited, company number 1580771,
organized and existing under the laws of the United Kingdom, and its permitted
successors and assigns.
"Borders" shall mean Borders, Inc., a corporation organized and existing
under the laws of the State of Colorado, and its permitted successors and
assigns.
"Borders' Note" shall mean that certain promissory note in the original
principal amount of $192,114,261, dated May 23, 1995, executed by Borders and
payable to Walden and which has been assigned to WPI.
"Borrower" shall mean Wilmington Trust Company, not in its individual
capacity, except as expressly stated in the Operative Agreements, but solely as
Owner Trustee.
"Borrowing Date" shall mean with respect to any Loan, the date for the
making thereof or the renewal or conversion thereof to the same or a different
Interest Rate Option, which shall be a Business Day.
<PAGE> 6
"Borrowing Request" shall have the meaning specified in Section 2.6 of each
Project Loan Agreement.
"Borrowing Tranche" shall mean specified portions of Loans outstanding to
the Borrower as follows: (i) any Loans to which a Euro-Rate Option applies and
which have the same Interest Period shall constitute one Borrowing Tranche and
(ii) all Loans to which a Base Rate Option applies shall constitute one
Borrowing Tranche.
"Business Day" shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be closed for
business in Pittsburgh, Pennsylvania, New York, New York, Wilmington, Delaware
or Chicago, Illinois, and if the applicable Business Day relates to any Loan to
which the Euro-Rate Option applies, such day must also be a day on which
dealings are carried on in the London Interbank market.
"Capitalized Lease" as applied to any Person, any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"Capitalized Lease Obligations" as applied to any Person, the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on the balance sheet of such Person prepared in accordance with GAAP.
"Capitalized Rent Expense" shall mean an amount equal to four times the sum
of Rent Expense and Lease Financing Rent Expense.
"Casualty" shall mean, with respect to any Property, any damage or
destruction of all or any portion of such Property as a result of a fire or
other casualty.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation,
and Liability Act of-1980, 42 U.S.C. Section Section 9601 et seq., as amended
by the Superfund Amendments and Reauthorization Act of 1986.
"Certifying Party" shall have the meaning specified in Section 27.1 of each
Lease.
"Change in Control" shall mean (a) the direct or indirect acquisition or
ownership by any Person or any syndicate or other group formed or existing for
the purpose of acquiring, holding or disposing of securities of the Company
within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934
of stock of the Company having in the aggregate more than 30% of the voting
power in the general election of directors (including securities convertible by
their terms into stock having such voting power) or (b) during any period of 12
consecutive calendar months, commencing on the Effective Date, an event or
circumstance as a result of which those individuals (the "Continuing
Directors") who (i) were directors of the Company on the first day of each such
period or (ii) subsequently became directors of the Company and whose initial
election or initial nomination
<PAGE> 7
for election subsequent to that date was approved by a majority of the
Continuing Directors then on the Board of Directors of the Company, cease to
constitute a majority of the Board of Directors of the Company.
"Claims" shall mean any and all obligations, liabilities, losses, actions,
suits, penalties, claims, demands, costs and expenses (including, without
limitation, reasonable attorney's fees and expenses) of any nature whatsoever.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute thereto.
"Collateral" all assets of the Borrower, now owned or hereafter acquired,
upon which a Lien is purported to be created by the Security Documents.
"Commencement Date" shall, with respect to each Project Loan, have the
meaning assigned to such term in Section 1.1 of each Project Loan Agreement.
"Commitment" as to any Lender at any date, the obligation of such Lender at
such date to (a) make Revolving Credit Loans to the Borrower and (b)
participate in Swing Loans made to the Borrower, in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth opposite
such Lender's name on Schedule II to the Credit Agreement in the column labeled
"Amount of Commitment" as such Schedule may be amended or supplemented from
time to time in accordance with the provisions of Section 12.08(a) of the
Credit Agreement; collectively, as to all such Lenders, the "Commitments", in
either case as such amounts may be reduced or terminated pursuant to Section
2.06 of the Credit Agreement or cancelled pursuant to Article IX of the Credit
Agreement.
"Company" shall mean Borders Group, Inc., a corporation organized and
existing under the laws of the State of Michigan, and its permitted successors
and assigns.
"Completion" shall mean, with respect to any Improvements, such time as
substantial completion of such Improvements has been achieved in accordance
with the Plans and Specifications and in compliance with all material Legal
Requirements and Insurance Requirements and otherwise in accordance with the
Development Agreement.
"Completion Guarantee" shall have the meaning assigned to such term in
Section 1.1 of each Project Loan Agreement.
"Condemnation" shall mean any taking or sale of the use, access, occupancy,
easement rights or title to any Property or any part thereof, wholly or
partially (temporarily or permanently), by or on account of any actual or
threatened eminent domain proceeding or other taking of action by any Person
having the power of eminent domain, including an action by a Governmental
Authority to change the grade of, or widen the streets adjacent to, any
Property or alter
<PAGE> 8
the pedestrian or vehicular traffic flow to any Property so as to result in a
change in access to such Property, or by or on account of an eviction by
paramount title or any transfer made in lieu of any such proceeding or action.
"Consent to Assignment" shall mean the Consent to Assignment of Leases and
Rents in the form attached to each Assignment of Leases.
"Consent to Assignment of Development Agency Agreement" shall mean the
Consent to Assignment of Development Agency Agreement in the form attached to
each Assignment of Development Agency Agreement.
"Consolidated Cash Flow from Operations" shall mean for any period of
determination shall mean the sum of Consolidated Net Income (excluding (i)
extraordinary gains, but not losses, and (ii) income or loss of any Person in
which the Company owns less than 50% of the shares of capital stock,
partnership interests or membership interests), depreciation, amortization,
interest expense, Rent Expense, Lease Financing Rent Expense and income tax
expense, in each case of the Company and its Subsidiaries for such period
determined and consolidated in accordance with GAAP; provided, however, that
there shall be excluded in calculating Consolidated Net Income any losses
attributable to the use of a fair value methodology for recognition and
measurement of impairment of goodwill not identified with impaired assets in
accordance with Accounting Principles Board Opinion No. 17.
"Consolidated Funded Indebtedness" shall mean as of any date of
determination, the aggregate of the Indebtedness for borrowed money (including
any Capitalized Lease Obligations and any Contingent Obligations in respect of
borrowed money or Capitalized Lease Obligations of third Persons) of the
Company and its Subsidiaries, all as determined and consolidated in accordance
with GAAP, plus the amount of the Contingent Obligations arising under Article
IX of the Guarantee.
"Consolidated Net Income" shall mean for any period the aggregate of the
net income of the Company and its Subsidiaries for such period determined and
consolidated in accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean as of any date of determination
total stockholders' equity less intangible assets of the Company and its
Subsidiaries as of such date determined and consolidated in accordance with
GAAP.
"Consolidated Total Capital" shall mean as of any date of determination the
sum of (a) total stockholders' equity of the Company and its Subsidiaries as of
such date determined and consolidated in accordance with GAAP, plus (b)
Consolidated Funded Indebtedness.
"Construction Advance" shall mean an advance of funds to pay Project Costs
pursuant to any Project Loan Agreement.
<PAGE> 9
"Construction Budget" shall have the meaning assigned to such term in Section
1.1 of each Project Loan Agreement.
"Construction Budget Deficit" shall have the meaning assigned to that term
in Section 2.3 of each Project Loan Agreement.
"Construction Commencement Date" shall mean, with respect to a Property, the
date on which construction of the Improvements on such Property commences
pursuant to the Development Agreement.
"Construction Period" shall mean, with respect to a Property, the period
commencing on the Property Closing Date for such Property and ending on the
earlier to occur of (a) the Interest Capitalization Termination Date and (b)
the Completion of such Property.
"Construction Project" shall have the meaning assigned to such term in
Section 2.08 of the Participation Agreement.
"Consulting Professional" shall have the meaning assigned to such term in
Section 1.1 of each Project Loan Agreement.
"Contingent Obligations" shall mean as to any Person, any obligation of such
Person guaranteeing or in effect guaranteeing any liability or obligation of
any other Person (other than, if the first Person is a Guarantor, another
Guarantor) in any manner, whether directly or indirectly, including any
agreement, undertaking or arrangement to indemnify or hold harmless any other
Person (other than, if the first Person is a Guarantor, another Guarantor), any
performance bond or other suretyship arrangement, any contingent agreement to
purchase or provide funds for such liability or obligation, any comfort letter,
any take-or-pay contract, and any other form of assurance against loss, except
endorsements of negotiable or other instruments for deposit or collection in
the ordinary course of business.
"Contracts" shall have the meaning assigned to such term in Section 2(c) of
each Assignment of Leases.
"Contract Rents" shall have the meaning assigned to such term in Section
2(c) of each Assignment of Leases.
"Contractual Obligations" shall have the meaning assigned to such term in
Section 1.1 of each Project Loan Agreement.
"Control" shall mean (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, the possession directly or indirectly, of the power to direct or cause
the direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
<PAGE> 10
"Corporate Credit Agreement" shall mean the Amended and Restated
Multicurrency Credit Agreement, dated as of March 28, 1995, and amended and
restated as of October 17, 1997, by and among each Lessee, BGP (UK) Limited,
the lenders party thereto, PNC Bank, National Association, as administrative
agent thereunder, The First National Bank of Chicago, as syndication agent
thereunder, and Bankers Trust Company, as real estate administrative agent
thereunder as the same may be amended, supplemented or otherwise modified from
time to time.
"Credit Agreement" shall mean the Credit Agreement, dated as of the
Effective Date, between the Owner Trustee, the Administrative Agent and the
Lenders.
"Credit Agreement Account" shall have the meaning assigned to such term in
Section 11.01(a) of the Credit Agreement.
"Credit Agreement Default" shall mean any event or condition which, with the
lapse of time or the giving of notice, or both, would constitute a Credit
Agreement Event of Default.
"Credit Agreement Event of Default" shall mean any event or condition
defined as an "Event of Default" in Article IX of the Credit Agreement.
"Credit Agreement Interest Rate" shall have the meaning specified in Section
1.1 of each Project Loan Agreement.
"Credit Documents" shall mean the Credit Agreement, the Notes, the
Guarantee and the Security Documents.
"Default" shall mean any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
"Developer" shall mean an entity chosen by a Lessee pursuant to the
Participation Agreement to construct and develop a particular Construction
Project.
"Developer Certificate" shall have the meaning specified in Section 1.1 of
each Project Loan Agreement.
"Developer Basic Rent" shall mean the amount set forth in a Lease as
"Developer Basic Rent."
"Developer Equity" shall have the meaning specified in Section 1.1 of each
Project Loan Agreement.
"Developer Yield" shall have the meaning specified in Section 1.1 of each
Project Loan Agreement.
<PAGE> 11
"Development Agreement" shall mean a Development Agreement, dated as of each
Property Closing Date or the Construction Commencement Date, if later, between
a Lessor and the Lessee substantially in the form of Exhibit E to the
Participation Agreement.
"Development Agency Agreement" shall have the meaning specified in Section
1.1 of each Project Loan Agreement.
"Development Agreement Default" shall mean any event or condition which,
with the lapse of time or the giving of notice, or both, would constitute a
Development Agreement Event of Default.
"Development Agreement Event of Default" shall mean any default by the
Lessor under the Development Agreement, after the expiration of any notice and
cure periods, if any.
"Development Documents" shall mean the collective reference to the
Architect's Agreement, the Development Agreement, the Development Agency
Agreement, the Plans and Specifications and the Permits.
"Distributions" shall have the meaning assigned to such term in Section
12.05 of the Guarantee.
"Dollar Equivalent" shall mean with respect to any amount of any currency,
the Equivalent Amount of such currency expressed in Dollars.
"Dollars", "U.S. Dollars" and "$" shall mean dollars in lawful currency of
the United States of America.
"Domestic Joint Venture" shall mean individually and "Domestic Joint
Ventures" shall mean collectively any corporation, partnership, limited
liability company, joint venture or other entity (i) organized under the laws
of any state of the United States of America for the purpose of doing business
primarily in the United States of America and (ii) in which the Company and its
Subsidiaries own less than 50% of the capital stock, partnership interests,
membership interests or other ownership interests.
"Domestic Purchase" means any transaction, or any series of related
transactions, consummated on or after the Effective Date, by which the Company
or any of its Subsidiaries (a) acquires (i) any ongoing business organized
under the laws of any state of the United States of America for the purpose of
doing business primarily in the United States of America or (ii) all or
substantially all of the assets of any Person or division thereof which assets
are located primarily in the United States of America, whether through purchase
of assets, merger or otherwise, or (b) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions) all
or substantially all of the securities of a corporation organized under the
laws of any state of the United States of America for the purpose of doing
business primarily in the United States
<PAGE> 12
of America, which securities have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or all or substantially all (by percentage and
voting power) of the outstanding partnership interests of a partnership or
membership interests of a limited liability company, in either case which
partnership or limited liability company is organized under the laws of any
state of the United States of America for the purpose of doing business
primarily in the United States of America.
"Domestic Subsidiary"shall mean individually and "Domestic Subsidiaries"
shall mean collectively any Subsidiary of the Company organized under the laws
of any state of the United States of America for the purpose of doing business
primarily in the United States of America.
"Effective Date" shall mean the effective date of the amendment and
restatement of the Prior Agreement, which shall occur on October 17, 1997 or,
if all the conditions specified in Article VII of the Credit Agreement have not
been satisfied or waived by such date, not later than November 30, 1997, as
designated by the Company by at least three (3) Business Days' advance notice
to the Administrative Agent, or such other date as the Company and the Lenders
agree. The closing on the Effective Date shall take place at 10:00 A.M.,
Chicago time, on the Effective Date at the offices of Schiff Hardin & Waite,
7200 Sears Tower, Chicago, Illinois 60606, or at such other time and place as
the parties agree.
"Environmental Audit" shall mean a phase one environmental audit of each
Property to be acquired by a Lessor on any Property Closing Date.
"Environmental Complaint" shall mean any written complaint (including but
not limited to any complaint alleging a cause of action for personal injury or
property damage or natural resource damage or equitable relief), order, notice
of violation, citation, request for information issued pursuant to any
Environmental Laws by a Governmental Authority, subpoena or other written
notice of any type relating to, arising out of, or issued pursuant to any of
the Environmental Laws or any Environmental Conditions, as the case may be.
"Environmental Conditions" shall mean any conditions of the environment,
including the work place, the ocean, natural resources (including flora or
fauna), soil, surface water, ground water, any actual or potential drinking
water supply sources, substrata or the ambient air, relating to or arising out
of, or caused by the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, emptying, discharging,
injecting, escaping, leaching, disposal, dumping, threatened release or other
management or mismanagement of Regulated Substances.
"Environmental Laws" shall mean all federal, state, local and foreign Laws
and regulations, including permits, licenses, authorizations, bonds, orders,
judgments, consent decrees issued, or entered into, pursuant thereto, relating
to pollution or protection of human health or the environment or employee
safety in the work place.
<PAGE> 13
"Environmental Violation" shall mean any activity, occurrence or condition
that violates or threatens to violate or results in or threatens to result in
non-compliance with any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings and
personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired by using the proceeds of a Project Loan by the Lessee or the
Lessor or the Developer and now or subsequently attached to, contained in or
used or usable in any way in connection with any operation or letting of a
Property, including but without limiting the generality of the foregoing, all
screens, awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs,
storm doors and windows, shelving, display cases, counters, furniture and
furnishings, heating, electrical, and mechanical equipment, lighting,
switchboards, plumbing, ventilation, air conditioning and air-cooling
apparatus, refrigerating, and incinerating equipment, escalators, elevators,
loading and unloading equipment and systems, stoves, ranges, laundry equipment,
cleaning systems (including window cleaning apparatus), telephones,
communication systems (including satellite dishes and antennae), televisions,
computers, sprinkler systems and other fire prevention and extinguishing
apparatus and materials, security systems, motors, engines, machinery, pipes,
pumps, tanks, conduits, appliances, fittings and fixtures of every kind and
description; provided, however, that Equipment shall not include any inventory
acquired by the Lessee in connection with a Property.
"Equivalent Amount" shall mean, at any time, as determined by the
Administrative Agent (which determination shall be conclusive absent manifest
error), with respect to an amount of any currency (the "Reference Currency")
which is to be computed as an equivalent amount of another currency (the
"Equivalent Currency"); (i) if the Reference Currency and the Equivalent
Currency are the same, the amount of such Reference Currency, or (ii) if the
Reference Currency and the Equivalent Currency are not the same, the amount of
such Equivalent Currency converted from such Reference Currency at the
Administrative Agent's spot selling rate (based on the market rates then
prevailing and available to the Administrative Agent) for the sale of such
Equivalent Currency for such Reference Currency at a time determined by the
Administrative Agent on the second Business Day immediately preceding the event
for which such calculation is made.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
"ERISA Group" shall mean, at any time, the Guarantors and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
the Guarantors, are treated as a single employer under Section 414 of the
Internal Revenue Code.
"Euro-Rate" shall mean with respect to the Loans comprising any Euro-Rate
Borrowing Tranche for any Interest Period, the interest rate per annum
determined by the Administrative Agent by dividing (the resulting quotient
rounded upward to the nearest 1/100th of
<PAGE> 14
1% per annum) (i) the rate of interest determined by the Administrative Agent
in accordance with its usual procedures (which determination shall be
conclusive absent manifest error) to be the average of the London interbank
offered rates for Dollars quoted by British Bankers' Association ("BBA") as set
forth on Dow Jones Market Service display page 3750 (or appropriate successor
or, if BBA or its successor ceases to provide such quotes, a comparable
replacement) at approximately 11:00 a.m. London time two (2) Business Days
prior to the first day of such Interest Period for an amount comparable to such
Borrowing Tranche and having a Borrowing Date and a maturity comparable to such
Interest Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. Such Euro-Rate may also be expressed by the following formula:
Average of London interbank offered rates
on Dow Jones Market Service display page
Euro-Rate = 3750 quoted by BBA or appropriate
successor
------------------------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Borrowing
Tranche outstanding on the effective date of any change in the Euro-Rate
Reserve Percentage as of such effective date. The Administrative Agent shall
give prompt notice to the Borrower of the Euro-Rate as determined or adjusted
in accordance herewith, which determination shall be conclusive absent
manifest error.
"Euro-Rate Borrowing Tranche" shall mean a Borrowing Tranche consisting of
all Revolving Credit Loans to which the Euro-Rate Option applies and which have
the same Interest Period.
"Euro-Rate Margin" shall mean at any time, for any Revolving Credit Loans
accruing interest at the Euro-Rate Option, a percentage equal to the greater of
(i) "Euro-Rate Margin" set forth in Schedule I to the Credit Agreement opposite
the then-current Fixed Charge Coverage Ratio or (ii) the "Euro-Rate Margin" as
defined in, and as then in effect under, the Corporate Credit Agreement.
"Euro-Rate Option" shall mean the option of the Borrower to have Revolving
Credit Loans bear interest at the rate and under the terms and conditions set
forth in Section 4.01(a)(ii) of the Credit Agreement.
"Euro-Rate Reserve Percentage" shall mean the maximum percentage (expressed
as a decimal rounded upward to the nearest 1/100 of 1%) as determined by the
Administrative Agent which is in effect during any relevant period, (i) as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental,
marginal and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities") of a member bank
in such System; or (ii) to be maintained by a Lender as required for reserve
liquidity, special deposit, or a similar purpose by any
<PAGE> 15
governmental or monetary authority of any country or political subdivision
thereof (including any central bank), against (A) any category of liabilities
that includes deposits by reference to which a Euro-Rate is to be determined,
or (B) any category of extension of credit or other assets that includes Loans
or Borrowing Tranches to which a Euro-Rate applies.
"Event of Default" shall mean a Lease Event of Default, a Development Agency
Agreement Event of Default, a Project Loan Agreement Event of Default or a
Credit Agreement Event of Default.
"Excepted Payments" shall mean:
(a) all indemnity payments (including indemnity payments made pursuant to
Article XIII of the Participation Agreement), whether made by adjustment to
Developer Basic Rent or otherwise, to which the Owner Trustee, the Trust
Company, the Investor, or any of their respective Affiliates, agents,
officers, directors or employees is entitled;
(b) any amounts (other than Project Loan Basic Rent, Termination Value, or
Purchase Option Price) payable under any Operative Agreement to reimburse the
Owner Trustee, the Trust Company, the Investor, or any of their respective
Affiliates (including the reasonable expenses of the Owner Trustee, the Trust
Company, the Investor, incurred in connection with any such payment) for
performing or complying with any of the obligations of any of the Lessees
under and as permitted by any Operative Agreement;
(c) any amount payable to the Investor by any transferee of the interest
of the Investor as the purchase price of the Investor's interest in the Trust
Estate (or a portion thereof);
(d) any insurance proceeds (or payments with respect to risks self-insured
or policy deductibles) under liability policies other than such proceeds or
payments payable to the Administrative Agent;
(e) any insurance proceeds under policies maintained by the Owner
Trustee, the Trust Company, or the Investor other than such proceeds
or payments which are payable to the Administrative Agent;
(f) Transaction Expenses or other amounts or expenses paid or payable to
or for the benefit of the Owner Trustee, the Trust Company or the Investor;
(g) any payments in respect of interest to the extent attributable to
payments referred to in clauses (a) through (f) above; and
<PAGE> 16
(h) any rights of the Investor, the Owner Trustee, or the Trust Company to
demand, collect, sue for or otherwise receive and enforce payment of any of
the foregoing amounts.
"Excepted Rights" shall mean the rights retained by each Lessor pursuant to
Section 9.3(a)(i) of each Project Loan Agreement and all right, title and
interest of any such Lessor in the Shared Rights.
"Excess Proceeds" shall have the meaning assigned to such term in Section
1.1 of each Project Loan Agreement.
"Excess Sale Proceeds" shall have the meaning assigned to such term in
Section 9.1(b)(iv) of each Project Loan Agreement.
"Facility" shall mean a facility used for the treatment, storage or disposal
of Hazardous Substances.
"Facility Fee" shall mean the fee referred to in Section 2.07(a) of the
Credit Agreement.
"Facility Fee Rate" at any time shall mean a rate per annum equal to the
greater of (i) the "Facility Fee Rate" set forth on Schedule I to the Credit
Agreement opposite the then-current Fixed Charge Coverage Ratio or (ii) the
"Facility Fee Rate" as defined in, and as then in effect under, the Corporate
Credit Agreement.
"Fair Market Sales Value" shall mean, with respect to any Property, the
amount, which in any event shall not be less than zero, that would be paid in
cash in an arm's-length transaction between an informed and willing purchaser
and an informed and willing seller, neither of whom is under any compulsion to
purchase or sell, respectively, for the ownership of such Property. Fair
Market Sales Value of any Property shall be determined based on the assumption
that, except for purposes of Section 18.1 of each Lease, such Property is in
the condition and state of repair required under Section 8.1 of each Lease and
the Lessee is in compliance with the other requirements of the Operative
Agreements.
"Federal Funds Effective Rate" for any day shall mean the rate per annum
(based on a year of 360 days and actual days elapsed and rounded upward to the
nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
Federal funds transactions arranged by Federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such
<PAGE> 17
rate on any day, the "Federal Funds Effective Rate" for such day shall be the
Federal Funds Effective Rate for the last day on which such rate was announced.
"Fee Letters" shall mean those certain letter agreements dated September
1997, between the Company and any or all of the Agents, and all other letter
agreements between the Company and any party hereto under which the parties
thereto designate that such letter agreement is a fee letter for purposes of
the Operative Agreements, as the same may be supplemented or amended from time
to time in accordance therewith.
"Fees" shall mean the Facility Fee and any fees payable pursuant to the Fee
Letters.
"Financed Lease" shall mean a lease of real property, improvements on real
property or real property and improvements thereon by the Company or any of its
Subsidiaries entered into pursuant to the Participation Agreement.
"Financial Projections" shall have the meaning assigned to such term in
Section 7.03(i)(B) of the Participation Agreement.
"Fiscal Quarter" shall mean the 13/14 week period commencing on the day
after the last day of the preceding Fiscal Quarter and ending on the Sunday
preceding the last Wednesday in each of April (first), July (second), October
(third) and January (fourth) of each Fiscal Year.
"Fiscal Year" shall mean the 52/53 week period commencing on the day after
the last day of the preceding Fiscal Year and ending on the Sunday preceding
the last Wednesday in January. By way of illustration, the Company's 1996
Fiscal Year ended January 26, 1997.
"Fixed Charge Coverage Ratio" shall mean the ratio of Consolidated Cash
Flow from Operations to Fixed Charges.
"Fixed Charges" shall mean for any period of determination the sum of
interest expense, Rent Expense, Lease Financing Rent Expense and scheduled
principal installments on Indebtedness (as adjusted for prepayments, and
including amortization payments under Capitalized Leases), in each case of the
Company and its Subsidiaries for such period determined and consolidated in
accordance with GAAP.
"Fixtures" shall mean all fixtures relating to the Improvements, including
all components thereof, located in or on the Improvements, together with all
replacements, modifications, alterations and additions thereto.
"Force Majeure Delay" shall have the meaning assigned to such term in
Section 1.1 of each Project Loan Agreement.
<PAGE> 18
"Force Majeure Event" shall mean any event beyond the control of the
Developer, other than a Casualty or Condemnation, including, but not limited
to, strikes, lockouts, adverse soil conditions, acts of God, adverse weather
conditions, inability to obtain labor or materials, governmental activities,
civil commotion and enemy action; but excluding any event, cause or condition
that results from the Developer's or Lessee's financial condition.
"Foreign Joint Venture" shall mean individually and "Foreign Joint Ventures"
shall mean collectively any corporation, partnership, limited liability
company, joint venture or other entity (i) organized under the laws of any
jurisdiction other than a state of the United States of America or formed
primarily for the purpose of doing business outside of the United States of
America and (ii) in which the Company and its Subsidiaries own less than 50% of
the capital stock, partnership interests, membership interests or other
ownership interests.
"Foreign Purchase" means any transaction, or any series of related
transactions, consummated on or after the Effective Date, by which the Company
or any of its Subsidiaries (a) acquires (i) any ongoing business organized
under the laws of any jurisdiction other than a state of the United States of
America or formed primarily for the purpose of doing business outside the
United States of America or (ii) all or substantially all of the assets of any
Person or division thereof are located outside the United States of America,
whether through purchase of assets, merger or otherwise, or (b) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) all or substantially all of the securities of a
corporation organized under the laws of any jurisdiction other than a state of
the United States of America or formed primarily for the purpose of doing
business outside the United States of America, which securities have ordinary
voting power for the election of directors (other than securities having such
power only by reason of the happening of a contingency) or all or substantially
all (by percentage and voting power) of the outstanding partnership interests
of a partnership or membership interests of a limited liability company, in
either case which partnership or limited liability company is organized under
the laws of any jurisdiction other than a state of the United States of America
or formed primarily for the purpose of doing business outside the United States
of America.
"Foreign Subsidiary" shall mean individually and "Foreign Subsidiaries"
shall mean collectively any Subsidiary of the Company organized under the laws
of any jurisdiction other than a state of the United States of America or
formed primarily for the purpose of doing business outside the United States of
America.
"Fulfillment" shall mean Borders Fulfillment, Inc., a corporation organized
and existing under the laws of the State of Delaware, and its permitted
successors and assigns.
"GAAP" shall mean generally accepted accounting principles as are in effect
in the United States of America from time to time, subject to the provisions of
Section 1.02 of the Guarantee, and applied on a basis consistent with the
Historical Statements both as to classification of items and amounts.
<PAGE> 19
"Governmental Action" shall mean all permits, authorizations, registrations,
consents, approvals, waivers, exceptions, variances, orders, judgments, written
interpretations, decrees, licenses, exemptions, publications, filings, notices
to and declarations of or with, or required by, any Governmental Authority, or
required by any Legal Requirement, and shall include, without limitation, all
environmental and operating permits and licenses that are required for the full
use, occupancy, zoning and operation of any Property.
"Governmental Authority" shall mean any national, federal, state, local or
other government or political subdivision or any agency, authority, bureau,
central bank, commission, department or instrumentality of either, or any
court, tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.
"Ground Lease" shall mean a ground lease, in form and substance acceptable
to the Real Estate Administrative Agent and its counsel, between a Lessor, as
ground lessee, and the owner of the fee interest in the Land, as ground lessor.
"Ground Lessor" shall mean the ground lessor under a Ground Lease.
"Guarantee" shall mean the guarantee to be executed and delivered by each
Guarantor, substantially in the form of Exhibit F to the Credit Agreement.
"Guarantors" shall mean the collective reference to the Lessees and such
other direct and indirect subsidiaries of the Company as shall have executed
and delivered the Guarantee or a letter agreement pursuant to the provisions of
Section 11.12 of the Guarantee or the definition of "Unrestricted Subsidiary."
"Hazardous Activity" shall mean any activity, process, procedure or
undertaking that directly or indirectly (i) produces, generates or creates any
Hazardous Substance, (ii) causes or results in (or threatens to cause or result
in) the Release of any Hazardous Substance into the environment (including air,
water vapor, surface water, groundwater, drinking water, land (including
surface or subsurface), plant, aquatic and animal life); (iii) involves the
containment or storage of any Hazardous Substance, or (iv) would be regulated
as hazardous waste treatment, storage or disposal within the meaning of any
Environmental Law.
"Hazardous Condition" shall mean any condition that violates or threatens to
violate, or that results in or threatens noncompliance with, any Environmental
Law.
"Hazardous Substance" shall mean any of the following: (i) any petroleum or
petroleum product, explosives, radioactive materials, asbestos, formaldehyde,
polychlorinated biphenyls, lead and radon gas; (ii) any substance, material,
product, derivative, compound or mixture, mineral, chemical, waste, gas,
medical waste, or pollutant, in each case whether naturally occurring, man-made
or the by-product of any process, that is toxic, harmful or hazardous to the
environment or human health or safety; or (iii) any substance, material,
product, derivative,
<PAGE> 20
compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant
that would support the assertion of any claim under any Environmental Law,
whether or not defined as hazardous as such under any Environmental Law.
"Historical Statements" shall have the meaning assigned to such term in
Section 7.03(i) of the Participation Agreement.
"Impositions" shall mean, except to the extent described in the following
sentence, any and all liabilities, losses, expenses and costs of any kind
whatsoever for fees, taxes, levies, imposts, duties, charges, assessments or
withholdings ("Taxes") (including (i) real and personal property taxes,
including personal property taxes on any property covered by a Lease that is
classified by Governmental Authorities as personal property, and real estate or
ad valorem taxes in the nature of property taxes; (ii) sales taxes, use taxes
and other similar taxes (including rent taxes and intangibles taxes); (iii) any
excise taxes; (iv) real estate transfer taxes, conveyance taxes, stamp taxes
and documentary recording taxes and fees; (v) taxes that are or are in the
nature of franchise, income, value added, privilege and doing business taxes,
license and registration fees; and (vi) assessments on any Property, including
all assessments for public improvements or benefits, whether or not such
improvements are commenced or completed within the Term), and in each case all
interest, additions to tax and penalties thereon, which at any time prior to,
during or with respect to the Term or in respect of any period for which the
Lessee shall be obligated to pay Supplemental Rent, may be levied, assessed or
imposed by any Federal, state, city, county or local authority upon or with
respect to (a) any Property or any part thereof or interest therein; (b) the
financing, refinancing, demolition, construction, substitution, subleasing,
assignment, control, condition, occupancy, servicing, maintenance, repair,
ownership, possession, activity conducted on, delivery, insuring, use,
operation, improvement, transfer of title, return or other disposition of such
Property or any part thereof or interest therein; (c) the Notes or the Project
Loan Notes or other indebtedness with respect to any Property or any part
thereof or interest therein; (d) the rentals, receipts or earnings arising from
any Property or any part thereof or interest therein; (e) the Operative
Agreements or any payment made or accrued pursuant thereto; (f) the income or
other proceeds received with respect to any Property or any part thereof or
interest therein upon the sale or disposition thereof; (g) any contract
(including the Agency Agreement) relating to the construction, acquisition or
delivery of any Improvements or any part thereof or interest therein; (h) the
issuance of the Notes or the Project Loan Notes; or (i) otherwise in connection
with the transactions contemplated by the Operative Agreements.
The term "Imposition" shall not mean or include:
(i) Taxes and impositions (other than Taxes that are, or
are in the nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on a Tax Indemnitee by the United
States federal government that are based on or measured by the net
income (including taxes based on capital gains and minimum taxes) of
such Person; provided that this clause (i) shall not be interpreted
to prevent a payment from being made on an After Tax Basis if such
payment is otherwise required to be so made;
<PAGE> 21
(ii) Taxes and impositions (other than Taxes that are, or
are in the nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed by any state or local jurisdiction or
taxing authority within any state or local jurisdiction and that are
based upon or measured by the gross or net income or gross or net
receipts (including any minimum taxes, withholding taxes or taxes on
or measured by capital, net worth, excess profits or items of tax
preference or taxes that are capital stock, franchise or doing
business taxes) except that this clause (ii) shall not apply to (and
thus shall not exclude) any such Taxes imposed on a Tax Indemnitee by
the state (or any local taxing authority thereof or therein) where any
Property is located, possessed or used under each Lease; provided that
this clause (ii) shall not be interpreted to prevent a payment from
being made on an After Tax Basis if such payment is otherwise required
to be so made;
(iii) any Tax or imposition to the extent, but only to such
extent, it relates to any act, event or omission that occurs after the
termination of a Lease with respect to a Property (but not any Tax or
imposition that relates to any period prior to the termination of each
Lease);
(iv) any Tax or imposition for so long as, but only for so
long as, it is being contested in accordance with the provisions of
Section 13.02(g) of the Participation Agreement;
(v) any interest or penalties imposed on a Tax Indemnitee
as a result of the failure of such Tax Indemnitee to file any return
or report timely and in the form prescribed by law or to pay any Tax
or imposition, except to the extent such failure is a result of a
breach by such Tax Indemnitee of its obligations under Section 13.02
of the Participation Agreement; provided that this clause (v) shall
not apply (x) if such interest or penalties arise as a result of a
position taken (or requested to be taken) by the Lessee in a contest
controlled by the Lessee under Section 13.02(g) of the Participation
Agreement or (y) to any such interest or penalties that result from
such Tax Indemnitee's complying with the reporting procedures set
forth in Section 13.02(d) of the Participation Agreement;
(vi) any Taxes or impositions imposed on a Lessor that are
a result of a Lessor not being considered a "United States person" as
defined in Section 7701(a) (30) of the Code;
(vii) any Taxes or impositions that are enacted or adopted
by their express terms as a substitute for any Tax that would not
have been indemnified against pursuant to the terms of Section 13.02
of the Participation Agreement;
(viii) any Taxes which are imposed on a Tax Indemnitee as a
result of a breach of a covenant or representation by such Tax
Indemnitee in any Operative Agreement (unless caused by the Lessee's
breach of its representations, warranties and covenants) or as a
result of the gross negligence or wilful misconduct of such Tax
Indemnitee itself (as opposed to
<PAGE> 22
gross negligence or wilful misconduct imputed to such Tax Indemnitee),
but not Taxes imposed as a result of ordinary negligence of such Tax
Indemnitee;
(ix) any Taxes or impositions imposed on a Lessor to the
extent that such Taxes are actually reimbursed to such Lessor by
another Person other than an Affiliate of such Lessor;
(x) any Taxes or impositions imposed upon a Lessor with
respect to any voluntary transfer, sale, financing or other voluntary
disposition by a Lessor (other than a transfer contemplated and
permitted by the Operative Agreements, including any transfer in
connection with (1) the exercise by the Lessee of its Purchase Option,
(2) the occurrence of a Lease Event of Default, a Credit Agreement
Event of Default, or a Project Loan Agreement Event of Default, or (3)
a Casualty or Condemnation affecting any Property) of any interest in
any Property or any interest in, or created pursuant to, the Operative
Agreements or any voluntary transfer of any interest in a Lessor
(other than in connection with the existence of a Lease Event of
Default, a Project Loan Agreement Event of Default or a Credit
Agreement Event of Default) or any involuntary transfer of any of the
foregoing interests resulting from the bankruptcy or insolvency of a
Lessor (other than in connection with the existence of a Lease Event
of Default or a Credit Agreement Event of Default);
(xi) any gift or inheritance Taxes;
(xii) any Taxes or impositions imposed on a Tax Indemnitee,
to the extent such Tax Indemnitee actually receives a credit (or
otherwise has a reduction in a liability for Taxes) in respect thereof
against Taxes that are not indemnified hereunder (but only to the
extent such credit is not taken into account in calculating the
indemnity payment on an After Tax Basis);
(xiii) any Tax or imposition to the extent that such Tax or
imposition is imposed on a Tax Indemnitee in respect of a transaction
or business in the jurisdiction imposing such Tax other than the
transactions arising out of the Operative Agreements; or
(xiv) any Tax or imposition imposed on a direct or indirect
transferee, successor or assign of a Lessor to the extent of the
excess of such Taxes over the amount of such Taxes that would have
been imposed had there not been a transfer by the original Lessor of
an interest arising under the Operative Agreements; provided that
there shall not be excluded under this clause (xiv) any such Tax or
imposition if such direct or indirect transferee, successor or assign
of a Lessor acquired its interest as a result of a transfer in
connection with a Lease Event of Default, a Project Loan Agreement
Event of Default or a Credit Agreement Event of Default; provided,
further, that there shall not be excluded under this clause (xiv) any
amount necessary to make any payment on an After Tax Basis.
<PAGE> 23
Any Tax or imposition excluded from the defined term "Imposition" in any one of
the foregoing clauses (i) through (xiv) shall not be construed as constituting
an Imposition by any provision of any other of the aforementioned clauses.
"Impositions Indemnitee" shall mean each Person entitled to
indemnification under Article XIII of the Participation Agreement and their
respective successors, assigns, directors, participants, shareholders,
partners, officers, employees, agents and Affiliates.
"Improvements" shall mean all buildings, structures, Fixtures,
Equipment, and other improvements of every kind existing at any time and from
time to time (including those constructed pursuant to a Development Agreement
or a Development Agency Agreement) on or under the Land, together with any and
all appurtenances to such buildings, structures or improvements, including
sidewalks, utility pipes, conduits and lines, parking areas and roadways, and
including all Modifications and other additions to or changes in the
Improvements at any time.
"Indebtedness" shall mean as to any Person at any time, any
and all indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or
joint or several) of such Person for or in respect of: (i) borrowed money, (ii)
amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement or repurchase obligations under
any letter of credit, note or accounts receivable financing arrangement,
currency swap agreement, interest rate swap, cap, collar or floor agreement or
other interest rate management device, (iv) Capitalized Lease Obligations, (v)
obligations, whether or not assumed, secured by Liens on or payable out of the
proceeds or production from Property now or hereafter owned or acquired by such
Person, (vi) any other transaction (including forward sale or purchase
agreements and conditional sales agreements) having the commercial effect of a
borrowing of money entered into by such Person to finance its operations or
capital requirements (but not including trade payables and accrued expenses
incurred in the ordinary course of business which are not represented by a
promissory note or other evidence of indebtedness and which are not more than
thirty (30) days past due), or (vii) any Contingent Obligation in respect of
borrowed money or Capitalized Lease Obligations of another Person.
"Indemnified Person" shall mean the Trust Company, in its
individual capacity and its trust capacity, the Agents, the Investor, the
Lenders and their respective successors, assigns, participants, directors,
shareholders, partners, officers, employees, agents and Affiliates.
"Ineligible Security" shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
"Initial Construction Advance" shall mean any initial Advance
under a Project Loan Agreement to pay for: (i) Project Costs for construction
or demolition of the Improvements on any Property; (ii) the Project Costs of
restoring or repairing any Property which is required to be restored
<PAGE> 24
or repaired in accordance with Section 11.1 of each Lease; and (iii) the costs
of any Modifications in accordance with Section 12.1 of each Lease.
"Insolvency Proceeding" shall mean, with respect to any
Person, (a) a case, action or proceeding with respect to such Person (i) before
any court or any other Governmental Authority under any bankruptcy, insolvency,
reorganization or other similar Law now or hereafter in effect, or (ii) for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or similar official) of the Company or any of its
Subsidiaries or otherwise relating to the liquidation, dissolution, winding-up
or relief of such Person, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other similar
arrangement in respect of such Person's creditors generally or any substantial
portion of its creditors undertaken under any Law.
"Insurance Requirements" shall mean all terms and conditions
of any insurance policy either required by a Lease to be maintained by the
Lessee or required by the Development Agency Agreement to be maintained by the
Developer, and all requirements of the issuer of any such policy.
"Interest Capitalization Termination Date" shall, with respect
to each Project, have the meaning assigned to such term in Section 1.1 of the
relevant Project Loan Agreement.
"Interest Payment Date" shall mean each date specified for the
payment of interest in Section 5.03 of the Credit Agreement.
"Interest Period" shall mean with respect to a Euro-Rate
Borrowing Tranche, a period of one month commencing on a Business Day selected
by the Owner Trustee pursuant to the Credit Agreement. Such Interest Period
shall end on (but exclude) the day which corresponds numerically to such date
one month thereafter; provided, however, that if there is no such numerically
corresponding day in such next succeeding month, such Interest Period shall end
on the last Business Day of such next succeeding month. If an Interest Period
would otherwise end on a day which is not a Business Day, such Interest Period
shall end on the next succeeding Business Day; provided, however, that if said
next succeeding Business Day falls in a new calendar month, such Interest
Period shall end on the immediately preceding Business Day.
"Interest Rate Option" shall mean any Euro-Rate Option or Base
Rate Option.
"Interim Statements" shall have the meaning assigned to such
term in Section 7.03(i) of the Participation Agreement.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations thereunder,
as from time to time in effect.
<PAGE> 25
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended, together with the rules and regulations promulgated
thereunder.
"Investments" shall have the meaning assigned to such term in
Section 12.04 of the Guarantee.
"Investor" shall mean SAM Project Funding Corp. I, a
corporation organized and existing under the laws of the State of Delaware, and
its permitted successors and assigns.
"Joint Venture" shall mean any Foreign Joint Venture or
Domestic Joint Venture, and "Joint Ventures" shall mean all Foreign Joint
Ventures and Domestic Joint Ventures.
"Kmart" shall mean Kmart Corporation, a corporation organized
and existing under the laws of the State of Michigan.
"Kmart Agreements" shall mean the Kmart Indemnity, the Kmart
Intercompany Agreement, the Kmart Registration Rights Agreement and the Kmart
Tax Agreement.
"Kmart Indemnity" shall mean that certain Lease Guaranty,
Indemnification and Reimbursement Agreement, dated May 24, 1995, entered into
by the Company and/or one or more of the other Guarantors, on the one hand, and
Kmart, on the other hand, as the same may be amended, supplemented or otherwise
modified from time to time subject to Section 12.18 of the Guarantee.
"Kmart Intercompany Agreement" shall mean that certain
Intercompany Agreement, dated May 24, 1995, entered into by the Company, on the
one hand, and Kmart, on the other hand, as the same may be amended,
supplemented or otherwise modified from time to time subject to Section 12.18
of the Guarantee.
"Kmart Registration Rights Agreement" shall mean that certain
Registration Rights Agreement, dated May 24, 1995, entered into by the Company,
on the one hand, and Kmart, on the other hand, as the same may be amended,
supplemented or otherwise modified from time to time subject to Section 12.18
of the Guarantee.
"Kmart Tax Agreement" shall mean that certain Tax Allocation
and Indemnification Agreement, dated May 24, 1995, entered into by the Company,
on the one hand, and Kmart, on the other hand, as the same may be amended,
supplemented or otherwise modified from time to time subject to Section 12.18
of the Guarantee.
"Labor Contracts" shall mean all employment agreements,
employment contracts, collective bargaining agreements and other agreements
between the Company or Subsidiary of the Company and its employees.
<PAGE> 26
"Land" shall mean a Property consisting of the parcel of real
property described on Schedule 1 of a Lease for such Land and all Appurtenant
Rights attached thereto.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Governmental Authority.
"Lease" shall mean a Lease, dated as of a Property Closing
Date, between a Lessor and one of the Lessees in the form of Exhibit G to the
Participation Agreement.
"Lease Commencement Date" for a particular Lease shall mean
the Effective Date (as defined in the particular Lease) for the Property
subject to such Lease.
"Lease Default" shall mean any event or condition which, with
the lapse of time or the giving of notice, or both, would constitute a Lease
Event of Default.
"Lease Event of Default" shall have the meaning given to such
term in Section 18.1 of each Lease.
"Lease Financing Payment" shall mean any payment by the
Company or any of its Subsidiaries (i) under the Guarantee in respect of
Contingent Obligations described in Section 12.03(h) of the Guarantee (other
than in respect of Basic Rent), (ii) to purchase or otherwise acquire all or
any portion of any Property subject to any Financed Lease, including, without
limitation, all payments pursuant to the exercise by the Company or any of its
Subsidiaries of any Purchase Option, or (iii) that constitutes a payment of the
Termination Value or the Maximum Residual Guarantee Amount.
"Lease Financing Rent Expense" shall mean all Basic Rent
payable by the Company and its Subsidiaries, as lessee or sublessee under a
Lease.
"Lease Rents" shall have the meaning given to such term in
each Assignment of Leases.
"Lease Supplement" shall mean a Lease Supplement in the form
of Exhibit K to the Participation Agreement, whereby a Lessor agrees to lease
the Improvements located or to be located upon the Land to the applicable
Lessee.
"Legal Requirements" shall mean all Federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting any Property, any
Improvements or the demolition, construction, use or alteration thereof,
whether now or hereafter enacted and in force, including any that require
repairs, modifications or alterations in or to any Property or in any way limit
the use and enjoyment thereof (including all building, zoning and fire codes
and the Americans with Disabilities Act of 1990, 42
<PAGE> 27
U.S.C. Section 12101 et. seq. and any other similar Federal, state or local
laws or ordinances and the regulations promulgated thereunder) and any that may
relate to environmental requirements (including all Environmental Laws), and
all permits, certificates of occupancy, licenses, authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments which are either of record or known
to the Lessee affecting any Property, the Appurtenant Rights and any easements,
licenses or other agreements entered into pursuant to Section 13.2 of each
Lease.
"Lender Financing Statements" shall mean UCC financing
statements appropriately completed and executed for filing in the applicable
jurisdiction in order to perfect a security interest in favor of the Real
Estate Administrative Agent in the Equipment located on a Property or in any
Improvements on a Property.
"Lenders" shall mean the several banks and other financial
institutions from time to time party to the Credit Agreement.
"Lending Office" shall mean, with respect to each Lender, the
office(s) specified for such Lender in Schedule II of the Credit Agreement or
such other office(s) as such Lender may specify in writing to the
Administrative Agent.
"Lessees" shall mean, collectively, the Company, Borders,
Walden, BPI and WPI.
"Lessor" or "Lessors" shall have the meaning assigned to such
terms in Section 2.01 of the Participation Agreement and shall include an
"Agree Lessor" unless otherwise indicated.
"Lessor Default" shall have the meaning assigned to such term
in Section 5.06 of the Participation Agreement.
"Lessor Financing Statements" shall mean UCC financing
statements appropriately completed and executed for filing in the applicable
jurisdiction in order to protect a Lessor's interest under a Lease to the
extent such Lease is a security agreement.
"Lessor Lien" shall mean any Lien, true lease or sublease or
disposition of title arising as a result of (a) any claim against a Lessor,
Agree SPC or Developer, (b) any act or omission of a Lessor, Agree SPC or
Developer which is not required by the Operative Agreements or is in violation
of any of the terms of the Operative Agreements, (c) any claim against a
Lessor, Agree SPC or a Developer with respect to Taxes or Transaction Expenses
against which Lessee is not required to indemnify Lessor, Agree SPC or a
Developer or (d) any claim against a Lessor, Agree SPC or a Developer arising
out of any transfer by a Lessor of all or any portion of the interest of a
Lessor in a Property , or a transfer by the Investor of its interest in the
Trust Estate or the Operative Agreements other than the transfer of title to or
possession of any Properties by a Lessor pursuant to and in accordance with a
Lease, the Credit Agreement, the Project Loan Agreement or the
<PAGE> 28
Participation Agreement or pursuant to the exercise of the remedies set forth
in Article XVIII of a Lease.
"Leverage Ratio" shall mean the ratio (expressed as a
percentage) of Consolidated Funded Indebtedness to Consolidated Total Capital.
"Lien" shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement of any
nature whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security.
"Limited Recourse Amount" with respect to each Property, shall
have the meaning assigned to such term in Section 22.1. of the applicable
Lease.
"Loans" and "Loan" shall mean the collective reference to all
Revolving Credit Loans and Swing Loans or separately, any Revolving Credit Loan
or Swing Loan.
"Marketing Period" shall mean, if the Lessee has not given
Purchase Notice in accordance with Section 21.1 of a Lease, the period
commencing on the date twelve months prior to the Maturity Date and ending on
the Maturity Date.
"Material Adverse Effect" shall mean (a) a material adverse
effect upon the validity or enforceability of any of the Operative Agreements,
(b) a material adverse effect on the business, properties, assets, financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole, (c) a material impairment of the ability of any Guarantor or the
Company and its Subsidiaries taken as a whole to duly and punctually pay or
perform its or their Indebtedness, or (d) a material impairment of the ability
of any of the Agents or any of the Lenders, to the extent permitted, to enforce
its legal remedies pursuant the Credit Agreement, the Project Loan Documents or
any other Operative Agreement.
"Maturity Date" shall mean October 16, 2002, or such later
date if such date is extended in accordance with the terms of the Credit
Agreement.
"Maturity Date Property Cost" shall mean the aggregate amount
of the Property Cost for all Properties as of the Maturity Date.
"Maximum Purchase Option Amount" shall mean sixty percent
(60%) of the highest aggregate amount of the Maximum Property Cost at any time
prior to the Maturity Date.
"Maximum Property Cost" shall mean the aggregate amount of the
Property Costs for the Properties subject to Leases as of the determination
date.
<PAGE> 29
"Maximum Residual Guarantee Amount" shall mean an amount equal
to the product of the principal amount of the Project Loan allocated to a
Property times the applicable Modified Tranche A Percentage or Percentages for
such Property.
"Memorandum of Lease" shall have the meaning specified in
Section 32.7 of each Lease.
"Memorandum of Ground Lease" shall mean a memorandum of ground
lease executed by the applicable Lessor and Ground Lessor on a Property Closing
Date to record the pertinent terms of a Ground Lease.
"Modification Amount" shall have the meaning assigned to such
term in Section 2.02(b) of the Credit Agreement.
"Modification Date" shall have the meaning assigned to such
term in Section 2.02(b) of the Credit Agreement.
"Modifications" shall have the meaning specified in Section
12.1 of each Lease.
"Modified Tranche A Percentage" shall mean at any date of
determination, (i) with respect to any Property consisting of Improvements or
Land and Improvements, if the cost of the Land (as shown on the Property
Closing Certificate) is less than 25% of the Property Cost, the maximum
percentage of the principal amount of the Project Loan in respect of such
Property which may be allocated to Tranche A Loans as of such date without
causing the Lease to be treated as a Capitalized Lease for the purposes of
Statement of Financial Accounting Standards (SFAS) No. 13, as determined in
good faith by the applicable Lessee, or any greater percentage specified by the
applicable Lessee by written notice to the Administrative Agent as constituting
the "Modified Tranche A Percentage" with respect to such Property, (ii) with
respect to any Property consisting of Land, the cost of which is greater than
or equal to 25% of the Property Cost, 100% and (iii) with respect to any
Property which is an Agree Project, 100%; provided that in no event shall the
Modified Tranche A Percentage be less than 80%.
"Modified Tranche B Percentage" shall mean at any date of
determination, with respect to any Property consisting of Improvements, a
percentage equal to 100% minus the Modified Tranche A Percentage then in effect
with respect to such Property.
"More Restrictive Provisions" shall have the meaning assigned
to such term in Section 11.10 of the Guarantee.
"Mortgage" shall mean, with respect to any Property, a
Mortgage and Security Agreement substantially in the form attached as Exhibit
D-2 to each
<PAGE> 30
Project Loan Agreement or a Deed of Trust and Security Agreement substantially
in the form attached as Exhibit D-2 to each Project Loan Agreement, in each
case made by the applicable Lessor in favor of the Owner Trustee in order to
create a first priority mortgage lien on such Property.
"Multiemployer Plan" shall mean any employee benefit plan that
is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and
to which the Company or any member of the ERISA Group is then making or
accruing an obligation to make contributions or at any time in the past has
made or had an obligation to make such contributions.
"Multiple Employer Plan" shall mean a Plan which has two or
more contributing sponsors (including the Company or any member of the ERISA
Group) at least two of whom are not under common control, as such a plan is
described in Sections 4063 and 4064 of ERISA.
"Net Proceeds" shall mean all amounts paid in connection with
any Casualty or Condemnation, and all interest earned thereon, less the
reasonable expense of claiming and collecting such amounts, including all costs
and expenses in connection therewith for which the Real Estate Administrative
Agent or Lessor are entitled to be reimbursed pursuant to a Lease.
"Net Sale Proceeds Shortfall" shall mean the amount by which
the proceeds of a sale described in Article XXI of a Lease (net of all expenses
of sale) are less than the Limited Recourse Amount with respect to any Property
if it has been determined that the Fair Market Sales Value of the Property at
the expiration of the term of such Lease has been impaired by greater than
expected wear and tear during the term of such Lease.
"Note Put Agreements" shall mean those certain Note Put
Agreements, dated as of November 10, 1994, by and among Kmart, the Company and
National Tenant Finance Corporation, as such documents may be amended,
supplemented or otherwise modified from time to time subject to Section 12.18
of the Guarantee.
"Notes" shall mean the collective reference to the Tranche A
Notes, the Tranche B Notes and Swing Notes.
"Obligations" shall mean any obligation or liability of the
Borrower (including any obligation or liability which accrues after the
commencement of any Insolvency Proceeding or would accrue but for the operation
of Law, whether or not allowed or allowable as a claim in such Insolvency
Proceeding) to any of the Agents or any of the Lenders, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, now
or hereafter existing, or due or to become due, under or in connection with the
Credit Agreement or any other Credit Document.
"Officer's Certificate" shall mean a certificate signed by any
individual holding the office of vice president or higher, which certificate
shall certify as true and correct the subject matter being certified to in such
certificate.
"Operative Agreements" shall mean the following:
<PAGE> 31
(a) the Participation Agreement;
(b) the Notes;
(c) the Project Loan Note;
(d) each Lease;
(e) each Lease Supplement;
(f) each Assignment of Lease;
(g) each Reassignment of Leases and Rents;
(h) each Consent to Assignment;
(i) the Credit Agreement;
(j) each Project Loan Agreement;
(k) each Agree Project Loan Agreement;
(l) each Ground Lease, if applicable;
(m) each Mortgage;
(n) each Agree LLC Pledge;
(o) each UCC Financing Statement;
(p) each Completion Guarantee;
(q) each Assignment of Development Agency Agreement;
(r) each Development Agency Agreement;
(s) the Guarantee;
(t) the Security Agreement;
(u) each Assignment of Contracts; and
(v) the Trust Agreement.
"OnLine, Inc." shall mean a corporation organized and existing
under the laws of the State of Delaware, and its permitted successors and
assigns.
"Other Leases" shall have the meaning assigned to such term in
Section 2(b) of each Assignment of Leases.
"Other Lease Rents" shall have the meaning assigned to such
term in Section 2(b) of each Assignment of Leases.
"Outlet, Inc." shall mean a corporation organized and existing
under the laws of the State of Colorado, and its permitted successors and
assigns
"Outside Completion Date" shall have the meaning assigned to
such term in Section 1.1 of each Project Loan Agreement; provided that such
date is prior to the date which is one month prior to the Maturity Date.
"Overdue Interest" shall mean any interest payable pursuant
to Section 4.06 of the Credit Agreement.
<PAGE> 32
"Overdue Interest Rate" shall mean the interest rate described
in Section 4.06 of the Credit Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, not in
its individual capacity, except as expressly stated in the Operative
Agreements, but solely as Owner Trustee under the Trust Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any successor.
"Participant" shall have the meaning assigned to such term in
Section 12.08(b) of the Credit Agreement.
"Participation Agreement" shall mean the Amended and Restated
Participation Agreement, dated as of November 22, 1995 and amended and restated
as of October 17, 1997, among the Lessees, the Owner Trustee, the Lenders, the
Investor and the Agents.
"Partnership Interests" shall have the meaning assigned to
such term in Section 7.03(c) of the Participation Agreement.
"Payment Date" shall mean any Interest Payment Date.
"Permitted Exceptions" shall mean:
(i) Liens of the types described in clauses (i), (ii),
(v) and (viii) of the definition of Permitted Liens;
(ii) Liens for Taxes not yet due and payable; and
(ii) all encumbrances, exceptions, restrictions,
easements, rights of way, servitudes, encroachments and irregularities
in title, other than Liens which, in the reasonable assessment of the
Developer or the Lessees, do not materially impair the use of the
Property for its intended purpose.
"Permitted Investments" shall mean:
(i) direct obligations of the United States of America
or any agency or instrumentality thereof or obligations backed by the
full faith and credit of the United States of America maturing in
twelve (12) months or less from the date of acquisition;
(ii) commercial paper maturing in 180 days or less
rated not lower than A-1 by Standard & Poor's Corporation or P-1 by
Moody's Investors Service, Inc. on the date of acquisition;
<PAGE> 33
(iii) demand deposits, time deposits or certificates of
deposit maturing within one year in any Lender or any commercial bank
whose commercial paper (or that of its parent corporation) is rated
not lower than A-1 by Standard & Poor's Corporation or P-1 by Moody's
Investors Service, Inc. on the date of acquisition;
(iv) adjustable rate preferred stock with an express
(or implied) rating not lower than A by Standard & Poor's Corporation
or A by Moody's Investors Service, Inc. on the date of acquisition;
and
(v) investments in any investment company registered
under the Investment Company Act of 1940, as amended (or any series
thereof) (A) that prices its shares in accordance with Rule 2a-7 under
such Act, (B) which holds at least ninety percent (90%) of its assets
in the investments itemized in (i) through (iv) above, and (C) which
has net asset value exceeding $100,000,000 on the date of acquisition.
"Permitted Joint Venture Activity" shall mean (i) any
Investment by the Company or any Unrestricted Subsidiary that is a Domestic
Subsidiary in any Joint Venture or any Contingent Obligations of the Company or
any Unrestricted Subsidiary that is a Domestic Subsidiary in respect of any
Indebtedness of any Joint Venture, provided that the aggregate amount of all
such Investments and Contingent Obligations does not at any time exceed 15% of
Consolidated Tangible Net Worth, determined as of the last day of the Fiscal
Quarter most recently ended and (ii) any Contingent Obligations of the Company
or any Unrestricted Subsidiary that is a Domestic Subsidiary, or Indebtedness
of the Company or any Unrestricted Subsidiary that is a Domestic Subsidiary
constituting reimbursement obligations under letters of credit, relating to
leases executed, as lessee, by a Joint Venture, provided, that the portion of
such Contingent Obligations and Indebtedness which constitutes current
liabilities determined and consolidated in accordance with GAAP is limited to
lease payments (whether such amounts are fixed or percentage rent, fees, costs,
accelerated payment requirements or otherwise) not in excess of an aggregate of
$15,000,000 in any Fiscal Year with respect to all Joint Ventures.
"Permitted Lease Contingent Obligations" shall mean all
guarantees, sureties or other forms of secondary liability in respect of real
property leases which have been assigned (which term shall also include new
leases entered into between the landlord and a third Person in respect of real
property being vacated by any of the Guarantors) by any of the Guarantors or
any Subsidiary of any of the Guarantors to any Person (other than any of the
Guarantors or any such Subsidiary), the terms of which assignment, or the
landlord's consent therefor, or of any such guarantee, surety or other
agreement or instrument, require any of the Guarantors or such Subsidiary to
remain liable for rent and other performance in respect of the assigned lease.
"Permitted Liens" shall mean:
(i) Liens for taxes, assessments, or similar
charges, incurred in the ordinary course of business and which
are not yet due and payable;
<PAGE> 34
(ii) pledges or deposits made in the ordinary
course of business to secure payment of worker's compensation,
or to participate in any fund in connection with worker's
compensation, unemployment insurance, old-age pensions or
other social security programs;
(iii) Liens of mechanics, materialmen,
warehousemen, carriers, or other like Liens, securing
obligations incurred in the ordinary course of business that
are not yet due and payable and Liens of landlords securing
obligations to pay lease payments that are not yet due and
payable or in default;
(iv) pledges or deposits made in the ordinary
course of business to secure performance of bids, tenders,
contracts (other than for the repayment of Indebtedness) or
leases, not in excess of the aggregate amount due thereunder,
or to secure statutory obligations, or surety, appeal,
indemnity, performance or other similar bonds required in the
ordinary course of business;
(v) encumbrances consisting of zoning
restrictions, easements or other restrictions on the use of
real property, none of which materially impairs the use of
such Property or the value thereof, and none of which is
violated in any material respect by existing or proposed
structures or land use;
(vi) Liens on property leased by the Company or
any Subsidiary of the Company under Capitalized Leases
permitted under the Guarantee securing obligations of the
Company or any such Subsidiary to the lessor under such
Capitalized Leases;
(vii) any Lien existing on the date of this
Agreement and described on Schedule 1 to the Guarantee;
provided that the principal amount secured thereby is not
hereafter increased and no additional assets become subject to
such Lien;
(viii) Purchase Money Security Interests;
(ix) the following, (A) if the validity or amount
thereof is being contested in good faith by appropriate and
lawful proceedings diligently conducted so long as levy and
execution thereon have been stayed and continue to be stayed
or (B) if a final judgment is entered and such judgment is
discharged within thirty (30) days of entry, and in either
case individually or in the aggregate, they could not
reasonably be expected to have a Material Adverse Effect;
(1) Liens for taxes, assessments or similar
charges due and payable and subject to interest or
penalty, provided that the Company maintains such
reserves or other appropriate provisions as shall
be required by GAAP and pays all such taxes,
assessments or charges forthwith upon the
<PAGE> 35
commencement of proceedings to foreclose any
such Lien and is otherwise conducted in accordance
with the provisions of the Participation
Agreement;
(2) Liens upon, and defects of title to,
Property, including any attachment of Property or
other legal process prior to adjudication of a
dispute on the merits; or
(3) Liens of mechanics, materialmen,
warehousemen, carriers, or other statutory
nonconsensual Liens;
(x) Liens on assets of the Guarantors securing
Indebtedness of the Company and its Subsidiaries incurred to
refinance the Contingent Obligations arising under the
Guarantee as permitted by Section 12.03(g) of the Guarantee;
provided, however, that such Liens may only attach to the
property previously subject to the Lease being refinanced; and
(xi) Liens on assets of the Company and its
Subsidiaries not otherwise permitted by clauses (i) through
(x) above, so long as any Indebtedness secured thereby is
permitted under the terms of Section 12.01 of the Guarantee
and the aggregate fair market value of all property secured by
such Liens does not at any time exceed 5% of Consolidated
Tangible Net Worth (determined as of the last day of the
Fiscal Quarter most recently ended).
"Permitted Restricted Subsidiary Activity" shall mean (i) any
Investment by the Company or any Unrestricted Subsidiary which is a Domestic
Subsidiary in any Restricted Subsidiary or any Contingent Obligations of the
Company or any Unrestricted Subsidiary which is a Domestic Subsidiary in
respect of any Indebtedness of any Restricted Subsidiary, provided that (a) the
aggregate amount of all such Investments and Contingent Obligations does not at
any time exceed 20% of Consolidated Tangible Net Worth, determined as of the
last day of the Fiscal Quarter most recently ended and (b) the aggregate amount
of all such Investments and Contingent Obligations made by the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary with respect to any
Restricted Subsidiary which is a Foreign Subsidiary and does not exceed 15% of
Consolidated Tangible Net Worth, determined as of the last day of the Fiscal
Quarter most recently ended and (ii) any Contingent Obligations of the Company
or any Unrestricted Subsidiary which is a Domestic Subsidiary, or Indebtedness
of the Company or any Unrestricted Subsidiary which is a Domestic Subsidiary
constituting reimbursement obligations under letters of credit, relating to
leases executed, as lessee, by a Restricted Subsidiary, provided, that, the
portion of such Contingent Obligations and Indebtedness which constitutes
current liabilities determined and consolidated in accordance with GAAP is
limited to lease payments (whether such amounts are fixed or percentage rent,
fees, costs, accelerated payment requirements or otherwise) not in excess of an
aggregate of $15,000,000 in any Fiscal Year with respect to all Restricted
Subsidiaries.
<PAGE> 36
"Permitted Sutro Refinancing Indebtedness" shall mean
Indebtedness of the Company or any other Guarantor which is incurred solely to
pay obligations of the Company under Section 2.2 of any of the Note Put
Agreements.
"Permits" shall have meaning assigned to such term in Section
1.1 of each Project Loan Agreement.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint- stock company,
trust, unincorporated organization, governmental authority or any other entity.
"Plan" shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees or former employees of any member
of the ERISA Group or (ii) has at any time within the preceding five years been
maintained by any entity which was at such time a member of the ERISA Group for
employees or former employees of any entity which was at such time a member of
the ERISA Group.
"Planet" shall mean Planet Music, Inc., a corporation
organized and existing under the laws of the State of North Carolina, and its
permitted successors and assigns.
"Plans and Specifications" shall have meaning assigned to such
term in Section 1.1 of each Project Loan Agreement.
"Principal Office" shall mean the main lending office of the
Administrative Agent in Pittsburgh, Pennsylvania.
"Principal Office of the Swing Lender" shall mean the main
lending office of the Swing Lender in New York, New York.
"Prior Agreement" shall have the meaning assigned to that term
in the preamble to the Credit Agreement.
"Prior Agreement Parties" shall have the meaning assigned to
that term in the preamble to the Credit Agreement.
"Prior Revolving Credit Loans" shall have the meaning assigned
to that term in Section 2.01(b) of the Credit Agreement.
"Prohibited Transaction" shall mean any prohibited transaction
as defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA
for which neither an individual nor a class exemption has been issued by the
United States Department of Labor.
<PAGE> 37
"Project Cost" shall mean the cost to a Lessor to construct
any Improvements, Fixtures or Modifications to be used on the Property in
accordance with Plans and Specifications and the Operative Agreements.
"Project Loan" shall have the meaning assigned to such term in
Section 1.1 to each Project Loan Agreement; the term "Project Loan" shall
include Agree Project Loans.
"Project Loan Advance" shall have the meaning assigned to such
term in Section 1.1 of each Project Loan Agreement.
"Project Loan Agreement" shall mean, for any given Property, a
Project Loan Agreement, dated as of each Property Closing Date in the
respective forms of Exhibit B-1 or Exhibit B-2 to the Participation Agreement,
as applicable; the term "Project Loan Agreement" shall include Agree Project
Loan Agreements unless otherwise indicated.
"Project Loan Agreement Default" shall mean any event or
condition which, with the lapse of time or the giving of notice, or both, would
constitute a Project Loan Agreement Event of Default.
"Project Loan Agreement Event of Default" shall mean any event
or condition defined as an "Event of Default" in Section 10 of a Project Loan
Agreement.
"Project Loan Basic Rent" shall mean an amount equal to the
interest due on the Project Loans on any Specified Interest Payment Date
pursuant to the Project Loan Agreement with respect to the Property that is
being leased under the Lease for which the Project Loan Basic Rent is being
determined.
"Project Loan Commitment" shall have the meaning specified in
Section 1.1 of each Project Loan Agreement.
"Project Loan Documents" shall have the meaning assigned to
such term in Section 1.1 to each Project Loan Agreement.
"Project Loan Note" shall have the meaning assigned to that
term in Section 2.8 of each Project Loan Agreement.
"Property" shall mean (i) with respect to a Twenty-Five
Percent Property, a parcel of Land (including all Appurtenant Rights attached
thereto) acquired by a Lessor pursuant to the provisions of the Participation
Agreement, and from and after the Effective Date of the Lease Supplement (or
the Property Closing Date, if Improvements exist on such date), shall include
all of the Improvements then or thereafter located on such Land even though
such Improvements are being leased pursuant to a Lease Supplement and for
purposes of the definition of "Modified Tranche A Percentage" shall be deemed a
separate Property from the Land or (ii) Land and Improvements, if,
<PAGE> 38
pursuant to Section 2.08 of the Participation Agreement, the Land and
Improvements are leased under one Lease without a Lease Supplement.
"Property Acquisition Cost" shall mean the cost to Lessor to
purchase a Property or, in the case of a Property subject to a Ground Lease,
the initial cost to enter into such Ground Lease, on a Property Closing Date.
"Property Closing Certificate" shall have the meaning assigned
to such term in Section 5.03(d) of the Participation Agreement.
"Property Closing Date" shall mean each date on which a Lessor
purchases or ground leases any Property.
"Property Cost" shall mean with respect to a Property the
aggregate amount of the Project Loan allocated to such Property pursuant to the
applicable Project Loan Agreement, plus the Developer Equity for such Property.
"Purchase" shall mean any transaction, or any series of
related transactions, consummated on or after the date of this Guarantee, by
which the Company or any of its Subsidiaries (a) acquires any ongoing business
or all or substantially all of the assets of any Person or division thereof,
whether through purchase of assets, merger or otherwise, or (b) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) all or substantially all of the securities of a
corporation, which securities have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or all or substantially all (by percentage and
voting power) of the outstanding partnership interests of a partnership or
membership interests of a limited liability company.
"Purchase Money Security Interest" shall mean Liens upon
tangible personal Property securing loans to any Guarantor or Subsidiary of the
Company or deferred payments by such Guarantor or Subsidiary for the purchase
of such tangible personal Property.
"Purchase Option" shall have the meaning given to such term in
Section 21.1 of each Lease.
"Purchase Option Price" shall have the meaning given to such
term in Section 21.1 of each Lease.
"Purchasing Lender" shall have the meaning assigned to such
term in Section 12.08(a) of the Credit Agreement.
"Ratable Share" shall mean the proportion that a Lender's
Commitment bears to the Commitments of all of the Lenders.
<PAGE> 39
"Real Estate Administrative Agent" shall mean Bankers Trust,
and its permitted successors and assigns, together with its affiliates.
"Reassignment of Leases" shall have the meaning assigned to
such term in Section 2.05 of the Participation Agreement.
"Refunded Swing Loans" shall have the meaning assigned to such
term in Section 3.04(a) of the Credit Agreement.
"Register" shall have the meaning assigned to such term in
Section 12.09(a) of the Credit Agreement.
"Regulated Substances" shall mean any substance, including any
solid, liquid, semisolid, gaseous, thermal, thoriated or radioactive material,
refuse, garbage, wastes, chemicals, petroleum products, by-products, co
products, impurities, dust, scrap, heavy metals, any substance defined as a
"hazardous substance," "pollutant," "pollution," "contaminant," "hazardous or
toxic substance," "extremely hazardous substance," "toxic chemical," "toxic
waste," "hazardous waste," "industrial waste," "residual waste," "solid waste,"
"municipal waste," "mixed waste," "infectious waste," "chemotherapeutic waste,"
"medical waste," "regulated substance" or any related materials, substances or
wastes as now or hereafter defined pursuant to any Environmental Laws, the
generation, manufacture, extraction, processing, distribution, treatment,
storage, disposal, transport, recycling, reclamation, use, reuse, spilling,
leaking, dumping, injection, pumping, leaching, emptying, discharge, escape,
release or other management or mismanagement of which is regulated by the
Environmental Laws.
"Regulation U" shall mean Regulation U, T, G or X as
promulgated by the Board of Governors of the Federal Reserve System, as amended
from time to time.
"Release" shall mean any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.
"Rent" shall have the meaning assigned to such term in Section
3.4 of each Lease.
"Rent Commencement Date" shall have the meaning assigned to
such term in Section 3.1 of each Lease.
"Rent Expense" shall mean all fixed rents payable by the
Company and its Subsidiaries, as lessee or sublessee under a lease of Property
(other than rents payable under the Leases), but shall be exclusive of any
amounts required to be paid by the Company and its Subsidiaries (whether or not
designated as rents or additional rents) on account of maintenance, repairs,
insurance, taxes, assessments, utilities, operating and labor costs, and
similar charges. Fixed rents under any so-called "percentage leases" shall be
computed based on the actual amount of rent
<PAGE> 40
paid, and not on the basis of the minimum rents, if any, required to be paid by
the lessee regardless of sales volume or gross revenues. The term Rent Expense
shall exclude any payments made in respect of any Capitalized Lease.
"Reportable Event" shall mean a reportable event described in
Section 4043 of ERISA and regulations thereunder with respect to a Plan or
Multiemployer Plan.
"Repurchase Amount" shall mean $100,000,000 plus (b) the
aggregate amount paid to the Company (whether in cash or in shares of the
Company's stock), from time to time and at any time since the Effective Date,
by officers, employees or directors of the Company or any of its Subsidiaries
in connection with the exercise of options to purchase shares of the Company's
stock, plus (c) the realized tax benefit (as calculated by the Company in a
manner satisfactory to the Administrative Agent), for tax periods after the
Effective Date resulting from the exercise of such options or resulting from
the lapse of restrictions on (and vesting of rights in) certain shares of the
Company's stock subject to the Management Stock Purchase Plan from time to time
and at any time since May 1, 1995. For purposes of calculating the Repurchase
Amount, to the extent shares of the Company's stock are delivered to the
Company in payment of the exercise price of options, or in payment of taxes
associated with the exercise of options or the vesting of restricted shares,
such delivered shares are deemed to be repurchased by the Company at fair
market value (as defined in the Company's stock option plan) on the date of
delivery to the Company. Such delivered share repurchases will serve to reduce
the available Repurchase Amount.
"Requesting Party" shall have the meaning specified in Section
27.1 of each Lease.
"Required Lenders" shall mean (i) Lenders whose Commitments
aggregate at least 51% of the Commitments of all of the Lenders, or (ii) if the
Commitments shall have been terminated, Lenders whose outstanding Loans
aggregate at least 51% of the total principal amount of outstanding Loans
hereunder.
"Requisition" shall mean the Requisition in the form attached
as Exhibit H to Participation Agreement.
"Restricted Subsidiary" shall mean individually and
"Restricted Subsidiaries" shall mean collectively any Subsidiary of the Company
(other than Unrestricted Subsidiaries).
"Revolving Credit Loan Request" shall have the meaning
assigned to such term in Section 2.02(a) of the Credit Agreement.
"Revolving Credit Loans" and "Revolving Credit Loan" shall
mean collectively, all Revolving Credit Loans or separately, any Revolving
Credit Loan made by the Lenders or one of the Lenders to the Borrower pursuant
to Section 2.01 of the Credit Agreement.
<PAGE> 41
"Section 20 Subsidiary" shall mean the Subsidiary of the bank
holding company controlling any Lender, which Subsidiary has been granted
authority by the Federal Reserve Board to underwrite and deal in certain
Ineligible Securities.
"Security Agreement" shall mean the Security Agreement,
substantially in the form of Exhibit G to the Credit Agreement.
"Security Documents" shall mean the collective reference to
each Security Agreement, each Reassignment of Leases, each Assignment of
Contracts and all other security documents hereafter delivered to the Real
Estate Administrative Agent granting a Lien on any asset or assets of any
Person to secure the obligations and liabilities of the Borrower under the
Credit Agreement and/or under any of the other Credit Documents or to secure
any guarantee of any such obligations and liabilities.
"Securities Act" shall mean the Securities Act of 1933, as
amended, together with the rules and regulations promulgated thereunder.
"Shared Rights" shall mean the rights retained by a Lessor,
but not to the exclusion of the Owner Trustee, pursuant to Section 9.3(a)(ii)
of each Project Loan Agreement.
"Significant Casualty" shall mean a Casualty that in the
reasonable, good faith judgment of the Lessee either (a) renders the Property
unsuitable for continued use as commercial or retail property of the type of
such Property immediately prior to such Condemnation or (b) is so substantial
in nature that restoration of such Property to substantially its condition as
existed immediately prior to such Casualty would be impracticable or
impossible.
"Significant Condemnation" shall mean a Condemnation that in
the reasonable, good faith judgment of the Lessee either (a) renders the
Property unsuitable for continued use as commercial or retail property of the
type of such Property immediately prior to such Condemnation or (b) is such
that restoration of such Property to substantially its condition as existed
immediately prior to such Condemnation would be impracticable or impossible.
"Significant Event" shall mean (i) a Total Condemnation of a
Property, (ii) an Environmental Violation with respect to a Property which in
the reasonable, good faith judgment of the Developer or the Lessee, as the case
may be, (as evidenced by an Officer's Certificate delivered within ten (60)
days of such event) will cost in excess of 25% of the Termination Value of such
Property to remediate, or (iii) a Condemnation, Casualty or Force Majeure Event
with respect to a Property which in the reasonable, good faith judgment of the
Lessee (as evidenced by an Officer's Certificate delivered within ten (60) days
of such event) is so substantial in nature that achieving Completion of the
Improvements on such Property on or prior to the Outside Completion Date would
be impracticable or impossible.
<PAGE> 42
"Solvent" shall mean, with respect to any Person on a
particular date, that on such date (i) the fair value of the assets of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (ii) the present fair
saleable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (iii) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and
other commitments as they mature in the normal course of business, (iv) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (v) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such Person
is engaged. In computing the amount of contingent liabilities at any time, it
is intended that such liabilities shall be computed at the amount which, in
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
"Subordinated Debt" shall mean the Indebtedness of the Company
which (x) is subordinated in the right of payment to the monetary obligations
of the Company under the Guarantee, (y) provides for an average life
(determined on a weighted average basis) of no less than the then remaining
term of the Credit Agreement plus 180 days and (z) contains provisions relating
to maturity, amortization, covenants, defaults and collateral satisfactory to
the Required Lenders, as the same may be modified, amended or supplemented from
time to time subject to Section 12.18 of the Guarantee.
"Subsidiary" of any Person at any time shall mean (i) any
corporation or trust of which 50% or more (by number of shares or number of
votes) of the outstanding capital stock or shares of beneficial interest
normally entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such Person or one or
more of such Person's Subsidiaries, or any partnership of which such Person is
a general partner or of which 50% or more of the partnership interests is at
the time directly or indirectly owned by such Person or one or more of such
Person's Subsidiaries, or any limited liability company of which 50% or more of
the membership interests is at the time directly or indirectly owned by such
Person or one or more of such Person's Subsidiaries or (ii) any corporation,
trust, partnership, limited liability company or other entity which is
controlled or capable of being controlled by such Person or one or more of such
Person's Subsidiaries.
"Subsidiary Shares" shall have the meaning assigned to such
term in Section 7.03(c) of the Participation Agreement.
"Supplemental Rent" shall mean all amounts, liabilities and
obligations (other than Basic Rent) which Lessee assumes or agrees to pay to a
Lessor or any other Person under a Lease
<PAGE> 43
or under any of the other Operative Agreements including, without limitation,
payments of Purchase Option Price, Termination Value and the Maximum Residual
Guarantee Amount.
"Swing Facility" shall mean a discretionary line of credit,
available in Dollars, offered to the Borrower by the Swing Lender in an
aggregate principal amount not to exceed $15,000,000.
"Swing Lender" shall mean Bankers Trust, in its capacity as
Lender of Swing Loans, and its permitted successors and assigns.
"Swing Loans" and "Swing Loan" shall mean collectively, all
Swing Loans or separately any Swing Loan made by the Swing Lender to the
Borrower pursuant to Section 3.01 of the Credit Agreement.
"Swing Loan Participation Certificate" shall mean a
certificate, substantially in the form of Exhibit D to the Credit Agreement.
"Swing Margin" shall mean the Federal Funds Effective Rate
plus 0.30% plus the applicable Euro-Rate Margin plus the applicable Facility
Fee Rate.
"Swing Note" shall have the meaning assigned to such term in
Section 3.03 of the Credit Agreement.
"Swing Loan Request" shall mean a request for Swing Loans made
in accordance with Section 3.02 of the Credit Agreement.
"Syndication Agent" shall mean The First National Bank of
Chicago (or its Affiliate, First Chicago Capital Markets, Inc.), and its
permitted successors and assigns.
"Tax Indemnitee" shall mean a Lessor, the Investor, the Owner
Trustee, the Trust Company, each Agent and each Lender and their respective
successors, assigns, participants directors, shareholders, partners, officers,
employees, agents and Affiliates.
"Taxes" shall have the meaning specified in the definition of
Impositions.
"Tenant's Current Plans and Specifications" shall have the
meaning specified in Section 16.1(e) of each Lease.
"Termination Date" shall have the meaning specified in Section
17.2 of each Lease.
"Termination Notice" shall have the meaning specified in
Section 17.1 of each Lease.
<PAGE> 44
"Termination Value" with respect to a Property shall mean an
amount equal to the sum of (i) the aggregate outstanding principal amount of
the applicable Project Loan Note, plus (ii) the Developer Equity, in each case
as of the applicable Payment Date.
"Title Company" shall have the meaning assigned to such term
in Section 1.1 of each Project Loan Agreement.
"Total Condemnation" shall mean a Condemnation that involves a
taking of a Lessor's entire title to the Property.
"Total Facility Usage" shall mean at any time the sum of
Revolving Credit Loans outstanding and the Swing Loans outstanding.
"Total Property Costs" shall mean the sum of Project Cost and
Property Acquisition Cost.
"Tranche A Loan" shall mean collectively, the Revolving Credit
Loans and the Swing Loans that are deemed to be "Tranche A Loans" pursuant to
Sections 2.02(b) and 3.02(b) of the Credit Agreement, respectively.
"Tranche A Maximum Amount" shall mean $233,750,000, as such
amount may be increased pursuant to the Credit Agreement.
"Tranche A Note" shall have the meaning assigned to such term
in Section 2.04 of the Credit Agreement.
"Tranche A Percentage" shall mean 93.5%.
"Tranche B Loan" shall mean collectively, the Revolving Credit
Loans and the Swing Loans that are deemed to be "Tranche B Loans" pursuant to
Sections 2.02(b) of the Credit Agreement and 3.02(b) of the Credit Agreement,
respectively.
"Tranche B Maximum Amount" shall mean $16,250,000, as such
amount may be increased pursuant to the Credit Agreement.
"Tranche B Note" shall have the meaning assigned to such term
in Section 2.04 of the Credit Agreement.
"Tranche B Percentage" shall mean 6.5%.
"Transaction Expenses" shall mean all costs and expenses
incurred in connection with the preparation, execution and delivery of the
Operative Agreements and the transactions contemplated by the Operative
Agreements including:
<PAGE> 45
(a) the reasonable fees, out-of-pocket expenses and
disbursements of counsel in negotiating the terms of the Operative
Agreements and the other transaction documents, preparing for the
closings under, and rendering opinions in connection with, such
transactions and in rendering other services customary for counsel
representing parties to transactions of the types involved in the
transactions contemplated by the Operative Agreements;
(b) any other reasonable fee, out-of-pocket expenses,
disbursement or cost of any party to the Operative Agreements or any
of the other transaction documents;
(c) any and all Taxes and fees incurred in recording
or filing any Operative Agreement or any other transaction document,
any deed, declaration, mortgage, security agreement, notice or
financing statement with any public office, registry or governmental
agency in connection with the transactions contemplated by the
Operative Agreements.
"Trust Agreement" shall mean the Trust Agreement, dated as of
November 22, 1995, between the Investor and the Trust Company, as such
agreement may be amended from time to time.
"Trust Company" shall mean Wilmington Trust Company, a
Delaware Corporation, in its individual capacity.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Twenty-Five Percent Property" shall have the meaning assigned
to such term in Section 2.08 of the Participation Agreement.
"UCC Financing Statements" shall mean collectively the Lender
Financing Statements and the Lessor Financing Statements.
"Uniform Commercial Code" and "UCC" shall mean the Uniform
Commercial Code as in effect in any applicable jurisdiction.
"Unrestricted Subsidiary" shall mean individually and
"Unrestricted Subsidiaries" shall mean collectively any Subsidiary of the
Company (i) of which 80% or more of the outstanding shares of capital
stock, partnership interests or membership interests are owned by
the Company (whether directly or through one or more Subsidiaries of
the Company) and (ii) that has executed and delivered the Guarantee or a letter
agreement in form and substance satisfactory to the Administrative Agent under
which such Subsidiary agrees to be bound by the provisions of the Guarantee,
together with such legal opinions and other documents and instruments as the
Administrative Agent may request.
"WPI" shall mean Waldenbooks Properties, Inc., a corporation
organized and existing under the laws of the State of Delaware, and its
permitted successors and assigns.
<PAGE> 46
"Walden" shall mean Walden Book Company, Inc., a corporation
organized and existing under the laws of the State of Colorado, and its
permitted successors and assigns.
"Weighted Average Maximum Residual Guarantee Percentage" shall
mean, as of each Determination Date, a fraction, expressed as a percentage,
equal to the sum of the aggregate of the Maximum Residual Guarantee Amounts
with respect to each of the Leased Properties as of such Determination Date
divided by the aggregate of the Property Costs of each of the Leased Properties
as of the relevant Test Date. For purposes of this definition, (a) "Test Date"
means any proposed date of occurrence of any of the events ("Test Events")
described in Sections 5.03 or 16.03 of the Participation Agreement, (b)
"Determination Date" means (i) the last day of each month occurring after the
relevant Test Date and prior to the Maturity Date and (ii) the Maturity Date,
and (c) "Leased Properties" means all Properties subject to a Lease as of the
relevant Test Date after giving effect to the relevant Test Event.
"Wholly-owned Subsidiary" shall mean individually and
"Wholly-owned Subsidiary" shall mean collectively any Subsidiary of the Company
of which all of the outstanding shares of capital stock or other equity
interests are owned by the Company (whether directly or through one or more
Wholly-owned Subsidiaries of the Company).
<PAGE> 1
EXHIBIT 10.41
EXECUTION COPY
EXHIBIT A TO THE PARTICIPATION AGREEMENT
================================================================================
AMENDED AND RESTATED
CREDIT AGREEMENT
among
WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY EXCEPT AS EXPRESSLY STATED HEREIN,
BUT SOLELY AS OWNER TRUSTEE,
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO
AND
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS SYNDICATION AGENT
AND
BANKERS TRUST COMPANY,
as Real Estate Administrative Agent
Dated as of November 22, 1995
Amended and Restated as of October 17, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I.CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II.AMOUNT AND TERMS OF COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.01(a) Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.01(b) Prior Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.02 Revolving Credit Loan Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.03 Making Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.04 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.05 Nature of Lenders' Obligations with Respect to Revolving Credit Loans . . . . . . . . . . . . . . 5
2.06 Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.07 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.08 Use of Proceeds of Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.09 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.10 Advances to Pay Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III.AMOUNT AND TERMS OF SWING SUB-FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.01 Swing Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.02 Swing Loan Requests and Making of Swing Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.03 Swing Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.04 Borrowings to Repay Swing Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.05 Use of Proceeds of Swing Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV.INTEREST RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.01 Interest Rate Options on Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.02 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.03 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits
Not Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.04 Selection of Interest Rate Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.05 Interest Rates Payable on Swing Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.06 Interest After Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.07 Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.08 Interest Under Project Loan Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V.PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.02 Pro Rata Treatment of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.03 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
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5.04 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.05 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.06 Additional Compensation in Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI.REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.01 Due Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.02 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.03 Enforceability, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.04 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.05 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.06 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.07 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.08 Chief Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.09 Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.10 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.11 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.12 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.13 Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII.CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.01 Conditions to Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.02 Conditions to Each Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VIII.COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.01 Other Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.02 Ownership of Properties, Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.03 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.04 Compliance with Operative Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.05 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.07 Discharge of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.08 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IX.EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE X.THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<Capiton>
Page
<S> <C>
10.03 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.04 Reliance by Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.06 Non-Reliance on Agents and Other Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.08 Agents in Their Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.09 Successor Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.10 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.11 Availability of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.12 Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.13 Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
RTICLE XI.MATTERS RELATING TO PAYMENTS AND COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.01 The Credit Agreement Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.02 Proceeds of Collateral; Proceeds Remaining in Credit Agreement Account . . . . . . . . . . . . . 33
ARTICLE XII.MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.01 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.02 Notices; Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.04 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.05 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.06 Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.07 Funding by Branch, Subsidiary or Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.08 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.09 The Register; Disclosure; Pledges to Federal Reserve Banks . . . . . . . . . . . . . . . . . . . 39
12.10 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.13 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.14 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.15 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.16 Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.17 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.18 Waivers by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.19 Tax Withholding Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SCHEDULE
Schedule I Euro-Rate Margin, Commitment Fee Rate, Facility Fee Rate
</TABLE>
- iii -
<PAGE> 5
Page
Schedule II Commitments and Addresses of Lenders
EXHIBITS
Exhibit A-1 Form of Tranche A Note
Exhibit A-2 Form of Tranche B Note
Exhibit A-3 Form of Swing Note
Exhibit B Form of Revolving Credit Loan Request
Exhibit C Form of Swing Loan Request
Exhibit D Form of Swing Loan Participation Certificate
Exhibit E Form of Renewal/Conversion Notice
Exhibit F Form of Guarantee
Exhibit G Form of Security Agreement
Exhibit H Form of Reassignment of Leases and Rents
Exhibit I Form of Assignment of Contracts
Exhibit J Form of Assignment and Acceptance
Exhibit K Guidelines re: Bankruptcy Remote Entities
- iv -
<PAGE> 6
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of November 22, 1995
and amended and restated as of October 17, 1997, among WILMINGTON TRUST
COMPANY, not in its individual capacity except as expressly stated herein, but
solely as Owner Trustee (the "Owner Trustee" or the "Borrower"), the several
banks and other financial institutions from time to time parties to this
Agreement (the "Lenders"), PNC BANK, NATIONAL ASSOCIATION, as administrative
agent for the Lenders hereunder (the "Administrative Agent"), THE FIRST
NATIONAL BANK OF CHICAGO, as syndication agent of the Lenders hereunder (the
"Syndication Agent"), and BANKERS TRUST COMPANY, as real estate administrative
agent for the Lenders hereunder (the "Real Estate Administrative Agent"; and
together with the Administrative Agent and the Syndication Agent, collectively
referred to as the "Agents").
WITNESSETH:
WHEREAS, the Borrower, the Real Estate Administrative Agent, as agent, the
Administrative Agent, as co-agent and the Lenders (collectively, the "Prior
Agreement Parties") are parties to that certain Credit Agreement dated as of
November 22, 1995 (as heretofore amended, the "Prior Agreement");
WHEREAS, the Prior Agreement Parties desire to amend and restate the Prior
Agreement to (i) increase the aggregate amount of Commitments and extend the
Maturity Date, (ii) change the agency role of PNC Bank, National Association as
co-agent to Administrative Agent, (iii) change the agency role of Bankers Trust
Company from agent to Real Estate Administrative Agent, (iv) add The First
National Bank of Chicago as Syndication Agent, (v) eliminate and add certain
financial institutions as Lenders, and (vi) amend certain other terms and
conditions of the Prior Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
1.1 Certain Definitions. Capitalized terms used but not otherwise defined
in this Agreement shall have the meanings set forth in Appendix A hereto.
1.2 Accounting Principles. Except as otherwise provided in this
Agreement, all computations and determinations as to accounting or financial
matters and all financial statements to be delivered pursuant to this Agreement
shall be made and prepared in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or financial terms shall
have the meanings ascribed to such terms by GAAP; provided, however, that if
any change in GAAP or the application thereof occurs hereafter, or if the
Company adopts a change to its accounting principles or methods with the
agreement of its independent certified public accountants, and such change
results in a change in the calculation of any financial covenant or restriction
set forth herein, then the parties hereto agree to enter into and diligently
pursue negotiations in order to amend such
<PAGE> 7
financial covenant or restriction so as to equitably reflect such change, with
the desired result that the criteria for evaluating the financial condition and
results of operations of the Company and its Subsidiaries shall be the same
after such change as if such change had not been made. Pending the resolution
of any such negotiations, the Company agrees to provide to each of the Lenders
such unaudited financial information and pro forma statements using the
accounting methods and principles used in the preparation of the audited
financial statements for the fiscal year ended January 26, 1997, as are
necessary to enable the Lenders to test the financial covenants contained
herein.
ARTICLE II.
AMOUNT AND TERMS OF COMMITMENTS
2.01(a) Commitments. Subject to the terms and conditions hereof and
relying upon the representations and warranties herein set forth, each Lender
severally agrees to make Revolving Credit Loans to the Borrower at any time or
from time to time from and including the Effective Date but excluding the date
which is one month prior to the Maturity Date for the purpose of enabling the
Borrower to make Project Loans to the Lessors acceptable to the Real Estate
Administrative Agent for financing the Project Costs or to Agree SPC's
acceptable to the Real Estate Administrative Agent who will make capital
contributions to Agree Lessors to pay Project Costs, in an aggregate principal
amount at any one time outstanding not to exceed the amount of such Lender's
Commitment minus in the case of the Swing Lender, the Swing Loans outstanding.
After giving effect to any such Revolving Credit Loans and any other Loans made
on or before the Borrowing Date of such Revolving Credit Loans, the aggregate
amount of the Total Facility Usage shall not exceed the aggregate amount of the
Commitments. Within such limits of time and amount and subject to the other
provisions of this Agreement, the Borrower may borrow, repay and reborrow
pursuant to this Section 2.01.
2.01(b) Prior Revolving Credit Loans. Schedule 2.01(b) lists the Revolving
Credit Loans outstanding for each Lender under the Prior Agreement prior to the
Effective Date (the "Prior Revolving Credit Loans") and the Revolving Credit
Loans to be outstanding for each Lender hereunder as of the Effective Date. On
the Effective Date, any such Prior Revolving Credit Loans which are held by a
Prior Lender which will continue to be a Lender on and after the Effective Date
shall be deemed to continue as Revolving Credit Loans made hereunder. Any
principal balance of the Tranche A Notes and Tranche B Notes includes the
Borrower's indebtedness under the Prior Revolving Credit Loans evidenced by the
original Tranche A Notes and Tranche B Notes (the "Original Notes") and the
Amended and Restated Tranche A Notes and Amended and Restated Tranche B Notes
executed in connection with this Agreement (i) merely re-evidence the
indebtedness evidenced by the Original Notes, (ii) are not given as payment of
the Original Notes and (iii) are in no way intended to or shall, constitute a
novation of the Original Notes or any obligation of the Borrower thereunder.
Any Prior Lender which has determined not to continue to be a Lender after the
Effective Date will be repaid its Revolving Credit Loans in full and the
Borrower will pay such Prior Lender up to but not including the Effective Date
the amount of all interest, Fees and additional costs described in Section
5.06(b) owing to any such Prior Lender. Any Lender hereunder which was not a
Prior Lender or any Prior Lender that has increased its Commitment as of the
Effective Date shall purchase from Prior Lenders or other Lenders hereunder
<PAGE> 8
such Revolving Credit Loans in an amount such that, after the Effective Date,
the amount of outstanding Revolving Credit Loans from each Lender shall equal
such Lender's respective Ratable Share, as modified to give effect to the
Effective Date, of outstanding Revolving Credit Loans. To the extent that any
Prior Revolving Credit Loans bear interest at the Euro-Rate Option, the
Borrower shall pay any additional costs described in Section 5.06(b) incurred
by any Lender, and the Borrower shall pay any similar additional costs incurred
by any Lender which becomes or continues to be a Lender on and after the
Effective Date and assumes or funds a portion of any Revolving Credit Loan for
the remainder of an Interest Period which is outstanding on the Effective Date.
2.02 Revolving Credit Loan Requests. (a) Except as otherwise provided
herein, the Borrower may from time to time prior to the Maturity Date request
the Lenders to make Revolving Credit Loans, or renew or convert the Interest
Rate Option applicable to existing Revolving Credit Loans, by delivering to the
Administrative Agent, not later than 10:00 A.M. Eastern time, ten (10) Business
Days prior to the proposed Borrowing Date with respect to the making of each
Revolving Credit Loan (provided that, so long as the applicable Lessee shall
have waived the conditions precedent set forth in Schedule 11.02 to the
Participation Agreement pursuant to Section 11.02 thereto (other than in
connection with an Acquisition Advance), (i) three (3) Business Days prior to
the proposed Borrowing Date with respect to the making of Revolving Credit
Loans to which the Euro-Rate Option applies and (ii) one (1) Business Day prior
to the proposed Borrowing Date with respect to the making of Revolving Credit
Loans to which the Base Rate Option applies), of a duly completed request
therefor substantially in the form of Exhibit B or a request by telephone
immediately confirmed in writing by letter, facsimile or telex in such form
(each, a "Revolving Credit Loan Request"), it being understood that the
Administrative Agent may rely on the authority of any individual making such a
telephonic request without the necessity of receipt of such written
confirmation. Each Revolving Credit Loan Request shall be irrevocable and
shall specify (i) the proposed Borrowing Date; (ii) the aggregate amount of the
proposed Revolving Credit Loans comprising each Borrowing Tranche, which,
except as otherwise provided in Section 2.10, shall not be less than
$5,000,000, for each Euro-Rate Borrowing Tranche and shall not be less than the
lesser of $1,000,000 or the maximum amount available for borrowing for each
Base Rate Borrowing Tranche; (iii) whether the Euro-Rate Option or Base Rate
Option shall apply to the proposed Revolving Credit Loans comprising the
Borrowing Tranche; and (iv) in the case of a Euro-Rate Borrowing Tranche an
appropriate Interest Period for the proposed Revolving Credit Loans comprising
such Borrowing Tranche.
(b) A portion of the principal amount of each Revolving Credit Loan made
by each Lender equal to the Tranche A Percentage of the principal amount of
such Revolving Credit Loan shall be deemed to be a "Tranche A Loan" for the
purposes of the Operative Agreements and the remaining portion of the principal
amount of such Loan shall be deemed to be a "Tranche B Loan" for the purposes
of the Operative Agreements, provided, that payments in respect of the
Revolving Credit Loans shall be allocated to reduce the aggregate outstanding
principal amount of Tranche A Loans and Tranche B Loans of each Lender in the
manner specified in Section 5.02. Notwithstanding the foregoing, on any date
(each, a "Modification Date") on which any payment of the Tranche A Loans or
Tranche B Loans is to be made and/or on which any Maximum Residual Guarantee
Amount with respect to any Property is to be determined, prior to giving effect
to such payment or determination, (i) the aggregate principal amount of Tranche
B Loans then outstanding
<PAGE> 9
shall be deemed to be increased (or decreased, in the event that the applicable
Modification Amount shall be a negative number) by an amount (the "Modification
Amount") equal to (x) the Modified Tranche B Percentage with respect to the
affected Property minus the Tranche B Percentage multiplied by (y) the
outstanding principal amount of the Project Loan with respect to such Property
(or, if there shall be more than one affected Property, the sum of all such
amounts for all such Properties) and (ii) the aggregate principal amount of
Tranche A Loans then outstanding shall be deemed to be reduced or increased, as
the case may be, by a corresponding amount. Any such adjustment shall be
applied ratably to adjust the outstanding principal amount of the Tranche A
Loans and Tranche B Loans deemed to have been made by each Lender.
(c) Notwithstanding anything contained in subsection (b) above, the entire
principal amount of each Revolving Credit Loan made by each Lender which is
allocated to make an Agree Project Loan by the Borrower shall be deemed to be a
Tranche A Loan.
2.03 Making Revolving Credit Loans. The Administrative Agent shall,
promptly after receipt by it of a Revolving Credit Loan Request pursuant to
Section 2.02(a), notify the Lenders of its receipt of such Revolving Credit
Loan Request specifying: (i) the proposed Borrowing Date and the time and
method of disbursement of such Revolving Credit Loans; (ii) the aggregate
amount and type of such Revolving Credit Loans and the applicable Interest
Period (if any); and (iii) the apportionment among the Lenders of the Revolving
Credit Loans as determined by the Administrative Agent in accordance with each
Lender's Ratable Share. Each Lender shall remit the principal amount of each
Revolving Credit Loan to be made by it to the Administrative Agent such that
the Administrative Agent is able to, and the Administrative Agent shall, to the
extent the Lenders have made funds available to it for such purpose, fund such
Revolving Credit Loans to the Borrower in U.S. Dollars and immediately
available funds at the Principal Office prior to 2:00 P.M. Eastern time on the
Borrowing Date, provided, that if any Lender fails to remit such funds to the
Administrative Agent in a timely manner the Administrative Agent may elect in
its sole discretion to fund with its own funds the Revolving Credit Loan of
such Lender on the Borrowing Date and such Lender shall be subject to the
repayment obligation in Section 10.11.
2.04 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 A-1, in the case of Tranche A Loans (each, a "Tranche A Note"), or
Exhibit A-2, in the case of Tranche B Loans (each, a "Tranche B Note"), with
appropriate insertions as to payee, date and principal amount, payable to the
order of such Lender and in a principal amount equal to the lesser of (a) the
initial Commitment of such Lender and (b) the aggregate unpaid principal amount
of all Tranche A Loans or Tranche B Loans, as the case may be, made by such
Lender. Each Lender is hereby authorized to record the date, the Borrowing
Tranche and amount of each Revolving Credit Loan made by such Lender, each
continuation thereof, each conversion of all or a portion thereof to another
Borrowing Tranche, the date and amount of each payment or prepayment of
principal thereof and, in the case of Revolving Credit Loans with Euro- Rate
Option, the length of each Interest Period with respect thereto, on the
schedule annexed to and constituting a part of its Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded, provided, that the failure to make any such
recordation or any error in such recordation shall not affect the Borrower's
obligations hereunder or under such Note. Each Note shall (i) be dated the
Effective Date, (ii) be
<PAGE> 10
stated to mature on the Maturity Date and (iii) provide for the payment of
interest in accordance with Section 4.01.
2.05 Nature of Lenders' Obligations with Respect to Revolving Credit Loans.
Subject to the terms of this Agreement (including Article VII), each Lender
shall be obligated to participate in each request for Revolving Credit Loans in
accordance with its Ratable Share. The obligations of each Lender hereunder
are several. The failure of any Lender to perform its obligations hereunder
shall not affect the obligations of the Borrower to any other party nor shall
any other party be liable for the failure of such Lender to perform its
obligations hereunder. The Lenders shall have no obligation to make Revolving
Credit Loans hereunder on or after a date which is one month prior to the
Maturity Date.
2.06 Termination or Reduction of Commitments. The Borrower shall have the
right at any time and from time to time upon five (5) Business Days' prior
written notice to the Administrative Agent to permanently reduce, in whole
multiples of $1,000,000 of principal, or to terminate the Commitments without
penalty or premium, except as set forth in Section 5.06(b)(i), provided, that
any such reduction or termination shall be accompanied by (i) the payment in
full of any Fees then accrued on the amount of such reduction or termination
and (ii) prepayment of the Loans, together with the full amount of interest and
Fees accrued on the principal sum to be prepaid (and all amounts referred to in
Section 5.06), to the extent that the Total Facility Usage exceeds the
Commitments as so reduced or terminated, and provided, further, that after
giving effect to any reduction of Commitments, the aggregate amount of the
Project Loan Commitments shall not exceed the aggregate amount of the
Commitments so reduced. If at any time the Commitments are reduced to an
amount which is less than the Swing Facility then in effect, the Swing Facility
shall automatically, without notice of any kind, be reduced to the amount of
the Commitments then in effect.
2.07 Fees.
(a) The Borrower hereby agrees to pay to the Administrative Agent for the
account of each Lender, as consideration for such Lender's Commitment, a
nonrefundable facility fee ("Facility Fee") calculated on a daily basis by
multiplying the Facility Fee Rate by such Lender's Commitment (whether used or
unused). All Facility Fees shall be payable in arrears on the last Business
Day of each March, June, September and December after the Effective Date and on
the Maturity Date or upon acceleration of the Obligations. The Facility Fee
Rate shall be subject to adjustment quarterly to the percentage, based on the
higher of the Fixed Charge Coverage Ratio, as set forth on Schedule I hereto,
or the Fixed Charge Coverage Ratio, as set forth on Schedule I to the Corporate
Credit Agreement. Each adjustment in the Facility Fee Rate shall be effective
on the second Business Day next following delivery to the Administrative Agent
of the financial statements or certificate required to be delivered by the
Company pursuant to Article XIII of the Guarantee showing the basis for such
adjustment. In the event that such financial statements or certificate shall
not have been delivered to the Administrative Agent on the date required for
such delivery pursuant to Article XIII of the Guarantee, then on the second
Business Day following such date, the Facility Fee Rate shall be increased to
the highest Facility Fee Rate set forth on Schedule I hereto or Schedule I to
the Corporate Credit Agreement, provided, that after delivery of such financial
statements or
<PAGE> 11
certificate (effective two Business Days following delivery) the Facility Fee
Rate shall be adjusted to the Facility Fee Rate that would have been effective
had such financial statements or certificate been timely delivered.
(b) All Fees shall be calculated on the basis of a year of 360 days and the
actual number of days elapsed.
2.08 Use of Proceeds of Revolving Credit Loans. The Administrative Agent
is hereby irrevocably authorized by the Borrower to apply the proceeds of the
Revolving Credit Loans to fund any Project Loans as requested by any Lessor
under any Project Loan Agreement or by any Agree SPC under any Agree Project
Loan Agreement.
2.09 [Reserved]
2.10 Advances to Pay Interest. During the Construction Period for a
Project Loan, if any, on each date which is one Business Day prior to any
Interest Payment Date (unless otherwise requested by the Borrower at least one
Business Day prior to such Interest Payment Date by written notice to the
Administrative Agent) the Borrower shall be deemed to have requested a
borrowing pursuant to Section 2.02(a) of a Revolving Credit Loan with a
Base-Rate Option in an amount equal to the aggregate amount of interest due and
payable on such date with respect to the principal portion of the Loans
allocated to the related Project Loan; provided, that if (a) such Interest
Payment Date falls upon the same day as the last day of an Interest Period and
(b) the Borrower shall have given the Administrative Agent a renewal/conversion
notice described in Section 2.02(a) requesting continuation of the Euro-Rate
Borrowing Tranche with respect to which the Interest Period is ending on such
Interest Payment Date, on the day which is three Business Days prior to such
Interest Payment Date, the Borrower shall be deemed to have requested a
borrowing pursuant to Section 2.02(a) of a Loan with a Euro-Rate Option in an
amount equal to the aggregate amount of interest due and payable on such date
with respect to the principal portion of the Loans allocated to the related
Project Loan. One Business Day, in the case of a Loan with a Base-Rate Option
or three Business Days, in the case of a Loan with a Euro-Rate Option, prior to
such Interest Payment Date, the Borrower shall deliver to the Administrative
Agent a notice indicating the amount of such interest. The Borrowing Date with
respect to any such borrowing shall be the relevant Interest Payment Date;
provided, that the making of the Loans pursuant to such borrowing shall be
subject to satisfaction of the applicable conditions precedent set forth in
Article VII and the proceeds of such borrowing shall be applied solely to pay
the aggregate amount of interest due and payable on such date with respect to
the Loans. On the relevant Borrowing Date, the aggregate principal amount of
the Euro-Rate Borrowing Tranche with respect to which the Interest Period is
being continued or the Base Rate Borrowing Tranche, as the case may be, shall
be deemed to be increased by the amount of the new Loan made on such day.
<PAGE> 12
ARTICLE III.
AMOUNT AND TERMS OF SWING SUB-FACILITY
3.01 Swing Facility. Subject to the terms and conditions hereof (including
fulfillment of those conditions set forth in Article VII, as applicable, which
conditions may not be waived without the consent of each Lender) and relying
upon the representations and warranties herein set forth, and in order to
facilitate loans and repayments, the Swing Lender may, at its option,
cancelable at any time for any reason whatsoever, make Swing Loans to the
Borrower at any time or from time to time after the Effective Date, but not
including, the Maturity Date, in an aggregate principal amount at any one time
outstanding not to exceed $15,000,000, subject to reduction as provided herein,
to be made in accordance with the following provisions, and provided, that the
Swing Loans outstanding hereunder shall not exceed the Swing Lender's
Commitment minus its outstanding Revolving Credit Loans. Within such limits of
time and amount and subject to the other provisions of this Agreement, the
Borrower may borrow, repay and reborrow pursuant to this Section 3.01.
3.02 Swing Loan Requests and Making of Swing Loans. (a) Except as
otherwise provided herein, the Borrower may from time to time prior to the
Maturity Date request the Swing Lender to make Swing Loans by delivery to the
Swing Lender (with a copy to the Administrative Agent) not later than 11:00
A.M. Eastern time, ten (10) Business Days prior to the proposed Borrowing Date
with respect to the making of each Swing Loan (provided that, so long as the
applicable Lessee shall have waived the conditions precedent set forth in
Schedule 11.02 to the Participation Agreement pursuant to Section 11.02 thereto
(other than in connection with an Acquisition Advance), one (1) Business Day
prior to the proposed Borrowing Date), of a duly completed request therefor
substantially in the form of Exhibit C hereto or a request by telephone
immediately confirmed in writing by letter, facsimile or telex (each, a "Swing
Loan Request"), it being understood that the Swing Lender (and the
Administrative Agent) may rely on the authority of any individual making such a
telephonic request without the necessity of receipt of such written
confirmation. Each Swing Loan Request shall be irrevocable and shall specify
the proposed Borrowing Date and the aggregate amount of the proposed Swing
Loans. So long as the Swing Lender elects to make Swing Loans, the Swing
Lender shall fund such Swing Loans to the Borrower in U.S. Dollars and
immediately available funds at the Principal Office of the Swing Lender prior
to 2:00 P.M. Eastern time on the Borrowing Date.
(b) A portion of the principal amount of each Swing Loan made by the Swing
Lender equal to the Tranche A Percentage of the principal amount of such Swing
Loan shall be deemed to be a "Tranche A Loan" for the purposes of the Operative
Agreements and the remaining portion of the principal amount of such Swing Loan
shall be deemed to be a "Tranche B Loan" for the purposes of the Operative
Agreements. The provisions of Section 2.02(b) shall apply mutatis mutandis to
the Swing Loans made by the Swing Lender.
3.03 Swing Note. The Swing Loans shall be evidenced by a promissory note
of the Borrower substantially in the form of Exhibit A-3, with appropriate
insertions (the "Swing Note"), payable to the order of the Swing Lender and
representing the obligation of the Borrower to pay the aggregate unpaid
principal amount of the Swing Loans, with interest thereon as prescribed
<PAGE> 13
in Section 4.05. The Swing Lender is hereby authorized to record the borrowing
date, the amount of each Swing Loan and the date and amount of each payment or
prepayment of principal thereof, on the schedule annexed to and constituting a
part of the Swing Note and, in the absence of manifest error, any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded, provided, that the failure of the Swing Lender to make
such recordation (or any error in such recordation) shall not affect the
obligations of the Borrower hereunder or under such Note. The Swing Note shall
(i) be dated the Effective Date, (ii) be stated to mature on the Maturity Date
and (iii) provide for the payment of interest in accordance with Section 4.05.
3.04 Borrowings to Repay Swing Loans. (a) The Swing Lender, at its option
exercisable at any time, may, and so long as there shall be at least
$10,000,000 in aggregate principal amount of Swing Loans outstanding, on the
last day of any Interest Period immediately following the making of such Swing
Loans, shall, on behalf of the Borrower (which hereby irrevocably directs the
Swing Lender to act on its behalf) request each Lender, including the Swing
Lender, to make a Revolving Credit Loan in an amount equal to such Revolving
Credit Lender's Ratable Share of the amount of the Swing Loans, (the "Refunded
Swing Loans") outstanding on the date such notice is given plus, if the Swing
Lender so requests, accrued interest thereon. The Refunded Swing Loans shall
bear interest at the Base Rate Option and shall be deemed to have been properly
requested in accordance with Section 2.02 without regard to any of the
requirements of that provision. Unless any of the events described in
paragraph (h) of Article IX shall have occurred (in which event the procedures
of paragraph (b) of this Section 3.04 shall apply), the Swing Lender shall
provide notice to the Administrative Agent and the Administrative Agent shall
provide notice to the Lenders (which may be a telephonic or written notice by
letter, facsimile or telex) that such Revolving Credit Loans are to be made
under this Section 3.03 and of the apportionment among the Lenders, and the
Lenders shall be unconditionally obligated to fund such Revolving Credit Loans
(whether or not the conditions specified in Section 7.02 are then satisfied) by
the time the Administrative Agent so requests, which shall not be earlier than
12:00 noon Eastern time on the Business Day next succeeding the date the
Administrative Agent gives the demand notice to the Lenders. If for any reason
a Lender is prohibited from funding its Ratable Share of Revolving Credit Loans
to repay the principal amount of the Swing Loans outstanding, such Lender shall
purchase a participation in the Swing Loans equal to its Ratable Share of the
principal amount of Swing Loans outstanding in accordance with paragraph (b) of
this Section 3.04. The proceeds of such Revolving Credit Loans shall be
immediately applied to repay the Refunded Swing Loans.
(b) If, prior to the making of a Revolving Credit Loan pursuant to
paragraph (a) of this Section 3.04, one of the events described in paragraph
(h) of Article IX shall have occurred, each Revolving Credit Lender will, on
the date such Revolving Credit Loan was to have been made, purchase an
undivided participating interest in the Refunded Swing Loan in an amount equal
to its Ratable Share of such Refunded Swing Loan. Each Revolving Credit Lender
will immediately transfer to the Swing Lender, in immediately available funds,
the amount of its participation and upon receipt thereof the Swing Lender will
deliver to such Revolving Credit Lender a Swing Loan Participation Certificate
dated the date of receipt of such funds and in such amount.
(c) Whenever, at any time after the Swing Lender has received from any
Revolving Credit Lender such Revolving Credit Lender's participating interest
in a Refunded Swing
<PAGE> 14
Loan pursuant to clause (b) above, the Swing Lender receives any payment on
account thereof, the Swing Lender will distribute to such Revolving Credit
Lender its participating interest in such amount (appropriately adjusted, in
the case of interest payments, to reflect the period of time during which such
Revolving Credit Lender's participating interest was outstanding and funded) in
like funds as received; provided, however, that in the event that such payment
received by the Swing Lender is required to be returned, such Revolving Credit
Lender will return to the Swing Lender any portion thereof previously
distributed by the Swing Lender to it in like funds as such payment is required
to be returned by the Swing Lender.
(d) Each Lender's obligation to make its Ratable Share of Revolving Credit
Loans to repay the principal amount of the Swing Loans outstanding or to
purchase its Ratable Share of the principal amount of the Swing Loans pursuant
to paragraphs (a) and (b) of this Section 3.04 shall be absolute and
unconditional and shall not be subject to any qualification or exception
whatsoever and shall be made under all circumstances, including without
limitation any of the following circumstances: (i) any lack of validity or
enforceability of this Agreement or any of the Credit Documents; (ii) the
existence of any claim, setoff, defense or other right which the Borrower may
have at any time against any of the Agents, any Lender or any other Person,
whether in connection with this Agreement, the transactions contemplated herein
or any unrelated transactions (including any underlying transactions between
the Company or any of its Subsidiaries); or (iii) the occurrence of any
Default, Event of Default, or termination of the Commitments or this Agreement.
3.05 Use of Proceeds of Swing Loans. The proceeds of the Swing Loans
hereunder shall be used by the Borrower for any purpose for which the proceeds
of Revolving Credit Loans may be used. The Swing Lender and/or Administrative
Agent is hereby irrevocably authorized by the Borrower to apply the proceeds of
the Swing Loans to fund any Project Loans as requested by any Lessor under any
Project Loan Agreement.
ARTICLE IV.
INTEREST RATES
4.01 Interest Rate Options on Revolving Credit Loans. The Borrower shall
pay interest in respect of the outstanding unpaid principal amount of the
Revolving Credit Loans as selected by the Borrower from the Base Rate Option or
the Euro-Rate Option set forth below applicable to the Revolving Credit Loans,
it being understood that, subject to the provisions of this Agreement, the
Borrower may select different Interest Rate Options to apply simultaneously to
the Revolving Credit Loans comprising different Borrowing Tranches and may
convert to or renew one or more Interest Rate Options with respect to all or
any portion of the Revolving Credit Loans comprising any Borrowing Tranche;
provided, that there shall not be at any one time outstanding more than six (6)
Euro-Rate Borrowing Tranches, and provided, further, that from and after one
month prior to the Maturity Date, Revolving Credit Loans shall be made only at
the Base Rate Option.
(a) Interest Rate Option. The Borrower shall have the right to select
from the following Interest Rate Options applicable to the Revolving Credit
Loans:
<PAGE> 15
(i) Base Rate Option: A fluctuating rate per annum (computed on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed) equal to the Base Rate;
(ii) Euro-Rate Option: A rate per annum (computed on the basis of a
year of 360 days and actual days elapsed) equal to the Euro-Rate plus the
Euro- Rate Margin. The Euro-Rate Margin shall be subject to adjustment
quarterly to the percentage, based on the Fixed Charge Coverage Ratio, as
set forth on Schedule I. Each adjustment in the Euro-Rate Margin shall be
effective on the second Business Day next following delivery to the
Administrative Agent of the financial statements or certificate required to
be delivered by the Company pursuant to Article XIII of the Guarantee
showing the basis for such adjustment. In the event that such financial
statements or certificate shall not have been delivered to the
Administrative Agent on the date required for such delivery pursuant to
Article XIII of the Guarantee, then on the second Business Day following
such date, the Euro-Rate Margin shall be increased to the highest Euro-Rate
Margin set forth on Schedule I, provided, that after delivery of such
financial statements or certificate (effective two Business Days following
delivery) the Euro-Rate Margin shall be adjusted to the Euro-Rate Margin
that would have been effective had such financial statements or certificate
been timely delivered. Each Euro-Rate Borrowing Tranche shall bear interest
from and including the first day of the Interest Period applicable thereto,
but not including the last day of such Interest Period. No Interest Period
may end after the Maturity Date.
(b) Rate Quotations. The Borrower may call the Administrative Agent on or
before the date on which a Revolving Credit Loan Request is to be delivered to
receive an indication of the rates then in effect, but it is acknowledged that
such projection shall not be binding on the Administrative Agent or the Lenders
nor affect the rate of interest which thereafter is actually in effect when the
election is made.
4.02 [Reserved]
4.03 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available. (a) If on any date on which a Euro-Rate would otherwise be
determined, the Administrative Agent shall have determined that:
(i) adequate and reasonable means do not exist for ascertaining such
Euro-Rate, or
(ii) a contingency has occurred which materially and adversely affects
the London interbank market or any other applicable interbank market, the
Administrative Agent shall have the rights specified in Section 4.03(c).
<PAGE> 16
(b) If at any time any Lender shall have determined that:
(i) the making, maintenance or funding of any Revolving Credit Loan to
which a Euro-Rate Option applies has been made impracticable or unlawful by
compliance by such Lender in good faith with any Law or any interpretation
or application thereof by any Governmental Authority or with any request or
directive of any such Governmental Authority (whether or not having the
force of Law), or
(ii) such Euro-Rate option will not adequately and fairly reflect the
cost to such Lender of the establishment or maintenance of any such
Revolving Credit Loan, or
(iii) after making all reasonable efforts, deposits of the relevant
amount in Dollars for the relevant Interest Period for a Revolving Credit
Loan to which a Euro-Rate Option applies are not available to such Lender in
the London interbank market at the effective cost of funding of a proposed
Euro-Rate Loan, the Administrative Agent shall have the rights specified in
Section 4.03(c).
(c) In the case of any event specified in Section 4.03(a) above, the
Administrative Agent shall promptly so notify the Lenders and the Borrower
thereof and in the case of an event specified in Section 4.03(b) above, such
Lender shall promptly so notify the Administrative Agent and enclose a
certificate with such notice as to the specific circumstances of such notice
and the Administrative Agent shall promptly send copies of such notice and
certificate to the other Lenders and the Borrower. Upon such date as shall be
specified in such notice (which shall not be earlier than the date such notice
is given) the obligation of (A) the Lenders in the case of such notice given by
the Administrative Agent or (B) such Lender in the case of such notice given by
such Lender, to allow the Borrower to select, convert to or renew a Euro-Rate
Option shall be suspended until the Administrative Agent shall have later
notified the Borrower or such Lender shall have later notified the
Administrative Agent, of the Administrative Agent's or such Lender's, as the
case may be, determination that the circumstances giving rise to such previous
determination no longer exist. If at any time the Administrative Agent makes a
determination under subsection (a) or (b) of this Section 4.03 and the Borrower
has previously notified the Administrative Agent of its selection of,
conversion to or renewal of a Euro-Rate Option and such Euro-Rate Option has
not yet gone into effect, such notification shall be deemed to provide for
selection of, conversion to or renewal of the Base Rate Option. If any Lender
notifies the Administrative Agent of a determination under subsection (b) of
this Section 4.03, the Borrower shall, subject to the Borrower's
indemnification obligations under Section 5.06(b), as to any Revolving Credit
Loan of the Lender to which a Euro-Rate Option applies, on the date specified
in such notice either convert such Loan to the Base Rate Option or prepay such
Loan in accordance with Section 5.04(b). Absent due notice from the Borrower of
conversion or prepayment, such Loan shall automatically be converted to the
Base Rate Option upon such specified date.
4.04 Selection of Interest Rate Options. Revolving Credit Loans for which
the Borrower has selected the Base Rate Option shall continue as such unless
and until the Borrower chooses to convert such Revolving Credit Loans to a
Euro-Rate Borrowing Tranche. If Borrower
<PAGE> 17
fails to select a new Interest Period to apply to any Borrowing Tranche at the
expiration of an existing Interest Period applicable to such Euro-Rate
Borrowing Tranche in accordance with the provisions of Section 2.02(a), the
Borrower shall be deemed to have converted such Euro-Rate Borrowing Tranche to
the Base Rate Option commencing upon the last day of the existing Interest
Period.
4.05 Interest Rates Payable on Swing Loans. The Borrower shall pay
interest in respect of the outstanding unpaid principal amount of any Swing
Loan at a fluctuating rate per annum (computed on the basis of a year of 360
days, as the case may be, and actual days elapsed) equal to the Swing Margin.
4.06 Interest After Default. To the extent permitted by Law, upon the
occurrence of an Event of Default and until such time such Event of Default
shall have been cured or waived:
(a) the rate of interest for each Loan otherwise applicable pursuant to
Section 4.01 or 4.05 shall be increased by 2.0% per annum; and
(b) each other Obligation hereunder if not paid when due shall bear
interest at a rate per annum equal to the sum of the Base Rate plus an
additional 2.0% per annum from the time such Obligation becomes due and
payable and until it is paid in full.
(c) The Borrower acknowledges that such increased rates reflect, among
other things, the fact that such Loans or other amounts have become a
substantially greater risk given their default status and that the Lenders
are entitled to additional compensation for such risk; and, all such interest
shall be payable by the Borrower upon demand by the Administrative Agent.
4.07 Maximum Interest Rate. If at any time the designated rate applicable
to any Loan made by any Lender exceeds such Lender's highest lawful rate, the
rate of interest on such Lender's Loan shall be limited to such Lender's
highest lawful rate.
4.08 Interest Under Project Loan Agreement. At such times when the
Borrower receives payments of interest on a Project Loan pursuant to a Project
Loan Agreement, the Borrower shall promptly deposit such amount with the
Administrative Agent who will deposit such payment in the Credit Agreement
Account. Such payments shall be applied in accordance with the provisions of
Article XI.
ARTICLE V.
PAYMENTS
5.01 Payments. All payments and prepayments to be made in respect of
principal, interest, Fees or other amounts due from the Borrower hereunder
shall be payable prior to 2:00 P.M. (Eastern time) on the date when due without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrower, and without setoff, counterclaim or other
<PAGE> 18
deduction of any nature, and an action therefor shall immediately accrue. Such
payments shall be made to the Administrative Agent at the Principal Office in
U.S. Dollars and in immediately available funds, and the Administrative Agent
shall promptly distribute such amounts in immediately available funds,
provided, that in the event payments are received by 2:00 P.M. (Eastern time)
by the Administrative Agent and such payments are not distributed on the same
day received by the Administrative Agent, the Administrative Agent shall pay
the Federal Funds Effective Rate with respect to the amount of such payments
for each day held by the Administrative Agent and not distributed to the
Lenders. Unless the Interest Period in respect thereof is continued or
converted in accordance with Section 4.02, all Revolving Credit Loans to which
a Euro-Rate Option applies shall be due and payable on the last day of the
applicable Interest Period. All Loans outstanding on the Maturity Date shall
be due and payable in full on the Maturity Date.
5.02 Pro Rata Treatment of Lenders. Each borrowing of Revolving Credit
Loans shall be allocated to each Lender according to its Ratable Share, and
each selection of, conversion to or renewal of any Interest Rate Option and
each payment or prepayment by the Borrower with respect to principal, interest,
Fees, or other amounts due with respect to the Revolving Credit Loans (except
for Fees payable under the Fee Letter, any payments with respect to the Swing
Loans, and except as otherwise provided in Section 4.03(b), 5.04(b), 5.06 or
Article XI) shall be made in proportion to the applicable Revolving Credit
Loans outstanding from each Lender and if no such Loans are then outstanding,
in proportion to the Ratable Share of each Lender (it being understood that,
except as otherwise provided in Section 5.06 or Article XI, any payment so made
in respect of principal of any Lender's Revolving Credit Loans shall be deemed
to ratably reduce the outstanding amount of Tranche A Loans and Tranche B Loans
of such Lender).
5.03 Interest Payment Dates. Interest on Loans to which the Base Rate
Option or the Euro-Rate Option applies shall be due and payable in arrears on
the last Business Day of each March, June, September and December after the
Effective Date and on the Maturity Date or upon acceleration of the
Obligations. Interest on mandatory prepayments of principal under Section 2.06
shall be due on the date such mandatory prepayment is due. Interest on the
principal amount of each Loan or other Obligation shall be due and payable on
demand after such principal amount or other Obligation becomes due and payable
(whether on the stated maturity date, upon acceleration or otherwise).
Interest on amounts covered by optional prepayments shall be paid in accordance
with Section 5.04(a).
5.04 Optional Prepayments. (a) The Borrower shall have the right at its
option from time to time to prepay the Loans in whole or part without premium
or penalty (except as provided in subsection (b) below or in Section 5.05 or
5.06):
(i) at any time with respect to any Swing Loan or any Revolving Credit
Loan to which the Base Rate Option applies;
(ii) on the last day of the applicable Interest Period with respect to
Revolving Credit Loans to which a Euro-Rate Option applies; and
<PAGE> 19
(iii) on the date specified in a notice by any Lender pursuant to
Section 4.03(b) with respect to any Revolving Credit Loan to which a
Euro-Rate Option applies.
Whenever the Borrower desires to prepay any part of the Loans, the Borrower
shall provide a prepayment notice to the Administrative Agent at least one (1)
Business Day prior to the date of prepayment of the Loans setting forth the
following information:
(x) the date, which shall be a Business Day, on which the proposed
prepayment is to be made;
(y) a statement indicating the application of the prepayment among the
Revolving Credit Loans and Swing Loans; and
(z) the total principal amount of such prepayment, which shall not be
less than $2,500,000.
All prepayment notices shall be irrevocable. The principal amount of the
Loans for which a prepayment notice is given, together with interest on such
principal amount, except with respect to Loans to which the Base Rate Option
applies, shall be due and payable on the date specified in such prepayment
notice as the date on which the proposed prepayment is to be made. If the
Borrower prepays a Loan but fails to specify the applicable Borrowing Tranche
which is being prepaid, the prepayment shall be applied (i) first to Swing
Loans and then to Revolving Credit Loans; and (ii) after giving effect to the
allocations in clause (i) above and in the preceding sentence, first to Loans
to which the Base Rate Option applies and then to Loans to which the Euro-Rate
Option applies (it being understood that, except as otherwise provided in
Section 5.06 or Article XI, any payment so made in respect of principal of any
Lender's Revolving Credit Loans shall be deemed to ratably reduce the
outstanding amount of Tranche A Loans and Tranche B Loans of such Lender). Any
prepayment hereunder shall be subject to the Borrower's obligation to indemnify
the Lenders under Section 5.06(b).
(b) In the event any Lender (i) gives notice under Section 4.03(b) or
Section 5.06(a), (ii) does not fund Revolving Credit Loans because the making
of such Loans would contravene any Law applicable to such Lender, (iii) does
not approve any action as to which consent of the Required Lenders is requested
by the Borrower and obtained hereunder or (iv) becomes subject to the control
of an Governmental Authority (other than normal and customary supervision),
then, unless an Event of Default shall have occurred and be continuing, the
Borrower shall have the right at its option, with the consent of the
Administrative Agent, which shall not be unreasonably withheld, to prepay the
Loans of such Lender in whole together with all interest accrued thereon and
terminate such Lender's Commitment, within ninety (90) days after (w) receipt
of such Lender's notice under Section 4.03(b) or 5.06(a), (x) the date such
Lender has failed to fund Revolving Credit
Loans because the making of such Loans would contravene a Law applicable to
such Lender, (y) the
<PAGE> 20
date of obtaining the consent which such Lender has not approved or (z) the
date such Lender became subject to the control of an Governmental Authority, as
applicable; provided, that the Borrower shall also pay to such Lender at the
time of such prepayment any amounts required under Section 5.06 and any accrued
interest due on such amount and any related Fees; and provided, further, that
the remaining Lenders shall have no obligation hereunder to increase their
Commitments. Notwithstanding the foregoing, the Administrative Agent may only
be replaced subject to the requirements of Section 10.09.
(c) In the event any Lender does not approve any increase in the aggregate
Commitments as to which increase the Borrower has obtained the consent of all
other Lenders whose Commitments will not otherwise be prepaid and terminated
pursuant to this Section 5.04(c), then, unless an Event of Default shall have
occurred and be continuing, the Borrower shall have the right at its option,
with the consent of the Administrative Agent, which shall not be unreasonably
withheld, to prepay the Loans of such Lender in whole together with all
interest accrued thereon and terminate such Lender's Commitment (or Lenders'
Commitments) within ninety (90) days after the date the Borrower has obtained
the consent of all such other Lenders; provided, that the termination of such
Lender's Commitment (or Lenders' Commitments) pursuant to this Section 5.04(c)
shall only be permitted if the Borrower has identified one or more Assignee
Lenders acceptable to the Administrative Agent which Assignee Lenders have
agreed to the increase in the aggregate Commitments and such termination is
accomplished by means of an assignment pursuant to Section 12.08(a) which does
not reduce the aggregate amount of the Commitments after giving effect to the
addition of any such Assignee Lenders; and provided, further, that the
remaining Lenders shall have no obligation hereunder to increase their
Commitments.
(d) Each Lender agrees that upon the occurrence of any event giving rise
to increased costs or other special payments under Section 4.03 or 5.06 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 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, as determined by such
Lender, with the object of avoiding the consequence of the event giving rise to
the operation of such Section. Nothing in this Section 5.04(d) shall affect or
postpone any of the Obligations of Borrower or the rights of any Agent or any
Lender provided in this Agreement.
5.05 Mandatory Prepayments. If the Borrower shall receive any principal
repayment of a Project Loan pursuant to a Project Loan Agreement, the Borrower
shall make a deposit of such payment with the Administrative Agent to be
applied as a prepayment of the Loans. The Administrative Agent will deposit
such payment in the Credit Agreement Account to be applied as a prepayment of
the Loans in accordance with Article XI.
5.06 Additional Compensation in Certain Circumstances.
(a) Increased Costs or Reduced Return Resulting From Taxes, Reserves,
Capital Adequacy Requirements, Expenses, Etc. If any Law, guideline or
interpretation or any change in any Law, guideline or interpretation or
application thereof by any Governmental Authority charged with
<PAGE> 21
the interpretation or administration thereof or compliance with any request or
directive (whether or not having the force of Law) of any central bank or other
Governmental Authority:
(i) subjects any Lender to any tax or changes the basis of taxation
with respect to this Agreement, the other Credit Documents, Loans, or
payments by the Borrower of principal, interest, Fees, or other amounts due
from the Borrower hereunder or under the other Credit Documents (except for
taxes on the net income of such Lender or any Lending Office of any Lender),
(ii) imposes, modifies or deems applicable any reserve, special deposit
or similar requirement against credits or commitments to extend credit
extended by, or assets (funded or contingent) of, deposits with or for the
account of, or other acquisitions of funds by, any Lender or any Lending
Office of any Lender, or
(iii) imposes, modifies or deems applicable any capital adequacy or
similar requirement (A) against assets (funded or contingent) of, or letters
of credit, other credits or commitments to extend credit extended by, any
Lender, or (B) otherwise applicable to the obligations of any Lender or any
Lending Office of any Lender under this Agreement, and the result of any of
the foregoing is to increase the cost to, reduce the income receivable by,
or impose any additional expense (including loss of margin) upon any Lender
or any Lending Office of any Lender with respect to this Agreement, the
other Credit Documents or the making, maintenance or funding of any part of
the Loans (or, in the case of any capital adequacy or similar requirement,
to have the effect of reducing the rate of return on any Lender's capital,
taking into consideration such Lender's customary policies with respect to
capital adequacy) by an amount which such Lender in its sole discretion
deems to be material, such Lender shall from time to time notify the
Borrower and the Administrative Agent of the amount determined in good faith
(using any averaging and attribution methods employed in good faith) by such
Lender to be necessary to compensate such Lender for such increase in cost,
reduction of income or additional expense. Such notice shall set forth in
reasonable detail the basis for such determination. Such amount shall be
due and payable by the Borrower to such Lender ten (10) Business Days after
such notice is given.
(b) Indemnity. In addition to the compensation required by subsection (a)
of this Section 5.06, the Borrower shall indemnify each Lender against all
liabilities, losses or expenses (including loss of margin, any loss or expense
incurred in liquidating or employing deposits from third parties and any loss
or expense incurred in connection with funds acquired by a Lender to fund
or maintain Loans subject to the Euro-Rate Option) which such Lender sustains
or incurs as a consequence of any:
(i) payment, prepayment, conversion or renewal of any Revolving Credit
Loan to which the Euro-Rate Option applies on a day other than the last day
of the corresponding Interest Period (whether or not such payment or
prepayment is
<PAGE> 22
mandatory, voluntary or automatic, through acceleration or otherwise,
and whether or not such payment or prepayment is then due),
(ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any Revolving Credit
Loan Request under Section 2.02 or, Renewal/Conversion Notice under Section
2.02 or prepayment notice under Section 5.04, or
(iii) default by the Borrower in the performance or observance of any
covenant or condition contained in this Agreement or any other Credit
Document, including any failure of the Borrower to pay when due (by
acceleration or otherwise) any principal, interest, Fee or any other amount
due hereunder.
If any Lender sustains or incurs any such loss or expense it shall from time
to time notify the Borrower of the amount determined in good faith by such
Lender (which determination may include such assumptions, allocations of costs
and expenses and averaging or attribution methods as such Lender shall deem
reasonable) to be necessary to indemnify such Lender for such loss or expense.
Such notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrower to such
Lender ten (10) Business Days after such notice is given.
(c) Taxes. Any and all payments made by the Borrower hereunder or under
the Credit Documents shall be made, in accordance with the provisions hereof,
free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and
each Lending Office, taxes on the overall net income of such Lender imposed by
the jurisdiction under the Laws of which such Lender is organized or any taxing
authority thereof or therein (all of such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by Law to deduct any Taxes from
or in respect of any sum payable to any Lender or any Agent hereunder or under
any Credit Document, (i) the sum payable shall be increased as may be necessary
so that, after making all required deductions (including deductions applicable
to additional sums payable under this Section 5.06(c)), such Lender or Agent,
as the case may be, receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions,
and (iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable Law. In
addition, the Borrower agrees to pay any present or future stamp, transfer,
recording, filing or documentary taxes, fees or any other excise or property
taxes, charges, or similar levies which arise from any payment made hereunder
or from the execution, delivery, or registration of, or otherwise with respect
to, this Agreement. All such Taxes shall be paid by the Borrower prior
to the date on which penalties attach thereto or interest accrues thereon;
provided, that if any penalties or interest become due, the Borrower may make
prompt payment thereof to the appropriate governmental authority. The Borrower
shall indemnify each Lender and each Agent for the full amount of such Taxes
(including any taxes on amounts payable under this Section 5.06(c)) paid by the
Lender or the Agent and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were
<PAGE> 23
correctly or legally asserted. Any indemnification payment shall be due and
payable to such Lender or Agent ten (10) Business Days after the date the
Lender or the Agent makes written demand therefor. Within 30 days after the
date of any payment of any Taxes by the Borrower, the Borrower shall furnish to
each Lender, at its address referred to herein, the original or a certified
copy of a receipt evidencing payment thereof. If no Taxes are payable in
respect of any payment by the Borrower, the Borrower shall, if so requested by
a Lender, provide a certificate of an Authorized Officer of the Borrower to
that effect.
(d) Survival. The Obligations of the Borrower under this Section 5.06
shall survive and continue in full force and effect notwithstanding (i) the
execution and delivery of this Agreement and the other Credit Documents, (ii)
the making of the Loans, (iii) the repayment of the Loans, (iv) the payment in
full of all interest, Fees and all other Obligations and (v) the termination of
all obligations of the Agents and the Lenders to the Borrower under all Credit
Documents.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to amend and restate this Agreement and
to make and maintain the Loans, the Owner Trustee hereby represents and
warrants to the Agents and each Lender as follows (provided that the
representations in Sections 6.03, 6.07, 6.09, 6.10, 6.12 and 6.13 are made
solely by the Owner Trustee in its capacity as such):
6.01 Due Organization, etc. It is a banking corporation duly organized and
validly existing and in good standing under the laws of the State of Delaware
and has the power and authority to enter into and perform its obligations under
the Trust Agreement and (assuming due authorization, execution and delivery of
the Trust Agreement by the Investor) has the corporate and trust power and
authority to act as the Owner Trustee and to enter into and perform the
obligations under each of the other Operative Agreements to which the Owner
Trustee is or will be a party and each other agreement, instrument and document
to be executed and delivered by it on or before the date this representation is
made or deemed made in connection with or as contemplated by each such
Operative Agreement to which the Owner Trustee is or will be a party.
6.02 Authorization; No Conflict. The execution, delivery and performance
of each Operative Agreement to which it is or will be a party, either in its
individual capacity or (assuming due authorization, execution and delivery of
the Trust Agreement by the Investor) as the Owner Trustee, as the case may be,
has been duly authorized by all necessary action on its part and neither the
execution and delivery thereof, nor the consummation of the transactions
contemplated thereby, nor compliance by it with any of the terms and provisions
thereof (a) does or will require any approval or consent of any trustee or
holders of any of its indebtedness or obligations, (b) does or will contravene
any current United States or Delaware law, governmental rule or regulation
relating to its banking or trust powers, (c) does or will contravene or result
in any breach of or constitute any default under, or result in the creation of
any Lien upon any of its property under, its charter or by-laws, or any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement or other agreement or instrument to
which it is a party or by which it or its
<PAGE> 24
properties may be bound or affected (other than as contemplated by the
Operative Agreements) or (d) does or will require any Governmental Action by
any Governmental Authority of the United States or the State of Delaware
regulating its banking or trust powers.
6.03 Enforceability, etc. The Trust Agreement and, assuming the Trust
Agreement is the legal, valid and binding obligation of the Investor, each
other Operative Agreement to which the Owner Trustee is or will be party have
been, or on or before the date this representation is made or deemed made will
be, duly executed and delivered by the Owner Trustee and the Trust Agreement
and each such other Operative Agreement to which the Owner Trustee is a party
constitutes, or upon execution and delivery will constitute, a legal, valid and
binding obligation enforceable against the Owner Trustee in accordance with the
terms thereof.
6.04 Litigation. There is no action or proceeding pending or, to its
knowledge, threatened to which it is or will be a party, either in its
individual capacity or as the Owner Trustee, before any Governmental Authority
that concerns any Property being purchased on the date this representation is
made or deemed made or that, if adversely determined, would materially and
adversely affect its ability, in its individual capacity or as Owner Trustee,
to perform its obligations under the Operative Agreements to which it is a
party, would have a material adverse effect on the financial condition of the
Owner Trustee or would question the validity or enforceability of any of the
Operative Agreements to which it is or will become a party.
6.05 Assignment. It has not assigned or transferred any of its right,
title or interest in or under any Project Loan Agreement, Project Loan Note,
Mortgage, Agree LLC Pledge, Assignment of Lease or Contract Assignment, except
in accordance with the Operative Agreements and the Credit Documents.
6.06 No Default. It is not in default under or with respect to any of its
Contractual Obligations. No Default or Event of Default has occurred and is
continuing.
6.07 Use of Proceeds. The proceeds of the Loans shall be applied by the
Owner Trustee solely to make Project Loans to the Lessors or to Agree SPC's.
6.08 Chief Place of Business. The Owner Trustee's chief place of business,
chief executive office and office where the documents, accounts and records
relating to the transactions contemplated by this Agreement and each other
Credit Document are kept are located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890.
6.09 Federal Reserve Regulations. No part of the proceeds of any Loans
will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation G or
Regulation U of the Board as now and from time to time hereafter in effect. If
requested by any Lender or the Administrative Agent, the Owner Trustee will
furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-1 or FR Form
U-1 referred to in said Regulation G or Regulation U, as the case may be.
<PAGE> 25
6.10 Investment Company Act. It is not an "investment company" or a
company controlled by an "investment company" within the meaning of the
Investment Company Act.
6.11 Liens. The Trust Estate shall be free of any Liens attributable to
the Owner Trustee in its individual capacity.
6.12 Securities Act. Neither the Owner Trustee nor any Person authorized
by the Owner Trustee to act on its behalf has offered or sold any interest in
the Trust Estate or the Notes, or in any similar security relating to a
Property, or in any security the offering of which for the purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person other than, in the case of
the Notes, the Lenders, and neither the Owner Trustee nor any Person authorized
by the Owner Trustee to act on its behalf will take any action which would
require the issuance or sale of any interest in the Trust Estate or the Notes
to be registered in accordance with the provisions of Article V of the
Securities Act of 1933, as amended, or require the qualification of any
Operative Agreement under the Trust Indenture Act of 1939, as amended.
6.13 Documentation. The only document to which the Owner Trustee, in its
trust capacity, is a party are those Operative Agreements (and any other
documents delivered in connection with the Operative Agreements) to which the
Owner Trustee, in its trust capacity, is a party, together with any instruments
appointing one or more co-trustees under the Trust Agreement.
ARTICLE VII.
CONDITIONS PRECEDENT
7.1 Conditions to Effectiveness. The effectiveness of this Agreement is
subject to the satisfaction of all conditions precedent set forth in Article VI
of the Participation Agreement required by said Article to be satisfied on or
prior to the Effective Date.
7.2 Conditions to Each Loan. The agreement of each Lender to make any
Loan requested to be made by it on any date is subject to the satisfaction of
the following conditions precedent:
(a) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the Loans requested
to be made on such date, other than a Default or an Event of Default which
the Administrative Agent has agreed not to declare pursuant to Section 5.06
of the Participation Agreement.
(b) Participation Agreement Conditions. With respect to each Project
Loan and Agree Project Loan, the applicable conditions precedent to the
Advance associated therewith specified in Section 4.04, and Articles V and
XIV, as applicable of the Participation Agreement shall have been satisfied.
<PAGE> 26
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower or the Guarantors, as the case may be, as of the date
of such Loan that the conditions contained in this Section 7.02 have been
satisfied.
ARTICLE VIII.
COVENANTS
So long as the Commitments remain in effect, any Note remains outstanding
and unpaid or any other amount is owing to any Lender or Agent hereunder:
8.01 Other Activities. The Borrower shall not conduct, transact or
otherwise engage in, or commit to transact, conduct or otherwise engage in, any
business or operations other than the entry into, and exercise of rights and
performance of obligations in respect of, the Operative Agreements and other
activities incidental or related to the foregoing and shall conduct its
business in accordance with the guidelines set forth in Exhibit K.
8.02 Ownership of Properties, Indebtedness. The Borrower shall not own,
lease, manage or otherwise operate any properties or assets other than in
connection with the activities described in Section 8.01, or incur, create,
assume or suffer to exist any Indebtedness or other consensual liabilities or
financial obligations other than the Loans and other obligations incurred by
the Borrower hereunder or the other Operative Agreements.
8.03 Disposition of Assets. Except to the extent expressly contemplated by
the Operative Agreements, the Borrower shall not convey, sell, lease, assign,
transfer or otherwise dispose of, or grant Liens on, any of its property,
business or assets, whether now owned or hereafter acquired.
8.04 Compliance with Operative Agreements. The Borrower shall at all times
observe and perform all of the covenants, conditions and obligations required
to be performed by it (whether in its capacity as lender, Owner Trustee or
otherwise) under each Operative Agreement to which it is a party.
8.05 Further Assurances. At any time and from time to time, upon the
written request of the Administrative Agent, and at the sole expense of the
Borrower, the Borrower will promptly and duly execute and deliver such further
instruments and documents and take such further action as the Administrative
Agent or the Required Lenders may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and the other
Operative Agreements and of the rights and powers herein or therein granted.
8.06 Notices. If on any date the Borrower shall obtain actual knowledge of
the occurrence of a Default or Event of Default, the Borrower will give written
notice thereof to the Administrative Agent within five Business Days after such
date.
<PAGE> 27
8.07 Discharge of Liens. Neither the Borrower nor the Trust Company on
behalf of the Borrower will create or permit to exist at any time, and will, at
its own expense, promptly take such action as may be necessary duly to
discharge, or cause to be discharged, all Liens attributable to it, provided,
that the Borrower and the Trust Company shall not be required to discharge any
Lien while the same is being contested in good faith by appropriate proceedings
diligently prosecuted so long as such proceedings shall not involve any
material danger of impairment of any of the Liens contemplated by the Security
Documents or of the sale, forfeiture or loss of, and shall not materially
interfere with the disposition of, any Property or title thereto or any
interest therein or the payment of Rent.
8.08 Trust Agreement. Without prejudice to any right under the Trust
Agreement of the Owner Trustee to resign, the Owner Trustee (a) agrees not to
terminate or revoke the trust created by the Trust Agreement except as
permitted by Article VII of the Trust Agreement, (b) agrees not to amend,
supplement, terminate, revoke or otherwise modify any provision of the Trust
Agreement in any manner which could reasonably be expected to have an adverse
effect on the rights or interests of the Agents or the Lenders hereunder or
under the other Operative Agreements and (c) agrees to comply with all of the
terms of the Trust Agreement except to the extent the failure to so comply
could not reasonably be expected to have an adverse effect on the rights or
interests of the Agents or the Lenders hereunder or under the other Operative
Agreements.
ARTICLE IX.
EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events (each an "Event
of Default"):
(a) The Borrower shall (i) default in the payment when due of any
principal of the Loans or (ii) default, and such default shall continue for
five or more days, in the payment when due of any interest on the Loans or
any other amounts owing hereunder, under any other Credit Document to which
it is a party; or
(b) The Borrower shall default in the due performance or observance by
it of any term, covenant or agreement contained in any Credit Document to
which it is a party (other than those referred to in paragraph (a) above),
provided, that in the case of any such default under Article VIII, such
default shall have continued unremedied for a period of at least 30 days; or
the Borrower shall default in the due performance or observance by it of any
term, covenant or agreement contained in any Project Loan Document to which
it is a party (other than those referred to in paragraph (a) above), and
such default shall have continued unremedied for a period of at least 30
days; or
(c) Subject to the provisions of Section 5.06 of the Participation
Agreement, any "Event of Default" as defined in each Project Loan Agreement
shall have occurred and be continuing; or
<PAGE> 28
(d) Any of the Guarantors shall default in the observance or
performance by it of (i) any covenant contained in Article XII or Section
13.04 of the Guarantee or (ii) any other covenant, condition or provision
hereof or of any other Credit Document to which it is a party and such
default shall continue unremedied for a period of 15 Business Days after any
Authorized Officer of any Guarantor becomes aware of the occurrence thereof
(such grace period to be applicable only in the event such default can be
remedied by corrective action of the Guarantors as determined by the
Administrative Agent in its sole discretion); or
(e) Any representation, warranty or statement made or deemed made by
the Borrower herein or in any other Credit Document or by the Borrower or
the Lessee in the Participation Agreement, or in any statement or
certificate delivered or required to be delivered pursuant hereto or
thereto, shall prove to be untrue in any material respect on the date as of
which made or deemed made, and in the case of the Borrower, such
misrepresentation or breach of warranty shall remain unremedied for a period
of at least 35 days after notice to the Borrower by the Administrative Agent
or the Required Lenders; or
(f) Any representation, warranty or statement made or deemed made by
any Guarantor in the Guarantee, or in any statement or certificate delivered
or required to be delivered pursuant thereto, shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
(g) (i) Any Lease Event of Default shall have occurred and be
continuing, (ii) the Owner Trustee shall default in the due performance or
observance by it of any term, covenant or agreement contained in the
Participation Agreement or in the Trust Agreement, provided, that in the
case of any such default under Section 10.01, 10.02(b)(iii) or 10.02(g) of
the Participation Agreement or Article II, III, IV, V or VI of the Trust
Agreement, such default shall have continued unremedied for a period of at
least 30 days; or (iii) the Investor shall default in the due performance or
observance by it of any term, covenant or agreement contained in Section
10.02 or 12.01 of the Participation Agreement; or
(h) A default or event of default shall occur at any time under the
terms of any other agreement involving borrowed money or the extension of
credit or any other Indebtedness under which any Guarantor or Subsidiary of
any Guarantor may be obligated as a borrower or guarantor in excess of
$5,000,000 (or to Kmart in respect of the Kmart Indemnity in excess of
$1,000,000) in the aggregate, and such breach, default or event of default
consists of the failure to pay (beyond any period of grace permitted with
respect thereto, whether waived or not) any Indebtedness when due (whether
at stated maturity, by acceleration or otherwise) or if such breach or
default permits or causes the acceleration of any Indebtedness (whether or
not such right shall have been waived) or the termination of any commitment
to lend;
(i) Any of the following occurs: (i) an Event of Default shall have
occurred under the Kmart Indemnity such that Kmart shall have the right
thereunder to exercise the rights granted to it pursuant to Sections
3(c)(ii) or 3(c)(iii) thereof in respect of more than two Premises (as such
term is defined therein), (ii) a Triggering Event shall have occurred under
<PAGE> 29
any of the Note Put Agreements (other than a Triggering Event which is
"a Rating Decline" or a "Restructuring Event" (as such terms are defined in
the Note Put Agreements)) and such Triggering Event shall continue
unremedied for a period of sixty (60) days or (iii) any of the Guarantors
shall receive a "Put Notice" (as defined in the Note Put Agreements) which
states the occurrence of a Triggering Event that is a "Lease/Lease Guaranty
Default" or a "Lease Guaranty Termination" (as such terms are defined in the
Note Put Agreements), or (iv) any of the Guarantors shall receive a Put
Notice which states the occurrence solely of a Rating Decline or a
Restructuring Event, and, within five (5) Business Days of receipt of such
Put Notice, the Guarantors shall have failed to deliver to the Lenders
documentation satisfactory to the Required Lenders showing that the Notes as
to which the Put Notice was received will be refinanced on the Tenant
Purchase Date with Permitted Sutro Refinancing Indebtedness on the terms
permitted under Section 12.01(l) of the Guarantee;
(j) Any final judgments or orders for the payment of money in excess
of $5,000,000 in the aggregate shall be entered against all or any of the
Guarantors by a court having jurisdiction in the premises (other than a
judgment or order as to which such Guarantor's insurance company has
accepted full liability in writing) which judgment is not discharged,
satisfied, vacated, bonded or stayed pending appeal within a period of
thirty (30) days from the date of entry;
(k) any final judgments or orders for the payment of money in excess
of $100,000 in the aggregate shall be entered against the Borrower or the
Investor by a court having jurisdiction in the premises (other than a
judgment or order as to which the Borrower's or the Investor's insurance
company has accepted full liability in writing) which judgment is not
discharged, satisfied, vacated, bonded or stayed pending appeal within a
period of thirty (30) days from the date of entry;
(l) Any of the Credit Documents shall cease to be a legal, valid and
binding agreement enforceable against the party executing the same or such
party's successors and assigns (as permitted under the Credit Documents) in
accordance with the respective terms thereof or shall in any way be
terminated (except in accordance with its terms) or become or be declared
ineffective or inoperative in any material respect or shall in any way be
challenged or contested or cease to give or provide the respective rights,
titles, interests, remedies, powers or privileges intended to be created
thereby (except if caused by the event described in Section 10.10);
(m) Any Guarantor ceases to be Solvent or admits in writing its
inability to pay its debts as they mature;
(n) Any of the following occurs: (i) any Reportable Event, which the
Administrative Agent determines in good faith constitutes grounds for the
termination of any Plan by the PBGC or the appointment of a trustee to
administer or liquidate any Plan, shall have occurred and be continuing;
(ii) proceedings shall have been instituted or other action taken to
terminate any Plan, or a termination notice shall have been filed with
respect to any Plan; (iii) a trustee shall be appointed to administer or
liquidate any Plan; (iv) the PBGC shall
<PAGE> 30
give notice of its intent to institute proceedings to terminate any Plan
or Plans or to appoint a trustee to administer or liquidate any Plan; (v)
any Guarantor or its Subsidiary adopts, sponsors, maintains or makes
contributions to any Plan, any Multiemployer Plan, any Multiple Employer
Plan or any Benefit Arrangement that provides benefits to retirees (other
than the Benefit Arrangement of Walden described on Schedule 6.1(t)); and,
in the case of each occurrence of (i), (ii), (iii), (iv) above or any
occurrence under such Benefit Arrangement of Walden, the Administrative
Agent determines in good faith that the amount of the liability of the
Company and its Subsidiaries in respect thereof could reasonably be expected
to individually or in the aggregate have a Material Adverse Effect;
(o) Any Guarantor ceases to conduct its business as contemplated or
such Guarantor is enjoined, restrained or in any way prevented by court
order from conducting all or any material part of its business and such
injunction, restraint or other preventive order is not dismissed within
thirty (30) days after the entry thereof;
(p) Any Change in Control shall occur;
(q) Any circumstances or events shall occur which individually or in
the aggregate could reasonably be expected to have a Material Adverse
Effect;
(r) A proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect
of any Guarantor, the Borrower or the Investor in an involuntary case under
any applicable bankruptcy, insolvency, reorganization or other similar law
now or hereafter in effect or for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or similar
official) of any Guarantor, the Borrower or the Investor, as the case may
be, for any substantial part of its property, or for the winding-up or
liquidation of its affairs, and such proceeding shall remain undismissed or
unstayed and in effect for a period of thirty (30) consecutive days or such
court shall enter a decree or order granting any of the relief sought in
such proceeding; or
(s) Any Guarantor, the Borrower or the Investor shall commence a
voluntary case under any applicable bankruptcy, insolvency, reorganization
or other similar law now or hereafter in effect, shall consent to the entry
of an order for relief in an involuntary case under any such law, or shall
consent to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or other similar
official) of itself or for any substantial part of its property or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any action in
furtherance of any of the foregoing.
then, and in any such event, (A) if such event is an Event of Default specified
in paragraphs (m), (r) or (s) above, automatically the Commitments shall
immediately terminate and the Loans hereunder (with accrued interest thereon)
and all other amounts owing under this Agreement and the Notes shall
immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative
<PAGE> 31
Agent shall, by notice to the Borrower, declare the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement and
the Notes to be due and payable forthwith, whereupon the same shall immediately
become due and payable (any of the foregoing occurrences or actions referred to
in clause (A) or (B) above, an "Acceleration"). Except as expressly provided
above in this Article IX, presentment, demand, protest and all other notices of
any kind are hereby expressly waived.
ARTICLE X.
THE AGENTS
10.01 Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent, the Syndication Agent and the Real Estate
Administrative Agent, as the agents of such Lender under this Agreement and the
other Operative Agreements, and each such Lender irrevocably authorizes each
Agent, in such capacity, to take such action on its behalf under the provisions
of this Agreement and the other Operative Agreements and to exercise such
powers and perform such duties as are expressly delegated to each Agent by the
terms of this Agreement and the other Operative Agreements, together with such
other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, none of the Agents shall
have any duties or responsibilities, except those expressly set forth herein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Operative Agreement or otherwise exist against
any Agent. Without limiting the generality of the foregoing, the use of the
term "agent" in this Agreement with the reference to the Agents is not intended
to connote any fiduciary or other implied (or express) obligations arising
under agency doctrine of any applicable law. Instead, such term is used merely
as a matter of market custom and is intended to create or reflect only an
administrative relationship between independent contracting parties.
10.02 Delegation of Duties. Each Agent may execute any of its duties under
this Agreement and the other Operative Agreements by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. None of the Agents shall be responsible for
the negligence or misconduct of any agents or attorneys in-fact selected by it
with reasonable care.
10.03 Exculpatory Provisions. None of the Agents nor any of their officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (a)
liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Operative
Agreement (except for its or such Person's own gross negligence or willful
misconduct) or (b) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
Guarantor or any officer thereof contained in this Agreement or any other
Operative Agreement or in any certificate, report, statement or other document
referred to or provided for in, or received by any Agent under or in connection
<PAGE> 32
with, this Agreement or any other Operative Agreement or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Operative Agreement or for any failure of the Borrower
or any Guarantor to perform its obligations hereunder or thereunder. None of
the Agents shall be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Operative Agreement, or to
inspect the properties, books or records of the Borrower or any Guarantor.
10.04 Reliance by Agents. Each Agent shall be entitled to rely, and shall
be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, 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 the proper Person or
Persons and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agents. Each Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. Any Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other
Operative Agreement unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate or it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. Each Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Operative Agreements
in accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.
10.05 Notice of Default. None of the Agents shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event
that the Administrative Agent receives such a notice, the Administrative Agent
shall promptly give notice thereof to the Lenders, the Syndication Agent and
the Real Estate Administrative Agent. Each Agent shall take such action with
respect to such Default or Event of Default as shall be directed by the
Required Lenders; provided, that unless and until such Agent shall have
received such directions, the 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 advisable in the best interests of the
Lenders.
10.06 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that none of the Agents nor any of their officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by any Agent hereinafter taken, including
any review of the affairs of the Borrower or any Guarantor, shall be deemed to
constitute any representation or warranty by such Agent to any Lender. Each
Lender represents to the Agents that it has, independently and without reliance
upon any Agent or any Lender, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition
<PAGE> 33
and creditworthiness of the Borrower and the Guarantors and made its own
decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon
any Agent 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,
appraisals and decisions in taking or not taking action under this Agreement
and the other Operative Agreements, 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 Guarantors.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Agents hereunder, none of the Agents shall have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower or any Guarantor
which may come into the possession of any Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
10.07 Indemnification. Each Lender agrees to indemnify each Agent in its
capacity as such (to the extent not reimbursed by the Borrower or the
Guarantors and without limiting the obligation of the Borrower and the
Guarantors to do so), ratably according to its Ratable Share in effect on the
date on which indemnification is sought under this Section 10.07 (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with its Ratable Share immediately prior to such date), from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, or reasonable out-of- pocket costs, expenses or
disbursements, of any kind whatsoever which may at any time (including, at any
time following the payment of the Notes) be imposed on, incurred by or asserted
against any Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Operative Agreements or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any Agent
under or in connection with any of the foregoing; provided, that no Lender
shall be liable to an Agent for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (a) if the same results from that Agent's gross
negligence or willful misconduct, or (b) if such Lender was not given notice of
the subject claim and the opportunity to participate in the defense thereof, at
its expense (except that such Lender shall remain liable to the extent such
failure to give notice does not result in a loss to the Lender), or (c) if the
same results from a compromise and settlement agreement entered into without
the consent of such Lender, which shall not be unreasonably withheld. The
agreements in this Section 10.07 shall survive the payment of the Notes and all
other amounts payable hereunder.
10.08 Agents in Their Individual Capacity. The Agents and their Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower or any Guarantor as though the Agents were not
Agents hereunder and under the other Operative Agreements. With respect to its
Loans made or renewed by it and any Note issued to it, the Agents shall have
the same rights and powers under this Agreement and the other Operative
Agreements as any Lender and may exercise the same as though it were not an
Agent, and the terms "Lender" and "Lenders" shall include the Agents in their
individual capacity.
<PAGE> 34
10.9 Successor Agents. Any of the Agents (a) may resign as an Agent, or
(b) shall resign if such resignation is requested by the Required Lenders (it
being understood that the Agent's Loans and Commitment shall be considered in
determining whether the Required Lenders have requested such resignation) or
required by Section 5.04(b), in either case of (a) or (b) by giving not less
than thirty (30) days' prior written notice to the Company. If any Agent shall
resign as an Agent under this Agreement and the other Operative Agreements,
then either (a) the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, subject to the consent of the Company (unless
and until an Event of Default has occurred and is continuing, after which no
consent of the Company shall be required), such consent not to be unreasonably
withheld, or (b) if a successor agent shall not be so appointed and approved
within the thirty (30) day period following the Agent's notice to the Lenders
of its resignation, then the resigning Agent shall appoint, with the consent of
the Company (unless and until an Event of Default has occurred and is
continuing, after which no consent of the Company shall be required), such
consent not to be unreasonably withheld, a successor agent who shall serve as
Administrative Agent, Syndication Agent or Real Estate Administrative Agent, as
the case may be, until such time as the Required Lenders appoint and the
Company consents to the appointment of a successor agent. Upon its appointment
pursuant to either clause (a) or (b) above, such successor agent shall succeed
to the rights, powers and duties of the Administrative Agent, Syndication Agent
or Real Estate Administrative Agent, as the case may be, and the term
"Administrative Agent," "Syndication Agent" or "Real Estate Administrative
Agent" shall mean such successor agent, effective upon its appointment, and the
former Agent's rights, powers and duties as an Agent shall be terminated
without any other or further act or deed on the part of such former Agent or
any of the parties to this Agreement or the other Operative Agreements. After
the resignation of any Agent hereunder, the provisions of this Article X shall
inure to the benefit of such former Agent and such former Agent shall not by
reason of such resignation be deemed to be released from liability for any
actions taken or not taken by it while it was an Agent under this Agreement.
10.10 [Reserved]
10.11 Availability of Funds. Unless the Administrative Agent shall have
been notified by a Lender prior to the date upon which a Loan is to be made
that such Lender does not intend to make available to the Administrative Agent
such Lender's portion of such Loan, the Administrative Agent may assume that
such Lender has made or will make such proceeds available to the Administrative
Agent on such date and the Administrative Agent may, in reliance upon such
assumption (but shall not be required to), make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent by such Lender, the Administrative Agent
shall be entitled to recover such amount on demand from such Lender (or, if
such Lender fails to pay such amount forthwith upon such demand from the
Borrower) together with interest thereon, in respect of each day during the
period commencing on the date such amount was made available to the Borrower
and ending on the date the Administrative Agent recovers such amount, at a rate
per annum equal to the applicable Federal Funds Effective Rate if recovered
from such Lender or equal to the applicable interest rate in respect of the
Loan if recovered from the Borrower.
<PAGE> 35
10.12 Calculations. In the absence of gross negligence or willful
misconduct, the Administrative Agent shall not be liable for any error in
computing the amount payable to any Lender whether in respect of the Loans,
Fees or any other amounts due to the Lenders under this Agreement. In the
event an error in computing any amount payable to any Lender is made, the
Administrative Agent, the Borrower, each Guarantor and each affected Lender
shall, forthwith upon discovery of such error, make such adjustments as shall
be required to correct such error, and any compensation therefor will be
calculated at the Federal Funds Effective Rate.
10.13 Beneficiaries. Except as expressly provided herein, the provisions
of this Article X are solely for the benefit of the Agents and the Lenders, and
the Borrower and the Guarantors shall not have any rights to rely on or enforce
any of the provisions hereof. In performing their functions and duties under
this Agreement, the Agents shall act solely as agent of the Lenders and do not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any of the Borrower.
ARTICLE XI.
MATTERS RELATING TO PAYMENTS AND COLLATERAL
11.1 The Credit Agreement Account. (a) The Administrative Agent shall
establish an account (the "Credit Agreement Account") into which the
Administrative Agent and the Real Estate Administrative Agent shall deposit all
payments, receipts and other consideration of any kind whatsoever received by
the Administrative Agent or the Real Estate Administrative Agent pursuant to
the Assignment of Lease or this Agreement or any other Operative Agreement.
(b) Payments deposited from time to time in the Credit Agreement Account
shall be paid out as follows:
(i) Any amount received by the Borrower under Section 9.01(b)(i) of a
Project Loan Agreement or an Agree Project Loan Agreement and paid to the
Administrative Agent under Section 4.08 shall be paid out of the Credit
Agreement Account by the Administrative Agent on the relevant Interest
Payment Date and shall be applied ratably to the payment of interest on the
Loans which is due and payable on such date (other than Overdue Interest)
until such interest has been paid in full.
(ii) Except as otherwise provided in Section 11.01(c), any amount
received by the Borrower under Section 9.01(b)(ii) of a Project Loan
Agreement and paid to the Administrative Agent under Section 5.05 shall be
paid out of the Credit Agreement Account by the Administrative Agent
promptly after receipt and shall be applied ratably to the Tranche A Loans
and the Tranche B Loans on the date received by the Administrative Agent.
(iii) Except as otherwise provided in Section 11.01(c), any amount
received by Borrower under Section 9.01(b)(iii) of a Project Loan Agreement
and paid to the Administrative Agent under Section 5.05 shall be paid out of
the Credit
<PAGE> 36
Agreement Account by the Administrative Agent promptly after receipt and shall
be applied ratably to the Tranche A Loans and the Tranche B Loans on the date
received by the Administrative Agent.
(iv) Except as otherwise provided in Section 11.01(c), any Net Sales
Proceeds received by Borrower under Section 9.01(b)(iv) of a Project Loan
Agreement and paid to the Administrative Agent under Section 5.05 shall be
paid out of the Credit Agreement Account by the Administrative Agent
promptly after receipt, and shall be applied, on the date received by the
Administrative Agent, first, ratably to the payment of the principal of
Tranche B Loans then outstanding in an amount not to exceed the product of
(x) the outstanding principal amount of the Project Loan in respect of such
Property and (y) the Modified Tranche B Percentage in respect of such
Property, and second, to the extent such payment exceeds the maximum amount
payable pursuant to the foregoing provisions of this paragraph (iv), ratably
to the payment of the principal of Tranche A Loans then outstanding in an
amount not to exceed the product of (x) the outstanding principal amount of
the Project Loan in respect of such Property and (y) the Modified Tranche A
Percentage in respect of such Property.
(v) Except as otherwise provided in Section 11.01(c), any Excess Sales
Proceeds received by the Borrower under Section 9.01(b)(iv) in a Project
Loan Agreement and contained in the Credit Agreement Account on the Maturity
Date shall be applied, on the date received by the Administrative Agent, as
follows (which application shall be made immediately prior to any
application made on such date of amounts contained in the Credit Agreement
Account pursuant to Section 11.02): first, ratably to the payment of the
principal of Tranche B Loans then outstanding in an amount not to exceed the
product of (x) the outstanding principal amount of the Project Loan in
respect of such Property and (y) the Modified Tranche B Percentage in
respect of such Property, and second, to the extent such payment exceeds the
maximum amount payable pursuant to the foregoing provisions of this
paragraph (v), ratably to the payment of the principal of Tranche A Loans
then outstanding in an amount not to exceed the product of (x) the
outstanding principal amount of the Project Loan in respect of such Property
and (y) the Modified Tranche A Percentage in respect of such Property.
(vi) Any amount received by the Borrower under Section 9.01(b)(v) of a
Project Loan Agreement or an Agree Project Loan Agreement and paid to the
Administrative Agent under Section 5.05 shall be paid out of the Credit
Agreement Account by the Administrative Agent promptly after receipt and
shall be applied ratably, on the date received by the Administrative Agent,
to the payment of the principal of Tranche A Loans then outstanding.
(vii) Except as otherwise provided in Section 11.01(c), any amount
received by the Borrower under Section 9.01(b)(vi) of a Project Loan
Agreement and paid to the Administrative Agent under Section 5.05 shall be
paid out of the Credit
<PAGE> 37
Agreement Account by the Administrative Agent promptly after receipt and
shall be applied ratably, on the date received by the Administrative Agent,
to the payment of the principal of Tranche B Loans then outstanding.
(viii) Any amount received by the Borrower under Section 9.01(b)(vii)
of a Project Loan Agreement or an Agree Project Loan Agreement and paid to
the Administrative Agent under Section 5.05 shall be paid out of the Credit
Agreement Account by the Administrative Agent promptly after receipt, and
shall be applied, on the date received by the Administrative Agent, to the
payment of any amounts then owing to the Agents, the Lenders and the other
parties to the Operative Agreements (or any of them) (other than any such
amounts payable pursuant to the preceding provisions of this Section
11.01(a)) as shall be designated by the Administrative Agent in accordance
with the provisions of this Agreement.
(c) Any amount received by the Borrower under Sections 9.01(b)(ii), (iii),
(iv), (v) and (vi) of an Agree Project Loan Agreement and paid to the
Administrative Agent under Section 5.05 shall be paid out of the Credit
Agreement Account by the Administrative Agent promptly after receipt thereof
and shall be applied to the Tranche A Loans on the date received by the
Administrative Agent.
(d) Upon the termination of the Commitments and the Swing Commitment and
the payment in full of the Loans and all other amounts owing by the Borrower or
any Guarantor hereunder or under any other Operative Agreement, any moneys
remaining in the Credit Agreement Account shall be paid to the Borrower or such
other Person or Persons as the Borrower may designate.
11.20 Proceeds of Collateral; Proceeds Remaining in Credit Agreement
Account. (a) All moneys collected by the Administrative Agent or the Real
Estate Administrative Agent upon any sale or other disposition of the
Collateral pursuant to any Security Document, together with all other moneys
received by the Administrative Agent or the Real Estate Administrative Agent
thereunder (except as otherwise specified in Section 11.01) and (b) all
moneys contained in the Credit Agreement Account on the date of an
Acceleration or on the Maturity Date (if the Loans have not then been repaid
in full), or deposited in the Credit Agreement Account thereafter shall be
applied as follows:
First, to the payment of (x) any and all sums advanced by the Administrative
Agent or the Real Estate Administrative Agent in order to preserve the
Collateral or preserve its security interest therein and (y) the expenses of
retaking, holding, preparing for sale or lease, selling or otherwise
disposing or realizing on the Collateral, or of any exercise by the
Administrative Agent or the Real Estate Administrative Agent of its rights
under the Security Documents, together with attorneys' fees and court costs;
Second, to the amounts then due and unpaid for interest accrued on the
Loans, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Loans for accrued interest;
<PAGE> 38
Third, to the payment of the amounts then due and unpaid for principal of
the Tranche B Loans, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Tranche B Loans in respect of
principal;
Fourth, to the payment of the amounts then due and unpaid for principal of
the Tranche A Loans, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Tranche A Loans in respect of
principal;
Fifth, to the payment of any other amounts then due and unpaid in respect of
any other obligations of the Borrower to any Agent or any Lender hereunder or
under any other Operative Agreement, ratably, without preference or priority
of any kind, according to the amounts so due and payable; and
Sixth, to the extent moneys remain after application pursuant to clauses
First through Fifth above, to the Borrower or to whomever may be lawfully
entitled to receive such surplus.
ARTICLE XII.
MISCELLANEOUS
12.01 Amendments and Waivers. Neither this Agreement, any other Credit
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 12.01 and
Section 15.05 of the Participation Agreement. The Required Lenders may, or,
with the written consent of the Required Lenders, the Administrative
Agent may, from time to time, (a) subject to receipt of the written consent of
the Lessees, enter into with the Borrower or the Guarantors, as applicable,
written amendments, supplements or modifications to the Credit Documents for the
purpose of adding any provisions to the Credit Documents or changing in any
manner the rights of the Agents, the Lenders, the Borrower or the Guarantors
thereunder or (b) waive, on such terms and conditions as the Required Lenders or
the Administrative Agent, as the case may be, may specify in such instrument,
any of the requirements of the Credit Documents or any Default or Event of
Default and its consequences. In addition, the Administrative Agent may from
time to time consent in writing to amendments, supplements, modifications or
waivers with respect to any Operative Agreement (other than the Credit
Documents), subject to receipt of the prior written consent of the Required
Lenders. Notwithstanding the foregoing, no such amendment, supplement,
modification or waiver shall (i) reduce the amount or extend the scheduled date
of maturity of any Note, or reduce the stated rate of any interest payable
hereunder (other than as a result of waiving the applicability of any
post-default increase in interest rates) or any Fees payable under the
Participation Agreement, or extend the scheduled date of any payment of such
interest or Fees, or increase the amount or extend the expiration date of any
Lender's Commitment, in each case without the consent of each Lender directly
affected thereby, or (ii) amend, modify or waive any provision of Sections 5.02,
12.01 or 12.08, or alter any provision regarding the pro rata treatment of the
Lenders, or reduce the percentage specified in the definition of Required
Lenders, or consent to the assignment or transfer by the Borrower or any
Guarantor of any of its right and obligations under the Credit Documents, or
release
<PAGE> 39
a material portion of the Collateral, or change any requirement providing for
the Lenders or the Required Lenders to authorize the taking of any action
hereunder, or increase the aggregate amount of the Commitments of the Lenders
to an amount greater than $250,000,000, or release any Guarantor the assets of
which represent 5% or 12.2 more of the consolidated total assets of
the Company and its Subsidiaries, in each case without the written consent of
all the Lenders, or (iii) amend, modify or waive any provision of Article X
without the written consent of each affected Agent. Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Borrower, the Guarantors, the Lenders, the
Agents and all future holders of the Notes. In the case of any waiver, the
Borrower, the Guarantors, the Lenders and the Agents shall be restored to their
former position and rights under the Credit Documents, and any Default or Event
of Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon. Notwithstanding anything to the contrary
in this Section 12.01, no Agreement, waiver or consent which would modify the
interests, rights or obligations of the Syndication Agent in its capacity as
Syndication Agent shall be effective without the written consent of the
Syndication Agent, no agreement, waiver or consent which would modify the
interests, rights or obligations of the Real Estate Administrative Agent in its
capacity as Real Estate Administrative Agent shall be effective without the
written consent of the Real Estate Administrative Agent and no agreement, waiver
or consent which would modify the interests, rights or obligations of the Swing
Lender in its capacity as Swing Lender shall be effective without the written
consent of the Swing Lender.
12.02 Notices; Lending Offices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or three Business
Days after being deposited in the mail, postage prepaid, or, in the case of
telecopy notice, when received, addressed as follows in the case of the
Borrower and the Agents, and as set forth in Schedule II, in the case of the
other parties hereto, or to such other address as may be hereafter notified by
the respective parties hereto and any future holders of the Notes:
The Borrower: Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Department
Telecopy: (302) 651-8882
with a copy to: Borders, Inc.
311 Maynard Street
Ann Arbor, Michigan 48104
Attention: Edward W. Wilhelm
Telecopy: (313) 913-2324
The Administrative
Agent: PNC Bank, National Association
<PAGE> 40
One PNC Plaza, 4th Floor Annex
5th Avenue & Wood Street
Pittsburgh, Pennsylvania 15265
Attention:Multi-Bank Loan Administration - Arlene Ohler
Telecopy: (412) 762-8672
The Syndication
Agent: The First National Bank of Chicago
14th Floor, Suite 0086
One First National Plaza
Chicago, Illinois 60670
Attention: Paul E. Rigby
Telecopy: (312) 732-8587
The Real Estate
Administrative
Agent: Bankers Trust Company
280 Park Avenue
New York, New York 10017
Attention: Jeffrey Baevsky
Telecopy: (212) 454-1733
provided, that any notice, request or demand to or upon the Agents or the
Lenders pursuant to Section 2.02, 2.03, 3.02 or 4.02 shall not be effective
until received. The addresses set forth in Schedule II shall be the Lending
Offices. Each Lender may change its Lending Office by written notice to the
other parties hereto.
12.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of any Agent or any Lender, any right, remedy, power
or privilege hereunder or under the other Credit Documents shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
12.04 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Credit Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Notes and
the making of the Loans hereunder.
12.05 Payment of Expenses and Taxes. The Borrower agrees to: (a) pay all
reasonable out-of-pocket costs and expenses of (i) the Agents, whether or not
the transactions herein contemplated are consummated, in connection with the
negotiation, preparation, execution
<PAGE> 41
and delivery of the Operative Agreements and the documents and instruments
referred to therein and any amendment, waiver or consent relating thereto
(including, the reasonable fees and disbursements of Schiff Hardin & Waite, as
counsel to the Administrative Agent and Simpson Thacher & Bartlett as counsel
to the Real Estate Administrative Agent, and (ii) the Agent and each of the
Lenders (A) in connection with the enforcement of the Operative Agreements and
the documents and instruments referred to therein (including, the reasonable
fees and disbursements of counsel for each of the Agents and for each of the
Lenders), (B) relating to any requested amendments, waivers or consents
pursuant to the provisions of the Operative Agreements, (C) in connection with
the enforcement of the Operative Agreements or collection of amounts due
thereunder or the proof and allowability of any claim arising under the
Operative Agreements, whether in bankruptcy or receivership proceedings or
otherwise, and (D) in any workout, restructuring or in connection with the
protection, preservation, exercise or enforcement of any of the terms of the
Operative Agreements or of any rights under the Operative Agreements or in
connection with any foreclosure, collection or bankruptcy proceedings; and (b)
pay and hold each of the Lenders harmless from and against any and all present
and future stamp and other similar taxes with respect to the foregoing matters
and save each of the Lenders harmless from and against any and all liabilities
with respect to or resulting from any delay or omission (other than to the
extent attributable to such Lender) to pay such taxes.
12.06 Holidays. Whenever any payment or action to be made or taken
hereunder shall be stated to be due on a day which is not a Business Day, such
payment or action shall be made or taken on the next following Business Day
(except as provided in the definition of "Interest Period"), and such extension
of time shall be included in computing interest or fees, if any, in connection
with such payment or action.
12.07 Funding by Branch, Subsidiary or Affiliate.
(a) Notional Funding. Each Lender shall have the right from time to time,
without notice to the Borrower, to deem any branch, Subsidiary or Affiliate
(which for the purposes of this Section 12.07 shall mean any corporation or
association which is directly or indirectly controlled by or is under direct or
indirect common control with any corporation or association which directly or
indirectly controls such Lender) of such Lender to have made, maintained or
funded any Loan to which the Euro-Rate Option applies at any time, provided,
that immediately following (on the assumption that a payment was then due from
the Borrower to such other office) and as a result of such change the Borrower
would not be under any greater financial obligation pursuant to Section 5.06
than they would have been in the absence of such change. Notional funding
offices may be selected by each Lender without regard to the Lender's actual
methods of making, maintaining or funding the Loans or any sources of funding
actually used by or available to such Lender.
(b) Actual Funding. Each Lender shall have the right from time to time to
make or maintain any Loan by arranging for a branch, Subsidiary or Affiliate of
such Lender to make or maintain such Loan subject to the last sentence of this
Section 12.07(b). If any Lender causes a branch, Subsidiary or Affiliate to
make or maintain any part of the Loans hereunder, all terms
<PAGE> 42
and conditions of this Agreement shall, except where the context clearly
requires otherwise, be applicable to such part of the Loans to the same extent
as if such Loans were made or maintained by such Lender, provided, that in no
event shall any Lender's use of such a branch, Subsidiary or Affiliate to make
or maintain any part of the Loans hereunder cause such Lender or such branch,
Subsidiary or Affiliate to incur any cost or expenses payable by the Borrower
hereunder or require the Borrower to pay any other compensation to any Lender
(including any expenses incurred or payable pursuant to Section 5.06) which
would otherwise not be incurred.
12.08 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Lenders, the Agents, all future
holders of the Notes and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender. Each Lender
may, at its own cost, make assignments of or sell participations in all or any
part of its Commitment and the Loans made by it to one or more Lenders or other
Persons, subject to the terms set forth herein:
(a) Assignments. Any Lender may, in the ordinary course of its business
and in accordance with applicable law, at any time and from time to time assign
to any Lender or any affiliate of any Lender or to any Person in accordance
with the provisions of Section 2.09, or, with the consents of the Company
(unless and until an Event of Default has occurred and is continuing, after
which no consent of the Company shall be required) and the Administrative Agent
(neither of which shall be unreasonably withheld or delayed), to an additional
bank, financial institution or other entity (each, a "Purchasing Lender") all
or any part of its rights and obligations under this Agreement and the other
Operative Agreements pursuant to an Assignment and Acceptance, substantially in
the form of Exhibit J, executed by such Purchasing Lender, such assigning
Lender (and, in the case of a Purchasing Lender that is not a Lender or an
affiliate thereof, by the Borrower and the Administrative Agent) and delivered
to the Administrative Agent for its acceptance and recording in the Register;
provided, that (i) no such assignment to a Purchasing Lender (other than any
Lender or any affiliate thereof) shall be in an aggregate principal amount less
than $5,000,000 (other than in the case of an assignment of all of a Lender's
interests under this Agreement and the Notes) and (ii) after giving effect to
any such assignment (other than an assignment of all of a Lender's interests
under this Agreement and the Notes), the assigning Lender (together with any
Lender which is an affiliate of such assigning Lender) shall retain Loans
and/or Commitments aggregating not less than $5,000,000. Any such assignment
shall be ratable as between the Tranche A Loans and Tranche B Loans of the
assigning Lender. Upon such execution, delivery, acceptance and recording,
from and after the Effective Date determined pursuant to such Assignment and
Acceptance, (x) the Purchasing Lender thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with a Commitment as set forth therein, and
(y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding anything to the contrary in this Agreement, the consent of the
Borrower shall not be required, and, unless requested by the relevant
Purchasing Lender and/or assigning Lender, new Notes shall not be required to
be executed and delivered by the Borrower, for
<PAGE> 43
any assignment which occurs at any time when any of the events described in
Section 9(h) shall have occurred and be continuing. Upon its receipt of an
Assignment and Acceptance executed by an assigning Lender and a Purchasing
Lender (and, in the case of a Purchasing Lender that is not a Lender or an
affiliate thereof, by the Borrower and the Administrative Agent) together with
payment to the Administrative Agent of a registration and processing fee of
$3,500, the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) promptly after the Effective Date determined pursuant
thereto, record the information contained therein in the Register and give
notice of such acceptance and recordation to the Lenders and the Borrower. On
or prior to such Effective Date, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent new Notes (in exchange for the
Notes of the assigning Lender), each in an amount equal to the Commitment
assumed by the relevant Purchasing Lender pursuant to such Assignment and
Acceptance, and, if the assigning Lender has retained a Commitment hereunder,
new Notes to the order of the assigning Lender, each in an amount equal to the
Commitment retained by it hereunder. Such new Notes shall be dated the
Effective Date and shall otherwise be in the form of the Notes replaced
thereby.
(b) Participations. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
banks, financial institutions or other entities (each, a "Participant")
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder and under the other Operative Agreements; provided, that any such
participation shall be ratable as between the Tranche A Loans and Tranche B
Loans of such Lender. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Note for all purposes under this Agreement
and the Notes, and the Borrower and the Administrative Agent shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the Notes. In no event shall
any Participant have any right to approve any amendment or waiver of any
provision of this Agreement or any other Operative Agreement, or any consent to
any departure by the Borrower, any Guarantor or any other Person therefrom,
except to the extent that such amendment, waiver or consent would (a) reduce
the principal of, or interest on, any Loan or Note, or postpone the date of the
final maturity of any Loan or Note, or reduce the amount of any Fee, in each
case to the extent subject to such participation or (b) release all or
substantially all of the Collateral. The Borrower agrees that, while an Event
of Default shall have occurred and be continuing, if amounts outstanding under
this Agreement and the Notes are due or unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall, to the maximum extent permitted by applicable law, be
deemed to have the right of setoff in respect of its participating interest in
amounts owing under this Agreement and any Note to the same extent as if the
amount of its participating interest were owing directly to it as a Lender
under this Agreement or any Note, provided, that in purchasing such
participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 12.10(a) as
fully as if it were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 4.03, 5.06, 12.05 and
12.10 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender; provided, that in the case
of Section
<PAGE> 44
5.06(c), such Participant shall have complied with the requirements of said
Section and provided, further, that no Participant shall be entitled to receive
any greater amount pursuant to any such Section than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Other Provisions. Any Purchasing Lender or Participant which is not
incorporated under the Laws of the United States of America or a state thereof
shall deliver to the Borrower and the Administrative Agent the form of
certificate described in Section 12.21 relating to Federal income tax
withholding and the Lender who makes an assignment or sells a participation
shall cause the assignee or participant to comply with the provisions of
Section 12.21. Each Lender may furnish any publicly available information
concerning the Company or its subsidiaries and any other information concerning
the Company or its Subsidiaries in the possession of such Lender from time to
time to Purchasing Lenders and Participants (including prospective assignees or
participants), provided that such assignees and participants agree to be bound
by the provisions of Section 12.19.
12.09 The Register; Disclosure; Pledges to Federal Reserve Banks. (a) The
Administrative Agent shall maintain at its address referred to in Section 12.02
copy of each Assignment and Acceptance delivered to it and a register (the
"Register") for the recordation of the names and addresses of the Lenders, the
Commitments of the Lenders, and the principal amount of the Loans owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of clearly demonstrable error, and the Borrower, the Agents and the
Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(b) Nothing herein shall prohibit any Lender from pledging or assigning
any Note to any Federal Reserve Bank in accordance with applicable law.
12.10 Adjustments; Set-off. (a) If any Lender (a "Benefitted Lender")
shall at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 9(h), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest.
(b) In addition to any rights now or hereafter granted under applicable
law or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Agent and each Lender is hereby
authorized at any time or from time to time, without
<PAGE> 45
presentment, demand, protest or other notice of any kind to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Agent or such Lender
(including, by branches and agencies of such Agent or such Lender wherever
located) to or for the credit or the account of the Borrower against and on
account of the obligations and liabilities of the Borrower to such Agent or
such Lender under this Agreement or under any of the other Operative
Agreements, including, all interests in obligations of the Borrower purchased
by any such Lender pursuant to Section 12.10(a), and all other claims of any
nature or description arising out of or connected with this Agreement or any
other Operative Agreement, irrespective of whether or not such Agent or such
Lender shall have made any demand hereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured, and
regardless of any difference between the currency of the Loans or other
Obligations and the currency of such debt owing to or funds held for the
account of the Borrower.
12.11 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
12.12 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.13 Integration. This Agreement and the other Credit Documents represent
the agreement of the Borrower, the Agents and the Lenders with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by any Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Credit Documents.
12.14 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
12.15 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Credit Documents to which it is a
party, or for recognition and enforcement of any judgement in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State
of New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
<PAGE> 46
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action
or proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;
(b) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 12.02 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(c) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue
in any other jurisdiction; and
(d) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in
this Section 12.15 any special, exemplary, punitive or consequential damages.
12.16 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the Notes and the other Credit Documents;
(b) neither any Agent nor any Lender has any fiduciary relationship with
or duty to the Borrower arising out of or in connection with this Agreement
or any of the other Credit Documents, and the relationship between Agents and
Lenders, on one hand, and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Credit Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders.
12.17 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR
ANY COUNTERCLAIM THEREIN.
12.18 Waivers by Borrower. Except as otherwise provided for in this
Agreement and the other Credit Documents, the Borrower waives (i) presentment,
demand and protest and notice of presentment, protest, default, non-payment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by the Borrower on which the Borrower may
in any way be liable and hereby ratifies and confirms what the Administrative
Agent or the Real
<PAGE> 47
Estate Administrative Agent may do in this regard; (ii) the benefit of all
valuation, appraisement and exemption laws; and (iii) any right the Borrower
may have upon payment in full of its obligations to require any Agent or any
Lender to terminate its security interest in any property of the Borrower until
termination of this Agreement in accordance with its terms and the execution by
the Administrative Agent and the Borrower, and by any Person whose loans to the
Borrower are used in whole or in part to satisfy the Obligations, of an
agreement indemnifying the Agents and the Lenders from any loss or damage the
Agents or the Lenders may incur as the result of dishonored checks or other
items of payment received by the Agents from the Borrower and applied to the
Obligations.
12.19 Tax Withholding Forms. Each Lender or Purchasing Lender or
Participant that is not incorporated under the Laws of the United States of
America or a state thereof agrees that it will deliver to each of the Borrower
and the Administrative Agent two (2) duly completed copies of the following:
(i) Internal Revenue Service Form W-9 or W-8 and 4224 or 1001, or other
applicable form prescribed by the Internal Revenue Service, certifying that
such Lender, Purchasing Lender or Participant is entitled to receive payments
under this Agreement and the other Credit Documents without deduction or
withholding of any United States Federal income taxes, or is subject to
such tax at a reduced rate under an applicable tax treaty, or (ii) a certificate
of the Lender, Purchasing Lender or Participant indicating that no such
exemption or reduced rate is allowable with respect to such payments. Each
Purchasing Lender or Participant shall deliver such form or certificate on or
before the Effective Date of such assignment or participation. Each Lender,
assignee or participant which so delivers a Form W-8, W-9, 4224 or 1001 further
undertakes to deliver to each of the Borrower and the Administrative Agent two
(2) additional copies of such form (or a successor form) on or before the date
that such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Administrative Agent, either certifying that
such Lender, Purchasing Lender or Participant is entitled to receive payments
under this Agreement and the other Credit Documents without deduction or
withholding of any United States Federal income taxes or is subject to such tax
at a reduced rate under an applicable tax treaty or stating that no such
exemption or reduced rate is allowable. The Administrative Agent shall be
entitled to withhold United States Federal income taxes at the full withholding
rate unless the Lender, Purchasing Lender or Participant establishes an
exemption or that it is subject to a reduced rate as established pursuant to the
above provisions.
12.20 Effective Date Transition Provision. Immediately after the Effective
Date, Wells Fargo Bank, N.A., Credit Lyonnais, NationsBank, N.A. (Carolinas),
U.S. National Bank of Oregon, Mitsubishi Trust and Banking Corp., The Fuji
Bank, Limited, The Sumitomo Bank, Ltd. and The Tokai Bank, Ltd. shall cease to
be Lenders under, and shall cease to have any rights, benefits or obligations
under, this Agreement or any other Loan Document, except Wells Fargo Bank,
N.A., Credit Lyonnais, NationsBank, N.A. (Carolinas), U.S. National Bank of
Oregon, Mitsubishi Trust and Banking Corp., The Fuji Bank, Limited, The
Sumitomo Bank, Ltd. and The Tokai Bank, Ltd. shall continue to have: (a)
obligations arising under Section 10.07 insofar as such obligations relate to
events occurring prior to the Effective Date; and (b) rights and benefits
arising under Sections 5.06 and 12.05 insofar as such rights and benefits
relate to events occurring prior to the Effective Date.
<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
stated herein, but solely as Owner
Trustee
By:
-------------------------------------
Title:
-------------------------------
<PAGE> 49
PNC BANK, NATIONAL ASSOCIATION, as
Administrative Agent
By:
-------------------------------------
Title:
-------------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
as Syndication Agent
By:
-------------------------------------
Title:
-------------------------------
BANKERS TRUST COMPANY, as Real Estate
Administrative Agent
By:
-------------------------------------
Title:
-------------------------------
Lenders
PNC BANK, NATIONAL ASSOCIATION
By:
-------------------------------------
Title:
-------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By:
-------------------------------------
Title:
-------------------------------
BANKERS TRUST COMPANY
By:
-------------------------------------
Title:
-------------------------------
<PAGE> 50
FIRST UNION NATIONAL BANK
By:
-------------------------------------
Title:
-------------------------------
FLEET NATIONAL BANK
By:
-------------------------------------
Title:
-------------------------------
KEYBANK NATIONAL ASSOCIATION
By:
-------------------------------------
Title:
-------------------------------
COMERICA BANK
By:
-------------------------------------
Title:
-------------------------------
MORGAN GUARANTY TRUST COMPANY,
OF NEW YORK
By:
-------------------------------------
Title:
-------------------------------
UNION BANK OF CALIFORNIA, N.A.
By:
-------------------------------------
Title:
-------------------------------
<PAGE> 51
CORESTATES BANK, N.A.
By:
-------------------------------------
Title:
-------------------------------
BANQUE NATIONALE DE PARIS
By:
-------------------------------------
Title:
-------------------------------
SUNTRUST BANK, ATLANTA
By:
-------------------------------------
Title:
------------------------------
BANK BOSTON, N.A.
By:
-------------------------------------
Title:
-------------------------------
HIBERNIA NATIONAL BANK
By:
-------------------------------------
Title:
-------------------------------
THE NORTHERN TRUST COMPANY
By:
-------------------------------------
Title:
-------------------------------
<PAGE> 52
BANK OF NEW YORK
By:
-------------------------------------
Title:
-------------------------------
MERCANTILE BANK
By:
-------------------------------------
Title:
-------------------------------
THE DAI-ICHI KANGYO BANK, LTD. -
CHICAGO BRANCH
By:
-------------------------------------
Title:
-------------------------------
FIRST HAWAIIAN BANK
By:
-------------------------------------
Title:
-------------------------------
BANK ONE, NATIONAL ASSOCIATION
By:
-------------------------------------
Title:
-------------------------------
LONG TERM CREDIT BANK OF JAPAN
By:
-------------------------------------
Title:
-------------------------------
<PAGE> 53
WACHOVIA BANK, N.A.
By:
-------------------------------------
Title:
-------------------------------
<PAGE> 54
SCHEDULE 1.01(A)
EURO-RATE MARGIN
BASE RATE MARGIN, FACILITY FEE RATE (1)
<TABLE>
<Capiton>
- ------------------------------------------------------------------------------------------------------------------------------------
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
- ------------------------------------------------------------------------------------------------------------------------------------
If the
If the Company's Fixed If the
Company's Fixed Charge Coverage Company's Fixed
Charge Coverage Ratio EXCEEDS Charge Coverage If the
If the Ratio EXCEEDS 1.80 : 1.00 AND Ratio EXCEEDS Company's Fixed
Company's Fixed 2.00 : 1.00 AND IS LESS THAN OR 1.60 TO 1.0 AND Charge Coverage
Charge Coverage IS LESS OR EQUAL TO IS LESS THAN OR Ratio IS LESS
Ratio EXCEEDS EQUAL TO 2.00 : 1.00. EQUAL TO THAN OR EQUAL
2.20 : 1.00. 2.20 : 1.00. 1.80 : 1.00. TO 1.60 TO
1.00.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Euro-Rate
Margin 14.5 17.5 20.0 22.5 32.5
- ------------------------------------------------------------------------------------------------------------------------------------
Base Rate
Margin 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Facility Fee
Rate 8.0 10.0 12.5 15.0 17.5
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All prices are expressed in basis points. A basis point is equal to 1/100
of 1%.
<PAGE> 55
SCHEDULE II
COMMITMENTS OF LENDERS
<TABLE>
<CAPTION>
ADDRESS FOR AMOUNT OF RATABLE
NAME OF LENDER NOTICES COMMITMENT SHARE*
<S> <C> <C> <C>
PNC Bank, National National Corporate Banking-- $ 26,666,666.67 10.67%
Association Chicago Office
500 West Monroe Street
Chicago, IL 60661
FAX: (312) 906-3420
Phone: (312) 906-3426
Attn: Mr. Peter F. Stack
The First National Bank of 14th Floor, Suite 0086 $ 26,481,481.48 10.59%
Chicago One First National Plaza
Chicago, IL 60670
FAX: (312) 732-8587
Phone: (312) 732-6132
Attn: Mr. Paul E. Rigby
Bankers Trust Company 130 Liberty Street, 34th Floor $ 26,481,481.48 10.59%
New York, NY 10006
FAX: (212) 250-7218
Phone: (212) 250-5175
Attn: Ms. Patricia Hogan
First Union National Bank One First Union Center, DC5 $ 14,814,814.81 5.92%
Charlotte, NC 28288-0745
FAX: (704) 374-2802
Phone: (704) 374-2641
Attn: Ms. Mary Amatore
Fleet National Bank One Federal Street, OF0320 $ 14,814,814.81 5.92%
Boston, MA 02110-2010
FAX: (617) 346-0689
Phone: (617) 346-0611
Attn: Mr. Richard M. Seufert
KeyBank National 127 Public Square $ 14,814,814.81 5.92%
Association Cleveland, OH 44114-1306
FAX: (216) 689-4981
Phone: (216) 689-3589
Attn: Mr. Thomas Crandell
</TABLE>
*Ratable Shares used for calculating Required Lenders, but not for loan
operation purposes, such as fundings and payments.
<PAGE> 56
<TABLE>
<CAPTION>
ADDRESS FOR AMOUNT OF RATABLE
NAME OF LENDER NOTICES COMMITMENT SHARE*
<S> <C> <C> <C>
Comerica Bank One Detroit Center $ 14,814,814.81 5.92%
500 Woodward Ave.
Mail Code 3268 - 9th Floor
Detroit, MI 48226-3289
FAX: (313) 222-9514
Phone: (313) 222-5060
Attn: Mr. David C. Bird
Morgan Guaranty Trust c/o J.P. Morgan & Company, Inc. $ 11,111,111.11 4.44%
Company of New York 22nd Floor
60 Wall Street
New York, NY 10260
FAX: (212) 648-5018
Phone: (212) 648-8063
Attn: Ms. Deborah Broadheim
Union Bank of California, 350 California Street $ 11,111,111.11 4.44%
N.A. 6th Floor
San Francisco, CA 94104-1402
FAX: (415) 705-7085
Phone: (415) 705-7021
Attn: Mr. Timothy P. Streb
CoreStates Bank, N.A. 1345 Chestnut Street, FC 1-8-8-14 $ 9,259,259.26 3.70%
Philadelphia, PA 19101-7618
FAX: (215) 973-7671
Phone: (215) 973-2318
Attn: Ms. Anne Marie Fitzsimmons
Banque Nationale de Paris Suite 500 $ 9,259,259.26 3.70%
209 South LaSalle Street
Chicago, IL 60604
FAX: (312) 977-1380
Phone: (312) 977-2211
Attn: Mr. Frederick Moryl
SunTrust Bank, Atlanta 24th Floor $ 9,259,259.26 3.70%
25 Park Place
Atlanta, GA 30303
FAX: (404) 588-8505
Phone: (404) 724-3457
Attn: Mr. Roger P. Shreero
</TABLE>
*Ratable Shares used for calculating Required Lenders, but not for loan
operation purposes, such as fundings and payments.
<PAGE> 57
<TABLE>
<CAPTION>
ADDRESS FOR AMOUNT OF RATABLE
NAME OF LENDER NOTICES COMMITMENT SHARE*
<S> <C> <C> <C>
Bank Boston, N.A. 100 Federal Street $ 9,259,259.26 3.70%
Boston, MA 02110
FAX: (617) 434-6685
Phone: (617) 434-5280
Attn: Ms. Judith Kelly
Hibernia National Bank 12th Floor $ 7,407,407.41 2.96%
313 Carondelet Street
New Orleans, LA 70130
FAX: (504) 533-5344
Phone: (504) 533-2911
Attn: Mr. Jeffrey Peck
The Northern Trust Company Floor B-11 $ 5,555,555.56 2.22%
50 South LaSalle Street
Chicago, IL 60675
FAX: (312) 444-5055
Phone: (312) 557-8205
Attn: Ms. Nicole R. Kidder
The Bank of New York One Wall Street, 8th Floor $ 5,555,555.56 2.22%
New York, NY 10286
FAX: (212) 635-1483, 1481
Phone: (212) 635-7885
Attn: Mr. Michael V. Flannery
Mercantile Bank 12th Floor $ 5,555,555.56 2.22%
721 Locust Street
St. Louis, MO 63101
FAX: (314) 425-2203
Phone: (314) 425-2459
Attn: Mr. Steve Reese
The Dai-Ichi Kangyo Bank, 10 S. Wacker Drive $ 5,555,555.56 2.22%
Ltd.--Chicago Branch 26th Floor
Chicago, IL 60606
FAX: (312) 876-2011
Phone: (312) 715-6361
Attn: Mr. Michael Pleasants
</TABLE>
*Ratable Shares used for calculating Required Lenders, but not for loan
operation purposes, such as fundings and payments.
<PAGE> 58
<TABLE>
<CAPTION>
ADDRESS FOR AMOUNT OF RATABLE
NAME OF LENDER NOTICES COMMITMENT SHARE*
<S> <C> <C> <C>
First Hawaiian Bank 999 Bishop Street $ 5,555,555.56 2.22%
11th Floor
Honolulu, HI 96813
FAX: (808) 525-6372
Phone: (808) 525-6289
Attn: Mr. Charles Jenkins
Bank One, National 7th Floor $ 5,555,555.56 2.22%
Association 100 East Broad Street
Columbus, OH 43215
FAX: (614) 248-5518
Phone: (614) 248-6390
Attn: Mr. Larry Christ
Long Term Credit Bank of Suite 800 $ 5,555,555.56 2.22%
Japan 190 South LaSalle Street
Chicago, IL 60670
FAX: (312) 704-8505
Phone: (312) 704-5482
Attn: Mr. Curtis Flammini
Wachovia Bank 28th Floor $ 5,555,555.56 2.22%
191 Peachtree Street
Atlanta, GA 30303
FAX: (404) 332-6898
Phone: (404) 332-4036
Attn: Ms. Katie S. Proctor
TOTAL $250,000,000.00 100%
</TABLE>
*Ratable Shares used for calculating Required Lenders, but not for loan
operation purposes, such as fundings and payments.
<PAGE> 59
Exhibit A-1 to
Credit Agreement
FORM OF TRANCHE A NOTE
$________________________
New York, New York
Dated as of November 22, 1995
Amended and Restated as of October ___, 1997
FOR VALUE RECEIVED, the undersigned, WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly stated in the Credit Agreement, as
hereinafter defined, but solely as Owner Trustee (the "Borrower"), hereby
unconditionally promises to pay to the order of ________ _______ (the "Lender")
at the office of PNC Bank, National Association, located at
______________________________________________, in lawful money of the United
States of America and in immediately available funds, on the Maturity Date (as
defined in the Credit Agreement referred to below), the principal amount of (a)
____________________ DOLLARS ($____________________), or, if less, (b) the
aggregate unpaid principal amount of all Tranche A Loans made by the Lender to
the Borrower pursuant to Section 2.01 of such Credit Agreement. The Borrower
further agrees to pay interest in like money at such office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in Section 4.01 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Interest Rate Option and
amount of each Tranche A Loan made pursuant to the Credit Agreement and the
date and amount of each payment or prepayment of principal thereof, each
continuation thereof, each conversion of all or a portion thereof to another
Interest Rate Option and, in the case of Euro-Rate Borrowing Tranche, the
length of each Interest Period with respect thereto. Each such endorsement
shall constitute prima facie evidence of the accuracy of the information
endorsed. The failure to make any such endorsement or any error in such
endorsement shall not affect the obligations of the Borrower in respect of such
Tranche A Loan.
This Note (a) is one of the Tranche A Notes referred to in the Amended and
Restated Credit Agreement dated as of November 22, 1995 and amended and
restated as of October _____, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
Lender, the other banks and financial institutions from time to time parties
thereto and PNC Bank, National Association, as administrative agent (b) is
subject to the provisions of the Credit Agreement and (c) is subject to
optional and mandatory prepayment in whole or in part as provided in the Credit
Agreement. This Note is secured and guaranteed as provided in the Credit
Documents. Reference is hereby made to the Credit Documents for a description
of the properties and assets in which a security interest has been granted, the
nature and extent of the security and the
Tranche A Note
<PAGE> 60
guarantees, the terms and conditions upon which the security interests and each
guarantee were granted and the rights of the holder of this Note in respect
thereof.
Upon the occurrence of any one or more of the Events of Default, all amounts
then remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
This Note is made by the Borrower in connection with the Credit Agreement.
Any unpaid balance of the indebtedness evidenced by the Original Note remains
outstanding as of the Effective Date. Any principal balance of this Note
includes the Borrower's indebtedness evidenced by the Original Note and this
Note (i) merely re-evidences the indebtedness evidenced by the Original Note,
(ii) is not given as payment of the Original Note and (iii) is in no way
intended to, or shall, constitute a novation of the Original Note or any
obligations of Borrower thereunder.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
stated in the Credit Agreement, but solely
as Owner Trustee
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Tranche A Note
<PAGE> 61
Schedule A to
Tranche A Note
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE BORROWING TRANCHE
Amount of Base Rate
<TABLE>
<CAPTION>
Amount Converted to Amount of Principal of Borrowing Tranche Unpaid Principal
Amount of Base Rate Base Rate Borrowing Base Rate Borrowing Converted to Euro-Rate Balance of Base Rate Notation
Date Borrowing Tranche Tranche Tranche Repaid Borrowing Tranche Borrowing Tranche Made By
<S> <C> <C> <C> <C> <C> <C> <C>
------ ---------------------- --------------------- ---------------------- ---------------------- ------------------- -----
------ ---------------------- --------------------- ---------------------- ---------------------- ------------------- -----
------ ---------------------- --------------------- ---------------------- ---------------------- ------------------- -----
------ ---------------------- --------------------- ---------------------- ---------------------- ------------------- -----
------ ---------------------- --------------------- ---------------------- ---------------------- ------------------- -----
------ ---------------------- --------------------- ---------------------- ---------------------- ------------------- -----
------ ---------------------- --------------------- ---------------------- ---------------------- ------------------- -----
------ ---------------------- --------------------- ---------------------- ---------------------- ------------------- -----
------ ---------------------- --------------------- ---------------------- ---------------------- ------------------- -----
------ ---------------------- --------------------- ---------------------- ---------------------- ------------------- -----
------ ---------------------- --------------------- ---------------------- ---------------------- ------------------- -----
===================================================================================================================================
</TABLE>
<PAGE> 62
Schedule B to
Tranche A Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURO-RATE BORROWING TRANCHE
<TABLE>
<CAPTION>
Amount of Euro-
Amount of Rate Borrowing Unpaid Principal
Amount of Amount Converted Interest Period Principal of Euro- Tranche Converted Balance of Euro-
Euro-Rate to Euro-Rate and Euro-Rate with Rate Borrowing to Base Rate Rate Borrowing Notation
Date Borrowing Tranche Borrowing Tranche Respect Thereto Tranche Repaid Borrowing Tranche Tranche Made By
<S> <C> <C> <C> <C> <C> <C> <C>
- ----- ------------------ ----------------- ------------------ ------------------ ------------------ ------------------ -------
- ----- ------------------ ----------------- ------------------ ------------------ ------------------ ------------------ -------
- ----- ------------------ ----------------- ------------------ ------------------ ------------------ ------------------ -------
- ----- ------------------ ----------------- ------------------ ------------------ ------------------ ------------------ -------
- ----- ------------------ ----------------- ------------------ ------------------ ------------------ ------------------ -------
- ----- ------------------ ----------------- ------------------ ------------------ ------------------ ------------------ -------
- ----- ------------------ ----------------- ------------------ ------------------ ------------------ ------------------ -------
- ----- ------------------ ----------------- ------------------ ------------------ ------------------ ------------------ -------
- ----- ------------------ ----------------- ------------------ ------------------ ------------------ ------------------ -------
===================================================================================================================================
</TABLE>
<PAGE> 63
Exhibit A-2 to
Credit Agreement
FORM OF TRANCHE B NOTE
$____________________
New York, New York
Dated as of November 22, 1995
Amended and Restated as of October ___, 1997
FOR VALUE RECEIVED, the undersigned, WILMINGTON TRUST COMPANY,
not in its individual capacity except as expressly stated in the Credit
Agreement, as hereinafter defined, but solely as Owner Trustee (the
"Borrower"), hereby unconditionally promises to pay to the order of
________________ (the "Lender") at the office of PNC Bank, National
Association, located at ____________________________________________________,
in lawful money of the United States of America and in immediately available
funds, on the Maturity Date (as defined in the Credit Agreement referred to
below), the principal amount of (a) ____________________________ DOLLARS ($___
_________________), or, if less, (b) the aggregate unpaid principal amount of
all Tranche B Loans made by the Lender to the Borrower pursuant to Section 2.01
of such Credit Agreement. The Borrower further agrees to pay interest in like
money at such office on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in Section 4.01 of such
Credit Agreement.
The holder of this Note is authorized to endorse on the
schedules annexed hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof the date, Interest Rate
Option and amount of each Tranche B Loan made pursuant to the Credit Agreement
and the date and amount of each payment or prepayment of principal thereof,
each continuation thereof, each conversion of all or a portion thereof to
another Interest Rate Option and, in the case of Eurodollar Loans, the length
of each Interest Period with respect thereto. Each such endorsement shall
constitute prima facie evidence of the accuracy of the information endorsed.
The failure to make any such endorsement or any error in such endorsement shall
not affect the obligations of the Borrower in respect of such Tranche B Loan.
This Note (a) is one of the Tranche B Notes referred to in the
Amended and Restated Credit Agreement dated as of November 22, 1995 and amended
and restated as of October ___, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
Lender, the other banks and financial institutions from time to time parties
thereto and PNC Bank, National Association, administrative agent, (b) is
subject to the provisions of the Credit Agreement and (c) is subject to
optional and mandatory prepayment in whole or in part as provided in the Credit
Agreement. This Note is secured and guaranteed as provided in the Credit
Documents. Reference is hereby made to the Credit Documents for a description
of the properties and assets in which a security interest hasbeen granted, the
nature and extent of the security and the guarantees, the terms and conditions
upon which the security interests and each guarantee were granted and the
rights of the holder of this Note in respect thereof.
Tranche B Note
<PAGE> 64
Upon the occurrence of any one or more of the Events of
Default, all amounts then remaining unpaid on this Note shall become, or may be
declared to be, immediately due and payable, all as provided in the Credit
Agreement.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or otherwise,
hereby waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.
This Note is made by the Borrower in connection with the
Credit Agreement. Any unpaid balance of the indebtedness evidenced by the
Original Note remains outstanding as of the Effective Date. Any principal
balance of this Note includes the Borrower's indebtedness evidenced by the
Original Note and this Note (i) merely re-evidences the indebtedness evidenced
by the Original Note, (ii) is not given as payment of the Original Note and
(iii) is in no way intended to, or shall, constitute a novation of the Original
Note or any obligations of Borrower thereunder.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
stated in the Credit Agreement, but solely
as Owner Trustee
By:
-----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Tranche B Note
<PAGE> 65
Schedule A to
Tranche B Note
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE BORROWING TRANCHE
<TABLE>
<CAPTION>
Amount of Base Rate
Amount Converted to Amount of Principal of Borrowing Tranche Unpaid Principal
Amount of Base Rate Base Rate Borrowing Base Rate Borrowing Converted to Euro-Rate Balance of Base Rate Notation
Date Borrowing Tranche Tranche Tranche Repaid Borrowing Tranche Borrowing Tranche Made
By
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
--- -------------------------------------------- ---------------------- ---------------------- --------------------- ------
--- -------------------------------------------- ---------------------- ---------------------- --------------------- -------
--- -------------------------------------------- ---------------------- ---------------------- --------------------- -------
--- -------------------------------------------- ---------------------- ---------------------- --------------------- -------
--- -------------------------------------------- ---------------------- ---------------------- --------------------- -------
--- -------------------------------------------- ---------------------- ---------------------- --------------------- -------
--- -------------------------------------------- ---------------------- ---------------------- --------------------- -------
</TABLE>
<PAGE> 66
Schedule B to
Tranche B Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURO-RATE BORROWING TRANCHE
<TABLE>
<CAPTION>
Amount of Euro-
Amount of Rate Borrowing Unpaid Principal
Amount of Euro- Amount Converted Interest Period Principal of Euro- Tranche Converted Balance of Euro-
Rate Borrowing to Euro-Rate and Euro-Rate with Rate Borrowing to Base Rate Rate Borrowing Notation
Date Tranche Borrowing Tranche Respect Thereto Tranche Borrowing Tranche Tranche Made
By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---- ----------------------------------- ------------------ ------------------ ------------------ -------------------- ----
- ---------------------------------------- ------------------ ------------------ ------------------ -------------------- ------
- ---------------------------------------- ------------------ ------------------ ------------------ -------------------- ------
- ---------------------------------------- ------------------ ------------------ ------------------ -------------------- ------
- ---------------------------------------- ------------------ ------------------ ------------------ -------------------- ------
</TABLE>
<PAGE> 67
Exhibit A-3 to
Credit Agreement
FORM OF SWING NOTE
$15,000,000
New York, New York
Dated as of November 22, 1995
Amended and Restated as of October ___, 1997
FOR VALUE RECEIVED, the undersigned, WILMINGTON TRUST COMPANY,
not in its individual capacity except as expressly stated in the Credit
Agreement, as hereinafter defined, but solely as Owner Trustee (the
"Borrower"), hereby unconditionally promises to pay to the order of BANKERS
TRUST COMPANY (the "Swing Lender") at the office of Bankers Trust Company,
located at __________________________________________, in lawful money of the
United States of America and in immediately available funds, on the Maturity
Date (as defined in the Credit Agreement referred to below) the principal
amount of (a) FIFTEEN MILLION DOLLARS ($15,000,000), or, if less, (b) the
aggregate unpaid principal amount of all Swing Loans made by the Swing Lender
to the undersigned pursuant to subsection 3.01 of the Credit Agreement. The
Borrower further agrees to pay interest on the unpaid principal amount hereof
in like money from time to time from the Effective Date at the rates and on the
dates specified in subsection 4.05 of the Credit Agreement.
The Swing Lender is authorized to record the information set
forth in subsection 3.03 of the Credit Agreement on the schedule annexed hereto
and made a part hereof and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded; provided that the
failure of the Swing Lender to make such recordation (or any error in such
recordation) shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.
This Note is (a) the Swing Note referred to in the Amended and
Restated Credit Agreement, dated as of November 22, 1995 and amended and
restated as of October ____, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement", among the Borrower, the
Swing Lender, the other financial institutions from time to time parties
thereto and PNC Bank, National Association, as administrative agent, (b) is
subject to the provisions of the Credit Agreement and (c) is subject to
optional and mandatory prepayment in whole or in part as provided in the Credit
Agreement. This Note is secured and guaranteed as provided in the Credit
Documents. Reference is hereby made to the Credit Documents for a description
of the properties and assets in which a security interest has been granted, the
nature and extent of the security interest and the guarantees, the terms and
conditions upon which the security interests and each guarantee were granted
and the rights of the Swing Lender in respect of this Note.
Swing Note
<PAGE> 68
Upon the occurrence of any one or more of the Events of
Default, all amounts then remaining unpaid on this Note may become, or may be
declared to be, immediately due and payable, all as provided in the Credit
Agreement.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or otherwise,
hereby waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.
This Note is made by the Borrower in connection with the
Credit Agreement. Any unpaid balance of the indebtedness evidenced by the
Original Note remains outstanding as of the Effective Date. Any principal
balance of this Note includes the Borrower's indebtedness evidenced by the
Original Note and this Note (i) merely re-evidences the indebtedness evidenced
by the Original Note, (ii) is not given as payment of the Original Note and
(iii) is in no way intended to, or shall, constitute a novation of the Original
Note or any obligations of Borrower thereunder.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
stated in the Credit Agreement, but solely
as Owner Trustee
By:
-----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Swing Note
<PAGE> 69
Schedule A to
Swing Note
LOANS AND REPAYMENT OF SWING LOANS
<TABLE>
<CAPTION>
Amount of Principal Unpaid Principal Notation Made By
Date Amount of Loans Repaid Balance of Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- -------------------- ------------------
---------- --------------------- ----------------------- --------------------
</TABLE>
Swing Note
<PAGE> 70
EXHIBIT B
FORM OF REVOLVING CREDIT LOAN REQUEST
[Date]
PNC Bank, National Association
as Administrative Agent for the Lenders party
to the Credit Agreement referred to below
One PNC Plaza, 4th Floor Annex
5th Avenue & Wood Street
Pittsburgh, Pennsylvania 15265
Attention: Multi-Bank Loan Administration - Arlene Ohler
Telecopy (412) 762-8672
Ladies and Gentlemen:
The undersigned, Wilmington Trust Company, not in its
individual capacity except as expressly stated in the Amended and Restated
Credit Agreement, as hereinafter defined, but solely as Owner Trustee (the
"Borrower"), refers to the Credit Agreement, dated as of November 22, 1995 and
amended and restated as of October ____, 1997 (as amended, modified or
supplemented from time to time, the "Credit Agreement", the capitalized terms
defined therein being used herein as therein defined), among the Borrower, the
financial institutions from time to time party thereto (the "Lenders") and you,
as Administrative Agent for such Lenders, and hereby gives you notice,
irrevocably, pursuant to Section 2.02 of the Credit Agreement, that the
undersigned hereby makes the following Revolving Credit Loan Request, and in
that connection sets forth below the information relating to such Borrowing
(the "Proposed Borrowing") as required by Section 2.02 of the Credit Agreement:
(i) Proposed Borrowing Date (which must be a Business
Day) is ______, 19__.(1)
(ii) The Proposed Borrowing[s] [is] [are] to consist of
[Euro-Rate Borrowing Tranche] [Base Rate Borrowing Tranche].
(iii) The aggregate principal amount of the Proposed
Borrowing $_________.
__________________________________
(1) Shall be a Business Day at least one Business Day in the case of Base Rate
Options and three Business Days in the case of Euro-Rate Options, in each
case, after the date of the Revolving Credit Loan Request.
<PAGE> 71
[(v) The initial Interest Period for the Proposed
Borrowing is one month.](2)
The undersigned hereby certifies that the following
statements are true on the Effective Date, and will be true on the date of the
Proposed Borrowing:
(a) Each of the representations and warranties made by the
Borrower or any Guarantor in or pursuant to the Operative Agreements shall
be true and correct in all material respects on and as of such date as if
made on and as of such date (except to the extent such representations and
warranties expressly relate to an earlier date).
(b) No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the Proposed Borrowing
or from the application of the proceeds thereof.
(c) With respect to each Project Loan, the applicable
conditions precedent to the Advance associated therewith specified in
Section 4.04, and Articles V and XIV of the Participation Agreement shall
have been satisfied.
Very truly yours,
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
stated in the Credit Agreement, but solely
as Owner Trustee
By:
-----------------------------------------
Title:
-----------------------------------
__________________________________
(2) To be included for a Proposed Borrowing of Euro-Rate Borrowing Tranche.
<PAGE> 72
EXHIBIT C
FORM OF SWING LOAN REQUEST
[Date]
Bankers Trust Company, as Swing Lender
Agent for the Lenders party
to the Credit Agreement referred to below
280 Park Avenue
New York, New York 10017
Attention:_________________________________
Copy to:
One PNC Plaza, 4th Floor Annex
5th Avenue & Wood Street
Pittsburgh, Pennsylvania 15265
Attention: Multi-Bank Loan Administration - Arlene Ohler
Telecopy (412) 762-8672
Ladies and Gentlemen:
The undersigned, Wilmington Trust Company, not in its
individual capacity except as expressly stated in the Credit Agreement, as
hereinafter defined, but solely as Owner Trustee (the "Borrower"), refers to
the Amended and Restated Credit Agreement, dated as of November 22, 1995 and
amended and restated as of October ____, 1997 (as amended, modified or
supplemented from time to time, the "Credit Agreement", the capitalized terms
defined therein being used herein as therein defined), among the Borrower, the
financial institutions from time to time party thereto (the "Lenders") and PNC
Bank, National Association, as Administrative Agent for such Lenders, and
hereby gives you notice, irrevocably, pursuant to Section 3.02 of the Credit
Agreement, that the undersigned hereby makes the following Swing Loan Request,
and in that connection sets forth below the information relating to such
Borrowing (the "Proposed Borrowing") as required by Section 3.02 of the Credit
Agreement:
(i) Proposed Borrowing Date (which must be a Business
Day) is ______, 19__.(1)
(ii) The aggregate principal amount of the Proposed
Borrowing is $______________.
(iii) The aggregate principal amount of the Proposed
Borrowing is $__________.
__________________________________
(1) Shall be a Business Day at least one Business Day after the date of the
Swing Loan Request.
<PAGE> 73
The undersigned hereby certifies that the following
statements are true on the Effective Date, and will be true on the date of
the Proposed Borrowing:
(a) Each of the representations and warranties made by the
Borrower or any Guarantor in or pursuant to the Operative Agreements shall
be true and correct in all material respects on and as of such date as if
made on and as of such date (except to the extent such representations and
warranties expressly relate to an earlier date).
(b) No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the Proposed Borrowing
or from the application of the proceeds thereof.
(c) With respect to each Project Loan, the applicable
conditions precedent to the Advance associated therewith specified in
Section 4.04, and Articles V and XIV of the Participation Agreement shall
have been satisfied.
Very truly yours,
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
stated in the Credit Agreement, but solely
as Owner Trustee
By:
-----------------------------------------
Title:
-----------------------------------
<PAGE> 74
EXHIBIT D
FORM OF SWING LOAN PARTICIPATION CERTIFICATE
_________ __, 199_
[Name of Lender]
_____________________
Ladies and Gentlemen:
Pursuant to Section 3.04 of the Amended and Restated Credit
Agreement, dated as of November 22, 1995 and amended and restated as of October
____, 1997 (as amended, modified or supplemented from time to time, the "Credit
Agreement", the capitalized terms defined therein being used herein as therein
defined), among the Borrower, you and other financial institutions from time to
time party thereto (the "Lenders") and PNC Bank, National Association, as
Administrative Agent for such Lenders, the undersigned hereby acknowledges
receipt from you of $______________ as payment for a participating interest in
the following Swing Loan:
Date of Swing Loan: ____________________________
Principal Amount of Swing Loan: _________________
Very truly yours,
BANKERS TRUST COMPANY
By:
----------------------------------------
Title:
----------------------------------
<PAGE> 75
EXHIBIT E
FORM OF
RENEWAL/CONVERSION NOTICE
TO: PNC Bank, National Association,
as Administrative Agent
One PNC Plaza, 4th Floor Annex
5th Avenue & Wood Street
Pittsburgh, Pennsylvania 15265
Attention: Multi-Bank Loan Administration - Arlene Ohler
Telecopy (412) 762-8672
FROM: Borders Group, Inc.
RE: Amended and Restated Credit Agreement (the "Credit Agreement")
dated as of November 22, 1995 and amended and restated as of
October ____, 1997 by and among Wilmington Trust Company, not in
its individual capacity but solely as Owner Trustee, as Borrower,
the Lenders, as defined therein, and PNC Bank, National
Association, as Administrative Agent.
Pursuant to Section 4.02(b) of the Credit Agreement, the
undersigned hereby requests conversion of Revolving Credit Loans to a new
Interest Rate Option or the continuation of an Interest Rate Option in respect
of Revolving Credit Loans.
1. This Notice is for (choose one):
_______ a. Conversion of outstanding Base Rate
Borrowing Tranche to Euro-Rate Borrowing
Tranche
_______ b. Continuation of Euro-Rate Borrowing Tranche
to a new Interest Period
_______ c. Conversion of outstanding Euro-Rate
Borrowing Tranche to Base Rate Borrowing
Tranche
2. Proposed date of conversion or continuation (which must be
a Business Day and, if 1(b) or 1(c) above is chosen, must
be last day of applicable Interest Period)
_________________
3. Aggregate principal amount of the Borrowing Tranche which
is to be converted or continued
$________________
4. Interest Rate Option applicable to the new Borrowing
Tranche and aggregate principal amount of such Borrowing
Tranche:
<PAGE> 76
_______ a. Euro-Rate Option
Aggregate principal amount of new Euro-Rate
Borrowing Tranche
$_______________
______ b. Base Rate Option
Aggregate principal amount of new Base Rate
Borrowing Tranche
$_______________
5. The undersigned hereby certifies that the following statements
are true on the Effective Date, and will be true on the date
of the conversion or continuation of the Revolving Credit
Loans:
(a) Each of the representations and warranties made by the
Borrower or any Guarantor in or pursuant to the Operative
Agreements shall be true and correct in all material respects
on and as of such date as if made on and as of such date
(except to the extent such representations and warranties
expressly relate to an earlier date).
(b) No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the
proposed conversion or continuation of the Revolving Credit
Loans.
(c) The conversion or continuation to a new Interest Rate
Option shall not contravene any Law applicable to the Company
or any of its Subsidiaries, any of the Agents or any of the
Lenders.
Capitalized terms used but not defined herein shall have the
meanings given to them in Appendix A to the Credit Agreement.
<PAGE> 77
The undersigned certifies to the accuracy of the foregoing.
WILMINGTON TRUST COMPANY, not in its
individual capacity except as expressly
stated in the Credit Agreement, but solely
as Owner Trustee
By:
-----------------------------------------
Its:
-------------------------------------
Date:
---------------------------------------
<PAGE> 78
Exhibit J to
Amended and Restated Credit Agreement
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Credit
Agreement, dated as of November 22, 1995 and amended and restated as of October
____, 1997 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among WILMINGTON TRUST COMPANY, not in its individual
capacity except as expressly stated in the Credit Agreement, but solely as
Owner Trustee (the "Borrower"), the Lenders named therein and PNC Bank,
National Association, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"). Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given
to them in the Credit Agreement.
____________________ (the "Assignor") and ____________________
(the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below), a ___% interest (the "Assigned
Interest") in and to the Assignor's rights and obligations under the Credit
Agreement with respect to those credit facilities contained in the Credit
Agreement as are set forth on SCHEDULE 1 (individually, an "Assigned Facility";
collectively, the "Assigned Facilities"), in a principal amount for each
Assigned Facility as set forth on SCHEDULE 1.
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Operative Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Operative
Agreement or any other instrument or document furnished pursuant thereto, other
than that it has not created any adverse claim upon the interest being assigned
by it hereunder and that such interest is free and clear of any such adverse
claim; (b) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower, any Guarantor or any
other obligor or the performance or observance by the Borrower, any Guarantor
or any other obligor of any of their respective obligations under the Credit
Agreement or any other Operative Agreement or any other instrument or document
furnished pursuant hereto or thereto; and (c) attaches the Notes held by it
evidencing the Assigned Facilities and requests that the Administrative Agent
exchange such Notes for new Notes payable to the Assignor and (if the Assignor
has retained any interest in the Assigned Facility) new Notes payable to the
Assignee in the respective amounts which reflect the assignment being made
hereby (and after giving effect to any other assignments which have become
effective on the Effective Date).
<PAGE> 79
3. The Assignee (a) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (b) confirms
that it has received copies of the Operative Agreements, together with copies
of the financial statements delivered pursuant to Sections 13.01 and 13.02 of
the Guarantee and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will, independently and without
reliance upon the Assignor, the Administrative Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement, the other Operative Agreements or any other
instrument or document furnished pursuant hereto or thereto; (d) appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers and discretion under the Credit Agreement, the
other Operative Agreements or any other instrument or document furnished
pursuant hereto or thereto as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are incidental thereto; and (e)
agrees that it will be bound by the provisions of the Credit Agreement and will
perform in accordance with its terms all the obligations which by the terms of
the Credit Agreement are required to be performed by it as a Lender including,
if it is organized under the laws of a jurisdiction outside the United States,
its obligation pursuant to Section 12.21 of the Credit Agreement.
4. The Effective Date of this Assignment and Acceptance shall
be ____________ __, 19___ (the "Effective Date"). Following the execution of
this Assignment and Acceptance, it will be delivered to the Administrative
Agent for acceptance by it and recording by the Administrative Agent pursuant
to Section 12.09 of the Credit Agreement, effective as of the Effective Date
(which shall not, unless otherwise agreed to by the Administrative Agent, be
earlier than five Business Days after the date of such acceptance and recording
by the Administrative Agent).
5. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and
other amounts) to the Assignee whether such amounts have accrued prior to the
Effective Date or accrue subsequent to the Effective Date. The Assignor and
the Assignee shall make all appropriate adjustments in payments by the
Administrative Agent for periods prior to the Effective Date or with respect to
the making of this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall
be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Operative Agreements and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement and the other Operative Agreements.
7. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
<PAGE> 80
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.
<PAGE> 81
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE AMENDED AND RESTATED CREDIT AGREEMENT,
DATED AS OF NOVEMBER 22, 1995, AND AMENDED AND RESTATED
AS OF OCTOBER ____, 1997,
AMONG
WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS OWNER TRUSTEE
THE LENDERS NAMED THEREIN
AND
PNC BANK, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT FOR THE LENDERS
(IN SUCH CAPACITY, THE "ADMINISTRATIVE AGENT")
- --------------------------------------------------------------------------------
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Credit Principal
Facility Assigned Amount Assigned Commitment Percentage Assigned(1)
----------------- --------------- ---------------------------------
$ . %
--------------- --- ---------------
[Name of Assignee] [Name of Assignor]
By By
-------------------------------- ---------------------------------
Name: Name:
Title: Title:
__________________________________
(1) Calculate the Commitment Percentage that is assigned to at least 15 decimal
places and show as a percentage of the aggregate commitments of all
Lenders.
<PAGE> 82
Consented To:
BORDERS GROUP, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
PNC BANK, NATIONAL ASSOCIATION
as Administrative Agent
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
[consents required only to the extent
expressly provided in Section 12.08 of
the Credit Agreement]
Accepted for Recordation in the Register:
PNC BANK, NATIONAL ASSOCIATION
as Administrative Agent
By:
---------------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE> 1
EXHIBIT 10.42
EXECUTION COPY
EXHIBIT F TO
CREDIT AGREEMENT
AMENDED AND RESTATED
GUARANTEE AGREEMENT
BY AND AMONG
BORDERS GROUP, INC.,
BORDERS, INC.,
WALDEN BOOK COMPANY, INC.,
BORDERS PROPERTIES, INC.,
WALDENBOOKS PROPERTIES, INC.,
CERTAIN OTHER SUBSIDIARIES OF BORDERS GROUP, INC.
AND
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent
FOR THE BENEFIT OF CERTAIN LENDERS
DATED AS OF NOVEMBER 22, 1995
AMENDED AND RESTATED AS OF OCTOBER 17, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS.........................................2
1.01. Defined Terms.......................................2
1.02. Accounting Principles...............................2
ARTICLE II. GUARANTEE...........................................2
ARTICLE III. RIGHT OF CONTRIBUTION...............................3
ARTICLE IV. RIGHT OF SET-OFF....................................3
ARTICLE V. NO SUBROGATION......................................4
ARTICLE VI. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS;
WAIVER OF RIGHTS....................................4
ARTICLE VII. GUARANTEE ABSOLUTE AND UNCONDITIONAL................5
ARTICLE VIII. REINSTATEMENT.......................................5
ARTICLE IX. PAYMENTS............................................6
ARTICLE X. REPRESENTATIONS, WARRANTIES AND AGREEMENTS..........6
ARTICLE XI. AFFIRMATIVE COVENANTS...............................6
11.01. Preservation of Existence, etc......................6
11.02. Payment of Liabilities, Including Taxes, etc........6
11.03. Maintenance of Insurance............................7
11.04. Maintenance of Properties...........................7
11.05. Maintenance of Patents, Trademarks, etc.............7
11.06. Visitation Rights...................................7
11.07. Keeping of Records and Books of Account.............7
11.08. Plans and Benefit Arrangements......................8
11.09. Compliance with Laws................................8
11.10. Subsequent Credit Terms.............................8
11.11. [Reserved]..........................................8
11.12. Subsidiary Guarantees...............................8
ARTICLE XII. NEGATIVE COVENANTS..................................8
12.01. Indebtedness........................................9
12.02. Liens..............................................10
12.03. Contingent Obligations.............................10
12.04. Loans and Investments..............................11
<PAGE> 3
Page
12.05. Dividends and Related Distributions.............13
12.06. Liquidations, Mergers, Consolidations...........14
12.07. Dispositions of Assets or Subsidiaries..........14
12.08. Affiliate Transactions..........................14
12.09. Subsidiaries, Partnerships and Joint Ventures...15
12.10. Continuation of or Change in Business...........15
12.11. Plans and Benefit Arrangements..................15
12.12. Fiscal Year.....................................15
12.13. Issuance of Stock...............................15
12.14. Changes in Organizational Documents.............16
12.15. Minimum Fixed Charge Coverage Ratio.............16
12.16. Maximum Leverage Ratio..........................16
12.17. Minimum Tangible Net Worth......................16
12.18. Modifications of Other Documents................16
12.19. Prepayment of Note Put Agreement Obligations....16
12.20. Foreign Activities..............................16
12.21. Inconsistent Agreements.........................17
ARTICLE XIII. REPORTING REQUIREMENTS..........................17
13.01. Quarterly Financial Statements..................17
13.02. Annual Financial Statements.....................17
13.03. Certificates of the Company.....................17
13.04. Notice of Default...............................18
13.05. Notice of Litigation............................18
13.06. Certain Events..................................18
13.07. Other Reports and Information...................18
13.08. Notices Regarding Benefit Arrangements..........19
13.09. Access to the Company's Auditors................19
13.10. Notices Regarding Corporate Credit Agreement....19
13.11. Notices Regarding Repurchases of Stock..........19
ARTICLE XIV. AUTHORITY OF ADMINISTRATIVE AGENT...............20
ARTICLE XV. NOTICES.........................................20
ARTICLE XVI. COUNTERPARTS....................................20
ARTICLE XVII. SEVERABILITY....................................20
ARTICLE XVIII. INTEGRATION........ ............................21
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE XIX. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES............. 21
ARTICLE XX. SECTION HEADINGS.................................................. 21
ARTICLE XXI. SUCCESSORS AND ASSIGNS............................................ 21
ARTICLE XXII. RELEASES OF GUARANTORS, ETC....................................... 21
ARTICLE XXIII. JURY TRIAL; SUBMISSION TO JURISDICTION; WAIVERS................... 21
ARTICLE XXIV. INDEMNITY......................................................... 22
ARTICLE XXV. GOVERNING LAW..................................................... 23
SCHEDULE
Schedule 1 Existing Liens
Schedule 2 Existing Indebtedness
Schedule 5 Employee Benefit Plan Disclosures
EXHIBITS
Exhibit A Form of Compliance Certificate
</TABLE>
- iii -
<PAGE> 5
AMENDED AND RESTATED GUARANTEE AGREEMENT, dated as of November
22, 1995 and amended and restated as of October 17, 1997, made by BORDERS GROUP,
INC., a Michigan corporation (the "Company"), and each of the corporations that
is a signatory hereto or to a letter agreement acknowledging that it is bound
hereby (collectively, with the Company, the "Guarantors"), in favor of PNC BANK,
NATIONAL ASSOCIATION, as administrative agent (in such capacity, the
"Administrative Agent") for the lenders (the "Lenders") which are parties to
that certain Amended and Restated Credit Agreement, dated as of November 22,
1995 and amended and restated as of the date hereof (as amended, supplemented,
extended or otherwise modified from time to time, the "Credit Agreement"), among
WILMINGTON TRUST COMPANY, not in its individual capacity except as provided in
the Credit Agreement but solely as Owner Trustee (the "Borrower"), the Lenders,
certain other agents and the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make or maintain loans (the "Loans") to the Borrower upon
the terms and subject to the conditions set forth therein, to be evidenced by
the notes issued by the Borrower under the Credit Agreement;
WHEREAS, each Guarantor will derive substantial direct and
indirect benefit from the making and maintenance of the Loans; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make and maintain their respective Loans to the Borrower under the
Credit Agreement that the Guarantors shall have executed and delivered this
Guarantee to the Administrative Agent for the ratable benefit of the Lenders.
WHEREAS, the Company and certain of the Guarantors entered
into the Guarantee Agreement dated November 22, 1995 in favor of Bankers Trust
Company as agent for the Lenders (as heretofore amended, the "Prior Agreement");
and
WHEREAS, those parties to the Prior Agreement desire to amend
and restate the Prior Agreement to (i) substitute PNC Bank, National Association
for Bankers Trust Company as the agent for the Lenders; (ii) add certain
Guarantors, and (iii) amend certain other terms and conditions of the Prior
Agreement.
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into, and to amend and
restate, the Credit Agreement and to induce the Lenders to make and maintain
their respective Loans to the Borrower under the Credit Agreement, the
Guarantors hereby agree with the Administrative Agent, for the ratable benefit
of the Lenders, as follows:
<PAGE> 6
ARTICLE I. DEFINITIONS
1.01. Defined Terms. Capitalized terms used but not otherwise
defined in this Agreement shall have the meanings set forth in Appendix A
hereto.
1.02. Accounting Principles. Except as otherwise provided in
this Guarantee, all computations and determinations as to accounting or
financial matters and all financial statements to be delivered pursuant to this
Guarantee shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP; provided, however,
that if any change in GAAP or the application thereof occurs hereafter, or if
the Company adopts a change to its accounting principles or methods with the
agreement of its independent certified public accountants, and such change
results in a change in the calculation of any financial covenant or restriction
set forth herein, then the parties hereto agree to enter into and diligently
pursue negotiations in order to amend such financial covenant or restriction so
as to equitably reflect such change, with the desired result that the criteria
for evaluating the financial condition and results of operations of the Company
and its Subsidiaries shall be the same after such change as if such change had
not been made. Pending the resolution of any such negotiations, the Guarantors
agree to provide to each of the Lenders such unaudited financial information and
pro forma statements using the accounting methods and principles used in the
preparation of the audited financial statements for the fiscal year ended
January 26, 1997, as are necessary to enable the Lenders to test the financial
covenants contained herein.
ARTICLE II. GUARANTEE. (a) Subject to the provisions of
Section 2(b), each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative Agent, for the
ratable benefit of the Lenders and their respective successors, indorsees,
transferees and assigns, the prompt and complete payment by the Borrower when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations.
(b) Anything herein or in any other Credit Document to the
contrary notwithstanding, (i) the Guarantors shall not at any time be required
to make any payment hereunder in respect of the principal of any Tranche B Loans
unless at such time a Lease Event of Default under any Lease has occurred and is
continuing, and (ii) the maximum liability of each Guarantor hereunder shall in
no event exceed the maximum amount which can be validly guaranteed by such
Guarantor under applicable Laws relating to the insolvency of debtors. An
acknowledgment of such limit may be contained in the letter agreement executed
after the Effective Date by any additional Guarantor if required by applicable
Law.
(c) Each Guarantor further agrees, jointly and severally, to
pay any and all reasonable expenses (including, without limitation, all fees and
disbursements of counsel) which may be paid or incurred by any Agent or any
Lender in enforcing, or obtaining advice of counsel in respect of, any rights
with respect to, or collecting, any or all of the Obligations and/or enforcing
any rights with respect to, or collecting against, any Guarantor under this
Guarantee. This Guarantee shall remain in full force and effect until the
Obligations and all amounts owing hereunder are paid in full and the Commitments
are terminated, notwithstanding that from time to time prior thereto the
Borrower may be free from any Obligations.
<PAGE> 7
(d) Each Guarantor agrees that the Obligations may at any time
and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing this Guarantee or affecting the rights and remedies
of any Agent or any Lender hereunder.
(e) No payment or payments made by the Borrower, any of the
Guarantors, any other guarantor or any other Person or received or collected by
any Agent or any Lender from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment or payments other than payments made by
such Guarantor in respect of the Obligations or payments received or collected
from such Guarantor in respect of the Obligations, remain liable for the
Obligations up to the maximum liability of such Guarantor hereunder until the
Obligations and all amounts owing hereunder are paid in full and the Commitments
are terminated.
(f) Each Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to any Agent or any Lender on account of
its liability hereunder, it will notify the Administrative Agent in writing that
such payment is made under this Guarantee for such purpose.
ARTICLE III. RIGHT OF CONTRIBUTION. Each Guarantor hereby
agrees that to the extent that a Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor shall be
entitled to seek and receive contribution from and against any other Guarantor
hereunder who has not paid its proportionate share of such payment. Each
Guarantor's right of contribution shall be subject to the terms and conditions
of Article V hereof. The provisions of this Article III shall in no respect
limit the obligations and liabilities of any Guarantor to the Agents and the
Lenders, and each Guarantor shall remain liable to the Agents and the Lenders
for the full amount guaranteed by such Guarantor hereunder.
ARTICLE IV. RIGHT OF SET-OFF. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of a Lease Event of Default
or an Event of Default under the Credit Agreement, each of the Agents, each
Lender and each Participant is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to any
Guarantor or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special) and any other Indebtedness at any time held or owing by the such Agent,
such Lender or such Participant (including, without limitation, by branches and
agencies of such Agent, such Lender or such Participant wherever located) to or
for the credit or the account of any Guarantor against and on account of the
obligations and liabilities of such Guarantor hereunder or under any of the
other Operative Agreements, and all other claims of any nature or description
arising out of or connected with this Guarantee or any other Operative
Agreement, irrespective of whether or not such Agent, such Lender or such
Participant shall have made any demand hereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
<PAGE> 8
ARTICLE V. NO SUBROGATION. Notwithstanding any payment or
payments made by any of the Guarantors hereunder or any set-off or application
of funds of any of the Guarantors by any Agent or any Lender, no Guarantor shall
be entitled to be subrogated to any of the rights of any Agent or any Lender
against the Borrower or any other Person or any collateral security or guarantee
or right of offset held by any Agent or any Lender for the payment of the
Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from the Borrower or any other Person in respect
of payments made by such Guarantor hereunder, until all amounts owing to the
Agents and the Lenders by the Borrower on account of the Obligations and all
amounts owing hereunder are paid in full and the Commitments are terminated. If
any amount shall be paid to any Guarantor on account of such subrogation rights
at any time when all of the Obligations and all amounts owing hereunder shall
not have been paid in full or the Commitments shall not have been terminated,
such amount shall be held by such Guarantor in trust for the Agents and the
Lenders, segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Administrative Agent in
the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Administrative Agent, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Administrative Agent may
determine.
ARTICLE VI. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS;
WAIVER OF RIGHTS. Each Guarantor shall remain obligated hereunder
notwithstanding that, without any reservation of rights against any Guarantor
and without notice to or further assent by any Guarantor, any demand for payment
of any of the Obligations made by any Agent or any Lender may be rescinded by
such party and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by any Agent or any
Lender, and the Credit Agreement and the other Operative Agreements and any
other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Administrative
Agent (or the Required Lenders, as the case may be) may deem advisable from time
to time, and any collateral security, guarantee or right of offset at any time
held by any Agent or any Lender for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. Neither any Agent nor any Lender
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Obligations or for this Guarantee or any
property subject thereto. When making any demand hereunder against any of the
Guarantors, any Agent or any Lender may, but shall be under no obligation to,
make a similar demand on the Borrower or any other Guarantor or guarantor, and
any failure by any Agent or any Lender to make any such demand or to collect any
payments from the Borrower or any such other Guarantor or guarantor or any
release of the Borrower or such other Guarantor or guarantor shall not relieve
any of the Guarantors in respect of which a demand or collection is not made or
any of the Guarantors not so released of their several obligations or
liabilities hereunder, and shall not impair or affect the rights and remedies,
express or implied, or as a matter of law, of any Agent or any Lender against
any of the Guarantors. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.
<PAGE> 9
ARTICLE VII. GUARANTEE ABSOLUTE AND UNCONDITIONAL.
Each Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by any
Agent or any Lender upon this Guarantee or acceptance of this Guarantee; the
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Guarantee; and all dealings between the Borrower and any of the
Guarantors, on the one hand, and any Agent and the Lenders, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Guarantee. Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Borrower or any of the Guarantors with respect to the Obligations. Each
Guarantor understands and agrees that this Guarantee shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity, regularity or enforceability of the Credit Agreement or any
other Operative Agreement, any of the Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by any Agent or any Lender, (b) any defense,
set-off or counterclaim (other than a defense of payment or performance) which
may at any time be available to or be asserted by the Borrower against any Agent
or any Lender, or (c) any other circumstance whatsoever (with or without notice
to or knowledge of the Borrower or such Guarantor) which constitutes, or might
be construed to constitute, an equitable or legal discharge of the Borrower for
the Obligations, or of such Guarantor under this Guarantee, in bankruptcy or in
any other instance. When pursuing its rights and remedies hereunder against any
Guarantor, any Agent and any Lender may, but shall be under no obligation to,
pursue such rights and remedies as it may have against the Borrower or any other
Person or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by any Agent or any
Lender to pursue such other rights or remedies or to collect any payments from
the Borrower or any such other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release of
the Borrower or any such other Person or any such collateral security, guarantee
or right of offset, shall not relieve such Guarantor of any liability hereunder,
and shall not impair or affect the rights and remedies, whether express, implied
or available as a matter of law, of the Agents and the Lenders against such
Guarantor. This Guarantee shall remain in full force and effect and be binding
in accordance with and to the extent of its terms upon each Guarantor and the
successors and assigns thereof, and shall inure to the benefit of the Agents and
the Lenders, and their respective successors, indorsees, transferees and
assigns, until all the Obligations and the obligations of each Guarantor under
this Guarantee shall have been satisfied by payment in full and the Commitments
shall be terminated, notwithstanding that from time to time during the term of
the Credit Agreement the Borrower may be free from any Obligations.
ARTICLE VIII. REINSTATEMENT. This Guarantee shall continue to
be effective, or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any Agent or any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
<PAGE> 10
ARTICLE IX. PAYMENTS. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in U.S. Dollars at the Principal Office of the Administrative
Agent.
ARTICLE X. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In
order to induce the Lenders to enter into, and to amend and restate, the Credit
Agreement and to make and maintain the Loans as provided for therein, each
Guarantor makes the representations and warranties contained in Section 7.03 of
the Participation Agreement to, and agrees with, the Agents and the Lenders, all
of which shall survive the execution and delivery of the Credit Documents and
the making of the Loans (with the occurrence of each borrowing under the Credit
Agreement being deemed to constitute a representation and warranty that the
matters specified in this Article X are true and correct in all material
respects on and as of, and after giving effect to, the Effective Date and as of
the date of each such borrowing unless such representation and warranty
expressly indicates that it is being made as of any specific date in which case
such representation and warranty shall be true and correct in all material
respects as of such specific date).
ARTICLE XI. AFFIRMATIVE COVENANTS. Each Guarantor hereby
covenants and agrees that on the Effective Date and thereafter, for so long as
this Guarantee is in effect and until the Commitments have terminated and the
Obligations and all amounts owing hereunder are paid in full:
11.01. Preservation of Existence, etc. Each Guarantor shall,
and shall cause each of its Subsidiaries to maintain its corporate existence and
its license or qualification and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary; provided that (a) the Guarantors may engage in
transactions permitted by Section 12.06, and (b) with respect to Subsidiaries of
the Guarantors (other than the Guarantors themselves), such Subsidiaries may
fail to do so to the extent that such failure individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.
11.02. Payment of Liabilities, Including Taxes, etc. Each
Guarantor shall, and shall cause each of its Subsidiaries to, duly pay and
discharge all liabilities to which it is subject or which are asserted against
it, promptly as and when the same shall become due and payable, including all
taxes, assessments and governmental charges upon it or any of its Properties,
income or profits, prior to the date on which penalties attach thereto, except
to the extent that such liabilities, including taxes, assessments or charges,
are being contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other appropriate provisions,
if any, as shall be required by GAAP shall have been made, and except to the
extent that failure to discharge any such liabilities individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect;
provided that the Guarantors and their Subsidiaries will pay all such
liabilities forthwith upon the commencement of proceedings to foreclose any Lien
which may have attached as security therefor.
<PAGE> 11
11.03. Maintenance of Insurance. Each Guarantor shall, and
shall cause each of its Subsidiaries to, insure its Properties against loss or
damage by fire and such other insurable hazards as such assets are commonly
insured (including fire, extended coverage, property damage, worker's
compensation, public liability and business interruption insurance) and against
other risks (including errors and omissions) in such amounts as similar
properties and assets are insured by prudent companies in similar circumstances
carrying on similar businesses, and with reputable and financially sound
insurers, including self-insurance to the extent customary, all as reasonably
determined by the Administrative Agent. At the request of the Administrative
Agent, the Company shall deliver from time to time a summary schedule indicating
all insurance then in force with respect to each of the Guarantors.
11.04. Maintenance of Properties. Each Guarantor shall, and
shall cause each of its Subsidiaries to, maintain in good repair, working order
and condition (ordinary wear and tear excepted) in accordance with the general
practice of other businesses of similar character and size, all Property useful
or necessary to its business, and from time to time, each such Guarantor will
make or cause to be made all appropriate repairs, renewals or replacements
thereof except to the extent that the failure to do so individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
11.05. Maintenance of Patents, Trademarks, etc. Each Guarantor
shall, and shall cause each of its Subsidiaries to, maintain in full force and
effect all patents, trademarks, trade names, copyrights, licenses, franchises,
permits and other authorizations necessary for the ownership and operation of
its properties and business, except to the extent that the failure so to
maintain the same individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
11.06. Visitation Rights. Each Guarantor shall, and shall
cause each of its Subsidiaries to, permit any of the officers or authorized
employees or representatives of the Administrative Agent or any of the Lenders
to visit and inspect any of its properties and to examine and make excerpts from
its books and records and discuss its business affairs, finances and accounts
with its officers, all in such detail and at such times and as often as any of
the Lenders may reasonably request. Each Lender shall provide the Company and
the Administrative Agent with reasonable notice prior to any visit or
inspection; provided that no such notice shall be required after the occurrence
and during the continuation of a Lease Default or a Lease Event of Default. In
the event any Lender desires to conduct an audit of any Guarantor, such Lender
shall make a reasonable effort to conduct such audit contemporaneously with any
audit to be performed by the Administrative Agent. At the request of the
Administrative Agent, but not more frequently than once a year, the Guarantors
and their respective Authorized Officers shall hold a meeting of the Lenders, at
which the Guarantors will present an analysis of the financial performance of
the Company and its Subsidiaries during the previous Fiscal Year and a
discussion of the expected results of operations for the then current Fiscal
Year.
11.07. Keeping of Records and Books of Account. The Company
shall, and shall cause each Subsidiary of the Company to, maintain and keep
proper books of record and account which enable the Company and its Subsidiaries
to issue financial statements in accordance with GAAP and as otherwise required
by applicable Laws or any Official Body having jurisdiction over the Company or
any Subsidiary of the Company, and in which full, true and correct entries shall
be made in all material respects of all its dealings and business and financial
affairs.
<PAGE> 12
11.08. Plans and Benefit Arrangements. The Company shall, and
shall cause each of its Subsidiaries to, comply with ERISA, the Internal Revenue
Code and other applicable Laws applicable to Benefit Arrangements except where
failure to comply individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. Without limiting the generality of
the foregoing, the Company shall make, and cause each of its Subsidiaries to
make, in a timely manner, all contributions due to Benefit Arrangements.
11.09. Compliance with Laws. Each Guarantor shall, and shall
cause each of its Subsidiaries to, comply with all applicable Laws, including
all Environmental Laws, in all respects, provided that it shall not be deemed to
be a violation of this Section 11.09 if any failure to comply with any Law would
not result in fines, penalties, remediation costs, other similar liabilities or
injunctive relief which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect.
11.10. Subsequent Credit Terms. The Company shall notify the
Administrative Agent in writing not less than ten (10) Business Days prior to
any Guarantor entering into any credit agreement or any amendment or
modification to any existing credit agreement in either case as otherwise
permitted hereunder, pursuant to which any Guarantor agrees to representations,
warranties or covenants which are more restrictive, as determined in the sole
discretion of the Administrative Agent, than the representations, warranties or
covenants contained herein (the "More Restrictive Provisions"). Upon the
execution of such new credit agreement, amendment or modification, the
corresponding covenants, terms and conditions of this Guarantee shall be and
shall be deemed to be automatically and immediately amended to conform with and
to include the applicable More Restrictive Provisions of such new credit
agreement, amendment or modification; provided, that the foregoing shall not be
applicable to or be deemed to affect any provision of this Guarantee if any new
credit agreement, amendment or modification is less restrictive. Each of the
Guarantors hereby agrees promptly to execute and deliver any and all such
documents and instruments and to take all such further actions as the
Administrative Agent may, in its sole discretion, deem necessary or appropriate
to effectuate the provisions of this Section 11.10.
11.11. [Reserved]
11.12. Subsidiary Guarantees. If (i) any Restricted
Subsidiary's total assets determined in accordance with GAAP at the end of any
Fiscal Quarter constitute more than 10% of Consolidated Tangible Net Worth
determined at the end of such Fiscal Quarter or (ii) any Restricted Subsidiary's
net income determined in accordance with GAAP for any rolling four Fiscal
Quarter period exceeds 10% of Consolidated Net Income for such four Fiscal
Quarters, the Company shall cause such Restricted Subsidiary to execute a letter
agreement in form and substance satisfactory to the Administrative Agent
pursuant to which such Restricted Subsidiary shall become a Guarantor hereunder
and to deliver such legal opinions and other documents and instruments as the
Administrative Agent may request. Such letter agreement may include a limitation
on amount or a limitation on scope of such Guarantor's obligations, in a form
and substance satisfactory to the Administrative Agent to the extent required by
law or tax considerations.
ARTICLE XII. NEGATIVE COVENANTS. The Guarantors, jointly and
severally, covenant and agree that until payment in full of the Loans and
interest thereon,
<PAGE> 13
satisfaction of all of the Obligations under the Operative Agreements and
termination of the Commitments, the Guarantors shall comply at all times with
the following negative covenants:
12.01. Indebtedness. Each of the Guarantors shall not, and
shall not permit any of its Subsidiaries to, at any time create, incur, assume
or suffer to exist any Indebtedness, except:
(a) Indebtedness under the Operative Agreements;
(b) Indebtedness existing on the Effective Date as
set forth on Schedule 2, including Indebtedness under the
Corporate Credit Agreement (and any extensions or renewals
thereof provided there is no increase in the amount thereof or
other significant change in the terms thereof unless otherwise
specified on Schedule 2);
(c) Capitalized Lease Obligations;
(d) interest rate swap, cap, collar or floor
agreements or other interest rate management devices with any
Lender, referencing an aggregate notional amount not to
exceed, based on the reasonable business judgment of the
Company, the maximum principal amount outstanding at any time
of all Indebtedness of the Company and its Subsidiaries on a
consolidated basis plus an amount equal to 50% of Capitalized
Rent Expense, with such interest rate management devices to be
entered into for hedging purposes only and not for
speculation;
(e) Indebtedness secured by Purchase Money Security
Interests, so long as the amount of such Indebtedness does not
exceed the purchase price of the property which is subject to
such Purchase Money Security Interests;
(f) Indebtedness of an Unrestricted Subsidiary which
is a Domestic Subsidiary to another Unrestricted Subsidiary
which is a Domestic Subsidiary or to the Company;
(g) Indebtedness of the Company to an Unrestricted
Subsidiary which is a Domestic Subsidiary so long as such
Indebtedness is unsecured;
(h) Contingent Obligations as and to the extent
permitted under Section 12.03;
(i) Indebtedness of the Company and its Domestic
Subsidiaries in addition to Indebtedness otherwise permitted
by clauses (a) to (h) above with an aggregate principal Dollar
Equivalent amount outstanding not to exceed 20% of
Consolidated Tangible Net Worth (determined as of the last day
of the Fiscal Quarter most recently ended);
(j) unsecured Indebtedness of Foreign Subsidiaries
with an aggregate principal Dollar Equivalent amount
outstanding not to exceed $10,000,000 or Indebtedness of one
Foreign Subsidiary to another Foreign Subsidiary;
<PAGE> 14
(k) Permitted Sutro Refinancing Indebtedness, so long
as (A) the aggregate principal amount of any such Indebtedness
outstanding does not exceed $36,000,000, (B) the aggregate
principal amount of any such Indebtedness incurred, at the
date of incurrence, is at least 85% of the face value of the
amount of "Notes" (as defined in the Note Put Agreements)
purchased by Borders as required by Section 2.2 of the Note
Purchase Agreements, (C) any such Indebtedness is incurred no
sooner than the relevant "Tenant Purchase Date" (as defined in
the Note Put Agreements), (D) the representations, warranties
and covenants contained in the documentation with respect to
any such Indebtedness are no more restrictive, as determined
in the reasonable discretion of the Administrative Agent, than
the representations, warranties or covenants hereof, (E) the
maturity of any such Indebtedness is not less than two years
from the date of incurrence, and (F) on or before the date of
incurrence, the Guarantors shall have delivered to the Lenders
proforma financial statements, in form and substance
satisfactory to the Lenders, showing that, during the term of
such Indebtedness, based on reasonable projections of the
financial performance of the Guarantors, the Guarantors will
not be in violation of any of the financial covenants
contained in this Article XII;
(l) Any refinancing of any or all of the Indebtedness
of the Guarantors under the Guarantee on substantially the
terms described in Section 21.1 of the Form of Lease attached
as Exhibit G to the Participation Agreement.
12.02. Liens. Each of the Guarantors shall not, and shall not
permit any of its Subsidiaries to, at any time create, incur, assume or suffer
to exist any Lien on any of its Property now owned or hereafter acquired, or
agree or become liable to do so, except Permitted Liens.
12.03. Contingent Obligations. Each of the Guarantors shall
not, and shall not permit any of its Subsidiaries to, at any time, directly or
indirectly, become or be liable in respect of any Contingent Obligations, except
for:
(a) Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in
respect of obligations of the Company or any Unrestricted
Subsidiary which is a Domestic Subsidiary;
(b) Permitted Lease Contingent Obligations, provided
that the portion of all such Permitted Lease Contingent
Obligations which constitute current liabilities determined
and consolidated in accordance with GAAP (whether such amounts
are fixed or percentage rent, fees, costs, accelerated
payments or otherwise), shall not exceed Fifteen Million
Dollars ($15,000,000) at any one time;
(c) Contingent Obligations arising by operation of
any applicable law which individually or in the aggregate
could not reasonably be expected to have Material Adverse
Effect;
(d) any Contingent Obligations arising under the Note
Put Agreements;
<PAGE> 15
(e) any Contingent Obligations arising under any
computer leases with respect to which Kmart is the lessee and
any of the Guarantors is the user of such computer equipment;
(f) any Contingent Obligations arising under any of
the Kmart Agreements;
(g) Contingent Obligations arising under this
Guarantee, provided, however, that the aggregate amount of
Contingent Obligations permitted hereunder shall not exceed
$250,000,000;
(h) Contingent Obligations constituting a Permitted
Joint Venture Activity, provided no Event of Default or
Default has occurred and is continuing or would result
therefrom and subject to Section 12.20;
(i) Contingent Obligations constituting a Permitted
Restricted Subsidiary Activity, provided no Event of Default
or Default has occurred and is continuing or would result
therefrom and subject to Section 12.20;
(j) Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in
respect of any obligations (other than operating lease
obligations) of any Unrestricted Subsidiary which is a Foreign
Subsidiary, subject to Section 12.20;
(k) Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in
respect of operating lease obligations of any Unrestricted
Subsidiary which is a Foreign Subsidiary; provided that the
portion of all such Contingent Obligations which constitutes
current liabilities determined and consolidated in accordance
with GAAP is limited to lease payments (whether such amounts
are fixed or percentage rent, fees, costs, accelerated payment
requirements or otherwise) not in excess of an aggregate of
$15,000,000 in any Fiscal Year with respect to all
Unrestricted Subsidiaries which are Foreign Subsidiaries; and
(l) Contingent Obligations of any Unrestricted
Subsidiary which is a Foreign Subsidiary in respect of the
obligations of another Unrestricted Subsidiary which is a
Foreign Subsidiary.
12.04. Loans and Investments. Each of the Guarantors shall
not, and shall not permit any of its Subsidiaries to, at any time make or suffer
to remain outstanding any loan or advance to, or purchase, acquire or own any
stock, bonds, notes or securities of, or any partnership interest (whether
general or limited) in, or any other investment or interest in, or make any
capital contribution to, any other Person, or agree, become or remain liable to
do any of the foregoing, (collectively, "Investments"), except:
(a) trade credit extended on usual and customary
terms in the ordinary course of business;
<PAGE> 16
(b) advances to employees to meet expenses incurred by such
employees in the ordinary course of business;
(c) Permitted Investments;
(d) Investments by the Company in any Unrestricted Subsidiary
which is a Domestic Subsidiary or by any Unrestricted Subsidiary which
is a Domestic Subsidiary in the Company or an Unrestricted Subsidiary
which is a Domestic Subsidiary, so long as any loans or advances are
unsecured;
(e) Investments by the Company or by any Unrestricted
Subsidiary which is a Domestic Subsidiary in any Unrestricted
Subsidiary which is a Foreign Subsidiary, so long as any loans or
advances are unsecured; provided, however, that any such Investments
permitted by this clause (e) plus any Foreign Purchases pursuant to
clause (h) below may not exceed in the aggregate 15% of Consolidated
Tangible Net Worth (determined as of the last day of the Fiscal Quarter
most recently ended) and subject to Section 12.20;
(f) a Purchase of Books Etc. and its Subsidiaries (including
Books Etc. Properties Limited) corporations organized and existing
under the laws of England for a total purchase price (including
Indebtedness assumed) not to exceed $75,000,000, so long as no Default
or Event of Default has occurred and is continuing or would result
therefrom;
(g) Domestic Purchases (i) so long as no Default or Event of
Default has occurred and is continuing or would result therefrom, (ii)
so long as the assets or business subject to such Domestic Purchase is
in substantially the same or a similar type of business as the Company
and its Subsidiaries, (iii) so long as the Board of Directors of any
Person to be acquired has approved the terms of the Purchase, and (iv)
so long as the Company delivers to the Lenders on or before the date on
which it or any of its Subsidiaries agrees to or consummates any
Domestic Purchase pro forma financial statements, in form and substance
satisfactory to the Administrative Agent, showing that no Default or
Event of Default will occur under Sections 12.15, 12.16 or 12.17 over
the 12 month period following the effective date of the Purchase, based
on reasonable projections of the financial performance of the Company
and its Subsidiaries;
(h) Foreign Purchases (i) so long as no Default or Event of
Default has occurred and is continuing or would result therefrom, (ii)
so long as the assets or business subject to such Foreign Purchase is
in substantially the same or a similar type of business as the Company
and its Subsidiaries, (iii) so long as the Board of Directors of any
Person to be acquired has approved the terms of the Foreign Purchase,
(iv) so long as the aggregate purchase amount payable in cash for all
Foreign Purchases permitted by this clause (h) plus all Investments
pursuant to clause (e) above does not exceed 15% of Consolidated
Tangible Net Worth (determined as of the last day of the Fiscal Quarter
most recently ended) and subject to Section 12.20; and (v) so long as
the Company delivers to the Lenders on or before the date on which it
or any of its Subsidiaries agrees to or consummates any Foreign
Purchase pro forma financial statements, in form and substance
satisfactory to the Administrative Agent, showing that no Default or
Event of Default will occur under Sections 12.15, 12.16 or 12.17 over
the 12 month period following the effective date of
<PAGE> 17
the Purchase, based on reasonable projections of the financial
performance of the Company and its Subsidiaries;
(i) loans and advances, in addition to those permitted under
Section 12.04(b), to employees in an aggregate principal amount not to
exceed $10,000,000;
(j) Investments constituting Permitted Joint Venture
Activities, provided no Event of Default or Default has occurred and is
continuing or would result therefrom and subject to Section 12.20;
(k) Investments constituting Permitted Restricted Subsidiary
Activities, provided no Event of Default or Default has occurred and is
continuing or would result therefrom and subject to Section 12.20;
(l) repurchases of the Company's common stock in accordance
with Section 12.05; and
(m) Investments by one Foreign Subsidiary in another Foreign
Subsidiary.
12.05. Dividends and Related Distributions. The Company shall
not, and shall not permit any of its Subsidiaries to, make or pay, or agree to
become or remain liable to make or pay, any dividend or other distribution of
any nature (whether in cash, property, securities or otherwise) on account of or
in respect of its shares of capital stock or partnership interests or on account
of the purchase, redemption, retirement or acquisition of its shares of capital
stock (or warrants, options or rights therefor) (collectively, "Distributions"),
except:
(a) the Company may make open market repurchases of shares of
its common stock, and it may receive shares of its common stock as
payment of the exercise price of options, or as payment of taxes
associated with the exercise of options or the vesting of restricted
shares, which such delivered shares are deemed to be repurchased by the
Company at fair market value (as defined in the Company's stock option
plan) on the date of delivery to the Company, so long as the aggregate
amount paid by the Company with respect to all such repurchases
(including all such deemed repurchases) does not at any time exceed the
Repurchase Amount in effect from time to time and no Event of Default
or Default has occurred and is continuing or would result therefrom;
(b) the Company may engage in stock splits (including reverse
stock splits) or pay dividends in stock;
(c) Wholly-owned Subsidiaries may make Distributions to the
Company or another Wholly-owned Subsidiary;
(d) Subsidiaries other than Wholly-owned Subsidiaries may make
Distributions so long as (i) the aggregate amount of Distributions made
by any such Subsidiary to any Person other than the Company or a
Subsidiary of the Company in any Fiscal Year does not exceed 50% of
such Person's pro rata share (based on the percentage of stock or other
equity interests owned by such Person) of such Subsidiary's net income
for such Fiscal Year as determined in accordance with GAAP and (ii) no
later than ten (10) days prior to
<PAGE> 18
any such Distribution, the Company shall have given written notice to
the Lenders and the Agents thereof, together with calculations
demonstrating that such Distribution complies with this clause (d); and
(e) the Company may pay dividends on its preferred stock so
long as the dividend rate on such preferred stock (after taking into
account all other fees and amounts payable on such preferred stock) is
less than the interest rate payable on the Loans.
12.06. Liquidations, Mergers, Consolidations. Each of the
Guarantors shall not, and shall not permit any of its Subsidiaries to, dissolve,
liquidate or wind-up its affairs, or become a party to any merger or
consolidation, provided that any Guarantor (other than the Company) may
consolidate or merge into another Guarantor and any Subsidiary of a Guarantor
may consolidate or merge into any Guarantor or any Wholly-owned Subsidiary of a
Guarantor so long as (i) the Guarantor or a Wholly-owned Subsidiary is the
surviving corporation of such consolidation or merger and (ii) no Event of
Default shall have occurred and be continuing or result therefrom.
12.07. Dispositions of Assets or Subsidiaries. Each of the
Guarantors shall not, and shall not permit any of its Subsidiaries to, sell,
convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily
or involuntarily, any of its property (including sale, assignment, discount or
other disposition of accounts, contract rights, chattel paper, equipment or
general intangibles with or without recourse or any shares of capital stock,
shares of beneficial interest or partnership interests of a Subsidiary of such
Guarantor), except:
(a) transactions involving the sale of inventory in the
ordinary course of business;
(b) any sale, transfer or lease of property, including without
limitation any store closures, in the ordinary course of business
which are no longer necessary or required in the conduct of the
Guarantor's business;
(c) any sale or transfer of property in order to concurrently
or subsequently lease as lessee such property, so long as such sale and
leaseback occurs in the ordinary course of business;
(d) any sale, transfer or lease of property, by any Subsidiary
of an Unrestricted Subsidiary to such Unrestricted Subsidiary or to
another Unrestricted Subsidiary which is a Domestic Subsidiary;
(e) any sale, transfer or lease of property, in the ordinary
course of business which is replaced by substitute property; and
(f) any transfers to Kmart of "Premises" pursuant to the Kmart
Indemnity (as such term is defined therein) if and to the extent that
any such transfer does not cause an Event of Default under Section
9(i)(i) of the Credit Agreement.
12.08. Affiliate Transactions. Each of the Guarantors shall not, and
shall not permit any of its Subsidiaries to, enter into or carry out any
transaction (including purchasing
<PAGE> 19
property or services from or selling property or services to any Affiliate of
any Guarantor (other than another Guarantor) or other Person) unless such
transaction (i) is not otherwise prohibited by this Guarantee, (ii) is entered
into in the ordinary course of business upon fair and reasonable arm's-length
terms and conditions which are fully disclosed to the Administrative Agent and
(iii) is in accordance with all applicable Law.
12.09. Subsidiaries, Partnerships and Joint Ventures. Each of
the Guarantors shall not, and shall not permit any of its Subsidiaries to,
become or agree to become a general or limited partner, joint venturer or member
in any partnership, joint venture or limited liability company, as the case may
be, provided that the Company or any of its wholly-owned Subsidiaries may own or
create (a) any Wholly-owned Subsidiary, (b) any Unrestricted Subsidiary, (c) any
Restricted Subsidiary so long as (1) the aggregate of all Purchases by the
Company and its Subsidiaries of or Investments in or to such Restricted
Subsidiary is otherwise permitted under this Guarantee, and (2) no such
Restricted Subsidiary shall have Indebtedness which is recourse to or guaranteed
by the Company or any of its Subsidiaries except as otherwise permitted by this
Guarantee and (d) any Foreign Joint Venture so long as (1) the aggregate of all
Purchases by the Company and its Subsidiaries of or Investments by the Company
and its Subsidiaries in or to any such Joint Ventures is otherwise permitted by
this Guarantee, and (2) no such Joint Venture shall have Indebtedness which is
recourse to or guaranteed by the Company or any of its Subsidiaries, except as
otherwise permitted by this Guarantee.
12.10. Continuation of or Change in Business. Each of the
Guarantors shall not, and shall not permit any of its Subsidiaries to, engage in
any business other than (a) with respect to the Guarantors, substantially as
conducted and operated by such Guarantor during the Fiscal Year 1997 and (b)
with respect to any Subsidiary of a Guarantor, substantially as conducted and
operated by a Guarantor or in a business reasonably incidental and complementary
thereto or in an education-related retail business.
12.11. Plans and Benefit Arrangements. Each of the Guarantors
shall not, and shall not permit any of its Subsidiaries to:
(a) adopt, sponsor, maintain or make contributions to any
Plan, any Multiemployer Plan, any Multiple Employer Plan or except as
set forth on Schedule 5, any Benefit Arrangement that provides benefits
to retirees; or
(b) engage in a Prohibited Transaction with any Benefit
Arrangement which, alone or in conjunction with any other circumstances
or set of circumstances resulting in liability under ERISA, would have
a Material Adverse Effect.
12.12. Fiscal Year. Each of the Guarantors shall not, and
shall not permit any of its Subsidiaries to, change its Fiscal Quarter or change
its Fiscal Year.
12.13. Issuance of Stock. Each of the Guarantors (other than
the Company and any Unrestricted Subsidiary) shall not, and shall not permit any
of its Subsidiaries (other than Unrestricted Subsidiaries) to, issue any
additional shares of its capital stock or any options, warrants or other rights
in respect thereof, except to the Company or any Wholly-owned Subsidiary,
provided, however, that the Company shall not issue any preferred stock unless
the dividend rate thereon is permitted by Section 12.05(e).
<PAGE> 20
12.14. Changes in Organizational Documents. Each of the
Guarantors shall not, and shall not permit any of its Subsidiaries to, amend in
any respect its certificate of incorporation (including any provisions or
resolutions relating to capital stock), by-laws or other organizational
documents in the event such change would be adverse to the Lenders.
12.15. Minimum Fixed Charge Coverage Ratio. The Guarantors
shall not permit the Fixed Charge Coverage Ratio, calculated as of the end of
each Fiscal Quarter for the previous four Fiscal Quarters then ended, to be less
than 1.50 to 1.0.
12.16. Maximum Leverage Ratio. The Guarantors shall not permit
the Leverage Ratio (i) calculated as of the end of the third and fourth Fiscal
Quarters of Fiscal Year 1997 to exceed 60%, (ii) calculated as of the end of
each Fiscal Quarter of the Fiscal Year 1998 to exceed 60%, (iii) calculated as
of the end of each Fiscal Quarter of the Fiscal Year 1999 to exceed 55%, or (iv)
calculated as of the end of each Fiscal Quarter thereafter to exceed 50%.
12.17. Minimum Tangible Net Worth. The Guarantors shall not at
any time permit Consolidated Tangible Net Worth to be less than the sum of (i)
$430,000,000 plus (ii) 50% of the Consolidated Net Income for each Fiscal
Quarter in which net income was earned (with no deduction for a net loss) during
the period from July 28, 1997 through the last day of the Fiscal Quarter
immediately preceding the date of determination, plus (iii) 100% of the net cash
proceeds to the Company of any public or private issuance of equity securities,
minus (iv) the aggregate amount paid by the Company with respect to any
repurchase of its common stock and (v) in any event, without deduction of the
intangible assets arising from the Purchase permitted by Section 12.04(f).
12.18. Modifications of Other Documents. The Guarantors shall
not permit or otherwise consent to any amendment to or modification of any of
the Kmart Agreements or any of the Note Put Agreements which could reasonably be
expected to have a Material Adverse Effect, which would have the effect of
materially increasing the obligations of or burdens on the Guarantors or any of
their Subsidiaries thereunder or which would have the effect of shortening or
deleting any notice or cure period provided for therein.
12.19. Prepayment of Note Put Agreement Obligations. Each of
the Guarantors shall not, and shall not permit any of its Subsidiaries to, make
any payment or prepayment in respect of Border's obligations under any of the
Note Put Agreements at any time before a "Tenant Purchase Date" as defined in
the Note Put Agreements.
12.20. Foreign Activities. Notwithstanding anything in this
Article XII, the Company shall not, and shall not permit any of its Subsidiaries
to (i) incur any Contingent Obligation permitted under Section 12.03(j), or (ii)
make any Investment permitted under Section 12.04(e) [Foreign Investments],
Section 12.04(h) [Foreign Purchases], Section 12.04(j) in respect of a Foreign
Joint Venture [Foreign Joint Venture Activities], or Section 12.04(k) in respect
of a Foreign Restricted Subsidiary [Foreign Restricted Subsidiary Activities] if
immediately after incurring such Contingent Obligation or making such
Investment, the aggregate amount of all such Contingent Obligations and
Investments would exceed 25% of Consolidated Tangible Net Worth, determined as
of the last day of the Fiscal Quarter most recently ended.
<PAGE> 21
12.21. Inconsistent Agreements. Each of the Guarantors shall
not, and shall not permit any of its Subsidiaries to, become or remain subject
to any dividend restriction either in its organizational documents or in any
agreement or contract to which it is a party (other than restrictions in Section
12.05 hereof and in the Corporate Credit Agreement) nor shall any of them enter
into any indenture, agreement, instrument or other arrangement which, (a)
directly or indirectly prohibits or restrains, or has the effect of prohibiting
or restraining, or could reasonably be expected to impose materially adverse
conditions upon, the performance of the Obligations under the Operative
Agreements, any provisions of this Guarantee or the amending of any of the
Operative Agreements or (b) contains any provision which would be violated or
breached by the performance by any Guarantor or any of its Subsidiaries of any
of its obligations under any Operative Agreement.
ARTICLE XIII. REPORTING REQUIREMENTS. The Guarantors, jointly
and severally, covenant and agree that until payment in full of the Loans and
interest thereon, satisfaction of all of the Obligations and termination of the
Commitments, the Guarantors will furnish or cause to be furnished to the Agents
and each of the Lenders:
13.01. Quarterly Financial Statements. As soon as available
and in any event within forty-five (45) calendar days after the end of each of
the first three Fiscal Quarters in each Fiscal Year, consolidated financial
statements of the Company and its Subsidiaries, consisting of a consolidated
balance sheet as of the end of such Fiscal Quarter and related consolidated
statements of income, stockholders' equity and cash flows for the Fiscal Quarter
then ended and the Fiscal Year through that date, all in reasonable detail and
certified (subject to normal year-end audit adjustments) by an Authorized
Officer of the Company as having been prepared in accordance with GAAP,
consistently applied, and setting forth in comparative form the respective
financial statements for the corresponding date and period in the previous
Fiscal Year. As soon as available and in any event within forty-five (45)
calendar days after the end of each Fiscal Year of the Company, a certificate of
the Company signed by an Authorized Officer of the Company setting forth the
calculation of the Fixed Charge Coverage Ratio as of the end of such Fiscal
Year.
13.02. Annual Financial Statements. As soon as available and
in any event within ninety (90) days after the end of each Fiscal Year of the
Company, consolidated financial statements of the Company and its Subsidiaries
consisting of a consolidated balance sheet as of the end of such Fiscal Year,
and related consolidated statements of income, stockholders' equity and cash
flows for the Fiscal Year then ended, all in reasonable detail and setting forth
in comparative form the financial statements as of the end of and for the
preceding Fiscal Year, and certified by independent certified public accountants
of nationally recognized standing satisfactory to the Administrative Agent. The
certificate or report of accountants shall be free of qualifications (other than
any consistency qualification that may result from a change in the method used
to prepare the financial statements as to which such accountants concur) and
shall not indicate the occurrence or existence of any event, condition or
contingency which would materially impair the prospect of payment or performance
of any covenant, agreement or duty of any of the Guarantors under any of the
Operative Agreements.
13.03. Certificates of the Company. Concurrently with the
financial statements of the Company furnished to the Agents and to the Lenders
pursuant to Sections 13.01 and 13.02, a certificate of the Company signed by an
Authorized Officer of the Company, in the form of
<PAGE> 22
Exhibit A, (i) to the effect that, the representations and warranties of the
Guarantors contained in Section 7.03 of the Participation Agreement are true on
and as of the date of such certificate with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which expressly relate solely to an earlier date
or time), the Guarantors have performed and complied with all covenants and
conditions hereof, and no Event of Default or Default exists and is continuing
on the date of such certificate and (ii) containing calculations in sufficient
detail to demonstrate compliance as of the date of the financial statements with
all financial covenants contained in Article XII, and (iii) describing any
Permitted Joint Venture Activity or Permitted Restricted Subsidiary Activity
engaged in, or any Purchase made, during the period covered by such financial
statements.
13.04. Notice of Default. Promptly after any officer of any
Guarantor has learned of the occurrence of an Event of Default or Default, a
certificate signed by an Authorized Officer of the Company setting forth the
details of such Event of Default or Default and the action which the Guarantors
propose to take with respect thereto.
13.05. Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, proceedings or investigations before or
by any Official Body, arbitrator or any other Person against any Guarantor or
Subsidiary of any Guarantor which involve a claim or series of claims in excess
of $10,000,000 or which if adversely determined could reasonably be expected to
have a Material Adverse Effect.
13.06. Certain Events. Written notice of:
(a) promptly after the adoption thereof, any amendment to the
organizational documents of any Guarantor;
(b) promptly, the enactment or adoption of any Law which could
reasonably be expected to have a Material Adverse Effect;
(c) promptly, and in any event within two (2) Business Days
after any Guarantor's receipt thereof, a copy of any notice received by
the Guarantors that a default (whether matured or unmatured) has
occurred under the Kmart Indemnity (as distinct from a request for
reimbursement under Section 2(a) thereof); and
(d) promptly, and in any event within two (2) Business Days
after any Guarantor's receipt thereof, a copy of any notice received by
the Guarantors under any of the Note Put Agreements.
13.07. Other Reports and Information. Promptly upon their
becoming available to the Company:
(a) any reports, including management letters, submitted to
the Company by independent accountants in connection with any annual,
interim or special audit;
(b) any reports, notices or proxy statements generally
distributed by the Company to its stockholders on a date no later than
the date supplied to the stockholders;
<PAGE> 23
(c) regular or periodic reports, including Forms 10-K, 10-Q
and 8-K, registration statements and prospectuses, filed by the Company
with the Securities and Exchange Commission; and
(d) such other reports and information as the Lenders may from
time to time reasonably request.
13.08. Notices Regarding Benefit Arrangements. Promptly upon
becoming aware of the occurrence thereof, notice (including the nature of the
event and, when known, any action taken or threatened by the Internal Revenue
Service or the PBGC with respect thereto) of:
(a) any Reportable Event with respect to the Company or any of
its Subsidiaries (regardless of whether the obligation to report said
Reportable Event to the PBGC has been waived),
(b) any Prohibited Transaction that could subject the Company
or any of its Subsidiaries to a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Internal Revenue Code in connection with any Benefit Arrangement or any
trust created thereunder,
(c) any change in the coverage or terms of any Benefit
Arrangement, where the effect of such change is to materially increase
the unfunded liability of any of the Guarantors or any of their
Subsidiaries under such Benefit Arrangement, or
(d) any claim or lawsuit is commenced or, to the knowledge of
any of the Guarantors, threatened with respect to any Plan,
Multiemployer Plan or Benefit Arrangement, which, if successful, could
result in a material liability of the Company or any of its
Subsidiaries.
13.09. Access to the Company's Auditors. The Company hereby
irrevocably authorizes all accountants and third parties to disclose and deliver
to the Lenders, upon the reasonable request of the Administrative Agent, and at
the Company's expense, all financial information, books and records, work
papers, management reports and other information in their possession relating to
the financial condition of the Company and its Subsidiaries (other than those
subject to attorney-client privilege or written confidentiality agreements
furnished to the Administrative Agent).
13.10. Notices Regarding Corporate Credit Agreement.
(a) promptly, and in any event within five (5) days after the
execution thereof, a copy of any amendment or modification to or waiver in
respect to the Corporate Credit Agreement; and
(b) promptly, and in any event within five (5) days after the
occurrence thereof, written notice of any matured or unmatured default under the
Corporate Credit Agreement.
13.11. Notices Regarding Repurchases of Stock. Promptly, and
in any event within five (5) Business Days, after the repurchase by the Company
of any of its common stock, written
<PAGE> 24
notice thereof (including the number of shares repurchased, the amount paid by
the Company with respect to such repurchase and the date of such repurchase).
ARTICLE XIV. AUTHORITY OF ADMINISTRATIVE AGENT. Each Guarantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Guarantee with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and such Guarantor, the Administrative Agent
shall be conclusively presumed to be acting as Administrative Agent for the
Lenders with full and valid authority so to act or refrain from acting, and no
Guarantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
ARTICLE XV. NOTICES. All notices, requests and demands to or
upon any Agent, any Lender or any Guarantor shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three (3) Business Days after
being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows:
(a) if to any Agent or any Lender, at its address or
transmission number for notices provided in Section 12.02 of the
Credit Agreement; and
(b) if to any Guarantor, at its address or transmission number
for notices set forth opposite its signature below.
Each Agent, each Lender and each Guarantor may change its
address and transmission numbers for notices by notice in the manner provided in
this Article XV.
ARTICLE XVI. COUNTERPARTS. This Guarantee may be executed by
one or more of the Guarantors on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the counterparts of this Guarantee signed by all the
Guarantors shall be lodged with the Administrative Agent.
ARTICLE XVII. SEVERABILITY. Any provision of this Guarantee
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
<PAGE> 25
ARTICLE XVIII. INTEGRATION. This Guarantee represents the
agreement of each Guarantor with respect to the subject matter hereof and there
are no promises or representations by any Agent or any Lender relative to the
subject matter hereof not reflected herein.
ARTICLE XIX. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE
REMEDIES. (a) None of the terms or provisions of this Guarantee may be waived,
amended, supplemented or otherwise modified except as provided in Section 12.01
of the Credit Agreement.
(b) Neither any Agent nor any Lender shall by any act (except
by a written instrument pursuant to Section XIX(a) hereof), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of any Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by any Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which such Agent
or such Lender would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
ARTICLE XX. SECTION HEADINGS. The section headings used in
this Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
ARTICLE XXI. SUCCESSORS AND ASSIGNS. This Guarantee shall be
binding upon the successors and assigns of each Guarantor and shall inure to the
benefit of the Agents and the Lenders and their successors and assigns.
ARTICLE XXII. RELEASES OF GUARANTORS, ETC. Any Guarantor may
be released from its obligations hereunder with the consent of the Required
Lenders or all the Lenders, as the case may be, as provided in Section 12.01 of
the Credit Agreement. At the time of any such sale or disposition or release,
the respective Guarantor shall cease to be a Guarantor hereunder and shall have
no further liability or obligations arising from this Guarantee.
ARTICLE XXIII. JURY TRIAL; SUBMISSION TO JURISDICTION;
WAIVERS.
(a) EACH GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
<PAGE> 26
PROCEEDING RELATING TO THIS GUARANTEE OR ANY OTHER OPERATIVE
AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(B) Each Guarantor hereby irrevocably and unconditionally:
(I) submits for itself and its property in all legal
action or proceeding relating to this guarantee or any other operative
agreement to which it is a party, or for recognition and enforcement of
any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States for the Southern District of New York, and appellate
courts from any thereof;
(II) consents that any such action or proceeding may be
brought in such courts and waives trial by jury and any objection that
it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was
brought in any inconvenient court and agrees not to plead or claim the
same;
(III) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to it at its address set forth herein or at such other address
of which the administrative agent shall have been notified pursuant
thereto;
(IV) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(V) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Article XXIII any special, exemplary,
punitive or consequential damages.
ARTICLE XXIV. INDEMNITY. The Guarantors jointly and severally
agree to (a) indemnify the Administrative Agent, each Lender, and their
respective officers, directors, employees, representatives and agents from and
hold each of them harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising out of,
or in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not any Agent or any Lender is a party thereto)
related to the entering into and/or performance of any Operative Agreement or
the use of the proceeds of any Loans or the consummation of any other
transactions contemplated in any Operative Agreement, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified) and (b) reimburse each Lender for any payments
required to be made by such Lender to the Administrative Agent in accordance
with Section 10.07 of the Credit Agreement. The agreements in this Article XXIV
shall survive repayment of the Notes and all other amounts payable hereunder or
under the other Credit Documents.
<PAGE> 27
ARTICLE XXV. GOVERNING LAW. This Guarantee shall be governed
by, and construed and interpreted in accordance with, the law of the State of
New York.
<PAGE> 28
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee to be duly executed and delivered by its duly authorized officer as of
the day and year first above written.
Address for any Guarantor:
-------------------------
c/o Borders Group, Inc.
500 East Washington Street
Ann Arbor, Michigan 48104
Telecopier No.: (313) 995-8265
Attention: Thomas D. Carney
Telephone No.: (313) 913-1977
BORDERS GROUP, INC.
BORDERS, INC.
WALDEN BOOK COMPANY, INC.
BORDERS PROPERTIES, INC.
WALDENBOOKS PROPERTIES, INC.
PLANET MUSIC, INC.
BORDERS ONLINE, INC.
BORDERS OUTLET, INC.
THE LIBRARY, LTD.
By
-------------------------
Title:
------------------
BORDERS FULFILLMENT, INC.
By
-------------------------
Title:
------------------
BGP (UK) LIMITED
By
-------------------------
Title:
------------------
<PAGE> 29
Exhibit A
to the Guarantee
----------------
FORM OF COMPLIANCE CERTIFICATE
[For the quarter ended ____________]
Reference is made to that certain Amended and Restated
Guarantee Agreement (as amended, the "Guarantee") dated as of November 22, 1997
and amended and restated October ____, 1997 by and among Borders Group, Inc.
(the "Company"), Borders, Inc., Walden Book Company, Inc. and certain other
subsidiaries of Borders Group, Inc., as Guarantors, the Lenders, as defined
therein, and PNC Bank, National Association, as Administrative Agent.
Capitalized terms used but not defined herein shall have the
meanings given to them in the Guarantee. This certificate is being delivered
pursuant to the requirements of Section 13.03 of the Guarantee.
The undersigned, an Authorized Officer of the Company, hereby
certifies that:
1. The undersigned has reviewed the terms of the Guarantee and
the other Operative Agreements and has made, or caused to be made under
his supervision, a review of the transactions and conditions of the
Guarantors during the accounting period covered by the financial
statements being delivered simultaneously herewith;
2. Such review has not disclosed the existence during such
accounting period, and the undersigned does not have knowledge of the
existence as of the date hereof, of any Event of Default or any
Default; and
3. The representations and warranties contained in Article X
of the Guarantee are true on and as of the date hereof (except
representations and warranties that expressly relate solely to an
earlier date or time, which representations and warranties were true on
and as of the specific date referred to therein).
The undersigned hereby further certifies that the following calculations
demonstrate for the Fiscal Quarter ending ____________, _____ (the "Period"),
which is the [First] [Second] [Third] [Fourth] Fiscal Quarter, compliance by the
Guarantors with the financial covenants contained in Article XII of the
Guarantee.
<PAGE> 30
<TABLE>
<S> <C> <C> <C>
1. Indebtedness
a. Aggregate outstanding principal amount of
all Indebtedness $__________
b. Capitalized Rent Expense
(i) Rent Expense $__________
(ii) Lease Financing Rent Expense $__________
(iii) 4 x ((I) + (ii)) $__________
c. Maximum aggregate notional amount of all interest rate
management devices permitted
byss.12.01(b) [a + (b x 50%)] $__________
d. Actual aggregate notional amount of all
interest rate management devices. $__________
e. Consolidated Tangible Net Worth (see
8(b)(iii) below $__________
f. Maximum aggregate amount of additional Indebtedness of the
Company and its Domestic Subsidiaries permitted by
ss. 12.01(i) [e x 20%] $__________
g. Actual aggregate amount of additional
Indebtedness of the Company and its Domestic
Subsidiaries $__________
h. Maximum aggregate amount of Indebtedness of
Foreign Subsidiaries to third parties permitted byss.12.01(j) $10,000,000
i. Actual aggregate amount of Indebtedness of
Foreign Subsidiaries to third parties $__________
2. Permitted Liens
a. Consolidated Tangible Net Worth (See 8(b)(iii) below) $__________
</TABLE>
<PAGE> 31
<TABLE>
<S> <C> <C> <C>
b. Maximum aggregate fair market value of all property secured by
Liens permitted under clause (xi) of the definition
of "Permitted Liens" [a x 10%] $__________
c. Actual aggregate fair market value of all property secured by
Liens permitted under clause (xi) of the definition
of "Permitted Liens" $__________
3. Contingent Obligations
a. Maximum aggregate amount of current portion
of Permitted Lease Contingent Obligations
permitted byss.12.03(b) $15,000,000
b. Actual aggregate amount of current portion of
Permitted Lease Contingent Obligations $__________
c. Maximum aggregate amount of Contingent obligations of the
Company or any Unrestricted Subsidiary which is a Domestic
Subsidiary in respect of operating lease obligations of any
Unrestricted Subsidiary
which is a Foreign Subsidiary $15,000,000
d. Actual aggregate amount of Contingent Obligations of the
Company or any Unrestricted Subsidiary which is a Domestic
Subsidiary in respect of operating lease obligations of any
Unrestricted Subsidiary which
is a Foreign Subsidiary $__________
4. Loans and Investments
a. Consolidated Tangible Net Worth (see 8(b)(iii) below) $__________
b. Maximum aggregate amount of all Investments by Company and
Domestic Subsidiaries in Foreign Unrestricted Subsidiaries
permitted by ss. 12.04(e)
plus Foreign Purchases [a x 15%] $__________
c. Actual aggregate amount of all Investments permitted by ss.
12.04(e) by Company and Domestic
Subsidiaries in Foreign Unrestricted Subsidiaries $__________
</TABLE>
<PAGE> 32
<TABLE>
<S> <C> <C> <C>
d. Actual aggregate amount of all Foreign Purchases
by Company and Domestic Subsidiaries $__________
e. c + d $__________
f. Maximum aggregate principal amount of all
loans to employees $10,000,000
g. Actual aggregate principal amount of all
loans to employees $__________
5. Dividends and Distributions
a. Maximum permitted aggregate amount of repurchases
of the Company's stock
i. aggregate amount paid by
officers, employees, and
directors in connection with the
exercise of options $__________
ii. realized tax benefit $__________
iii. ($100,000 + i + ii ) $__________
b. Actual aggregate amounts paid for repurchases of
the Company's stock $__________
c. See Schedule 1 hereto
6. Minimum Fixed Charge Coverage Ratio
a. Minimum Fixed Charge Coverage Ratio 1.50 to 1.0
b. Actual Fixed Charge Coverage Ratio:
(i) Consolidated Cash Flow from Operations:
(A) Consolidated Net income
for the preceding four
Fiscal Quarters $_________
</TABLE>
<PAGE> 33
<TABLE>
<S> <C> <C> <C>
(B) Less Extraordinary gains ($________)
(C) Plus Income (minus loss)
of minority investments $_________
(D) Plus Depreciation and
amortization $_________
(E) Plus Interest expense $_________
(F) Plus Rent Expense $_________
(G) Plus Lease Financing
Rent Expense $_________
(H) Plus Income Tax expense $_________
(I) Exclude Losses
attributable to use of
fair value
methodology for
recognition and
measurement of
impairment of goodwill
in accordance with
Accounting Principles
Board Opinion No. 17 $_________
(J) Consolidated Cash Flow
from Operations [A-B-C+
D+E+F+G+H-I] $_________
(ii) Fixed Charges:
(A) Interest Expense $_________
(B) Rent Expense $_________
(C) Lease Financing
Rent Expense $_________
(D) Scheduled principal
installments on
Indebtedness $_________
</TABLE>
<PAGE> 34
<TABLE>
<S> <C> <C> <C> <C>
(E) Fixed charges
[A+B+C+D] $_________
c. Ratio of (i)(J) to (ii)(E) ______ to 1.0
7. Maximum Leverage Ratio (expressed as a percentage)
a. Required Leverage Ratio
I. third and fourth Fiscal Quarter in
Fiscal Year 1997 60%
ii. each Fiscal Quarter in
Fiscal Year 1998 60%
iii. each Fiscal Quarter in
Fiscal Year 1999 55%
iv. each Fiscal Quarter after
Fiscal Year 1999 50%
b. Actual Leverage Ratio:
(i) Consolidated Funded
Indebtedness (Indebtedness
for borrowed money, including
Capitalized Lease Obligations
($__________) plus Contingent
Obligations in respect of
borrowed money or Capitalized
Lease Obligations ($__________)
plus Contingent Obligations arising under
----
the Lease Financing Guarantee ($__________) $__________
(ii) Consolidated Total Capital:
(A) Total stockholders equity $__________
(B) Consolidated Funded
Indebtedness (see (I)
above) $__________
(C) (A) + (B) $__________
</TABLE>
<PAGE> 35
<TABLE>
<S> <C> <C> <C>
(iii) Ratio of (i) to (ii)(C) ____%
8. Minimum Tangible Net Worth
a. Required Consolidated Tangible Net Worth:
(i) $430,000,000
(ii)(A) Consolidated Net Income for
the period from July 28,
1997 through the end of the
Fiscal Quarter immediately
preceding the date hereof $_________
(B) 50% x (A) $_________
(iii) Net cash proceeds of any
issuance of equity
securities $_________
(iv) the aggregate amount paid
to repurchase stock $_________
(v) (i) + (ii)(B) + (iii) - (iv) $__________
b. Actual Consolidated Tangible Net Worth:
(i) Total stockholders' equity
as of the end of the Period $_________
(ii) Intangible assets of the Company and its
Subsidiaries on a consolidated basis as of the end
of the Period (excluding intangible assets from
the Books Etc. Limited Purchase permitted by ss.
12.04(f)) $_________
(iii) (i) - (ii) $__________
9. Foreign Activities
a. Consolidated Tangible Net Worth
(See 8(b)(iii)above) $__________
</TABLE>
<PAGE> 36
<TABLE>
<S> <C> <C> <C>
b. Maximum permitted aggregate amount of Contingent Obligations
permitted under ss. 12.03(j) and Investments permitted under
ss.ss. 12.04(e), 12.04(h), 12.04(j) in respect of a Foreign
Joint Venture, and ss. 12.04(k) in respect of a Foreign
Restricted
Subsidiary [a x 25%] $__________
c. Actual aggregate amount of Contingent Obligations permitted
under ss. 12.03(j) and Investments permitted under ss.ss.
12.04(e), 12.04(h), 12.04(j) in respect of a Foreign Joint
Venture, and ss. 12.04(k) in respect of a Foreign Restricted
Subsidiary $__________
10. Permitted Joint Venture Activity
a. Consolidated Tangible Net Worth
(See 8(b)(iii) above) $__________
b. Maximum permitted aggregate amount of all Investments in Joint
Ventures and Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in
respect of Indebtedness of Joint Ventures
[a x 15%] $__________
c. Actual aggregate amount of all Investments in Joint Ventures
($________) and Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in
respect of Indebtedness of
Joint Ventures($________) $__________
d. Maximum permitted aggregate amount of Contingent Obligations
of the Company or any Unrestricted Subsidiary which is a
Domestic Subsidiary relating to Leases of Joint Ventures $15,000,000
</TABLE>
<PAGE> 37
<TABLE>
<S> <C> <C>
e. Actual aggregate amount of Contingent Obligations of the
Company or any Unrestricted Subsidiary which is a
Domestic Subsidiary relating to Leases of Joint Ventures $__________
11. Permitted Restricted Subsidiary Activity
a. Consolidated Tangible Net Worth
(See 8(b)(iii) above) $__________
b. Maximum permitted aggregate amount of all Investments by the
Company or Unrestricted Domestic Subsidiary in Restricted
Subsidiaries and Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in
respect of Indebtedness of Restricted
Subsidiaries [a x 20%] $__________
c. Actual aggregate amount of all Investments by the Company or
Unrestricted Domestic Subsidiary in Restricted Subsidiaries
($_________) and Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in
respect of Indebtedness of Restricted
Subsidiaries ($________) $__________
d. Maximum permitted aggregate amount of all Investments by the
Company or Unrestricted Domestic Subsidiary and Contingent
Obligations of the Company or any Unrestricted Subsidiary
which is a Domestic Subsidiary in respect of Indebtedness of
Restricted Subsidiaries which are Foreign
Subsidiaries [a x 15%] $__________
e. Actual aggregate amount of
all Investments by the Company or Unrestricted Domestic
Subsidiary and Contingent Obligations of the Company or any
Unrestricted Subsidiary which is a Domestic Subsidiary in
respect of Indebtedness of Restricted Subsidiaries which are
Foreign
Subsidiaries $__________
</TABLE>
<PAGE> 38
<TABLE>
<S> <C> <C>
f. Maximum permitted aggregate amount of Contingent Obligations
of the Company or any Unrestricted Subsidiary which is a
Domestic
Subsidiary relating to Leases of Restricted Subsidiaries $15,000,000
g. Actual aggregate amount of Contingent Obligations of the
Company or any Unrestricted Subsidiary which is a Domestic
Subsidiary relating
to Leases of Restricted Subsidiaries $__________
11. Description of any Permitted Joint Venture Activity
or Permitted Restricted Subsidiary Activity engaged
in, or any Purchase Made, During the Period
[Describe transactions, including amounts involved]
IN WITNESS WHEREOF, the undersigned has caused this Compliance
Certificate to be executed and delivered this _____ day of _____________, _____.
BORDERS GROUP, INC.
By:
Title:
[Authorized Officer]
</TABLE>
<PAGE> 39
<TABLE>
<CAPTION>
Schedule 1
Maximum
Distribution
Minority to Minority Actual Distributions
Shareholders pro Shareholders Made to Minority
Minority Net Income rata Share of Net (50% of pro Shareholders
Subsidiary Shareholders Percent Ownership Year to Date Income rata share) During Fiscal Year
- ---------- ------------ ----------------- ------------ --------------------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 1
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
(dollars in millions except per share data) EXHIBIT 11.1 TO FORM 10-Q REPORT
PRIMARY EARNINGS PER COMMON SHARE: 13 WEEKS ENDED 39 WEEKS ENDED
October 26, 1997 October 27,1997
Net Income $ 0.4 $ 1.3
Weighted average
shares outstanding (000's) 82,361 82,294
------- ---------
Primary E.P.S. $ 0.00 $ 0.02
======= ======
FULLY DILUTED EARNINGS PER COMMON SHARE:
Net Income $ 0.4 $ 1.3
Weighted average
shares outstanding (000's) 82,387 82,500
------- ---------
Fully Diluted E.P.S. $ 0.00 $ 0.02
======= ======
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-25-1997
<PERIOD-START> JUL-28-1997
<PERIOD-END> OCT-26-1997
<CASH> 77
<SECURITIES> 0
<RECEIVABLES> 54
<ALLOWANCES> 0
<INVENTORY> 988
<CURRENT-ASSETS> 1,119
<PP&E> 635
<DEPRECIATION> 276
<TOTAL-ASSETS> 1,622
<CURRENT-LIABILITIES> 1,082
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 507
<TOTAL-LIABILITY-AND-EQUITY> 1,622
<SALES> 477
<TOTAL-REVENUES> 477
<CGS> 355
<TOTAL-COSTS> 355
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> 1
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
