<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
AUGUST 2, 1997 1-5287
PATHMARK STORES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2879612
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
301 BLAIR ROAD, P.O. BOX 5301 07095-0915
WOODBRIDGE, NEW JERSEY (Zip Code)
(Address of principal executive offices)
(732) 499-3000
(Registrant's telephone number, including area code)
-------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
JUNIOR SUBORDINATED DEFERRED COUPON NOTES DUE 2003
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
-------------------
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
------- -------
As of August 2, 1997, there were outstanding 100 shares of Common Stock,
$0.10 par value, all of which are privately owned and not traded on a public
market.
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<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
PATHMARK STORES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
13 WEEKS ENDED 26 WEEKS ENDED
------------------------------- -------------------------------
AUGUST 2, AUGUST 3, AUGUST 2, AUGUST 3,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales.............................................. $ 931,833 $ 931,237 $ 1,854,152 $ 1,844,074
Cost of sales (exclusive of depreciation and
amortization shown separately below)............ 669,683 656,540 1,332,740 1,303,353
------------ ------------ ------------ ------------
Gross profit....................................... 262,150 274,697 521,412 540,721
Selling, general and administrative expenses....... 213,095 214,957 425,436 428,637
Depreciation and amortization...................... 19,942 21,410 40,116 42,049
------------ ------------ ------------ ------------
Operating earnings................................. 29,113 38,330 55,860 70,035
Interest expense................................... (41,262) (40,470) (82,552) (80,359)
------------ ------------ ------------ ------------
Loss before income tax benefit and
extraordinary items............................. (12,149) (2,140) (26,692) (10,324)
Income tax benefit................................. 4,836 699 10,537 4,020
------------ ------------ ------------ ------------
Loss before extraordinary items.................... (7,313) (1,441) (16,155) (6,304)
Extraordinary items, net of an income tax
benefit......................................... (7,488) (204) (7,488) (877)
------------ ------------ ------------ ------------
Net loss........................................... $ (14,801) $ (1,645) $ (23,643) $ (7,181)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See notes to consolidated financial statements (unaudited).
1
<PAGE>
PATHMARK STORES, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands except share amounts)
<TABLE>
<CAPTION>
AUGUST 2, FEBRUARY 1,
1997 1997
------------- -------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents.......................... $ 7,669 $ 9,880
Accounts receivable, net........................... 11,413 12,492
Merchandise inventories............................ 196,339 216,931
Income taxes receivable............................ 1,725 --
Deferred income taxes.............................. 7,029 7,111
Prepaid expenses................................... 24,998 24,951
Due from suppliers................................. 10,856 13,923
Other current assets............................... 7,505 5,908
------------- -------------
Total current assets............................ 267,534 291,196
Property and equipment, net............................ 560,616 603,577
Deferred financing costs, net.......................... 20,802 28,743
Deferred income taxes.................................. 38,920 22,846
Other assets........................................... 45,684 43,534
------------- -------------
$ 933,556 $ 989,896
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Accounts payable................................... $ 149,668 $ 166,199
Book overdrafts.................................... 32,779 41,085
Current maturities of long-term debt............... 17,661 74,431
Income taxes payable............................... -- 860
Accrued payroll and payroll taxes.................. 57,505 56,335
Current portion of lease obligations............... 22,488 23,133
Accrued interest payable........................... 19,001 20,712
Accrued expenses and other current liabilities..... 88,182 90,589
------------- -------------
Total current liabilities......................... 387,284 473,344
------------- -------------
Long-term debt......................................... 1,253,112 1,185,639
------------- -------------
Lease obligations, long-term........................... 172,013 175,353
------------- -------------
Other noncurrent liabilities........................... 186,456 197,226
------------- -------------
Commitments and Contingencies (Note 4)
Stockholder's Deficit
Common Stock, $.10 par value....................... -- --
Authorized, issued and outstanding: 100 shares
Paid-in capital.................................... 68,703 68,703
Accumulated deficit................................ (1,134,012) (1,110,369)
------------- -------------
TOTAL STOCKHOLDER'S DEFICIT..................... (1,065,309) (1,041,666)
------------- -------------
$ 933,556 $ 989,896
------------- -------------
------------- -------------
</TABLE>
See notes to consolidated financial statements (unaudited).
2
<PAGE>
<TABLE>
<CAPTION>
PATHMARK STORES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT (Unaudited)
(in thousands)
TOTAL
COMMON PAID-IN ACCUMULATED STOCKHOLDER'S
STOCK CAPITAL DEFICIT DEFICIT
----- ------- ----------- -------------
<S> <C> <C> <C> <C>
Balance, February 1, 1997................. $ -- $ 68,703 $ (1,110,369) $ (1,041,666)
Net loss.............................. -- -- (23,643) (23,643)
----- --------- ------------- -------------
Balance, August 2, 1997................... $ -- $ 68,703 $ (1,134,012) $ (1,065,309)
----- --------- ------------- -------------
----- --------- ------------- -------------
Balance, February 3, 1996................. $ -- $ 65,303 $ (1,089,534) $ (1,024,231)
Net loss.............................. -- -- (7,181) (7,181)
----- --------- ------------- -------------
Balance, August 3, 1996................... $ -- $ 65,303 $ (1,096,715) $ (1,031,412)
----- --------- ------------- -------------
----- --------- ------------- -------------
</TABLE>
See notes to consolidated financial statements (unaudited).
3
<PAGE>
<TABLE>
<CAPTION>
PATHMARK STORES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
26 WEEKS ENDED
---------------------------
AUGUST 2, AUGUST 3,
1997 1996
---------- ----------
<S> <C> <C>
Operating activities
Net loss $ (23,643) $ (7,181)
Adjustments to reconcile net loss to net cash provided by operating activities:
Extraordinary loss on early extinguishment of debt..................................... 7,488 877
Depreciation and amortization.......................................................... 42,133 43,741
Deferred income tax benefit............................................................ (15,993) (1,678)
Interest accruable but not payable..................................................... 9,013 8,122
Amortization of original issue discount................................................ 177 177
Amortization of debt issuance costs.................................................... 3,510 3,637
(Gain) loss on disposal of property and equipment...................................... 89 (5,461)
Cash provided by (used for) operating assets and liabilities:
Accounts receivable, net.............................................................. 1,079 (389)
Merchandise inventories............................................................... 20,592 18,015
Income taxes 2,871 (3,556)
Other current assets.................................................................. (336) (795)
Other assets ...................................................................... (1,794) (4,535)
Accounts payable...................................................................... (16,531) (10,529)
Accrued interest payable.............................................................. (1,711) 1,823
Accrued expenses and other current liabilities........................................ (1,177) (8,466)
Other noncurrent liabilities.......................................................... (14,008) 1,935
---------- ----------
Cash provided by operating activities............................................... 11,759 35,737
---------- ----------
Investing Activities
Property and equipment expenditures...................................................... (13,608) (23,634)
Proceeds from disposition of property and equipment...................................... 25,470 6,655
---------- ----------
Cash provided by (used for) investing activities.................................... 11,862 (16,979)
---------- ----------
Financing Activities
Borrowings under term loan in connection with the new Credit Agreement................... 300,000 --
Repayments of former term loan........................................................... (243,127) (20,799)
Increase (decrease) in working capital facility borrowings............................... (52,600) 16,000
Increase (decrease) in book overdrafts................................................... (8,306) 780
Increase in other borrowings............................................................. 1,562 875
Repayment of other long-term borrowings.................................................. (4,322) (6,457)
Premiums incurred in early extinguishment of debt........................................ (132) (352)
Reduction in lease obligations........................................................... (10,615) (10,022)
Deferred financing fees.................................................................. (8,292) (1,566)
---------- ----------
Cash used for financing activities.................................................. (25,832) (21,541)
---------- ----------
Decrease in cash and cash equivalents....................................................... (2,211) (2,783)
Cash and cash equivalents at beginning of period............................................ 9,880 11,648
---------- ----------
Cash and cash equivalents at end of period.................................................. $ 7,669 $ 8,865
========== ==========
Supplemental Disclosures of Cash Flow Information
Interest paid $ 71,507 $ 66,312
========== ==========
Income taxes paid........................................................................ $ 3,143 $ 3,952
========== ==========
Noncash Investing and Financing Activities
Capital lease obligations................................................................ $ 13,669 $ 19,392
========== ==========
</TABLE>
See notes to consolidated financial statements (unaudited).
4
<PAGE>
PATHMARK STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1--Organization and Basis of Presentation
Pathmark Stores, Inc. (the "Company") operated 138 supermarkets as of
August 2, 1997, primarily in the New York-New Jersey and Philadelphia
metropolitan areas and is a wholly owned subsidiary of PTK Holdings, Inc.
("PTK") and an indirect wholly owned subsidiary of Supermarkets General Holdings
Corporation ("Holdings").
The unaudited consolidated financial statements included herein have been
prepared by the Company in accordance with the same accounting principles
followed in the presentation of the Company's annual financial statements for
the year ended February 1, 1997, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
consolidated financial statements included herein reflect all adjustments which
are of a normal and recurring nature and are necessary to present fairly the
results of operations and financial position of the Company. This report should
be read in conjunction with the financial statements and notes thereto included
in the Company's Form 10-K Annual Report for the year ended February 1, 1997.
Income taxes for the interim period are based on the estimated effective
tax rate expected to be applicable for the full fiscal year.
NOTE 2--LONG-TERM DEBT
Long-term debt is comprised of the following (dollars in thousands):
<TABLE>
<CAPTION>
AUGUST 2, FEBRUARY 1,
1997 1997
------------ ------------
<S> <C> <C>
Term Loan.................................................................... $ 300,000 $ --
Working Capital Facility..................................................... 20,900 --
Former term loan............................................................. -- 243,127
Former working capital facility.............................................. -- 73,500
9.625% Senior Subordinated Notes due 2003 ("Senior Subordinated Notes")...... 437,957 437,780
11.625% Subordinated Notes due 2002 ("Subordinated Notes")................... 199,017 199,017
12.625% Subordinated Debentures due 2002 ("Subordinated Debentures")......... 95,750 95,750
10.75% Deferred Coupon Notes due 2003 ("Ceferred Coupon Notes").............. 177,572 168,559
Debt payable to Holdings..................................................... 983 983
Industrial revenue bonds..................................................... 6,375 6,375
Other debt (primarily mortgages)............................................. 32,219 34,979
---------- ----------
Total debt................................................................... 1,270,773 1,260,070
Less: current maturities..................................................... 17,661 74,431
---------- ----------
Long-term portion............................................................ $1,253,112 $1,185,639
========== ==========
</TABLE>
On June 30, 1997, the Company entered into a new $500 million bank
credit agreement (the "Credit Agreement") with a group of lenders led by The
Chase Manhattan Bank. The Credit Agreement includes a $300 million term loan
(the "Term Loan") and a $200 million working capital facility (the "Working
Capital Facility"). The Company repaid in full the former term loan and former
working capital facility with the borrowings obtained under the Credit
Agreement.
5
<PAGE>
PATHMARK STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
NOTE 2--LONG-TERM DEBT--(CONTINUED)
Under the Credit Agreement, the Term Loan and Working Capital Facility
bear interest at floating rates, ranging from LIBOR plus 2.25% to LIBOR plus
2.50%. The Company is required to repay a portion of its borrowings under the
Term Loan each year, so as to retire such indebtedness in its entirety by
December 15, 2001. Under the Working Capital Facility, which expires on June
15, 2001, the Company can borrow or obtain letters of credit in an aggregate
amount not to exceed $200 million, of which the maximum of $125 million can be
in letters of credit. In addition, pursuant to a Permitted Subordinated Debt
Refinancing (as defined in the Credit Agreement), the Working Capital Facility
and a portion of the Term Loan can be extended up to an additional two and
one-half years and the remainder of the Term Loan can be extended up to an
additional three and one-half years from the original expiration dates.
The Credit Agreement contains certain covenants, including financial
covenants concerning levels of operating cash flow, minimum interest and rent
expense coverage, maximum leverage ratio, maximum senior debt leverage ratio,
maximum consolidated rental payments and maximum capital expenditures. The
Credit Agreement also contains other covenants including, but not limited to,
covenants with respect to the following matters: (i) limitation on
indebtedness; (ii) limitation on liens; (iii) restriction on mergers; (iv)
restriction on investments, loans, advances, guarantees and acquisitions;
(v) restriction on assets sales and sale/leaseback transactions; (vi)
restriction on certain payments of indebtedness and incurrence of certain
agreements and (vii) restriction on transactions with affiliates.
NOTE 3--INTEREST EXPENSE
Interest expense is comprised of the following (dollars in thousands):
<TABLE>
<CAPTION>
13 WEEKS ENDED 26 WEEKS ENDED
--------------------------- ---------------------------
AUGUST 2, AUGUST 3, AUGUST 2, AUGUST 3,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Term Loans.......................................... $ 5,393 $ 5,813 $ 10,523 $ 11,714
Working Capital Facilities.......................... 1,705 1,446 3,472 2,656
Senior Subordinated Notes
Amortization of Original Issue Discount......... 89 89 177 177
Currently payable............................... 10,587 10,587 21,175 21,175
Deferred Coupon Notes
Accrued but not payable......................... 4,565 4,114 9,013 8,122
Subordinated Debentures............................. 3,022 3,022 6,044 6,044
Subordinated Notes.................................. 5,812 5,812 11,625 11,625
Amortization of debt issuance costs................. 1,609 1,821 3,510 3,637
Lease obligations................................... 5,589 4,787 11,070 9,230
Other, net.......................................... 2,891 2,979 5,943 5,979
--------- --------- --------- ---------
Interest expense.................................... $ 41,262 $ 40,470 $ 82,552 $ 80,359
========= ========= ========= =========
</TABLE>
The majority of the cash interest payments are scheduled in the second
and fourth quarters.
6
<PAGE>
PATHMARK STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
NOTE 4--CONTINGENCIES
RICKEL:
In connection with the sale of its home centers segment in Fiscal
1994, the Company, as lessor, entered into leases for certain of the Company's
owned real estate properties with Rickel, as tenant (the "Leases"), pursuant to
which the Company is entitled to receive annual aggregate rentals of
approximately $4.2 million. In addition, as part of the sale, the Company
assigned to Rickel and Rickel assumed various liabilities of the home centers
segment, primarily third party leases (the "Assumed Liabilities"). As of August
2, 1997, the estimated present value of obligations under the Assumed
Liabilities approximated $27.6 million.
In January 1996, Rickel filed for bankruptcy protection under Chapter
11 of the United States Bankruptcy Code. Since the inception of Rickel's
bankruptcy, Rickel has rejected five Leases and two third party leases. The
five rejected Leases had annual rentals of approximately $2.7 million. One of
the rejected third party leases has been settled with the landlord and the
estimated present value of the other third party lease obligation is
approximately $4.2 million at August 2, 1997. The Company is actively marketing
these properties to other prospective tenants. Management has concluded that
the Company has sufficient reserves to cover any resulting liability which may
occur with respect to these rejected leases. Since the bankruptcy is not
concluded, the Company cannot determine whether Rickel will reject any
additional Leases or the extent to which the Company will become liable with
respect to the Assumed Liabilities in the event of Rickel's nonpayment thereof.
OTHER:
The Company is also a party to a number of legal proceedings in the
ordinary course of business. Management believes that the ultimate resolution
of these proceedings will not, in the aggregate, have a material adverse impact
on the financial condition, results of operations or business of the Company.
7
<PAGE>
PATHMARK STORES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The matters discussed herein, with the exception of historical
information, are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to, the competitive environment in which the Company operates and
the general economic conditions in the Company's trading areas.
RESULTS OF OPERATIONS
SALES:
Sales in the second quarter of Fiscal 1997 were $931.8 million
compared to $931.2 million in the prior year, an increase of 0.1%. For the
six-month period of Fiscal 1997, sales were $1,854.2 million compared to
$1,844.1 million in the prior year, an increase of 0.5%. Same store sales
increased 1.1% and 0.9% for the second quarter and six-month period,
respectively, primarily from the Company's promotional pricing program which
commenced in the first quarter of Fiscal 1997. Sales in Fiscal 1997 compared to
Fiscal 1996 were also impacted by new store openings and remodels offset by sold
and closed stores. The Company operated 138 and 143 supermarkets at the end of
the second quarters of Fiscal 1997 and Fiscal 1996, respectively, including 55
and 51 Pathmark 2000 format stores, respectively.
GROSS PROFIT:
Gross profit in the second quarter of Fiscal 1997 was $262.2 million
or 28.1% of sales compared to $274.7 million or 29.5% of sales for the prior
year. For the six-month period of Fiscal 1997, gross profit was $521.4 million
or 28.1% of sales compared to $540.7 million or 29.3% for the prior year. The
decrease in gross profit in both dollars and as a percentage of sales for the
second quarter and six-month period of Fiscal 1997 compared to the prior year
was primarily due to the promotional pricing program introduced during the first
quarter of Fiscal 1997. The cost of goods sold comparisons were affected by a
pretax LIFO charge of $0.5 million and $0.8 million in the second quarters of
Fiscal 1997 and Fiscal 1996, respectively, and a pretax LIFO charge of $0.9
million and $1.7 million in the six-month period of Fiscal 1997 and Fiscal 1996,
respectively.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A"):
SG&A in the second quarter of Fiscal 1997 decreased $1.9 million or
0.9% compared to the prior year and decreased $3.2 million or 0.7% in the
six-month period of Fiscal 1997 compared to the prior year. As a percentage of
sales, SG&A was 22.9% in the second quarter of Fiscal 1997, down from 23.1% in
the prior year and was 22.9% for the six-month period of Fiscal 1997 down from
23.2% the prior year. The decrease in SG&A as a percentage of sales in the
second quarter and six-month period of Fiscal 1997 compared to the prior year
was primarily due to lower administrative, advertising and utilities expenses,
partially offset by higher store labor expenses.
DEPRECIATION AND AMORTIZATION:
Depreciation and amortization of $19.9 million in the second quarter
of Fiscal 1997 was $1.5 million lower than the prior year of $21.4 million. For
the six-month period of Fiscal 1997, depreciation and amortization of $40.1
million was $1.9 million lower than the prior year of $42.0 million. The
decrease in depreciation and amortization expense in the second quarter and
six-month period of Fiscal 1997 compared to the prior year was primarily due to
the write down in the fourth quarter of Fiscal 1996 of certain fixed
8
<PAGE>
PATHMARK STORES, INC.
assets held for sale, principally in the Company's southern region, partially
offset by capital expenditures in Fiscal 1997. Depreciation and amortization
excludes video tape amortization, which is recorded in cost of goods sold, of
$0.9 million and $0.75 million in the second quarters of Fiscal 1997 and
Fiscal 1996, respectively, and $1.7 million and $1.5 million in the six-month
period of Fiscal 1997 and Fiscal 1996, respectively.
OPERATING EARNINGS:
Operating earnings in the second quarter of Fiscal 1997 were $29.1
million compared to the prior year of $38.3 million. For the six-month period
of Fiscal 1997, operating earnings were $55.9 million compared with $70.0
million in the prior year. The decrease in operating earnings in the second
quarter and six-month period of Fiscal 1997 compared to the prior year was due
to lower gross profit, partially offset by lower SG&A and depreciation and
amortization expense.
INTEREST EXPENSE:
Interest expense was $41.3 million in the second quarter of Fiscal
1997 compared to $40.5 million in the prior year and $82.6 million for the
six-month period of Fiscal 1997 compared to $80.4 million in the prior year,
primarily due to increases in lease obligations, the debt accretion on the
Deferred Coupon Notes, higher levels of borrowings under the former working
capital facility and higher interest rates, partially offset by reductions in
the former term loan.
INCOME TAXES:
Income taxes for the interim period are based on the estimated
effective tax rate expected to be applicable for the full fiscal year. The
income tax benefit in the second quarter and six-month period of Fiscal 1997 was
$4.8 million and $10.5 million, respectively. The income tax benefit for the
second quarter and six-month period of Fiscal 1996 was $0.7 million and $4.0
million, respectively.
During the six-month period of Fiscal 1997, the Company made income
tax payments of $3.1 million and received income tax refunds of $0.5 million.
During the six-month period of Fiscal 1996, the Company made income tax payments
of $4.0 million and received income tax refunds of $0.9 million.
EXTRAORDINARY ITEMS:
During the second quarter of Fiscal 1997, in connection with the
Credit Agreement, the Company wrote off deferred financing fees of $12.8 million
related to the former bank credit agreement, resulting in a net loss on early
extinguishment of debt of $7.4 million. In addition, during the second quarter
of Fiscal 1997, in connection with the sale of certain mortgaged property, the
Company made a mortgage paydown of $2.9 million, including accrued interest and
debt premiums, resulting in a net loss on early extinguishment of debt of $0.1
million.
During the second quarter of Fiscal 1996, in connection with the sale
of certain mortgaged property, the Company made a mortgage paydown of $5.3
million, including accrued interest and debt premiums, resulting in a net loss
on early extinguishment of debt of $0.2 million. In addition, during the first
quarter of Fiscal 1996, in connection with the termination of the Plainbridge,
Inc. credit agreement due to the reacquisition of Plainbridge, Inc. by Pathmark,
the Company wrote off deferred financing fees resulting in a net loss on early
extinguishment of debt of $0.7 million.
9
<PAGE>
PATHMARK STORES, INC.
SUMMARY OF OPERATIONS:
For the second quarter of Fiscal 1997, the Company's net loss was
$14.8 million compared to a net loss of $1.6 million for the prior year. For
the six-month period of Fiscal 1997, the Company's net loss was $23.6 million
compared to a net loss of $7.2 in the prior year. The increase in net loss in
the second quarter and six-month period of Fiscal 1997 compared to the prior
year was primarily due to lower operating earnings, the extraordinary loss on
early extinguishment of debt and higher interest expense, partially offset by a
higher income tax benefit.
EBITDA-FIFO:
EBITDA-FIFO was $50.6 million and $61.5 million in the second quarters
of Fiscal 1997 and Fiscal 1996, respectively, and $98.9 million and $115.7
million for the six-month period of Fiscal 1997 and Fiscal 1996, respectively.
EBITDA-FIFO represents net earnings before interest expense, income taxes,
depreciation, amortization, the LIFO charge (credit) and unusual transactions.
EBITDA-FIFO is a widely accepted financial indicator of a company's ability to
service and/or incur debt and should not be construed as an alternative to, or a
better indicator of, operating income or cash flows from operating activities,
as determined in accordance with generally accepted accounting principles.
FINANCIAL CONDITION
DEBT SERVICE:
During the six-month period of Fiscal 1997, total debt increased $10.7
million from Fiscal 1996 year end primarily due to debt accretion on the
Deferred Coupon Notes. On June 30, 1997, the Company entered into the Credit
Agreement with a group of lenders led by The Chase Manhattan Bank. The Credit
Agreement includes a $300 million Term Loan and a $200 million Working Capital
Facility. In connection with this refinancing, the Company repaid in full the
former term loan ($230.5 million) and the former working capital facility ($57.5
million) with the borrowings obtained under the Credit Agreement. Borrowings
under the Working Capital Facility were $20.9 million at August 2, 1997 and have
decreased to $19.5 million at September 11, 1997.
During the second quarter of Fiscal 1997, the Company sold four of the
12 supermarkets that it announced for divestiture at the end of Fiscal 1996 for
$14.9 million and sold two former operating sites, primarily drug stores, for
$11.1 million. There was no gain or loss recognized on these transactions. The
proceeds were used to paydown a portion of the former working capital facility
and certain mortgages.
Under the Credit Agreement, the Term Loan and Working Capital Facility
bear interest at floating rates, ranging from LIBOR plus 2.25% to LIBOR plus
2.50%. The Company is required to repay a portion of its borrowings under the
Term Loan each year, so as to retire such indebtedness in its entirety by
December 15, 2001. Under the Working Capital Facility, which expires on June
15, 2001, the Company can borrow or obtain letters of credit in an aggregate
amount not to exceed $200 million, of which the maximum of $125 million can be
in letters of credit. In addition, pursuant to a Permitted Subordinated Debt
Refinancing (as defined in the Credit Agreement), the Working Capital Facility
and a portion of the Term Loan can be extended up to an additional two and
one-half years and the remainder of the Term Loan can be extended up to an
additional three and one-half years from the original expiration dates.
However, there can be no assurance that the Company will undertake such
refinancing.
10
<PAGE>
The Credit Agreement contains certain covenants, including financial
covenants concerning levels of operating cash flow, minimum interest and rent
expense coverage, maximum leverage ratio, maximum senior debt leverage ratio,
maximum consolidated rental payments and maximum capital expenditures. The
Credit Agreement also contains other covenants including, but not limited to,
covenants with respect to the following matters: (i) limitation on
indebtedness; (ii) limitation on liens; (iii) restriction on mergers; (iv)
restriction on investments, loans, advances, guarantees and acquisitions;
(v) restriction on assets sales and sale/leaseback transactions; (vi)
restriction on certain payments of indebtedness and incurrence of certain
agreements and (vii) restriction on transactions with affiliates.
The Company does not currently maintain any interest rate hedging
arrangements. The Company is continuously evaluating this risk and will
implement interest rate hedging arrangements if deemed appropriate.
The majority of the cash interest payments are scheduled in the second
and fourth quarters.
The amount of principal payments required each year on outstanding
long-term debt (excluding the original issue discount with respect to the
Deferred Coupon Notes) are as follows (dollars in millions):
Principal
Fiscal Years Payments
------------ ---------
1997(a) $ 12.7
1998 37.5
1999 16.5
2000 81.6
2001 311.2
2002 195.8
2003 615.5
- ---------------
(a) Subsequent to August 2, 1997.
LIQUIDITY:
The consolidated financial statements of the Company indicate that, at
August 2, 1997, current liabilities exceeded current assets by $119.8 million
and stockholder's deficit was $1.07 billion. Management believes that cash
flows generated from operations, supplemented by the unused borrowing capacity
under the Working Capital Facility and the availability of capital lease
financing will be sufficient to pay the Company's debts as they come due,
provide for its capital expenditure program and meets its other cash
requirements.
The Company believes that it will be able to make the scheduled
payments or refinance its obligations with respect to its indebtedness through a
combination of operating funds and borrowing facilities. Future refinancing
will be necessary if the Company's cash flow from operations is not sufficient
to meet its debt service requirements related to the maturity of certain
mortgages in Fiscal 1998, the maturity of the Term Loan and Working Capital
Facility in Fiscal 2001 and the maturity of the Subordinated Notes and
Subordinated Debentures in Fiscal 2002. The Company expects that it will be
necessary to refinance all or a portion of the Senior Subordinated Notes and the
Deferred Coupon Notes due in Fiscal 2003. The Company may undertake a
refinancing of some or all of such indebtedness sometime prior to its maturity.
The Company was in compliance with its various debt covenants at August 2, 1997,
and, based on management's operating projections for Fiscal 1997, the Company
believes that it will continue to be in compliance with its debt covenants. The
Company's ability to make scheduled payments, to refinance or otherwise meet its
obligations with respect to its indebtedness depends on its financial and
operating
11
<PAGE>
PATHMARK STORES, INC.
performance, which in turn, is subject to prevailing economic conditions and
to financial, business and other factors beyond its control. Although the
Company's cash flow from its operations and borrowings has been sufficient to
meet its debt service obligations, there can be no assurance that the
Company's operating results will continue to be sufficient or that future
borrowing facilities will be available for payment or refinancing of the
Company's indebtedness.
The Board of Directors has approved, to the extent permitted by the
new Credit Agreement, that the Company may repurchase a portion of the
Subordinated Notes and Subordinated Debentures in such amounts and for
such consideration as the Company shall determine, in light of prevailing
market conditions.
While it is the Company's intention to enter into other refinancings
that it considers advantageous, there can be no assurances that the
prevailing market conditions will be favorable to the Company. In the event
the Company obtains any future refinancing on less than favorable terms, the
holders of outstanding indebtedness could experience increased credit risk
and could experience a decrease in the market value of their investment,
because the Company might be forced to operate under terms that would
restrict its operations and might find its cash flow reduced.
CAPITAL EXPENDITURES:
Capital expenditures for the second quarter of Fiscal 1997,
including property acquired under capital leases, were $15.5 million compared
to $27.8 million for the prior year and for the six-month period of Fiscal
1997 were $27.3 million compared to $43.0 million for the prior year. During
the six-month period of Fiscal 1997, the Company opened two new Pathmark 2000
format stores, completed five major renovations and enlargements to existing
supermarkets and sold four and closed four of the 12 stores announced for
divestiture at the end of Fiscal 1996. Subsequent to the second quarter of
Fiscal 1997, the Company closed an additional three of the 12 stores
announced for divestiture. During the remainder of Fiscal 1997, the Company
does not plan to open any new Pathmark 2000 format stores and expects to
complete up to an aggregate of seven major renovations and enlargements.
CASH FLOWS:
Cash provided by operating activities amounted to $11.8 million in
the six-month period of Fiscal 1997 compared to $35.7 million in the prior
year. The decrease in net cash provided by operating activities was primarily
due to an increase in the net loss and an increase in cash used for operating
assets and liabilities. Cash provided by investing activities was $11.9
million in the six-month period of Fiscal 1997 compared to cash used for
investing activities of $17.0 million in the prior year. The increase in
cash provided by investing activities was primarily due to an increase in
proceeds from property dispositions and a decrease in expenditures of
property and equipment. Cash used for financing activities was $25.8 million
in the six-month period of Fiscal 1997 compared to $21.5 million in the prior
year. The increase in cash used for financing activities was primarily due
to a decrease in book overdrafts and an increase in deferred financing fees
related to the Credit Agreement, partially offset by an increase in
borrowings in conjunction with the Credit Agreement, net of repaying in full
the former term loan and former working capital facility.
12
<PAGE>
PATHMARK STORES, INC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
NO. DESCRIPTION
--- -----------
4.4 Credit Agreement dated as of June 30, 1997 among Pathmark Stores,
Inc., the Lenders listed therein and The Chase Manhattan Bank as
Administrative Agent.
(b) REPORTS ON FORM 8-K:
The registrant filed one Form 8-K during the quarter for which this
report is filed.
DATE OF REPORT ITEM
-------------- ----
July 9, 1997 Announcement of $500 million Credit Agreement.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
Undersigned thereunto duly authorized.
PATHMARK STORES INC.
BY /S/ RON MARSHALL
----------------------------
(RON MARSHALL)
EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
BY /S/ JOSEPH ADELHARDT
-----------------------------
(JOSEPH ADELHARDT)
SENIOR VICE PRESIDENT AND CONTROLLER,
CHIEF ACCOUNTING OFFICER
Date: September 16, 1997
13
<PAGE>
EXHIBIT 4.4
CONFORMED COPY
PATHMARK STORES, INC.
$500,000,000
Credit Agreement
dated as of June 30, 1997
The Lenders Party Hereto
Chase Securities Inc.
as Arranger
The Chase Manhattan Bank
as Administrative Agent
[LOGO]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms.......................................................................... 1
SECTION 1.02. Classification of Loans and Borrowings................................................. 20
SECTION 1.03. Terms Generally........................................................................ 20
SECTION 1.04. Accounting Terms; GAAP................................................................. 21
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments............................................................................ 21
SECTION 2.02. Loans and Borrowings................................................................... 21
SECTION 2.03. Requests for Borrowings................................................................ 21
SECTION 2.04. Swingline Loans........................................................................ 22
SECTION 2.05. Letters of Credit...................................................................... 23
SECTION 2.06. Funding of Borrowings.................................................................. 25
SECTION 2.07. Interest Elections..................................................................... 26
SECTION 2.08. Termination and Reduction of Commitments............................................... 27
SECTION 2.09. Repayment of Loans; Evidence of Debt................................................... 27
SECTION 2.10. Amortization of Term Loans............................................................. 28
SECTION 2.11. Prepayment of Loans.................................................................... 30
SECTION 2.12. Fees................................................................................... 31
SECTION 2.13. Interest............................................................................... 31
SECTION 2.14. Alternate Rate of Interest............................................................. 32
SECTION 2.15. Increased Costs........................................................................ 32
SECTION 2.16. Break Funding Payments................................................................. 33
SECTION 2.17. Taxes.................................................................................. 33
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs; Partial Mortgages......... 34
SECTION 2.19. Mitigation Obligations; Replacement of Lenders......................................... 36
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Organization; Powers................................................................... 36
SECTION 3.02. Authorization; Enforceability.......................................................... 36
SECTION 3.03. Governmental Approvals; No Conflicts................................................... 36
SECTION 3.04. Financial Condition; No Material Adverse Change........................................ 37
SECTION 3.05. Properties............................................................................. 37
SECTION 3.06. Litigation and Environmental Matters................................................... 37
</TABLE>
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<TABLE>
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PAGE
<S> <C> <C>
SECTION 3.07. Compliance with Laws and Agreements.................................................... 38
SECTION 3.08. Investment and Holding Company Status.................................................. 38
SECTION 3.09. Taxes.................................................................................. 38
SECTION 3.10. ERISA.................................................................................. 38
SECTION 3.11. Disclosure............................................................................. 38
SECTION 3.12. Subsidiaries........................................................................... 38
SECTION 3.13. Insurance.............................................................................. 38
SECTION 3.14. Labor Matters.......................................................................... 38
SECTION 3.15. Solvency............................................................................... 39
SECTION 3.16. Security Documents..................................................................... 39
SECTION 3.17 Federal Reserve Regulations............................................................ 39
SECTION 3.18. Existing Letters of Credit............................................................. 40
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date......................................................................... 40
SECTION 4.02. Each Credit Event...................................................................... 42
ARTICLE V
Affirmative Covenants
---------------------
SECTION 5.01. Financial Statements and Other Information............................................. 42
SECTION 5.02. Notices of Material Events............................................................. 43
SECTION 5.03. Information Regarding Collateral....................................................... 43
SECTION 5.04. Existence; Conduct of Business......................................................... 44
SECTION 5.05. Payment of Obligations................................................................. 44
SECTION 5.06. Maintenance of Properties.............................................................. 44
SECTION 5.07. Insurance.............................................................................. 44
SECTION 5.08. Casualty and Condemnation.............................................................. 45
SECTION 5.09. Books and Records; Inspection.......................................................... 45
SECTION 5.10. Compliance with Laws................................................................... 45
SECTION 5.11. Use of Proceeds and Letters of Credit.................................................. 45
SECTION 5.12. Additional Subsidiaries................................................................ 45
SECTION 5.13 Further Assurances..................................................................... 45
ARTICLE VI
Negative Covenants
------------------
SECTION 6.01. Indebtedness; Certain Equity Securities................................................ 46
SECTION 6.02. Liens.................................................................................. 48
SECTION 6.03. Fundamental Changes.................................................................... 50
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.............................. 50
SECTION 6.05 Asset Sales............................................................................ 50
SECTION 6.06 Sale/Leaseback Transactions............................................................ 51
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 6.07. Hedging Agreements..................................................................... 52
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness.................................. 52
SECTION 6.09. Transactions with Affiliates........................................................... 52
SECTION 6.10. Restrictive Agreements................................................................. 53
SECTION 6.11. Amendment of Material Documents........................................................ 53
SECTION 6.12. Restriction on Leases.................................................................. 53
SECTION 6.13. Sale or Discount of Receivables........................................................ 53
SECTION 6.14. Fiscal Year............................................................................ 53
SECTION 6.15. Capital Expenditures................................................................... 54
SECTION 6.16. Leverage Ratio......................................................................... 54
SECTION 6.17. Consolidated Interest and Rental Expense Coverage Ratio................................ 54
SECTION 6.18. Minimum Consolidated EBITDA............................................................ 55
SECTION 6.19. Senior Debt Leverage Ratio............................................................. 56
ARTICLE VII
Events of Default...................................................................... 56
-----------------
ARTICLE VIII
The Administrative Agent............................................................... 58
------------------------
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Notices................................................................................ 59
SECTION 9.02. Waivers; Amendments.................................................................... 60
SECTION 9.03. Expenses; Indemnity; Damage Waiver..................................................... 60
SECTION 9.04. Successors and Assigns................................................................. 61
SECTION 9.05. Survival............................................................................... 63
SECTION 9.06. Counterparts; Integration; Effectiveness............................................... 63
SECTION 9.07. Severability........................................................................... 63
SECTION 9.08. Right of Setoff........................................................................ 63
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process............................. 64
SECTION 9.10. WAIVER OF JURY TRIAL................................................................... 64
SECTION 9.11. Headings............................................................................... 64
SECTION 9.12. Confidentiality........................................................................ 64
SECTION 9.13. Interest Rate Limitation............................................................... 65
SCHEDULES:
- ---------
Schedule 1.01(a) -- Mortgaged Properties
Schedule 1.01(b) -- Stores Held for Sale
Schedule 1.01(c) -- Permitted Sale/Leaseback Real Estate
Schedule 2.01 -- Commitments
Schedule 3.05(c) -- Real Property
Schedule 3.05(d) -- Condemnation Proceedings and Sales
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 3.16(d) -- Mortgage Filing Offices
Schedule 3.18 -- Existing Letters of Credit
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens and Covered Real Property
Schedule 6.04 -- Existing Investments
Schedule 6.10 -- Existing Restrictions
EXHIBITS:
- --------
Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of Shearman & Sterling
Exhibit B-2 -- Form of Opinion of General Counsel of the Borrower
Exhibit C -- Form of Opinion of Local Counsel
Exhibit D -- Form of Guarantee Agreement
Exhibit E -- Form of Indemnity, Subrogation and Contribution Agreement
Exhibit F -- Form of Pledge Agreement
Exhibit G -- Form of Security Agreement
Exhibit H -- Form of Mortgage
</TABLE>
4
<PAGE>
CREDIT AGREEMENT dated as of June 30, 1997, among
PATHMARK STORES, INC., the LENDERS party hereto, THE CHASE
MANHATTAN BANK, as Administrative Agent, and CIBC Inc. and
Corestates Bank, N.A., as Co-Agents.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its capacity as
administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Revolving Lender, the
percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day with respect to any Loan, or with
respect to the commitment fees payable hereunder, as the case may be, the
applicable rate per annum set forth below under the caption "ABR Spread-Tranche
A Term Loans and Revolving Loans", "ABR Spread-Tranche B Term Loans",
"Eurodollar Spread-Tranche A Term Loans and Revolving Loans", "Eurodollar
Spread-Tranche B Term Loans" or "Commitment Fee Rate", as the case may be, in
each case based upon the Leverage Ratio as of the most recent determination
date, provided that until the delivery to the Administrative Agent, pursuant to
Section 5.01(b), of the Borrower's consolidated financial statements for the
Borrower's first full fiscal quarter ending after the Effective Date, the
"Applicable Rate" shall for all purposes be the applicable rate per annum set
forth below with respect to Category 1:
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ABR
SPREAD EURODOLLAR
TRANCHE A TERM ABR SPREADTRANCHE A EURODOLLAR
LOANS SPREAD TERM SPREAD COMMIT- MENT
AND REVOLVING TRANCHE B LOANS AND TRANCHE B FEE
LEVERAGE RATIO LOANS TERM LOANS REVOLVING LOANS TERM LOANS RATE
- --------------------------------------- --------------- ----------- ------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Category 1............................. 1.25% 1.50% 2.25% 2.50% .50%
Greater than 6.00 to 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
Category 2............................. 1.00% 1.50% 2.00% 2.50% .50%
Equal to or less than 6.00 to 1.00 but
greater than 5.50 to 1.00............
- -----------------------------------------------------------------------------------------------------------------------------------
Category 3............................. .75% 1.25% 1.75% 2.25% .50%
Equal to or less than 5.50 to 1.00 but
greater than 5.00 to 1.00............
- -----------------------------------------------------------------------------------------------------------------------------------
Category 4............................. .50% 1.00% 1.50% 2.00% .375%
Equal to or less than 5.00 to 1.00 but
greater than 4.75 to 1.00............
- -----------------------------------------------------------------------------------------------------------------------------------
Category 5............................. .25% 1.00% 1.25% 2.00% .375%
Equal to or less than 4.75 to 1.00.....
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
For purposes of the foregoing, (a) the Leverage Ratio shall be determined as
of the end of each fiscal quarter of each Fiscal Year based upon the Borrower's
consolidated financial statements delivered pursuant to Section 5.01(a) or (b)
and (b) each change in the Applicable Rate resulting from a change in the
Leverage Ratio shall be effective during the period commencing on and including
the third day after the date of delivery to the Administrative Agent of such
consolidated financial statements indicating such change and ending on the date
immediately preceding the effective date of the next such change, provided that
the Leverage Ratio shall be deemed to be in Category 1 (i) at any time that an
Event of Default has occurred and is continuing or (ii) if the Borrower fails to
deliver the consolidated financial statements required to be delivered by it
pursuant to Section 5.01(a) or (b), during the period from the expiration of the
time for delivery thereof until such consolidated financial statements are
delivered.
2
<PAGE>
"Assessment Rate" means, for any day, the annual assessment rate in effect
on such day that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and within supervisory subgroup "B" (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by such Corporation of time deposits made in dollars at the offices of such
member in the United States, provided that if, as a result of any change in any
law, rule or regulation, it is no longer possible to determine the Assessment
Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall
be determined by the Administrative Agent to be representative of the cost of
such insurance to the Lenders.
"Asset Sale" means (a) the sale by the Borrower or any Subsidiary to any
Person other than the Borrower or any wholly owned Subsidiary of (i) any of the
stock of any Subsidiary or (ii) any other assets (whether tangible or
intangible) of the Borrower or any Subsidiary and (b) the assignment by the
Borrower or any Subsidiary to any Person other than the Borrower or any wholly
owned Subsidiary of any lease, whether a Capital Lease Obligation or an
Operating Lease, to which it is a party as lessee.
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America.
"Borrower" means Pathmark Stores, Inc., a Delaware corporation.
"Borrowing" means (a) Loans of the same Class and Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect, or (b) a Swingline Loan.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed, provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" means, for any period, (a) the sum of (i) the
additions to property, plant and equipment and other capital expenditures of the
Borrower and its consolidated Subsidiaries that are (or would be) set forth in a
consolidated statement of cash flows of the Borrower for such period prepared in
accordance with GAAP and (ii) Capital Lease Obligations incurred by the Borrower
and its consolidated Subsidiaries during such period minus (b) the aggregate
amount of all Net Proceeds of Asset Sales received by the Borrower and the
Subsidiaries during such period in connection with Permitted Sale/ Leaseback
Transactions with respect to any property all or a portion of the purchase price
of which was included in the calculation of Capital Expenditures for such period
or any prior period after the Effective Date. For purposes of this definition,
(a) the purchase price of any Equipment that is purchased simultaneously with
the trade-in or other disposition in the ordinary course of business of existing
Equipment or with insurance proceeds received by the Borrower or any of the
Subsidiaries in respect of the actual or constructive total loss of any
Equipment shall be included in Capital Expenditures only to the extent of the
gross amount of such purchase price less the credit granted by the seller of
such Equipment
3
<PAGE>
for the Equipment being traded in at such time or the amount of proceeds from
such other disposition or the amount of such insurance proceeds, as the case
may be, and (b) the amount of any expenditure for any Equipment (the "New
Equipment") that replaces existing leased Equipment (the "Leased Equipment")
that was purchased at the end of the applicable lease term and then
subsequently sold for a greater amount shall be included in Capital
Expenditures only to the extent of the gross amount of the expenditure for
the New Equipment less the excess of the proceeds received by the Borrower or
any of the Subsidiaries from the sale of the Leased Equipment over the gross
amount of the purchase price of the Leased Equipment.
"Capital Lease" of any Person means any lease of real or personal property
or a combination thereof, by such Person as Lessee that is required to be
classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any Capital Lease, and the amount of
such obligations shall be the capitalized amount thereof determined in
accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq.
"Change in Control" means (a) at any time that SMG-II Holdings has
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Exchange Act ("Beneficial Ownership")), directly
or indirectly, of Securities of the Borrower (or other Securities convertible
into such Securities) representing 20% or more of the combined voting power of
all Securities of the Borrower entitled to vote in the election of directors,
other than Securities having such power only by reason of the happening of a
contingency, any Person or any two or more Persons acting in concert (other than
Merrill Lynch Capital Partners, Inc. ("MLCP") or any of its Affiliates or
Equitable or any of its Affiliates) shall have or shall have acquired Beneficial
Ownership, directly or indirectly, of Securities of SMG-II Holdings (or other
Securities convertible into such Securities) representing 25% or more of the
combined voting power of all Securities of SMG-II Holdings entitled to vote in
the election of directors, other than Securities having such power only by
reason of the happening of a contingency; (b) at any time that Supermarket
Holdings has Beneficial Ownership, directly or indirectly, of Securities of the
Borrower (or other Securities convertible into such Securities) representing 20%
or more of the combined voting power of all Securities of the Borrower entitled
to vote in the election of directors, other than Securities having such power
only by reason of the happening of a contingency, any Person or any two or more
Persons acting in concert (other than MLCP or any of its Affiliates, Equitable
or any of its Affiliates, or SMG-II Holdings) shall have or shall have acquired
Beneficial Ownership directly or indirectly, of Securities of Supermarket
Holdings (or other Securities convertible into such Securities) representing 25%
or more of the combined voting power of all Securities of Supermarket Holdings
entitled to vote in the election of directors, other than Securities having such
power only by reason of the happening of a contingency; (c) at any time that
Holdings has Beneficial Ownership, directly or indirectly, of Securities of the
Borrower (or other Securities convertible into such Securities) representing 20%
or more of the combined voting power of all Securities of the Borrower entitled
to vote in the election of directors, other than Securities having such power
only by reason of the happening of a contingency, any Person or any two or more
Persons acting in concert (other than MLCP or any of its Affiliates, Equitable
or any of its Affiliates, SMG-II Holdings or Supermarket Holdings) shall have or
shall have acquired Beneficial Ownership, directly or indirectly, of Securities
of Holdings (or other Securities convertible into such Securities) representing
25% or more of the combined voting power of all Securities of Holdings entitled
to vote in the election of directors, other than Securities having such power
only by reason of the happening of a contingency; (d) any Person or any two or
more Persons acting in concert (other than MLCP or any of its Affiliates or
Equitable or any of its Affiliates (including SMG-II Holdings, Supermarket
Holdings or Holdings, in each case so long as such Person is an Affiliate of
MLCP or Equitable)) shall have acquired Beneficial Ownership, directly or
indirectly, of Securities of the Borrower (or other Securities convertible into
such Securities) representing 25% or more of the combined voting power of all
Securities of the
4
<PAGE>
Borrower entitled to vote in the election of directors, other than Securities
having such power only by reason of the happening of a contingency; or (e) a
"Change in Control" (as defined in the Supplemental Holdings Subordinated
Note Indenture, the Supplemental Holdings Subordinated Debenture Indenture,
any of the Subordinated Debt Indentures or any of the Refinancing Debt
Indentures) shall occur.
"Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender or the Issuing Bank
(or, for purposes of Section 2.15(b), by any lending office of such Lender or by
such Lender's or the Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Chefmark" means Chefmark, Inc., a Delaware corporation.
"Class", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Tranche
A Term Loans, Tranche B Term Loans or Swingline Loans and, when used in
reference to any Commitment, refers to whether such Commitment is a Revolving
Commitment, Tranche A Commitment or Tranche B Commitment.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means any and all "Collateral", as defined in any applicable
Security Document.
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by the Borrower
or any Subsidiary in the ordinary course of business of the Borrower or such
Subsidiary.
"Commitment" means a Revolving Commitment, Tranche A Commitment or Tranche B
Commitment, or any combination thereof (as the context requires).
"Consolidated EBITDA" means, for any period, Consolidated Net Income for
such period, plus, without duplication and to the extent deducted from revenues
in determining Consolidated Net Income, the sum of (a) the aggregate amount of
Consolidated Interest Expense for such period, (b) the aggregate amount of
letter of credit fees paid during such period, (c) provisions for taxes based on
income for such period, (d) all amounts attributable to depreciation and
amortization for such period, (e) total non-cash interest expense of the
Borrower with respect to the Junior Subordinated Notes for such period, (f)
other non-cash items (including charges for inventory accounted for on a last
in, first out basis) reducing Consolidated Net Income for such period and (g)
all extraordinary and unusual charges during such period, and minus, without
duplication and to the extent increasing Consolidated Net Income for such
period, (h) all extraordinary and unusual gains during such period and (i) other
non-cash items during such period, all as determined on a consolidated basis
with respect to the Borrower and the Subsidiaries in accordance with GAAP.
"Consolidated EBITDAR" means, for any period, Consolidated EBITDA for such
period, plus, without duplication, Consolidated Rental Payments for such period.
"Consolidated Interest Expense" means, for any period, the interest expense,
both expensed and capitalized (including the interest component in respect of
Capital Lease Obligations), accrued or paid by the Borrower and the Subsidiaries
during such period, determined on a consolidated basis in accordance with GAAP,
including all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and net costs
under Hedging Agreements,
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but excluding (a) any amounts referred to in Section 2.12 payable to the
Administrative Agent and the Lenders on or before the Effective Date, (b) any
deferred financing expenses amortized by the Borrower and the Subsidiaries
during such period and (c) any non-cash interest expense of the Borrower for
such period with respect to the Junior Subordinated Notes.
"Consolidated Net Income" means, for any period, net income or loss of
the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, provided that there shall be
excluded (a) the income (or loss) of any Person in which any other Person
(other than the Borrower or any of the Subsidiaries or any director holding
qualifying shares in compliance with applicable law) has a joint interest,
except to the extent of the amount of dividends or other distributions
actually paid to the Borrower or any of the Subsidiaries by such Person
during such period and (b) the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary or is merged into or consolidated with
the Borrower or any of the Subsidiaries or the date that Person's assets are
acquired by the Borrower or any of the Subsidiaries.
"Consolidated Rental Payments" means, for any period, the aggregate amount
of all rents paid or payable by the Borrower and the Subsidiaries on a
consolidated basis during that period under all Capital Leases and Operating
Leases to which the Borrower or any Subsidiary is a party as lessee (in each
case net of any sublease income received or receivable by the Borrower and the
Subsidiaries on a consolidated basis during that period with respect thereto),
excluding, however, (a) any amount of rent for which the Borrower or any
Subsidiary is contingently liable under any lease as a result of the assignment
thereof by the Borrower or such Subsidiary to any Person and (b) any tax,
insurance, maintenance and similar expenses that the Borrower or any Subsidiary
is obligated to pay as lessee under the terms of the applicable lease.
"Control" means 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 ability to exercise voting power, by contract or otherwise. The
terms "Controlling" and "Controlled" have meanings correlative thereto.
"Corestates" means Corestates Bank, N.A.
"Covered Real Property" means, at any time, (a) any Real Property Asset
listed on Schedule 6.02 that is not, at such time, subject to Liens permitted
under Section 6.02 securing Indebtedness (other than the Obligations) of the
Borrower or any Subsidiary permitted under Section 6.01; (b) any Real Property
Asset (other than any Real Property Asset listed in Schedule 6.02) consisting of
a leasehold interest in real property now owned or hereafter acquired by the
Borrower or any Subsidiary; and (c) any Real Property Asset (other than any Real
Property Asset listed in Schedule 6.02) consisting of a fee interest in real
property now owned or hereafter acquired by the Borrower or any Subsidiary,
excluding, however, (i) any fee interest in undeveloped land held by the
Borrower or any Subsidiary for the development of a Related Store, provided that
construction of such Related Store has commenced thereon not later than 270 days
following the acquisition of such fee interest in undeveloped land by the
Borrower or such Subsidiary, (ii) any fee interest in any Real Property Asset
consisting of a Related Store that is under construction, provided that (A) such
construction has not been continuing for longer than one year and (B) such fee
interest was not, prior to the commencement of such construction, required to be
encumbered by a Mortgage pursuant to Section 5.13(b), (iii) any fee interest in
any Real Property Asset consisting of a Related Store the construction of which
is complete, provided that (A) no more than 270 days have elapsed since the
later of the date of completion of such construction and the date on which the
Borrower or any Subsidiary acquired such fee interest and (B) such fee interest
was not previously required to be encumbered by a Mortgage pursuant to Section
5.13(b); (iv) any fee interest in any Real Property Asset consisting of a
Related Store (whether fully constructed or under construction) that is subject
to a Lien permitted under Section 6.02(d); and (v) any Real Property Asset from
and after such time as such Real Property Asset becomes subject to a Lien
permitted under Section 6.02(e) or Section 6.02(f), provided that if an
Unavoidable Delay (as defined below) occurs during any time period specified
with respect to any
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Related Store in clause (i), (ii) or (iii) above, such time period for such
Related Store shall be extended for a period equal to the duration of such
Unavoidable Delay plus 5 Business Days. For purposes of the foregoing, the
term "Unavoidable Delay" means the prevention of, or delay in, the
performance of any obligation or the satisfaction of any condition set forth
in the proviso to clause (i), (ii) or (iii) above as a result of the
occurrence of any unforeseeable condition beyond the reasonable control of
the Borrower or any Subsidiary, including any strike, lockout, labor dispute,
inability to obtain labor or materials or reasonable substitutes therefor,
act of God, governmental restriction or regulation or control, enemy or
hostile governmental action, civil commotion, insurrection, sabotage or fire
or other casualty.
"Default" means any event or condition that constitutes an Event of Default
or that upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"Dollars" or "$" refers to lawful money of the United States of America.
"Earliest Subordinated Debt Maturity Date" means (a) until the issuance of
any Refinancing Debt, June 15, 2002, and (b) from and after the date of any
issuance of any Refinancing Debt, the earliest date on which any of the
then-outstanding Subordinated Debt or Refinancing Debt matures.
"Effective Date" means the date on which the conditions specified in Section
4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions or binding agreements issued,
promulgated or entered into by or with any Governmental Authority, relating to
the environment, preservation or reclamation of natural resources, the handling,
treatment, storage, disposal, Release or threatened Release of any Hazardous
Material or to public or employee health and safety matters.
"Environmental Liability" means any liability (including any liability for
damages, natural resource damage, costs of environmental remediation,
administrative oversight costs, fines or penalties) of the Borrower or any
Subsidiary actually incurred and directly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the Release or threatened Release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"Equipment" shall have the meaning assigned to such term in the Security
Agreement.
"Equitable" means The Equitable Life Assurance Society of the United States.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice
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period is waived); (b) the existence with respect to any Plan of an
"accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan; (d) the
incurrence by the Borrower or any of its ERISA Affiliates of any liability
under Title IV of ERISA with respect to the termination of any Plan; (e) the
receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by
the Borrower or any of its ERISA Affiliates of any liability with respect to
the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or
(g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of
any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article
VII.
"Excess Cash Flow" means, for any period, the sum (without duplication)
of:
(a) the Consolidated Net Income for such period, adjusted to exclude
any gains or losses attributable to Prepayment Events; plus
(b) depreciation, amortization and other non-cash charges or losses
deducted in determining such Consolidated Net Income for such period; plus
(c) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such period plus (ii) the amount, if any, by which the
consolidated deferred revenues of the Borrower and its consolidated
Subsidiaries increased during such period plus (iii) the aggregate
principal amount of Capital Lease Obligations and other Indebtedness
incurred during such period to finance Capital Expenditures, to the extent
that mandatory principal payments in respect of such Indebtedness would not
be excluded from clause (f) below when made; minus
(d) the sum of (i) any non-cash gains included in determining such
consolidated net income (or loss) for such period plus (ii) the amount, if
any, by which Net Working Capital increased during such period plus (iii)
the amount, if any, by which the consolidated deferred revenues of the
Borrower and its consolidated Subsidiaries decreased during such period;
minus
(e) Capital Expenditures for such period; minus
(f) the aggregate principal amount of Indebtedness repaid or prepaid by
the Borrower and its consolidated Subsidiaries during such period,
excluding (i) Indebtedness in respect of Revolving Loans and Letters of
Credit, (ii) Term Loans prepaid pursuant to Section 2.11(b) or (c), (iii)
repayments or prepayments of Indebtedness financed by incurring other
Indebtedness, to the extent that mandatory principal payments in respect of
such other Indebtedness would, pursuant to this clause (f), be deducted in
determining Excess Cash Flow when made, and (iv) Indebtedness referred to
in clauses (iii) of Section 6.01(a); minus
(g) the amount, if any, by which the consolidated deferred expenses of
the Borrower and its Subsidiaries increased during such period; minus
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<PAGE>
(h) $25,000,000.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"Excluded Asset Sales" means (a) asset sales in connection with any
Permitted Sale/Leaseback Transaction, (b) sales of (i) manufacturers' coupons to
entities engaged in the business of processing such coupons and obtaining
payment from the issuers thereof and (ii) receivables from third-party
healthcare providers and insurers, relating to reimbursements owed to the
Borrower or its Subsidiaries in connection with the sale of prescription
medicines, medical devices and other healthcare products, to entities engaged in
the business of processing and collecting such receivables from the obligors
thereunder, (c) sales of stores and related store assets listed on Schedule
1.01(b) and (d) sales of inventory made in connection with any transfer of
assets of the Borrower or its Subsidiaries, relating to the inventory
distribution functions of the Borrower's or such Subsidiary's business, to third
parties who will perform such functions under contractual out-sourcing
arrangements.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its overall net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, or any branch office
(other than a branch office that is deemed to exist solely as a result of the
Loans or any transaction contemplated hereunder, (b) any branch profits taxes
imposed by the United States of America or any similar tax imposed by any other
jurisdiction in which the principal office, applicable lending office or any
branch office (other than a branch office that is deemed to exist solely as a
result of the Loans or any other transaction contemplated hereunder) of any
Lender is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 2.19(b)), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement, designates a new
lending office, becomes a party to a merger or to a similar conveyance of its
assets in which such Foreign Lender goes out of existence or is attributable to
such Foreign Lender's failure to comply with Section 2.17(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.17(a) and complies with Section 2.17(e).
"Existing Credit Agreement" means the Credit Agreement dated as of October
26, 1993, as amended, among the Borrower, the financial institutions from time
to time party thereto and Bankers Trust Company, as Agent.
"Existing Letter of Credit" means each letter of credit listed on Schedule
3.18.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
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"Financing Transactions" means the execution, delivery and performance by
each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans, the use of the proceeds thereof on the Effective Date and
the issuance of Letters of Credit hereunder.
"Fiscal Year" means the fiscal year of the Borrower and the Subsidiaries
ending on the Saturday closest to January 31 of each calendar year. For purposes
of this Agreement, any particular Fiscal Year shall be designated by reference
to the calendar year in which such Fiscal Year commences.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized under the laws
of a jurisdiction other than the United States of America or any State thereof
or the District of Columbia.
"Fronting Fee" has the meaning assigned to such term in Section 2.12(b).
"GAAP" means generally accepted accounting principles in the United States
of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness of the payment
thereof, (c) to maintain working capital, equity capital or any other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or (d) as an account party in respect
of any letter of credit or letter of guaranty issued to support such
Indebtedness, provided that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business.
"Guarantee Agreement" means the Guarantee Agreement, substantially in the
form of Exhibit D, made by the Subsidiary Loan Parties (other than the Real
Estate Subsidiaries) in favor of the Administrative Agent for the benefit of the
Secured Parties.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants or
contaminants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other materials, substances or wastes of any nature
regulated pursuant to any Environmental Law, including any material listed as a
hazardous substance under Section 101(14) of CERCLA.
"Hedging Agreement" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement
entered into by the Borrower or any Subsidiary.
"Holdings" means PTK Holdings, Inc., a Delaware corporation.
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"Holdings Bond Indenture" means the indenture dated as of October 26, 1993,
between Holdings and Nations Bank of Georgia, National Association, as trustee,
pursuant to which the Holdings Bonds are issued, as such indenture may be
amended from time to time (other than pursuant to an amendment that would result
in an Event of Default under paragraph (o) of Article VII).
"Holdings Bonds" means the 10 1/4% Exchangeable Guaranteed Debentures due
2003 of Holdings issued pursuant to the Holdings Bond Indenture on October 26,
1993, in an outstanding principal amount of $28,168,000 as of May 3, 1997.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or advances of any kind, (b)
all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property acquired by
such Person, (d) all obligations of such Person in respect of the deferred
purchase price of property or services (excluding current accounts payable
incurred in the ordinary course of business), (e) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned
or acquired by such Person, whether or not the Indebtedness secured thereby
has been assumed, (f) all Guarantees by such Person of Indebtedness of
others, (g) all Capital Lease Obligations of such Person, (h) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and (i) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnity, Subrogation and Contribution Agreement" means the Indemnity,
Subrogation and Contribution Agreement, substantially in the form of Exhibit E,
among the Borrower, the Subsidiary Loan Parties and the Administrative Agent.
"Information Memorandum" means the Confidential Information Memorandum dated
June 1997 relating to the Borrower and the Financing Transactions.
"Interest Election Request" means a request by the Borrower to convert or
continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.
"Interest Payment Date" means (a) with respect to any ABR Loan (other than a
Swingline Loan), the 15th day of each January, April, July and October, (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period, and (c) with
respect to any Swingline Loan, the day that such Loan is required to be repaid.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect, provided that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a
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Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Issuing Bank" means (a) The Chase Manhattan Bank (b) Corestates, with
respect to the Existing Letter of Credit issued by it so long as such Existing
Letter of Credit remains outstanding and (c) any other Lender selected by the
Borrower with the consent of the Administrative Agent (which consent shall not
be unreasonably withheld), in each case in its capacity as the issuer of Letters
of Credit hereunder, and its successors in such capacity as provided in Section
2.05(i). Any Issuing Bank may, with the consent of the Borrower (which consent
shall not be unreasonably withheld), arrange for one or more Letters of Credit
to be issued by Affiliates of the Issuing Bank, in which case the term "Issuing
Bank" shall include any such Affiliate with respect to Letters of Credit issued
by such Affiliate.
"Junior Subordinated Note Indenture" means the indenture pursuant to which
the Junior Subordinated Notes are issued, as such indenture may be amended from
time to time to the extent permitted under Section 6.11.
"Junior Subordinated Notes" means the up to $225,250,000 principal amount at
final maturity of 10-3/4% Junior Subordinated Deferred Coupon Notes due 2003 of
the Borrower issued pursuant to the Junior Subordinated Note Indenture.
"LC Availability Period" means the period from and including the Effective
Date to but excluding the earlier of (a) the date that is five Business Days
prior to the Revolving Maturity Date and (b) the date of termination of the
Revolving Commitments.
"LC Disbursement" means a payment made by any Issuing Bank pursuant to a
Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lender.
"Letter of Credit" means (a) any letter of credit issued pursuant to this
Agreement and (b) the Existing Letter of Credit issued by Corestates.
"Leverage Ratio" means, on any date, the ratio of (a) Total Debt as of such
date to (b) Consolidated EBITDA for the period of four consecutive fiscal
quarters of the Borrower most recently ended as of such date, all determined on
a consolidated basis in accordance with GAAP.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Page 3750 of the Telerate Service (or on any
successor or substitute page of such Service, or any successor to or substitute
for such Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period. In the event that such rate is not available at such time
for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing
for such Interest Period shall be the rate at which dollar
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deposits of $5,000,000 and for a maturity comparable to such Interest Period
are offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
"Loan Documents" means this Agreement, the Letters of Credit, the Guarantee
Agreement, the Indemnity, Subrogation and Contribution Agreement and the
Security Documents.
"Loan Parties" means the Borrower and the Subsidiary Loan Parties.
"Loans" means the loans made by the Lenders to the Borrower pursuant to this
Agreement.
"Margin Stock" shall have the meaning assigned to such term in Regulation U.
"Material Adverse Effect" means (a) a material adverse effect on (i) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries taken as a whole or (ii) the ability of any
Loan Party to perform any of its obligations of a monetary nature under any Loan
Document or (b) impairment of the rights of the Administrative Agent or the
Lenders to enforce any obligations of a monetary nature under any Loan Document.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging
Agreements, of any one or more of the Borrower and the Subsidiary Loan
Parties in an aggregate principal amount exceeding $10,000,000. For purposes
of determining Material Indebtedness at any time, the "principal amount" of
the obligations of the Borrower or any Subsidiary Loan Party in respect of
any Hedging Agreement at such time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Borrower or such
Subsidiary Loan Party would be required to pay if such Hedging Agreement were
terminated at such time.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means a mortgage, deed of trust, assignment of leases and rents,
leasehold mortgage or other substantially similar instrument granting a Lien on
any Mortgaged Property to secure the Obligations. Each Mortgage shall be
substantially in the form of Exhibit H.
"Mortgaged Property" means, initially, each parcel of real property and the
improvements thereto owned or leased by a Loan Party and identified on Schedule
1.01(a), and, from time to time, includes each other parcel of real property and
improvements thereto with respect to which a Mortgage is granted pursuant to
Section 5.12 or 5.13.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
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"Net Proceeds" means, with respect to any event, (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds in excess of $500,000 and (iii) in the case of a
condemnation or similar event, condemnation awards and similar payments in
excess of $500,000, in each case net of (b) the sum of (i) all reasonable
commissions, discounts, fees and out-of-pocket expenses paid by the Borrower and
the Subsidiaries to third parties in connection with such event, (ii) in the
case of a sale, transfer or other disposition of an asset (including pursuant to
a sale and leaseback transaction or a casualty or other insured damage or
condemnation or similar proceeding), the amount of all payments required to be
made by the Borrower and the Subsidiaries as a result of such event to repay
Indebtedness (other than Loans), and to pay any premium, penalty and interest
with respect to such Indebtedness, to the extent such Indebtedness is secured by
such asset or otherwise subject to mandatory prepayment as a result of such
event, and (iii) the amount of all taxes that are paid (or reasonably estimated
to be payable) by the Borrower and the Subsidiaries, and the amount of any
reserves established by the Borrower and the Subsidiaries to fund contingent
liabilities reasonably estimated to be payable, in each case during the two
years following the date of such event, and that are directly attributable to
such event (as determined reasonably and in good faith by the chief financial
officer of the Borrower) and (iv) the reasonable costs and expenses of any
repairs, alterations or improvements made by the Borrower or any Subsidiary to
the assets sold to the extent such repairs, alterations or improvements were
required pursuant to the terms of such event; provided, however, that, with
respect to any sale, transfer or other disposition of an asset (including
pursuant to a Sale/Leaseback Transaction or a casualty or other insured damage
or condemnation or similar proceeding), if (A) the Borrower shall deliver a
certificate of a Financial Officer to the Administrative Agent within 10
Business Days of such sale, transfer or other disposition setting forth the
Borrower's intent to use the proceeds of such sale, transfer or other
disposition to repair the assets that are the subject of such sale, transfer or
other disposition or replace such assets with other similar assets to be used in
the same line of business, in each case within 270 days of receipt of such
proceeds (or, in the case of a casualty or other insured damage or condemnation,
365 days of receipt of such proceeds) and (B) no Default or Event of Default
shall have occurred and shall be continuing at the time of such certificate or
at the proposed time of the application of such proceeds, such proceeds shall
not constitute Net Proceeds except to the extent not so used at the end of such
270-day period (or, in the case of a casualty or other insured damage or
condemnation, 365-day period), at which time such proceeds not so used shall be
deemed to be Net Proceeds.
"Net Working Capital" means, at any date, (a) the consolidated current
assets of the Borrower and its consolidated Subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of the Borrower and its consolidated Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working
Capital at any date may be a positive or negative number. Net Working Capital
increases when it becomes more positive or less negative and decreases when
it becomes less positive or more negative.
"Non-Recourse Indebtedness" means, as applied to any Person, all
Indebtedness of that Person secured by Liens on specified assets of that Person
under the terms of which (a) no recourse may be had against that or any other
Person for the payment of the principal of or interest or premium on such
Indebtedness or for any claim based thereon and (b) the enforcement of all
obligations relating to such Indebtedness is limited to foreclosure or other
actions with respect to such specified assets.
"Obligations" has the meaning assigned to such term in the Security
Agreement.
"Operating Lease" means, as applied to any Person, any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease other than any
such lease under which that Person is the lessor.
"Other Taxes" means any and all current or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies arising from
any payment made under any Loan
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Document or from the execution, delivery or enforcement of, or otherwise with
respect to, any Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation defined in
Section 4002 of ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in the form of Annex 1
to the Security Agreement or any other form approved by the Administrative
Agent.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes, assessments, governmental charges
or claims that are not yet due or are being contested in compliance with
Section 5.05;
(b) carriers', construction, warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 30 days or are being contested in compliance with Section 5.05;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations or securing liability to insurance
carriers under insurance or self-insurance arrangements;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, payment,
performance and return-of-money bonds and other obligations of a like
nature, in each case in the ordinary course of business;
(e) liens in respect of judgments that do not constitute an Event of
Default under clause (k) of Article VII;
(f) easements, zoning restrictions, minor defects, encroachments or
irregularities in title, rights-of-way and similar encumbrances on real
property that do not secure any monetary obligations and do not interfere
in any material respect with the ordinary conduct of business of the
Borrower or any Subsidiary;
(g) leases, subleases and licenses granted to third parties not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any Subsidiary;
(h) any (i) interest or title of a lessor or sublessor under any lease
permitted by Section 6.12, (ii) easement, restriction or encumbrance to
which the interest or title of such lessor or sublessor may by subject or
(iii) subordination of the interest of the lessee or sublessee under such
lease to any restriction or encumbrance referred to in the preceding clause
(ii);
(i) Liens arising from filing Uniform Commercial Code financing
statements relating solely to leases permitted by this Agreement;
(j) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(k) Liens in favor of issuers of Commercial Letters of Credit
encumbering any goods or documents covered by such Commercial Letters of
Credit and securing obligations that are not overdue for a period of more
than 15 days; and
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(l) encumbrances referred to in Schedule B of the title policies
insuring the Mortgages.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America
(or by any agency thereof to the extent such obligations are backed by the
full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, any state of the United States
of America or any political subdivision of such state or any public
instrumentality thereof, in each case maturing within one year from the
date of acquisition thereof and having, at such date of acquisition, the
highest rating obtainable from S&P or from Moody's (or, in the case of
tax-exempt securities referred to as "Variable Rate Demand Notes", maturing
within 90 days from the date of acquisition thereof and having, at such
date of acquisition, a rating of at least A from S&P or at least A2 from
Moody's);
(c) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, a
rating of at least A-1 from S&P or at least P-1 from Moody's;
(d) investments in certificates of deposit, banker's acceptances and
time deposits maturing within one year from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof that
has a combined capital and surplus and undivided profits of not less than
$250,000,000;
(e) Eurodollar time deposits maturing within one year from the date of
purchase thereof from any financial institution satisfying the criteria
described in clause (d) above; and
(f) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause
(d) above.
"Permitted Permanent Mortgage Financing" means Indebtedness of the
Borrower that is incurred after the Effective Date and is secured by a
mortgage on any Specified Real Estate; provided, however, that (a) the
recourse of the lenders with respect to such Indebtedness is limited solely
to the mortgaged real estate, (b) no agreement in connection with such
Indebtedness restricts the ability of the Borrower or any of the Subsidiaries
to create, incur, assume or suffer to exist any Indebtedness or any Lien upon
any of its properties, assets or revenues, whether now owned or hereafter
acquired, other than the mortgaged real estate, (c) the aggregate initial
principal amount of the Indebtedness in connection with such Permitted
Permanent Mortgage Financing is equal to at least 70% of the aggregate fair
market value of the mortgaged real estate (determined at the time of issuance
thereof in good faith by the board of directors of the Borrower), (d) the
final maturity of such Indebtedness is later than the date that is eight
years after the Effective Date, (e) such Indebtedness does not provide for
amortization or prepayment of more than 15% of the principal amount of such
Indebtedness prior to the date that is eight years after the Effective Date
and (f) the aggregate Net Proceeds from the Permitted Permanent Mortgage
Financing and all other Specified Permitted Refinancing Transactions (i) do
not exceed $100,000,000 and (ii) are used to redeem or repurchase all or a
portion of the Subordinated Notes or the Subordinated Debentures.
"Permitted Sale/Leaseback Transaction" means one or more sale and leaseback
transactions by the Borrower or any Subsidiary with respect to any Specified
Real Estate; provided, however, that (a) no agreement in connection with such
Permitted Sale/Leaseback Transaction restricts the
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ability of the Borrower or any of the Subsidiaries to create, incur, assume
or suffer to exist any Indebtedness or any Lien upon any of its properties,
assets or revenues, whether now owned or hereafter acquired, other than the
real estate (and the related improvements) that are the subject of such
Permitted Sale/Leaseback Transaction, (b) such Permitted Sale/Leaseback
Transaction is consummated for consideration that is at least equal to the
aggregate fair market value of the real estate (and the related improvements)
subject thereto (determined at the time of consummation thereof in good faith
by the board of directors of the Borrower), (c) the final maturity of the
lease in connection with such Permitted Sale/Leaseback Transaction has a
maturity date that is later than the date that is eight years after the
Effective Date and (d) the aggregate Net Proceeds from (i) all Permitted
Sale/Leaseback Transactions and (ii) all other Specified Permitted
Refinancing Transactions (A) do not exceed $100,000,000 and (B) are used to
redeem or repurchase all or a portion of the Subordinated Notes or the
Subordinated Debentures.
"Permitted Subordinated Debt Refinancing" means (a) any Specified Permitted
Refinancing Transaction and (b) the issuance by Holdings or the Borrower of
Indebtedness that (i) is permitted by Section 6.01(a)(vii) and (ii) refinances,
in whole or in part, either Subordinated Debt or Indebtedness that was
previously incurred pursuant to Section 6.01(a)(vii) in connection with the
refinancing of Subordinated Debt.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plainbridge" means Plainbridge, Inc., a Delaware corporation.
"Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" means the Pledge Agreement, substantially in the form of
Exhibit F, among the Borrower, the Subsidiaries party thereto and the
Administrative Agent for the benefit of the Secured Parties.
"Prepayment Event" means:
(a) any sale, transfer or other disposition (including pursuant to a
Sale/Leaseback Transaction (other than a Permitted Sale/Leaseback
Transaction or a Qualified Sale/Leaseback Transaction)) of any property or
asset of the Borrower or any Subsidiary, other than (i) Excluded Asset
Sales, (ii) transfers of property in connection with any Permitted
Permanent Mortgage Financing, (iii) sales, transfers and other dispositions
described in clauses (a) and (b) of Section 6.05 and (iv) other
dispositions resulting in aggregate Net Proceeds not exceeding $25,000,000
during any Fiscal Year; or
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property
or asset of the Borrower or any Subsidiary if the proceeds received by the
Borrower or such Subsidiary in connection with such event become Net
Proceeds; or
(c) the issuance by the Borrower or any Subsidiary of any equity
securities, other than any such issuance of equity securities to the
Borrower or a Subsidiary; or
(d) the incurrence by the Borrower or any Subsidiary of any
Indebtedness, other than Indebtedness permitted by Section 6.01(a) (i)
through (ix) and (xi) through (xx).
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"Prime Rate" means the rate of interest per annum publicly announced from
time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Qualified Sale/Leaseback Transaction" means the sale, pursuant to a
Sale/Leaseback Transaction, of (a) any fee interest in any Real Property Asset
consisting of a Related Store the construction of which is complete, provided
that such sale occurs no more than 270 days after the later of the date of
completion of such construction and the date on which the Borrower or any
Subsidiary acquired such fee interest, or (b) any Equipment within 270 days
after the acquisition of such Equipment by the Borrower or any Subsidiary;
provided, however, that (i) no agreement in connection with such Qualified
Sale/Leaseback Transaction restricts the ability of the Borrower or any of the
Subsidiaries to create, incur, assume or suffer to exist any Indebtedness or any
Lien upon any of its properties, assets or revenues, whether now owned or
hereafter acquired, other than the real estate or Equipment that is the subject
of such Qualified Sale/ Leaseback Transaction and (ii) such Qualified
Sale/Leaseback Transaction is consummated for consideration that is at least
equal to the aggregate fair market value of the real estate (and the related
improvements) or Equipment subject thereto (determined at the time of
consummation thereof in good faith by the chief financial officer of the
Borrower and, in the case of any Qualified Sale/Leaseback Transaction or series
of related Qualified Sale/Leaseback Transactions involving net proceeds in
excess of $10,000,000, the board of directors of the Borrower).
"Quarterly Amortization Date" means each January 15, April 15, July 15 and
October 15, commencing July 15, 1998.
"Real Estate Subsidiary" means (a) each wholly owned Subsidiary of the
Borrower listed in Part A of Schedule 3.12 and (b) each Special Purpose
Subsidiary, in each case so long as such wholly owned Subsidiary or Special
Purpose Subsidiary remains liable with respect to Indebtedness that prohibits
such wholly owned Subsidiary or Special Purpose Subsidiary from entering into
the Guarantee Agreement and the Security Documents.
"Real Property Assets" means interests in land, buildings, improvements and
fixtures attached thereto or used in the operation thereof, in each case owned
or leased (as lessee) by the Borrower or any Subsidiary.
"Redemption Agreement" means the Redemption Agreement dated as of October
26, 1993, among Supermarket Holdings, Holdings and the holders of the Holdings
Bonds, as such Redemption Agreement is in effect on the Effective Date and as
such Redemption Agreement may thereafter be amended from time to time (other
than pursuant to an amendment that would result in an Event of Default under
paragraph (o) of Article VII).
"Refinancing Debt" means any Indebtedness issued in connection with a
Permitted Subordinated Debt Refinancing.
"Refinancing Indenture" means the Indenture pursuant to which any
Refinancing Debt is issued, as such indenture may be amended from time to time
to the extent permitted under Section 6.11.
"Register" has the meaning assigned to such term in Section 9.04.
"Regulation G" shall mean Regulation G of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
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"Regulation X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Related Fund" means, with respect to any Lender that is a fund that invests
in loans, any other fund that invests in loans and is managed by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.
"Related Parties" means, with respect to any specified Person, such Person's
Affiliates and the respective directors, officers, employees, trustees, agents
and advisors of such Person and such Person's Affiliates.
"Related Store" means any store or facility (including any grocery store or
supermarket) that is or is intended to be used by the Borrower or any Subsidiary
in connection with the business permitted under Section 6.03(b).
"Release" has the meaning assigned to such term in Section 101(22) of
CERCLA.
"Required Lenders" means, at any time, Lenders having Revolving Exposures,
Term Loans and unused Commitments representing more than 50% of the sum of the
total Revolving Exposures, outstanding Term Loans and unused Commitments at such
time.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any shares of any class of
capital stock of the Borrower or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancelation or termination of any such shares of capital stock of the Borrower
or any Subsidiary or any option, warrant or other right to acquire any such
shares of capital stock of the Borrower or any Subsidiary.
"Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make Revolving Loans and to acquire participations in
Letters of Credit and Swingline Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount of
each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $200,000,000.
"Revolving Exposure" means, with respect to any Lender at any time, the sum
of the outstanding principal amount of such Lender's Revolving Loans and its LC
Exposure and Swingline Exposure at such time.
"Revolving Lender" means a Lender with a Revolving Commitment or, if the
Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loan" means a Loan made pursuant to clause (c) of Section 2.01.
"Revolving Maturity Date" means June 15, 2001. Notwithstanding the
foregoing, if the Tranche A Maturity Date is extended in connection with any
Permitted Subordinated Debt Refinancing,
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then the Revolving Maturity Date will be automatically extended to the
Tranche A Maturity Date as so extended.
"Sale/Leaseback Transaction" has the meaning assigned to such term in
Section 6.06.
"S&P" means Standard & Poor's.
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Securities" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Security Agreement" means the Security Agreement, substantially in the form
of Exhibit G, among the Borrower, the Subsidiary Loan Parties and the
Administrative Agent for the benefit of the Secured Parties.
"Security Documents" means the Security Agreement, the Pledge Agreement, the
Mortgages and each other security agreement or other instrument or document
executed and delivered pursuant to Section 5.12 or 5.13 to secure any of the
Obligations.
"Senior Debt Leverage Ratio" means, on any date, the ratio of (a) Total Debt
(other than Subordinated Indebtedness) as of such date to (b) Consolidated
EBITDA for the period of four consecutive fiscal quarters of the Borrower most
recently ended as of such date, all determined on a consolidated basis in
accordance with GAAP.
"Senior Subordinated Note Indenture" means the Indenture pursuant to which
the Senior Subordinated Notes are issued, as such indenture may be amended from
time to time to the extent permitted under Section 6.11.
"Senior Subordinated Notes" means the up to $440,000,000 principal amount of
9-5/8% Senior Subordinated Notes due 2003 of the Borrower issued pursuant to the
Senior Subordinated Note Indenture.
"SMG II Holdings" means SMG II Holdings Corp., a Delaware corporation.
"Specified ERISA Event" means all ERISA Events associated with the transfer
in 1997 of assets of the Borrower or its Subsidiaries, relating to the inventory
distribution and trucking functions of the Borrower's or such Subsidiary's
business, to third parties that will perform such functions under contractual
out-sourcing arrangements, which ERISA Events could reasonably be expected to
result in liability of the Borrower and the Subsidiaries of an aggregate amount
of up to $7,500,000.
"Special Purpose Subsidiary" means each wholly owned Subsidiary of the
Borrower that is organized for the purpose of, and is engaged solely in the
business of, (a) owning a fee or leasehold interest in a single Real Property
Asset and (b) owning or leasing Equipment located at such Real Property Asset,
in each case used in the operation of a Related Store, provided that such
interest in such Real Property Asset and such Equipment is acquired by such
wholly owned Subsidiary after the Effective Date (i) directly from a person
other than the Borrower or any Subsidiary or (ii) from the Borrower or any
Subsidiary (A) in the case of the interest in such Real Property Asset, no more
than 270 days after the later
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of the date of completion of the construction of such Related Store and the
date on which the Borrower or any Subsidiary acquired such interest and (B)
in the case of Equipment, within 270 days after the acquisition of such
Equipment by the Borrower or any Subsidiary.
"Specified Permitted Refinancing Transactions" means (a) any Permitted
Sale/Leaseback Transaction, (b) any Permitted Permanent Mortgage Financing
and (c) the issuance or incurrence by Holdings or the Borrower of unsecured
Indebtedness; provided, however, that (i) such unsecured Indebtedness has a
maturity date later than the date that is eight years after the Effective
Date, (ii) such unsecured Indebtedness does not provide for any amortization
or prepayment prior to the date that is eight years after the Effective Date,
(iii) the interest rate with respect to such unsecured Indebtedness is a rate
of interest determined in good faith by the board of directors of the
Borrower to be a market rate of interest at the time of the issuance of such
unsecured Indebtedness and (iv) the covenants, defaults and remedies of such
unsecured Indebtedness are no more restrictive with respect to the Borrower
than the analogous provisions of this Agreement.
"Specified Real Estate" means the real estate listed on Schedule 1.01(c)
(and the related improvements).
"Spin-Off Agreements" means (a) that certain Distribution and Transfer
Agreement dated as of October 26, 1993, among the Borrower, Holdings and
Plainbridge, (b) that certain Distribution and Transfer Agreement dated as of
May 3, 1993, among the Borrower, Supermarket Holdings and Chefmark, (c) that
certain Tax Indemnity Agreement dated as of October 26, 1993, between the
Borrower and Plainbridge, (d) that certain Tax Sharing Agreement dated as of
October 26, 1993, between the Borrower and SMG-II Holdings, (e) that certain
Logistical Services Agreement dated as of October 26, 1993, between the Borrower
and Plainbridge, (f) that certain Blair Services Agreement dated as of October
26, 1993, between the Borrower and Plainbridge, (g) that certain Rickel Services
Agreement dated as of October 26, 1993, between the Borrower and Plainbridge,
(h) that certain Chefmark Services Agreement dated as of May 3, 1993, between
the Borrower and Chefmark, and (i) that certain letter agreement dated as of May
3, 1993 between the Borrower and Chefmark filed as Exhibit 10.5 to the
Registration Statement of the Borrower and Supermarket Holdings (Registration
No. 33-59616) filed with the Securities and Exchange Commission on March 16,
1993, as amended by Amendment No. 1 to Post-Effective Amendment No. 1 thereto.
"Standby Letter of Credit" means any standby letter of credit or similar
instrument issued for the purpose of supporting (a) Indebtedness of the Borrower
or any Subsidiary in respect of industrial revenue or development bonds or
financings, (b) workers' compensation liabilities of the Borrower or any
Subsidiary, (c) the obligations of third party insurers of the Borrower or any
Subsidiary arising by virtue of the laws of any jurisdiction requiring third
party insurers, (d) Capital Lease Obligations or obligations with respect to
Operating Leases of the Borrower or any Subsidiary, (e) performance, payment,
deposit or surety obligations of the Borrower or any Subsidiary, in any case if
required by law or governmental rule or regulation or in accordance with custom
and practice in the industry and (f) other obligations of the Borrower and the
Subsidiaries to the extent consistent with past practices of the Borrower and
the Subsidiaries or otherwise consistent with custom and practice in the
industry.
"Subordinated Debenture Indenture" means the indenture pursuant to which the
Subordinated Debentures are issued, as such indenture may be amended from time
to time to the extent permitted under Section 6.11.
"Subordinated Debentures" means the up to $100,000,000 principal amount of
12-5/8% Subordinated Debentures due 2002 of the Borrower issued pursuant to the
Subordinated Debenture Indenture.
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"Subordinated Debt" means, collectively, the Indebtedness of the Borrower
evidenced by the Senior Subordinated Notes, the Subordinated Notes, the
Subordinated Debentures and the Junior Subordinated Notes.
"Subordinated Debt Indentures" means, collectively, the Senior Subordinated
Note Indenture, the Subordinated Note Indenture, the Subordinated Debenture
Indenture and the Junior Subordinated Note Indenture.
"Subordinated Indebtedness" means (a) the Subordinated Debt, (b)
Indebtedness that (i) is permitted by Section 6.01(a)(vii) and (ii) refinances,
in whole or in part, either Subordinated Debt or Indebtedness that was
previously incurred pursuant to Section 6.01(a)(vii) in connection with the
refinancing of Subordinated Debt and (c) any other Indebtedness of the Borrower
subordinated in right of payment to the Obligations pursuant to documentation
containing maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
satisfactory to the Administrative Agent and the Required Lenders.
"Subordinated Note Exchange Offer" means the offer by the Borrower to
exchange Subordinated Notes for Supermarket Holdings Subordinated Notes, as more
fully described in the Registration Statement of the Borrower and Supermarket
Holdings on Form S-1 (Registration No. 33-59616) filed with the Securities and
Exchange Commission on March 16, 1993, as amended by Amendment Nos. 1, 2 and 3
thereto and Post-Effective Amendment No. 1 filed with the Securities and
Exchange Commission on August 23, 1993, as amended by Amendment No. 1 thereto.
"Subordinated Note Indenture" means the indenture pursuant to which the
Subordinated Notes are issued, as such indenture may be amended from time to
time to the extent permitted under Section 6.11.
"Subordinated Notes" means the up to $200,000,000 principal amount of
11-5/8% Subordinated Notes due 2002 of the Borrower issued pursuant to the
Subordinated Note Indenture.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity (a) of which securities or other ownership interests
representing more than 50% of the ordinary voting power in the election of
Persons (whether directors, managers, trustees or other Persons performing
similar functions) having the power to direct or cause the direction of the
management and policies thereof or, in the case of a partnership, more than
50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled, by
the parent or one or more subsidiaries of the parent or by the parent and one
or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Subsidiary Loan Party" means any Subsidiary that is not a Foreign
Subsidiary or a Real Estate Subsidiary.
"Supermarket Holdings" means Supermarkets General Holdings Corporation, a
Delaware corporation.
"Supermarket Holdings Existing Credit Agreement" means that certain Credit
Agreement dated as of May 29, 1987, as amended, by and among Supermarket
Holdings (formerly SMG Holdings Corporation), the banks listed therein as
lenders, Bankers Trust Company and The Chase Manhattan Bank, as successor in
interest to Chemical Bank, as successor in interest to Manufacturers Hanover
Trust Company.
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"Supermarket Holdings Intercompany Note" means that certain Promissory Note
dated as of May 28, 1992, made by the Borrower to Supermarket Holdings in an
outstanding principal amount of $983,000 as of May 3, 1997.
"Supermarket Holdings Subordinated Notes" means the 11 5/8% Subordinated
Notes due 2002 issued by Supermarket Holdings in an aggregate original principal
amount of $200,000,000, which notes were in an aggregate outstanding principal
amount of $983,000 as of May 3, 1997.
"Swingline Exposure" means, at any time, the aggregate principal amount of
all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.
"Swingline Lender" means The Chase Manhattan Bank, in its capacity as lender
of Swingline Loans hereunder.
"Swingline Loan" means a Loan made pursuant to Section 2.04.
"Taxes" means any and all current or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Term Commitments" means a Tranche A Commitment or Tranche B Commitment or
any combination thereof (as the context requires).
"Term Loans" means Tranche A Term Loans and Tranche B Term Loans.
"Three-Month Secondary CD Rate" means, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day is not a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal Reserve
Bank of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day) or, if such rate is not so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Total Debt" means, as of any date of determination, without duplication,
the aggregate principal amount of indebtedness (determined in accordance with
GAAP) of the Borrower and the Subsidiaries outstanding as of such date,
determined on a consolidated basis in accordance with GAAP (other than
Indebtedness of the type referred to in clause (i) of the definition of the term
"Indebtedness", except to the extent of any unreimbursed drawings thereunder).
"Tranche A Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make a Tranche A Term Loan hereunder on the Effective
Date, expressed as an amount representing the maximum principal amount of the
Tranche A Term Loan to be made by such Lender hereunder, as such commitment may
be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender's Tranche A
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Tranche A Commitment, as
applicable. The initial aggregate amount of the Lenders' Tranche A Commitments
is $75,000,000.
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"Tranche A Lender" means a Lender with a Tranche A Commitment or an
outstanding Tranche A Term Loan.
"Tranche A Maturity Date" means June 15, 2001. Notwithstanding the
foregoing, if (a) any Permitted Subordinated Debt Refinancing is consummated and
(b) at the time of such Permitted Subordinated Debt Refinancing, no Default or
Event of Default has occurred and is continuing, then the Tranche A Maturity
Date will be automatically extended to the date that is the earlier of (i) the
date that is six and one-half years after the Effective Date and (ii) the date
that is one year prior to the Earliest Subordinated Debt Maturity Date, after
giving effect to such Permitted Subordinated Debt Refinancing.
"Tranche A Term Loan" means a Loan made pursuant to clause (a) of
Section 2.01.
"Tranche B Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche B Term Loan hereunder on
the Effective Date, expressed as an amount representing the maximum principal
amount of the Tranche B Term Loan to be made by such Lender hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.08 and
(b) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Lender's Tranche B
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Tranche A Commitment, as
applicable. The initial aggregate amount of the Lenders' Tranche B Commitments
is $225,000,000.
"Tranche B Lender" means a Lender with a Tranche B Commitment or an
outstanding Tranche B Term Loan.
"Tranche B Maturity Date" means December 15, 2001. Notwithstanding the
foregoing, if (a) any Permitted Subordinated Debt Refinancing is consummated and
(b) at the time of such Permitted Subordinated Debt Refinancing, no Default or
Event of Default has occurred and is continuing, then the Tranche B Maturity
Date will be automatically extended to the date that is the earlier of (i) the
date that is eight years after the Effective Date and (ii) the date that is six
months prior to the Earliest Subordinated Debt Maturity Date, after giving
effect to such Permitted Subordinated Debt Refinancing.
"Tranche B Term Loan" means a Loan made pursuant to clause (b) of
Section 2.01.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the LIBO Rate or the Alternate Base
Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise
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(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed
to include such Person's successors and assigns, (c) the words "herein",
"hereof" and "hereunder", and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, this Agreement and (e) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided,
however, that for purposes of determining compliance with any covenant set forth
in Article VI, such terms shall be construed in accordance with GAAP as in
effect on the date of this Agreement applied on a basis consistent with the
application used in preparing the Borrower's financial statements referred to in
Section 3.04.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees (a) to make a Tranche A Term Loan to the
Borrower on the Effective Date in a principal amount not exceeding its Tranche A
Commitment, (b) to make a Tranche B Term Loan to the Borrower on the Effective
Date in a principal amount not exceeding its Tranche B Commitment and (c) to
make Revolving Loans to the Borrower from time to time during the Revolving
Availability Period in an aggregate principal amount that will not result in
such Lender's Revolving Exposure exceeding such Lender's Revolving Commitment.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Revolving Loans. Amounts
repaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder, provided that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.
(b) Subject to Section 2.14, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request in accordance herewith. Notwithstanding anything to the
contrary contained herein, (i) all Borrowings made on the Effective Date and
during the first two Business Days thereafter shall be ABR Borrowings and (ii)
during the first 30 days following the Effective Date, only ABR Borrowings and
Eurodollar Borrowings consisting of Eurodollar Loans with Interest Periods of
one month may be made. Each Swingline Loan shall be an ABR Loan. Each Lender at
its option may make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan, so long as the exercise of
such option would not cause the Borrower to incur increased costs. Any exercise
of such option shall not affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than
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$5,000,000. At the time that each ABR Revolving Borrowing is made, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000, provided that an ABR Revolving
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Revolving Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.05(e). Each
Swingline Loan shall be in an amount that is an integral multiple of $100,000
and not less than $500,000. Borrowings of more than one Type and Class may be
outstanding at the same time, provided that there shall not at any time be more
than a total of 20 Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Maturity Date, Tranche A Maturity Date or Tranche B Maturity Date,
as applicable.
SECTION 2.03. Requests for Borrowings. To request a Revolving Borrowing
or Term Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
12:00 noon, New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00
noon, New York City time, one Business Day before the date of the proposed
Borrowing, provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving Borrowing,
Tranche A Term Borrowing or Tranche B Term Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) subject to the second sentence of Section 2.02(b), whether such
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(v) subject to the second sentence of Section 2.02(b), in the case of a
Eurodollar Borrowing, the initial Interest Period to be applicable thereto,
which shall be a period contemplated by the definition of the term
"Interest Period"; and
(vi) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of
Section 2.06.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Swingline Loans. (a) Subject to the terms and conditions
set forth herein, the Swingline Lender agrees to make Swingline Loans to the
Borrower from time to time during
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the Revolving Availability Period, in an aggregate principal amount at any time
outstanding that will not result in (i) the aggregate principal amount of
outstanding Swingline Loans exceeding $30,000,000 or (ii) the sum of the total
Revolving exposures exceeding the total Revolving Commitments, provided that
the Swingline Lender shall not be required to make a Swingline Loan to
refinancing an outstanding Swingline Loan. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 1:00 p.m., New York City time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested date
(which shall be a Business Day) and amount of the requested Swingline Loan. The
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower. The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the Borrower with the Swingline Lender (or, in the case of a
Swingline Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(e), by remittance to the Issuing Bank) by 3:00 p.m.,
New York City time, on the requested date of such Swingline Loan.
(c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Revolving Lender, specifying in such notice
such Lender's Applicable Percentage of such Swingline Loan or Loans. Each
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to the Administrative Agent, for the account of
the Swingline Lender, such Lender's Applicable Percentage of such Swingline Loan
or Loans. Each Revolving Lender acknowledges and agrees that its obligation to
acquire participations in Swingline Loans pursuant to this paragraph is absolute
and unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. Each Revolving
Lender shall comply with its obligation under this paragraph by wire transfer of
immediately available funds, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the Swingline Lender the amounts so
received by it from the Revolving Lenders. The Administrative Agent shall notify
the Borrower of any participations in any Swingline Loan acquired pursuant to
this paragraph, and thereafter payments in respect of such Swingline Loan shall
be made to the Administrative Agent and not to the Swingline Lender. Any amounts
received by the Swingline Lender from the Borrower (or other party on behalf of
the Borrower) in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear. The
purchase of participations in a Swingline Loan pursuant to this paragraph shall
not relieve the Borrower of any default in the payment thereof.
SECTION 2.05. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the applicable Issuing Bank, at any time and from time
to time during the LC Availability Period. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, any Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
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(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the applicable Issuing Bank) to
the applicable Issuing Bank and the Administrative Agent (reasonably in advance
of the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph
(c) of this Section), the amount of such Letter of Credit, the name and address
of the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
applicable Issuing Bank, the Borrower also shall submit a letter of credit
application on such Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $125,000,000 and (ii) the total Revolving Exposures
shall not exceed the total Revolving Commitments.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Lenders, such
Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender
hereby acquires from such Issuing Bank, a participation in such Letter of
Credit equal to such Lender's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit. In addition, Corestates
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from Corestates, a participation in the Existing Letter of Credit
issued by Corestates equal to such Lender's Applicable Percentage of the
aggregate amount available to be drawn under such Existing Letter of Credit,
effective as of the Closing Date. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the applicable Issuing Bank,
such Lender's Applicable Percentage of each LC Disbursement made by such Issuing
Bank and not reimbursed by the Borrower on the date due as provided in paragraph
(e) of this Section, or of any reimbursement payment required to be refunded to
the Borrower for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including any amendment, renewal or extension of
any Letter of Credit or the occurrence and continuance of a Default or reduction
or termination of the Commitments, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit issued by such Issuing Bank, the Borrower shall
reimburse such LC Disbursement by paying to the Administrative Agent an amount
equal to such LC Disbursement not later than 12:00 noon, New York City time, on
the date that such LC Disbursement is made, if the Borrower shall have received
notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such
date, or, if such notice has not been received by the Borrower prior to such
time on such date, then not later than 12:00 noon, New York City time, on (i)
the Business Day that the Borrower receives such notice, if such notice is
received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii)
the Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of receipt,
provided that, if such LC Disbursement is not less than $5,000,000, the Borrower
may, subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.03 or
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2.04 that such payment be financed with an ABR Revolving Borrowing or Swingline
Loan in an equivalent amount and, to the extent so financed, the Borrower's
obligation to make such payment shall be discharged and replaced by the
resulting ABR Revolving Borrowing or Swingline Loan. If the Borrower fails to
make such payment when due, the Administrative Agent shall notify each Revolving
Lender of the applicable LC Disbursement, the payment then due from the Borrower
in respect thereof and such Lender's Applicable Percentage thereof. Promptly
following receipt of such notice, each Revolving Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Borrower, in the same manner as provided in Section 2.06 with respect to Loans
made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the
payment obligations of the Revolving Lenders), and the Administrative Agent
shall promptly pay to the Issuing Bank the amounts so received by it from the
Revolving Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrower pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the applicable Issuing Bank or, to the extent
that Revolving Lenders have made payments pursuant to this paragraph to
reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their
interests may appear. Any payment made by a Revolving Lender pursuant to this
paragraph to reimburse the applicable Issuing Bank for any LC Disbursement
(other than the funding of ABR Revolving Loans or a Swingline Loan as
contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision herein or therein, (ii) any
draft or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the applicable Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does not
strictly comply with the terms of such Letter of Credit or (iv) any other event
or circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower's obligations
hereunder. Neither the Administrative Agent, the Lenders nor the applicable
Issuing Bank, nor any of their Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank, provided that the foregoing shall
not be construed to excuse such Issuing Bank from liability to the Borrower to
the extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by such Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit strictly comply with the terms thereof. The
parties hereto expressly agree that, in the absence of gross negligence or
wilful misconduct on the part of the applicable Issuing Bank (as finally
determined by a court of competent jurisdiction), such Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented that appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the applicable
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of
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Credit issued by it. The applicable Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether such Issuing Bank has made or will make an
LC Disbursement thereunder, provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse such
Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the applicable Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans,
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
applicable Issuing Bank, except that interest accrued on and after the date of
payment by any Revolving Lender pursuant to paragraph (e) of this Section to
reimburse such Issuing Bank shall be for the account of such Lender to the
extent of such payment.
(i) Replacement of an Issuing Bank. Any Issuing Bank may be replaced
at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank, if any. The
Administrative Agent shall notify the Lenders of any such replacement of the
replaced Issuing Bank. At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to Section 2.12(b). From and after the
effective date of any such replacement, (i) any successor Issuing Bank shall
have all the rights and obligations of an Issuing Bank under this Agreement
with respect to Letters of Credit to be issued thereafter and (ii) references
herein to the term "Issuing Bank" shall be deemed to refer to such successor
or to any previous Issuing Bank, or to such successor and all previous
Issuing Banks, as the context shall require. After the replacement of an
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.
(j) Cash Collateralization. If any Event of Default shall occur and
be continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of
such date plus any accrued and unpaid interest thereon, provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Article VII. Each such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Administrative Agent and at the Borrower's
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of Revolving
Lenders with LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
30
<PAGE>
hereunder as a result of the occurrence of an Event of Default, such amount
(to the extent not applied as aforesaid) shall be returned to the Borrower
within three Business Days after all Events of Default have been cured or
waived.
SECTION 2.06. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer
of immediately available funds by 12:00 noon, New York City time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders, provided that Swingline Loans shall be made
as provided in Section 2.04. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in
like funds, to an account of the Borrower maintained with the Administrative
Agent in New York City and designated by the Borrower in the applicable
Borrowing Request, provided that ABR Revolving Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be
remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from
a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its
share of the applicable Borrowing available to the Administrative Agent, then
the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is
made available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation or
(ii) in the case of the Borrower, the interest rate applicable to ABR Loans.
If such Lender pays such amount to the Administrative Agent, then such amount
shall constitute such Lender's Loan included in such Borrowing.
SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing and
Term Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter,
subject to the provisions of the second sentence of Section 2.02(b), the
Borrower may elect to convert such Borrowing to a different Type or to
continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among
the Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing. This
Section shall not apply to Swingline Borrowings, which may not be converted
or continued.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the Borrower
were requesting a Revolving Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent
of a written Interest Election Request in a form approved by the
Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and
paragraph (f) of this Section:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be
31
<PAGE>
allocated to each resulting Borrowing (in which case the information to
be specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar
Borrowing but does not specify an Interest Period, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of
such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing and the Administrative
Agent, at the request of the Required Lenders, so notifies the Borrower,
then, so long as an Event of Default is continuing (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii)
unless repaid, each Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
(f) A Borrowing of any Class may not be converted to or continued as
a Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date
plus the aggregate principal amount of outstanding ABR Borrowings of such
Class would be less than the aggregate principal amount of Loans of such
Class required to be repaid on such scheduled repayment date.
SECTION 2.08. Termination and Reduction of Commitments. (a) Unless
previously terminated, (i) the Tranche A Commitments and Tranche B
Commitments shall terminate at 5:00 p.m., New York City time, on the
Effective Date and (ii) the Revolving Commitments shall terminate on the
Revolving Maturity Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class, provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple
of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not
terminate or reduce the Revolving Commitments if, after giving effect to any
concurrent prepayment of the Revolving Loans in accordance with Section 2.11,
the sum of the Revolving Exposures would exceed the total Revolving
Commitments.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by
the Borrower pursuant to this Section shall be irrevocable, provided that
32
<PAGE>
a notice of termination of the Revolving Commitments delivered by the
Borrower may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or
reduction of the Commitments of any Class shall be permanent. Each reduction
of the Commitments of any Class shall be made ratably among the Lenders in
accordance with their respective Commitments of such Class.
SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Revolving
Loan of such Lender on the Revolving Maturity Date, (ii) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Term Loan of such Lender as provided in Section 2.10 and (iii)
to the Swingline Lender the then unpaid principal amount of each Swingline
Loan on the earlier of the Revolving Maturity Date and the first date after
such Swingline Loan is made that is the 15th or last day of a calendar month
and is at least two Business Days after such Swingline Loan is made. In the
event that the Revolving Maturity Date is extended in connection with any
Permitted Subordinated Debt Refinancing, (i) the Borrower will provide notice
to the Lenders of such Permitted Subordinated Debt Refinancing and (ii) the
Administrative Agent will (A) in consultation with the Borrower, determine
the new Revolving Maturity Date and (B) distribute to the Borrower and each
of the Lenders a notice setting forth the new Revolving Maturity Date. Any
such notice from the Administrative Agent shall be binding on the Borrower
and the Lenders absent manifest error.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein, provided that the
failure of any Lender or the Administrative Agent to maintain such accounts
or any error therein shall not in any manner affect the obligation of the
Borrower to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the 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 and
the Borrower. Thereafter, the Loans evidenced by such promissory note and
interest thereon shall at all times (including after assignment pursuant to
Section 9.04) 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).
SECTION 2.10. Amortization of Term Loans. (a) Subject to adjustment
pursuant to paragraph (d) of this Section, the Borrower shall repay Tranche A
Term Borrowings on each date set forth below in the aggregate principal
amount set forth opposite such date:
DATE AMOUNT
---- ------
October 15, 1997 $ 1,875,000
33
<PAGE>
<TABLE>
<CAPTION>
DATE AMOUNT
----------------------------------------------------- --------
<S> <C>
January 15, 1998..................................... 1,875,000
April 15, 1998....................................... 1,875,000
July 15, 1998........................................ 1,875,000
October 15, 1998..................................... 1,875,000
January 15, 1999..................................... 1,875,000
April 15, 1999....................................... 1,875,000
July 15, 1999........................................ 1,875,000
October 15, 1999..................................... 5,625,000
January 15, 2000..................................... 5,625,000
April 15, 2000....................................... 5,625,000
July 15, 2000........................................ 5,625,000
October 15, 2000..................................... 9,375,000
January 15, 2001..................................... 9,375,000
April 15, 2001....................................... 9,375,000
Tranche A Maturity Date.............................. 9,375,000
</TABLE>
Notwithstanding the foregoing, in the event that the Tranche A Maturity Date
is at any time extended in connection with any Permitted Subordinated Debt
Refinancing, the amortization schedule set forth above will be automatically
adjusted so that (i) 20% of the then-outstanding principal amount of the
Tranche A Term Loans will amortize in equal quarterly installments over the
four Quarterly Amortization Dates immediately following the date of such
extension and (ii) the remaining 80% of such principal amount will amortize
in equal installments over the remaining Quarterly Amortization Dates
occurring prior to the Tranche A Maturity Date after giving effect to such
extension and on the Tranche A Maturity Date. Upon the occurrence of any such
Permitted Subordinated Debt Refinancing, (i) the Borrower will provide notice
to the Lenders of such Permitted Subordinated Debt Refinancing and (ii) the
Administrative Agent will (A) in consultation with the Borrower, determine
the new amortization schedule with respect to the Tranche A Term Loans and
(B) distribute to the Borrower and each of the Lenders a notice setting forth
such new amortization schedule. Any such notice from the Administrative Agent
shall be binding on the Borrower and the Lenders absent manifest error.
(b) Subject to adjustment pursuant to paragraph (d) of this Section, the
Borrower shall repay Tranche B Term Borrowings on each date set forth below
in the aggregate principal amount set forth opposite such date:
<TABLE>
<CAPTION>
DATE AMOUNT
----------------------------------------------------- --------
<S> <C>
October 15, 1997..................................... $250,000
January 15, 1998..................................... 250,000
April 15, 1998....................................... 250,000
July 15, 1998........................................ 250,000
October 15, 1998..................................... 250,000
January 15, 1999..................................... 250,000
April 15, 1999....................................... 250,000
July 15, 1999........................................ 250,000
October 15, 1999..................................... 250,000
January 15, 2000..................................... 250,000
April 15, 2000....................................... 250,000
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
DATE AMOUNT
----------------------------------------------------- --------
<S> <C>
July 15, 2000........................................ 250,000
October 15, 2000..................................... 250,000
January 15, 2001..................................... 250,000
April 15, 2001....................................... 50,000,000
July 15, 2001........................................ 50,000,000
October 15, 2001..................................... 60,750,000
Tranche B Maturity Date.............................. 60,750,000
</TABLE>
Notwithstanding the foregoing, in the event that the Tranche B Maturity Date
is at any time extended in connection with any Permitted Subordinated Debt
Refinancing, the amortization schedule set forth above will be automatically
adjusted so that (i) the Tranche B Term Loans will amortize on each Quarterly
Amortization Date in the amount of $250,000 until the last three Quarterly
Amortization Dates occurring prior to the Tranche B Maturity Date after
giving effect to such extension and (ii) the remaining principal amount of
Tranche B Term Loans will amortize in equal installments over such last three
Quarterly Amortization Dates and on the Tranche B Maturity Date. Upon the
occurrence of any such Permitted Subordinated Debt Refinancing, (i) the
Borrower will provide notice to the Lenders of such Permitted Subordinated
Debt Refinancing and (ii) the Administrative Agent will (A) in consultation
with the Borrower, determine the new amortization schedule with respect to
the Tranche B Term Loans and (B) distribute to the Borrower and each of the
Lenders a notice setting forth such new amortization schedule. Any such
notice from the Administrative Agent shall be binding on the Borrower and the
Lenders absent manifest error.
(c) To the extent not previously paid, (i) all Tranche A Term Loans shall
be due and payable on the Tranche A Maturity Date and (ii) all Tranche B Term
Loans shall be due and payable on the Tranche B Maturity Date. In the event
that the Tranche A Maturity Date or the Tranche B Maturity Date is at any
time extended in connection with any Permitted Subordinated Debt Refinancing,
(i) the Borrower will provide notice to the Lenders of such Permitted
Subordinated Debt Refinancing and (ii) the Administrative Agent will (A) in
consultation with the Borrower, determine the new Tranche A Maturity Date or
Tranche B Maturity Date, as applicable, and (B) distribute to the Borrower
and each of the Lenders a notice setting forth the new Tranche A Maturity
Date or Tranche B Maturity Date, as applicable. Any such notice shall be
binding on the Borrower and the Lenders absent manifest error.
(d) If the initial aggregate amount of the Lenders' Term Commitments of
either Class exceeds the aggregate principal amount of Term Loans of such
Class that are made on the Effective Date, then the scheduled repayments of
Term Borrowings of such Class to be made pursuant to this Section shall be
reduced ratably by an aggregate amount equal to such excess. Any prepayment
of a Term Borrowing of either Class shall be applied to reduce the subsequent
scheduled repayments of the Term Borrowings of such Class to be made pursuant
to this Section ratably, provided that any prepayment made pursuant to
Section 2.11(a) shall be applied, first, to reduce the next scheduled
repayment of the Term Borrowings of such Class to be made pursuant to this
Section (to the extent that such scheduled repayment would otherwise occur
within 12 months of such prepayment made pursuant to Section 2.11(a)) unless
and until such next scheduled repayment has been eliminated as a result of
reductions hereunder and, second, to reduce the remaining scheduled
repayments of the Term Borrowings of such Class to be made pursuant to this
Section ratably.
(e) Prior to any repayment of any Term Borrowings of either Class
hereunder, the Borrower shall select the Borrowing or Borrowings of the
applicable Class to be repaid and shall notify the Administrative Agent by
telephone (confirmed by telecopy) of such selection not later than 11:00
a.m., New York City time, three Business Days before the scheduled date of
such repayment, provided that each repayment of Term Borrowings of either
Class shall be applied to repay any outstanding ABR Term
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<PAGE>
Borrowings of such Class before any other Borrowings of such Class. Each
repayment of a Borrowing shall be applied ratably to the Loans included in
the repaid Borrowing. Repayments of Term Borrowings shall be accompanied by
accrued interest on the amount repaid.
SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the right
at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section.
(b) In the event and on each occasion that any Net Proceeds are received
by or on behalf of the Borrower or any Subsidiary in respect of any
Prepayment Event, the Borrower shall, no later than the second Business Day
after such Net Proceeds are received, prepay Term Borrowings (or, following
the repayment of all Term Borrowings, permanently reduce the Revolving
Commitments) in an aggregate amount equal to (i) in the case of any
Prepayment Event described in clause (c) of the definition of the term
"Prepayment Event", 50% of such Net Proceeds and (ii) in the case of any
other Prepayment Event, 100% of such Net Proceeds.
(c) Following the end of each Fiscal Year, commencing with the 1997
Fiscal Year, the Borrower shall prepay Term Borrowings (or, following the
repayment of all Term Borrowings, permanently reduce the Revolving
Commitments) in an aggregate amount equal to 50% of Excess Cash Flow for such
Fiscal Year. Each prepayment pursuant to this paragraph shall be made on or
before the date on which financial statements are delivered pursuant to
Section 5.01 with respect to the Fiscal Year for which Excess Cash Flow is
being calculated (and in any event within 90 days after the end of such
Fiscal Year).
(d) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be
prepaid and shall specify such selection in the notice of such prepayment
pursuant to paragraph (f) of this Section, provided that each prepayment of
Borrowings of any Class shall be applied to prepay ABR Borrowings of such
Class before any other Borrowings of such Class. In the event of any optional
or mandatory prepayment of Term Borrowings made at a time when Term
Borrowings of both Classes remain outstanding, the Borrower shall select Term
Borrowings to be prepaid so that the aggregate amount of such prepayment is
allocated between the Tranche A Term Borrowings and Tranche B Term Borrowings
pro rata based on the aggregate principal amount of outstanding Borrowings of
each such Class (a "Pro Rata Allocation"), provided that to the extent
Tranche A Term Loans remain outstanding on the prepayment date, any Tranche B
Lender may elect, by notice to the Administrative Agent by telephone
(confirmed by telecopy) at least one Business Day prior to the prepayment
date, to decline all or any portion of any prepayment of its Tranche B Term
Loans pursuant to this Section, in which case the aggregate amount of the
prepayment that would have been applied to prepay such Tranche B Lender's
Tranche B Term Loans but was so declined shall be applied to prepay Tranche A
Term Borrowings.
(e) In the event that (a) the sum of (i) the aggregate principal amount
of all Loans outstanding under the Revolving Commitments at any time and (ii)
the LC Exposure at such time exceeds (b) the aggregate Revolving Commitments
at such time, the Borrower will immediately repay Revolving Loans and,
following the repayment of such Loans, cash collateralize outstanding Letters
of Credit, in an aggregate amount equal to such excess.
(f) The Borrower shall notify the Administrative Agent (and in the case
of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 12:00 Noon, New York
City time, three Business Days before the date of prepayment, (ii) in the
case of prepayment of an ABR Borrowing, not later than 12:00 Noon, New York
City time, one Business Day before the date of prepayment or (iii) in the
case of prepayment of a Swingline Loan, not later than 1:00 p.m., New York
City time, on the date of prepayment. Each such notice shall be irrevocable
and shall specify the prepayment
36
<PAGE>
date, the principal amount of each Borrowing or portion thereof to be prepaid
and, in the case of a mandatory prepayment, a reasonably detailed calculation
of the amount of such prepayment, provided that, if a notice of optional
prepayment is given in connection with a conditional notice of termination of
the Revolving Commitments as contemplated by Section 2.08, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.08. Promptly following receipt of any such notice
(other than a notice relating solely to Swingline Loans), the Administrative
Agent shall advise the Lenders of the contents thereof. Each partial
prepayment of any Borrowing shall be in an amount that would be permitted in
the case of an advance of a Borrowing of the same Type as provided in Section
2.02, except as necessary to apply fully the required amount of a mandatory
prepayment. Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.13.
SECTION 2.12. Fees. (a) The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at
the Applicable Rate on the average daily unused amount of the Revolving
Commitment of such Lender during the period from and including the Effective
Date to but excluding the date on which such Commitment terminates. Accrued
commitment fees shall be payable in arrears on the 15th day of January,
April, July and October of each year and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur after the
date hereof. All commitment fees shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of
computing commitment fees with respect to Revolving Commitments, a Revolving
Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline
Exposure of such Lender shall be disregarded for such purpose).
(b) The Borrower agrees to pay to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at a rate equal to
(i) in the case of the portion of such Lender's LC Exposure that is
attributable to Standby Letters of Credit, the excess of (A) the same
Applicable Rate as interest on Eurodollar Revolving Loans on the average
daily amount of such portion of such Lender's LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) over (B) the
Fronting Fee, in each case during the period from and including the Effective
Date to but excluding the later of the date on which such Lender's Revolving
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure, and (ii) in the case of the portion of such Lender's LC Exposure
that is attributable to Commercial Letters of Credit, the excess of (A)
one-half of the same Applicable Rate as interest on Eurodollar Revolving
Loans on the average daily amount of such portion of such Lender's LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) over (B) the Fronting Fee, in each case during the period from
and including the Effective Date to but excluding the later of the date on
which such Lender's Revolving Commitment terminates and the date on which
such Lender ceases to have any LC Exposure. The Borrower also agrees to pay
to each Issuing Bank a fronting fee (the "Fronting Fee"), which shall accrue
at the rate of 1/4 of 1% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) with respect to Letters of Credit issued by such Issuing Bank
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Revolving Commitments and the date on
which there ceases to be any LC Exposure, as well as such Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension
of any Letter of Credit or processing of drawings thereunder. Participation
fees and fronting fees accrued through and including the 15th day of January,
April, July and October of each year shall be payable on the third Business
Day following such fifteenth day, commencing on the first such date to occur
after the Effective Date, provided that all such fees shall be payable on the
date on which the Revolving Commitments terminate and any such fees accruing
after the date on which the Revolving Commitments terminate shall be payable
on demand. Any other fees payable to any Issuing Bank pursuant to this
paragraph shall be payable within 10 days after demand. All participation
fees and fronting fees shall be
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computed on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
(c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
(other than any Swingline Loan) shall bear interest at the Alternate Base
Rate plus the Applicable Rate. Each Swingline Loan shall bear interest at the
Alternate Base Rate plus the Applicable Rate with respect to ABR Revolving
Loans minus the Applicable Rate with respect to commitment fees.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at
the LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a
rate per annum equal to (i) in the case of overdue principal of any Loan, 2%
plus the rate otherwise applicable to such Loan as provided in the preceding
paragraphs of this Section or (ii) in the case of any other amount, 2% plus
the rate applicable to ABR Revolving Loans as provided in paragraph (a) of
this Section.
(d) Accrued interest on each Loan shall be payable in arrears (i) on each
Interest Payment Date for such Loan and (ii) in the case of Revolving Loans,
upon termination of the Revolving Commitments, provided that (A) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(B) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the Revolving
Availability Period), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and (C)
in the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year),
and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable
Alternate Base Rate or LIBO Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means
do not exist for ascertaining the LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of
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making or maintaining their Loans (or its Loan) included in such Borrowing
for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and
the Lenders by telephone or telecopy as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower and the Lenders
that the circumstances giving rise to such notice no longer exist, (i) any
Interest Election Request that requests the conversion of any Borrowing to,
or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective and (ii) if any Borrowing Request requests a Eurodollar
Borrowing, such Borrowing shall be made as an ABR Borrowing.
SECTION 2.15. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender or the Issuing Bank; or
(ii) impose on any Lender or any Issuing Bank or the London interbank
market any other condition (other than with respect to any matter addressed
by Section 2.17) affecting this Agreement or Eurodollar Loans made by such
Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or
such Issuing Bank of participating in, issuing or maintaining any Letter of
Credit or to reduce the amount of any sum received or receivable by such
Lender or such Issuing Bank hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender or such Issuing Bank,
as the case may be, in accordance with paragraph (c) below such additional
amount or amounts as will compensate such Lender or such Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or any Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or such Issuing Bank's capital or on the
capital of such Lender's or such Issuing Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by
such Issuing Bank, to a level below that which such Lender or such Issuing
Bank or such Lender's or such Issuing Bank's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
or such Issuing Bank's policies and the policies of such Lender's or such
Issuing Bank's holding company with respect to capital adequacy), then from
time to time the Borrower will pay to such Lender or such Issuing Bank, as
the case may be, such additional amount or amounts as will compensate such
Lender or such Issuing Bank or such Lender's or such Issuing Bank's holding
company for any such reduction suffered.
(c) A certificate of a Lender or any Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or such Issuing Bank or
its holding company, as the case may be, as specified in paragraph (a) or (b)
of this Section and setting forth in reasonable detail the basis of the
calculation of such amount or amounts shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such Lender
or the Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or any Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or such Issuing Bank's right to demand such compensation,
provided that the Borrower shall not be required to compensate a Lender or
such Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more
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than 270 days prior to the date that such Lender or such Issuing Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or such Issuing Bank's
intention to claim compensation therefor, and provided further that, if the
Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.
SECTION 2.16. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Revolving Loan or Term Loan on the date
specified in any notice delivered pursuant hereto (regardless of whether such
notice may be revoked under Section 2.11(f) and is revoked in accordance
therewith), or (d) the assignment of any Eurodollar Loan other than on the
last day of the Interest Period applicable thereto as a result of a request
by the Borrower pursuant to Section 2.19, then, in any such event, the
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event in accordance with the first two sentences of this
Section. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be
the excess, if any, of (i) the amount of interest that would have accrued on
the principal amount of such Loan had such event not occurred, at the LIBO
Rate that would have been applicable to such Loan, for the period from the
date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for
the period that would have been the Interest Period for such Loan), over (ii)
the amount of interest that would accrue on such principal amount for such
period at the interest rate that such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section and setting forth in reasonable detail the basis of
calculation of such amount or amounts shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such Lender
the amount shown as due on any such certificate within 10 days after receipt
thereof.
SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes, provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section) the Administrative Agent, Lender or Issuing Bank (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 Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within 10 days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on
or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts
payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto (other than penalties,
interest and reasonable expenses arising from the gross negligence or wilful
misconduct of such Lender), whether or not such Indemnified Taxes or Other
Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability and a copy of any written communication shall be delivered to the
Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on
its own behalf or on behalf
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of a Lender or the Issuing Bank, and shall be conclusive absent manifest
error, provided, however, that the Lender shall not be obligated to make any
of its tax returns available to the Borrower.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which the Borrower is
located, the Code or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with
a copy to the Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed
by applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate.
(f) If the Administrative Agent or a Lender (or assignee) receives a
refund in respect of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.17, it shall within 30 days
from the date of such receipt pay over such refund to the Borrower (but only
to the extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section 2.17 with respect to the Taxes or Other Taxes
giving rise to such refund), net of all reasonable out-of-pocket expenses of
the Administrative Agent or such Lender (or assignee) and without interest
(other than interest paid by the relevant Governmental Authority with respect
to such refund); provided, however, that the Borrower, upon the request of
the Administrative Agent or such Lender (or assignee), agrees to repay the
amount paid over to the Borrower (plus penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent
or such Lender (or assignee) in the event the Administrative Agent or such
Lender (or assignee) is required to repay such refund to such Governmental
Authority.
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs; Partial Mortgages. (a) The Borrower shall make each payment
required to be made by it hereunder or under any other Loan Document (whether
of principal, interest, fees or reimbursement of LC Disbursements, or of
amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 1:00
p.m., New York City time, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time
on any date may, in the discretion of the Administrative Agent, be deemed to
have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices at 270 Park Avenue, New York, New York,
except payments to be made directly to the Issuing Bank or Swingline Lender
as expressly provided herein and except that payments pursuant to Sections
2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled
thereto and payments pursuant to other Loan Documents shall be made to the
Persons specified therein. The Administrative Agent shall distribute any such
payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment
under any Loan Document shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and,
in the case of any payment accruing interest, interest thereon shall be
payable for the period of such extension. All payments under each Loan
Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disbursements, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment
of principal and unreimbursed LC Disbursements then due
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hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such
parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, Term Loans or participations in LC
Disbursements or Swingline Loans resulting in such Lender receiving payment
of a greater proportion of the aggregate amount of its Revolving Loans, Term
Loans and participations in LC Disbursements and Swingline Loans and accrued
interest thereon than the proportion received by any other Lender, then the
Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Revolving Loans, Term Loans and participations
in LC Disbursements and Swingline Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans, Term Loans and
participations in LC Disbursements and Swingline Loans, provided that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and
the purchase price restored to the extent of such recovery, without interest,
and (ii) the provisions of this paragraph shall not be construed to apply to
any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or participant,
other than to the Borrower or any Subsidiary or Affiliate thereof (as to
which the provisions of this paragraph shall apply). The Borrower consents to
the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off
and counterclaim with respect to such participation as fully as if such
Lender were a direct creditor of the Borrower in the amount of such
participation.
(d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and
may, in reliance upon such assumption, distribute to the Lenders or the
Issuing Bank, as the case may be, the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders or the
Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c),
then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are
fully paid.
(f) It is the intent of the parties hereto that each of the Lenders shall
share in all proceeds on the Collateral on a pro rata basis. Accordingly, on
each occasion that proceeds in respect of Mortgaged Property are not
allocated to Obligations owed to Revolving Lenders due to their omission as
secured obligations under the related Mortgage (any such Mortgage, a "Partial
Mortgage"), (i) each of the Lenders agrees (A) that the Administrative Agent
shall be permitted to reallocate from (x) such proceeds (on a pro rata basis
based on the aggregate amounts received by the Administrative Agent during
the term of this Agreement in respect of all Collateral (excluding Collateral
proceeds in respect of any Partial Mortgages)) to (y) the Revolving Lenders
in an amount equal to the amounts in respect of the Mortgaged Property
subject to such Partial Mortgage that would have been allocated to the
Revolving Lenders but for the omission of Obligations owed to Revolving
Lenders as secured obligations under such Partial Mortgage
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and (B) in allocating and depositing amounts to the respective Lenders, the
Administrative Agent may give effect to and consider (x) any amounts that
were previously permitted to be reallocated to the Revolving Lenders pursuant
to clause (A) above but which have not theretofore been so reallocated and
(y) if the Administrative Agent deems it appropriate given the amount and
nature of all the remaining Collateral at such time, the number of and the
expected proceeds in respect of any remaining Partial Mortgages.
(g) Consistent with the general intent of the parties hereto that each of
the Lenders shall share in the Collateral on a pro rata basis, if the
aggregate proceeds in respect of the Collateral shall be insufficient to
satisfy all the outstanding Obligations, each of the Lenders (other than the
Revolving Lenders) agrees that they shall reimburse the Revolving Lenders on
a pro rata basis (based on the aggregate amounts received by them during the
term of this Agreement to the extent that such Revolving Lenders shall have
not received (after giving effect to the other provisions of this paragraph
(g)) their pro rata share of such aggregate proceeds due to the omission of
the Obligations of Revolving Lenders as secured obligations under the Partial
Mortgages.
SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any
Lender requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different lending office
for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if,
in the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to
such Lender. The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by any Lender in connection with any such designation or
assignment.
(b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section
2.17, or if any Lender defaults in its obligation to fund Loans hereunder,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent (and, if a Revolving Commitment
is being assigned, the Issuing Bank and Swingline Lender), which consent
shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest
and fees) or the Borrower (in the case of all other amounts) and (iii) in the
case of any such assignment resulting from a claim for compensation under
Section 2.15 or payments required to be made pursuant to Section 2.17, such
assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and
delegation cease to apply.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of the Borrower and the
Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification
is required.
SECTION 3.02. AUTHORIZATION; ENFORCEABILITy. The Financing Transactions
to be entered into by each Loan Party are within such Loan Party's corporate
powers and have been duly authorized by all necessary corporate and, if
required, stockholder action. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document to
which any Loan Party is to be a party, when executed and delivered by such
Loan Party, will constitute, a legal, valid and binding obligation of the
Borrower or such Loan Party (as the case may be), enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a
proceeding in equity or at law.
SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. The Financing
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect and except filings
necessary to perfect Liens created under the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of the Subsidiaries or any order
of any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon the Borrower or any of
the Subsidiaries or its assets, or give rise to a right thereunder to require
any payment to be made by the Borrower or any of the Subsidiaries, and (d) will
not result in the creation or imposition of any Lien on any asset of the
Borrower or any of the Subsidiaries, except Liens created under the Loan
Documents.
SECTION 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of
and for the 1992 through 1996 Fiscal Years, reported on by Deloitte & Touche
LLP, independent public accountants, and (ii) as of and for the fiscal
quarter and the portion of the 1997 Fiscal Year ended May 3, 1997, certified
by its chief financial officer. Such financial statements present fairly, in
all material respects and on a consolidated basis, the financial position and
results of operations and cash flows of the Borrower and its consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes in the
case of the statements referred to in clause (ii) above.
(b) Except as disclosed in the financial statements referred to above or
the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Financing Transactions, neither
the Borrower nor any of the Subsidiaries has, as of the Effective Date, any
material contingent liabilities, unusual long-term commitments or unrealized
losses.
(c) Since February 1, 1997, there has been no material adverse change in
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries, taken as a whole, except as
disclosed in the Borrower's Quarterly Report on Form 10-Q for the fiscal
quarter ended May 3, 1997.
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SECTION 3.05. PROPERTIES. (a) Each of the Borrower and the Subsidiaries
has good title to, or valid leasehold interests in, all its real and personal
property material to its business (including its Mortgaged Properties).
Except as permitted by Section 6.02, all such property is free and clear of
Liens.
(b) Each of the Borrower and the Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower and
the Subsidiaries does not infringe upon the rights of any other Person,
except for any such infringements that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
(c) Schedule 3.05(c) sets forth the address of each real property that is
owned or leased by the Borrower or any of the Subsidiaries as of the
Effective Date that is material to the business of the Borrower or any
Subsidiary after giving effect to the Financing Transactions.
(d) Except as set forth on Schedule 3.05(d), as of the Effective Date,
neither the Borrower nor any of the Subsidiaries has received notice of (i)
any pending or contemplated condemnation proceeding affecting any Mortgaged
Property where such proceeding, if determined adversely to the Borrower,
could reasonably be expected to materially and adversely affect the operation
thereof or (ii) any sale or disposition thereof in lieu of condemnation.
Neither any Mortgaged Property nor any interest therein is subject to any
right of first refusal, option or other contractual right to purchase such
Mortgaged Property or interest therein.
SECTION 3.06. LITIGATION AND ENVIRONMENTAL MATTERS. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of the Subsidiaries as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters).
(b) Except with respect to any matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any of the Subsidiaries (i) is currently not in
compliance with any Environmental Law or does not maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received written notice
of any claim with respect to any Environmental Liability or (iv) knows of any
basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. COMPLIANCE WITH LAWS AND AGREEMENTS. Each of the Borrower
and the Subsidiaries is in compliance with all laws, regulations and orders
of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect. No Default
has occurred and is continuing.
SECTION 3.08. INVESTMENT AND HOLDING COMPANY STATUS. Neither the Borrower
nor any of the Subsidiaries is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. TAXES. Each of the Borrower and the Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid
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all Taxes required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which the Borrower
or such Subsidiary, as applicable, has set aside on its books adequate
reserves or (b) to the extent that the failure to do so could not reasonably
be expected to result in a Material Adverse Effect.
SECTION 3.10. ERISA. Except for any Specified ERISA Event, no ERISA Event
has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events for which liability is reasonably expected
to occur, could reasonably be expected to result in a Material Adverse
Effect. The present value of all accumulated benefit obligations under each
Plan (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts that have been issued prior to
the Effective Date, exceed by more than $500,000 the fair market value of the
assets of such Plan as of such date, and the present value of all accumulated
benefit obligations of all underfunded Plans (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not,
as of such date of the most recent financial statements reflecting such
amounts, exceed by more than $1,000,000 the fair market value of the assets
of all such underfunded Plans as of such date.
SECTION 3.11. DISCLOSURE. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which the
Borrower or any of the Subsidiaries is subject, and all other matters (other
than matters of a general economic nature or matters otherwise generally
known) known to any of them, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. Neither the
Information Memorandum nor any of the other reports, financial statements,
certificates or other information furnished by or on behalf of any Loan Party
to the Administrative Agent or any Lender in connection with the negotiation
of this Agreement or any other Loan Document or delivered hereunder or
thereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed
to be reasonable at the time (it being understood that such projected
financial information is subject to significant financial uncertainties and
contingencies and that no assurance can be given that such projections will
be realized).
SECTION 3.12. SUBSIDIARIES. Schedule 3.12 sets forth the name of, and the
ownership interest of the Borrower in, each Subsidiary of the Borrower and
identifies each Subsidiary that is a Subsidiary Loan Party, in each case as
of the Effective Date.
SECTION 3.13. INSURANCE. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of the Borrower and the Subsidiaries as
of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance that are due and payable have been paid.
SECTION 3.14. LABOR MATTERS. There are no strikes, lockouts or slowdowns
against the Borrower or any Subsidiary pending (or, to the knowledge of the
Borrower, threatened) that could reasonably be expected to have a Material
Adverse Effect. All payments due from the Borrower or any Subsidiary, or for
which any claim may be made against the Borrower or any Subsidiary, on
account of wages and employee health and welfare insurance and other
benefits, have been paid or accrued as a liability on the books of the
Borrower or such Subsidiary, except to the extent that the failure to make
such payments or accrue such liability could not reasonably be expected to
have a Material Adverse Effect. The consummation of the Financing
Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining
agreement to which the Borrower or any Subsidiary is bound where such right
or termination or renegotiation could reasonably be expected to have a
Material Adverse Effect.
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SECTION 3.15. SOLVENCY. Immediately after the consummation of the
Financing Transactions to occur on the Effective Date and immediately
following the making of each Loan made on the Effective Date and after giving
effect to the application of the proceeds of such Loans, (a) the fair value
of the assets of each Loan Party, at a fair valuation, will exceed its debts
and liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of each Loan Party will be greater than the
amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) each Loan Party will be
able to pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured; and (d) each Loan
Party will not have unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Effective Date. The amount of any
contingent liability at any time shall be computed as the amount that, in
light of all facts and circumstances existing at the time, represents the
amount that could reasonably be expected to become an actual or material
liability.
SECTION 3.16. SECURITY DOCUMENTS. (a) The Pledge Agreement is effective
to create in favor of the Administrative Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Collateral is
delivered to the Administrative Agent, the Pledge Agreement shall constitute
a fully perfected first priority Lien on all right, title and interest of the
pledgor thereunder in such Collateral to the extent such delivery is
effective to perfect a Lien on such Collateral, in each case prior and
superior in right to any other Person other than with respect to Liens
expressly permitted by Section 6.02.
(b) The Security Agreement is effective to create in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Collateral (as defined
in the Security Agreement) in which a Lien may be perfected by filing a
financing statement and, when financing statements in appropriate form are
filed in the offices specified on Schedule 6 to the Perfection Certificate,
the Security Agreement shall constitute a fully perfected Lien on all right,
title and interest of the grantors thereunder in such Collateral (other than
the Intellectual Property (as defined in the Security Agreement), in each
case prior and superior in right to any other Person, other than with respect
to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States Patent and
Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on all right, title and
interest of the Loan Parties in the Intellectual Property (as defined in the
Security Agreement) in which a Lien may be perfected by filing, recording or
registering a security agreement, financing statement or analogous document
in the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, in each case prior and superior in right to
any other Person other than with respect to Liens expressly permitted by
Section 6.02 (it being understood that subsequent recordings in the United
States Patent and Trademark Office and the United States Copyright Office may
be necessary to perfect a lien on registered trademarks, trademark
applications and copyrights acquired by the Loan Parties after the date
hereof).
(d) The Mortgages are effective to create, subject to the exceptions
listed in each title insurance policy covering such Mortgage, in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable Lien on all of the Loan Parties' right, title
and interest in and to the Mortgaged Properties thereunder and the proceeds
thereof, and when the Mortgages are filed in the offices specified on
Schedule 3.16(d), the Mortgages shall constitute a Lien on all right, title
and interest of the Loan Parties in such Mortgaged Properties and the
proceeds thereof, in each case prior and superior in right to any other
person, other than with respect to the rights of Persons pursuant to Liens
expressly permitted by Section 6.02.
SECTION 3.17. FEDERAL RESERVE REGULATIONS. No part of the proceeds of any
Loan or any Letter of Credit will be used, whether directly or indirectly, and
whether immediately, incidentally or
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ultimately, for any purpose that entails a violation of, or that is
inconsistent with, the provisions of Regulation G, U or X.
SECTION 3.18. EXISTING LETTERS OF CREDIT. Schedule 3.18 accurately and
completely describes each letter of credit outstanding immediately prior to
the Effective Date and issued for the account of the Borrower or any of the
Subsidiaries.
ARTICLE IV
CONDITIONS
SECTION 4.01. EFFECTIVE DATE. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received from
each party hereto either (i) a counterpart of this Agreement signed on behalf
of such party or (ii) written evidence satisfactory to the Administrative
Agent (which may include telecopy transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of each of (i) Shearman & Sterling, counsel for the Borrower,
substantially in the form of Exhibit B-1, (ii) Marc Strassler, General
Counsel of the Borrower, substantially in the form of Exhibit B-2, and (iii)
local counsel in each jurisdiction where a Mortgaged Property is located,
substantially in the form of Exhibit C, and, in the case of each such opinion
required by this paragraph, covering such other matters relating to the Loan
Parties, the Loan Documents or the Financing Transactions as the Required
Lenders shall reasonably request. The Borrower hereby requests such counsel
to deliver such opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of each
Loan Party, the authorization of the Financing Transactions and any other
legal matters relating to the Loan Parties, the Loan Documents or the
Financing Transactions, all in form and substance satisfactory to the
Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth
in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by any Loan Party hereunder or under any
other Loan Document.
(f) The Administrative Agent shall have received counterparts of the
Pledge Agreement signed on behalf of the Borrower and each Subsidiary Loan
Party thereto, together with stock certificates representing all the
outstanding shares of capital stock of each Subsidiary owned by or on behalf
of any Loan Party as of the Effective Date after giving effect to the
Financing Transactions (except that stock certificates representing shares of
common stock of a Foreign Subsidiary may be limited to 65% of the outstanding
shares of common stock of such Foreign Subsidiary), promissory notes
evidencing all intercompany Indebtedness owed to any Loan Party
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by the Borrower or any Subsidiary as of the Effective Date after giving
effect to the Financing Transactions and stock powers and instruments of
transfer, endorsed in blank, with respect to such stock certificates and
promissory notes.
(g) The Administrative Agent shall have received counterparts of the
Security Agreement signed on behalf of the Borrower and each Subsidiary Loan
Party, together with the following:
(i) all documents and instruments, including Uniform
Commercial Code financing statements, required by law or
reasonably requested by the Administrative Agent to be
filed, registered or recorded to create or perfect the
Liens intended to be created under the Security
Agreement; and
(ii) a completed Perfection Certificate dated the
Effective Date and signed by an executive officer or
Financial Officer of the Borrower, together with all
attachments contemplated thereby, including the results
of a search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Loan Parties
in the jurisdictions contemplated by the Perfection
Certificate and copies of the financing statements (or
similar documents) disclosed by such search and evidence
reasonably satisfactory to the Administrative Agent that
the Liens indicated by such financing statements (or
similar documents) are permitted by Section 6.02 or have
been released.
(h) The Administrative Agent shall have received counterparts of a
Mortgage with respect to each Mortgaged Property signed on behalf of the
record owner of such Mortgaged Property. The Administrative Agent shall also
have received, with respect to each Mortgaged Property that is owned by a
Loan Party, (i) a policy or policies of title insurance issued by a
nationally recognized title insurance company, insuring the Lien of each such
Mortgage as a valid first Lien on the Mortgaged Property described therein,
free of any other Liens except as permitted by Section 6.02, in form and
substance reasonably acceptable to the Administrative Agent, together with
such endorsements, coinsurance and reinsurance as the Administrative Agent or
the Required Lenders may reasonably request and (ii) such surveys as may be
required pursuant to such Mortgages or as the Administrative Agent or the
Required Lenders may reasonably request.
(i) The Administrative Agent shall have received (i) counterparts of the
Guarantee Agreement signed on behalf of each Subsidiary Loan Party and (ii)
counterparts of the Indemnity, Subrogation and Contribution Agreement signed
on behalf of the Borrower and each Subsidiary Loan Party.
(j) The Administrative Agent shall have received evidence satisfactory to
it that the insurance required by Section 5.07 is in effect.
(k) The Lenders shall be reasonably satisfied as to the amount and nature
of any Environmental Liabilities to which the Borrower and the Subsidiaries
may be subject, and the plans of the Borrower with respect thereto, after
giving effect to the Financing Transactions and the consummation of the other
transactions contemplated hereby.
(l) The Lenders shall be reasonably satisfied with the sufficiency of
amounts available under this Agreement to meet the ongoing working capital
requirements of the Borrower and the Subsidiaries following the Financing
Transactions and the consummation of the other transactions contemplated
hereby.
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(m) The Lenders shall have received (i) audited consolidated balance
sheets and related statements of income, stockholders' equity and cash flows
for the Borrower for the five Fiscal Years ended prior to the Effective Date
and (ii) unaudited consolidated balance sheets and related statements of
income, stockholders' equity and cash flows for the Borrower for the fiscal
quarter ending May 3, 1997, which financial statements shall not be
materially inconsistent with the forecasts for such period previously
provided to the Lenders.
(n) The Lenders shall have received evidence satisfactory to them that
after giving effect to the Financing Transactions, neither the Borrower nor
any of the Subsidiaries shall have outstanding any shares of preferred stock
or any Indebtedness, other than (i) Indebtedness incurred under the Loan
Documents, (ii) the Subordinated Debt and (iii) Indebtedness permitted under
Section 6.01.
(o) The Administrative Agent shall have received (i) a certificate, in
form and substance reasonably satisfactory to the Administrative Agent, from
the chief financial officer of the Borrower, and (ii) such other evidence
reasonably requested by the Lenders, in each case with respect to the
solvency of the Borrower and the Subsidiaries on a consolidated basis after
giving effect to the Financing Transactions.
(p) (i) The Existing Credit Agreement and all commitments thereunder to
lend shall have been terminated, all amounts outstanding thereunder shall
have been paid in full and all Liens on the assets of the Borrower or any
Subsidiary securing any obligations thereunder or under any related agreement
shall have been permanently released and (ii) the Administrative Agent shall
have received evidence satisfactory in form and substance to it demonstrating
such termination, payment and release.
(q) The Lenders shall have received financial projections for the
Borrower and the Subsidiaries for the 1997 through 2001 Fiscal Years, in each
case in form and substance satisfactory to the Administrative Agent.
(r) The Administrative Agent shall have received a Borrowing Request and
a letter of credit request described in Section 2.05(b) with respect to the
Loans and Letters of Credit to be made on the Effective Date.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on
July 15, 1997 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction
of the following conditions:
(a) The representations and warranties of each Loan Party set forth in
the Loan Documents shall be true and correct in all material respects on and
as of the date of such Borrowing or the date of issuance, amendment, renewal
or extension of such Letter of Credit, as applicable, except to the extent
such representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such earlier date.
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(b) At the time of and immediately after giving effect to such Borrowing
or the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty
by the Borrower on the date thereof as to the matters specified in paragraphs
(a) and (b) of this Section.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been
paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Borrower
will furnish to the Administrative Agent:
(a) within 90 days after the end of each Fiscal Year, its audited
consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year,
setting forth in each case in comparative form the figures for the previous
Fiscal Year, all reported on by Deloitte & Touche LLP or other independent
public accountants of recognized national standing (without a "going concern"
or like qualification or exception and without any qualification or exception
as to the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition
and results of operations of the Borrower and its consolidated Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied (except
as otherwise disclosed in such financial statements);
(b) within 45 days after the end of each of the first three fiscal
quarters of each Fiscal Year, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end
of and for such fiscal quarter and the then elapsed portion of the Fiscal
Year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as
of the end of) the previous Fiscal Year, all certified by one of its
Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end and audit adjustments and
the absence of footnotes;
(c) within 30 days after the end of each of the first two fiscal months
of each fiscal quarter of the Borrower, the monthly "Operating Cash Flow
(EBITDA)" report for such month, substantially in the form delivered to the
Lenders prior to the Effective Date;
(d) concurrently with any delivery of financial statements under clause
(a) or (b) above, a certificate of a Financial Officer of the Borrower (i)
certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) in the case of such financial statements
under clause (a) or (b) above, setting forth reasonably detailed calculations
demonstrating compliance with Sections 6.16, 6.17, 6.18 and 6.19 and
determining the Applicable Rate and (iii) stating whether any change in GAAP
or in the application thereof has occurred since the date of the
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Borrower's audited financial statements referred to in Section 3.04 and, if
any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under clause
(a) above, a certificate of the accounting firm that reported on such
financial statements (i) stating that their audit has included a review of
the terms of Article VI, Sections 6.01 through 6.05, 6.12, and 6.14 through
6.19 of this Agreement and any definitions set forth in this Agreement
relating thereto, in each case as they relate to accounting matters, and (ii)
stating whether, in connection with their audit, any condition or event that
constitutes a Default has come to their attention, specifying the nature and
period of existence thereof, provided that such accountants shall not be
liable by reason of any failure to obtain knowledge of any such Default that
would not be disclosed in the course of their audit examination;
(f) as soon as practicable and in any event no later than February 28 of
each Fiscal Year, a detailed consolidated budget for such Fiscal Year
(including a projected consolidated balance sheet and related statements of
projected operations and cash flow as of the end of and for such Fiscal Year)
and, promptly when available, any significant revisions of such budget;
(g) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Subsidiary with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, as the case may be; and
(h) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may reasonably request.
SECTION 5.02. NOTICES OF MATERIAL EVENTS. The Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the
following promptly after any officer of the Borrower obtains knowledge
thereof:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that could reasonably be expected (after
giving effect to coverage and policy limits of insurance policies maintained
by the Borrower and the Subsidiaries issued by unaffiliated insurers) to
result in a Material Adverse Effect; and
(c) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice
and any action taken or proposed to be taken with respect thereto.
SECTION 5.03. INFORMATION REGARDING COLLATERAL. (a) The Borrower will
furnish to the Administrative Agent prompt written notice of any change (i)
in any Loan Party's corporate name or in any trade name used to identify it
in the conduct of its business or in the ownership of its properties, (ii) in
the location of any Loan Party's chief executive office or its principal
place of business or any office or facility
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at which Equipment or Inventory (as each such term is defined in the Security
Agreement) owned by it is located (including the establishment of any such
new office or facility), (iii) in any Loan Party's identity or corporate
structure or (iv) in any Loan Party's Federal Taxpayer Identification Number.
The Borrower agrees not to effect or permit any change referred to in the
preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the
Administrative Agent to continue at all times following such change to have a
perfected security interest in all the Collateral. The Borrower also agrees
promptly to notify the Administrative Agent if any material portion of the
Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial statements
with respect to the preceding Fiscal Year pursuant to clause (a) of Section
5.01, the Borrower shall deliver to the Administrative Agent a certificate of
a Financial Officer and the chief legal officer of the Borrower setting forth
the information required pursuant to Section 2 of the Perfection Certificate
or confirming that there has been no change in such information since the
date of the Perfection Certificate delivered on the Effective Date or the
date of the most recent certificate delivered pursuant to this Section.
SECTION 5.04. EXISTENCE; CONDUCT OF BUSINESS. The Borrower will, and will
cause each of the Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its
business, provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03 and
provided further that neither the Borrower nor any of its Subsidiaries shall
be required to preserve, renew or keep in full force and effect any of the
foregoing if the board of directors of the Borrower or such Subsidiary, as
the case may be, shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Borrower or of such
Subsidiary, as the case may be, and that the loss thereof is not
disadvantageous in any material respect to the Borrower or such Subsidiary,
as the case may be.
SECTION 5.05. PAYMENT OF OBLIGATIONS. The Borrower will, and will cause
each of the Subsidiaries to, pay its Indebtedness and other obligations,
including Tax liabilities, before any penalty or fine shall be incurred by
the Borrower or such Subsidiary with respect thereto if the failure to pay
any such Indebtedness or other obligation has resulted or may result by law
in an imposition of a Lien upon any of its properties, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such Subsidiary has set aside on its books
adequate reserves or has made other appropriate provision with respect
thereto to the extent required in accordance with GAAP, (c) such contest
effectively suspends the enforcement of any Lien securing such obligation and
(d) the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.06. MAINTENANCE OF PROPERTIES. The Borrower will, and will
cause each of the Subsidiaries to, keep and maintain all property material to
the conduct of its business in good working order and condition, ordinary
wear and tear excepted.
SECTION 5.07. INSURANCE. (a) The Borrower will, and will cause each of
the Subsidiaries to, maintain, with financially sound and reputable insurance
companies:
(a) Insurance with respect to its properties and business and the
properties and businesses of its Subsidiaries against loss or damage of the
kinds customarily carried or maintained under similar circumstances by
corporations of established reputation engaged in similar businesses, in such
amounts (giving effect to self-insurance), with such deductibles and by such
methods as shall be customary for corporations similarly situated in the
industry. Each such policy of insurance that insures against loss or damage
with respect to any Collateral shall name the Administrative Agent for the
benefit of Lenders as the loss payee thereunder for amounts in excess of
$5,000,000 per occurrence and shall provide for at least 30 days prior
written notice to the Administrative Agent of any modification or
cancellation of such policy.
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Upon receipt by the Administrative Agent of any insurance proceeds as loss
payee, (i) to the extent that the Borrower or any of its Subsidiaries intends
to use any such insurance proceeds that are Net Proceeds to repair, restore
or replace assets of the Borrower or any of its Subsidiaries as provided in
the proviso of the definition of the term "Net Proceeds", the Administrative
Agent shall, subject to the provisions of such proviso, deliver such
insurance proceeds to the Borrower and (ii) otherwise, the Administrative
Agent shall, and the Borrower hereby authorizes the Administrative Agent to,
apply such insurance proceeds, to the extent that they are Net Proceeds, to
prepay the Loans in accordance with Section 2.11(b).
(b) If at any time the area in which any Mortgaged Property is located is
designated (i) a "flood hazard area" in any Flood Insurance Rate Map
published by the Federal Emergency Management Agency (or any successor
agency), the Borrower shall obtain flood insurance in such total amount as is
reasonable and customary for companies engaged in the business of operating
supermarkets, and otherwise comply with the National Flood Insurance Program
as set forth in the Flood Disaster Protection Act of 1973, as amended from
time to time, or (ii) a "Zone 1" area, the Borrower shall obtain earthquake
insurance in such total amount as is reasonable and customary for companies
engaged in the business of operating supermarkets.
SECTION 5.08. CASUALTY AND CONDEMNATION. (a) The Borrower will furnish to
the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any material portion of Collateral or the
commencement of any action or proceeding for the taking of any material
portion of Collateral under power of eminent domain or by condemnation or
similar proceeding.
(b) If any portion of any Net Proceeds retained by or paid over to the
Administrative Agent as provided in Section 5.07 and the definition of the
term "Net Proceeds" continues to be held by the Administrative Agent on the
date that is 365 days after the receipt of such Net Proceeds by the Borrower
or any Subsidiary, then such Net Proceeds shall be applied to prepay
Borrowings as provided in Section 2.11(b), provided that the Administrative
Agent shall have complied with such Section 5.07 and such definition.
SECTION 5.09. BOOKS AND RECORDS; INSPECTIOn. The Borrower will, and will
cause each of the Subsidiaries to, keep proper books of record and account in
which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will,
and will cause each of the Subsidiaries to, permit any representatives
designated by the Administrative Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts
from its books and records, and to discuss its affairs, finances and
condition with its officers and independent accountants (provided that, so
long as no Default or Event of Default shall have occurred and be continuing,
representatives of the Borrower or such Subsidiary may be present at and
participate in such discussions with such independent accountants), all at
such reasonable times during normal business hours and as often as reasonably
requested.
SECTION 5.10. COMPLIANCE WITH LAWS. The Borrower will, and will cause
each of the Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.11. USE OF PROCEEDS AND LETTERS OF CREDIT. The proceeds of the
Term Loans and up to $35,000,000 in principal amount of Revolving Loans, will
be used only for the payment of (a) amounts outstanding under the Existing
Credit Agreement and (b) fees and expenses payable in connection with the
Financing Transactions. The proceeds of the Revolving Loans (other than
Revolving Loans referred to in the immediately preceding sentence) and
Swingline Loans will be used only for working capital and other general
corporate purposes. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of
Regulations G, U and X. Letters of Credit will be issued only for general
corporate purposes.
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SECTION 5.12. ADDITIONAL SUBSIDIARIES. If any additional Subsidiary is
formed or acquired after the Effective Date, the Borrower will notify the
Administrative Agent and the Lenders thereof and (a) if such Subsidiary is a
Subsidiary Loan Party, the Borrower will cause such Subsidiary to become a
party to the Guarantee Agreement, the Indemnity, Subrogation and Contribution
Agreement and each applicable Security Document in the manner provided
therein within 15 Business Days after such Subsidiary is formed or acquired
and, subject to preexisting Liens on such Subsidiary's assets and the terms
thereof, promptly take such actions to create and perfect Liens on such
Subsidiary's assets to secure the Obligations as the Administrative Agent or
the Required Lenders shall reasonably request and (b) if any shares of
capital stock or Indebtedness of such Subsidiary are owned by or on behalf of
any Loan Party, the Borrower will cause such shares and promissory notes
evidencing such Indebtedness to be pledged pursuant to the Pledge Agreement
within 15 Business Days after such Subsidiary is formed or acquired (except
that, if such Subsidiary is a Foreign Subsidiary, shares of common stock of
such Subsidiary to be pledged pursuant to the Pledge Agreement may be limited
to 65% of the outstanding shares of common stock of such Subsidiary).
SECTION 5.13. FURTHER ASSURANCES. (a) The Borrower will, and will cause
each Subsidiary Loan Party to, execute any and all further documents,
financing statements, agreements and instruments, and take all such further
actions (including the filing and recording of financing statements, fixture
filings, mortgages, deeds of trust and other documents), that may be required
under any applicable law, or which the Administrative Agent or the Required
Lenders may reasonably request, to effectuate the transactions contemplated
by the Loan Documents or to grant or perfect or continue the perfection of
the Liens created or intended to be created by the Security Documents or the
validity or priority of any such Lien, all at the expense of the Loan
Parties. The Borrower also agrees to provide to the Administrative Agent,
from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created
or intended to be created by the Security Documents.
(b) If (i) any material assets (including any real property or
improvements thereto or any interest therein) are acquired by the Borrower or
any Subsidiary Loan Party after the Effective Date (other than assets
constituting Collateral under the Security Agreement that become subject to
the Lien of the Security Agreement upon acquisition thereof) or (ii) Liens
permitted pursuant to Section 6.02 in favor of any Person other than the
Administrative Agent or the Lenders on any material assets are released or
cease to exist and such assets are not subject to any Liens (other than
Permitted Encumbrances) for a period of 270 days, the Borrower will notify
the Administrative Agent and the Lenders thereof, and, if requested by the
Administrative Agent or the Required Lenders, the Borrower will cause such
assets to be subjected to a Lien securing the Obligations, subject (in the
case of clause (i) above) to preexisting Liens on such assets and the terms
thereof, and will take, and cause the Subsidiary Loan Parties to take, such
actions as shall be necessary or reasonably requested by the Administrative
Agent to grant and perfect such Liens, including actions described in
paragraph (a) of this Section, all at the expense of the Loan Parties.
(c) The Borrower shall, and shall cause each of its Subsidiaries to, use
their respective best efforts (which shall not be deemed to include, in the
good faith judgment of the Borrower, the material modification of any rights
or obligations, or the incurrence of any material obligations, under the
applicable lease or the expenditure of money in excess of nominal amounts or
the payment of monetary consideration other than nominal monetary
consideration) when entering into any lease as a lessee (including any such
lease entered into in connection with any Sale and Leaseback), whether such
lease is an Operating Lease or Capital Lease, to obtain lease terms
permitting (or not expressly prohibiting) the encumbrancing of the leasehold
interest of the Borrower or such Subsidiary, as the case may be, in the
property that is the subject of such lease pursuant to a Mortgage and the
assignment of such leasehold interest to the successful bidder at a
foreclosure or similar sale (and to a subsequent third party assignee by the
Administrative Agent or any Lender to the extent the Administrative Agent or
such Lender is the successful bidder at such sale) in the event of a
foreclosure or similar action pursuant to such Mortgage.
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ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the
Lenders that:
SECTION 6.01. INDEBTEDNESS; CERTAIN EQUITY SECURITIES. (a) The Borrower
will not, and will not permit any Subsidiary to, create, incur, assume or
permit to exist any Indebtedness, except that:
(i) the Borrower and the Subsidiaries may become and remain liable with
respect to the Obligations;
(ii) the Borrower and the Subsidiaries may become and remain liable with
respect to Capital Lease Obligations, provided that such Capital Lease
Obligations are permitted by Section 6.12;
(iii) the Borrower may become and remain liable with respect to
Indebtedness to any of its wholly owned Subsidiaries or any Subsidiary Loan
Party, and any wholly owned Subsidiary (other than any Real Estate
Subsidiary) or any Subsidiary Loan Party may become and remain liable with
respect to Indebtedness to the Borrower or any other wholly owned Subsidiary,
provided that (i) all such intercompany Indebtedness shall be evidenced by
promissory notes that are pledged to the Administrative Agent pursuant to the
terms of the Pledge Agreement, (ii) all such intercompany Indebtedness owed
by the Borrower to any of the Subsidiaries shall be subordinated in right of
payment to the payment in full of the Obligations pursuant to the terms of
the applicable promissory notes or an intercompany subordination agreement
and (iii) any payment by any Subsidiary under the Guarantee Agreement shall
result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to the Borrower or to any of the
Subsidiaries for whose benefit such payment is made;
(iv) the Borrower and the Subsidiaries, as applicable, may remain liable
with respect to Indebtedness described on Schedule 6.01;
(v) the Borrower and the Subsidiaries may become and remain liable with
respect to Indebtedness incurred to refinance, in whole or in part, any
outstanding Indebtedness of the Borrower or any of the Subsidiaries permitted
under clause (iv) of this Section or any Indebtedness previously incurred
pursuant to this clause (v); provided, however, that in each case (A) the
principal amount of such refinancing Indebtedness does not exceed the
principal amount of the Indebtedness so refinanced plus any fees, expenses,
premiums and penalties and (B) the interest rates, maturities, amortization
schedules, covenants, defaults, remedies, subordination provisions (in the
event the Indebtedness being refinanced is Subordinated Indebtedness) and
other terms of such refinancing Indebtedness are in each case (x) the same as
the corresponding provisions of the Indebtedness so refinanced, (y) more
favorable to the Lenders than the corresponding provisions of in the
Indebtedness being refinanced or (z) otherwise satisfactory to the
Administrative Agent and the Required Lenders, provided that interest rates
that are less than, maturities that are longer than and amortization
schedules that result in a longer average life to maturity than the
corresponding provisions of the Indebtedness being refinanced shall be deemed
satisfactory to the Administrative Agent and the Required Lenders, and
provided further that in no event shall any such refinancing Indebtedness
that refinances Subordinated Indebtedness have any required amortization
prior to the earliest scheduled amortization of the Subordinated
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Indebtedness being refinanced without the consent of the Administrative Agent
and the Required Lenders;
(vi) the Borrower may remain liable with respect to the Subordinated Debt;
(vii) the Borrower may become and remain liable with respect to
subordinated Indebtedness incurred to refinance, in whole or in part, any
Subordinated Debt or any Indebtedness previously incurred pursuant to this
subsection (vii); provided, however, that in each case (A) the principal
amount of such refinancing Indebtedness does not exceed the principal amount
of the Indebtedness so refinanced (plus any fees, expenses, premiums and
penalties), (B) the interest rate with respect to such refinancing
Indebtedness is a rate of interest determined in good faith by the board of
directors of the Borrower to be a market rate of interest at the time of the
issuance of such refinancing Indebtedness and (C) the maturities,
amortization schedules, covenants, defaults, remedies, subordination
provisions and other terms of such refinancing Indebtedness are in each case
(x) the same as the corresponding provisions of the Indebtedness so
refinanced, (y) more favorable to the Lenders than the corresponding
provisions of the Indebtedness so refinanced or (z) otherwise satisfactory to
the Administrative Agent and the Required Lenders, provided that interest
rates that are less than, maturities that are longer than and amortization
schedules that result in a longer average life to maturity than the
corresponding provisions of the Indebtedness being refinanced shall be deemed
satisfactory to the Administrative Agent and the Required Lenders;
(viii) the Borrower and the Subsidiaries may incur other Refinancing
Debt, provided that the aggregate Net Proceeds from all Specified Permitted
Refinancing Transactions (including the Net Proceeds of all Refinancing Debt
incurred in connection therewith) (A) do not exceed $100,000,000 and (B) are
used to redeem or repurchase all or a portion of the Subordinated Notes or
the Subordinated Debentures;
(ix) the Borrower and the Subsidiaries may become and remain liable with
respect to Indebtedness secured by Liens permitted under Section 6.02(d);
(x) the Borrower and the Subsidiaries may become and remain liable with
respect to Indebtedness secured by Liens permitted under Section 6.02(e);
(xi) the Borrower and the Subsidiaries may become and remain liable with
respect to Indebtedness secured by Liens permitted under Section 6.02(f);
(xii) the Borrower and the Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to exceed
$30,000,000 at any time outstanding;
(xiii) the Borrower and the Subsidiaries may become and remain liable
with respect to Indebtedness in respect of (i) Commercial Letters of Credit
(in addition to any Commercial Letters of Credit issued hereunder) in an
aggregate amount not to exceed at any time $10,000,000 and (ii) other Standby
Letters of Credit (in addition to any Standby Letters of Credit issued
hereunder) in an aggregate amount not to exceed at any time $25,000,000;
(xiv) the Borrower and the Subsidiaries may become and remain liable with
respect to Indebtedness under Hedging Agreements, provided that the Borrower
shall not enter into any Hedging Agreement pursuant to which the Borrower
would assume any floating interest rate exposure if the ratio of (i) the
aggregate principal amount of that portion of Total Debt for which the
Borrower has floating interest rate exposure (after giving effect to such
Hedging Agreement
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and all Hedging Agreements then in effect) to (ii) the aggregate principal
amount of Total Debt exceeds 0.50:1.00;
(xv) the Borrower and the Subsidiaries may become and remain liable with
respect to Indebtedness in respect of indemnification and purchase price
adjustment obligations incurred in connection with any sales of assets so
long as such indemnification and purchase price adjustment obligations are
customary in light of the type of sales of assets in connection with which
they were incurred;
(xvi) the Borrower and the Subsidiaries may become and remain liable with
respect to Indebtedness under guarantees in the ordinary course of business
of the obligations of suppliers, customers, franchisees and licensees of the
Borrower and the Subsidiaries in an aggregate amount not to exceed at any
time $10,000,000;
(xvii) the Borrower and the Subsidiaries may become and remain liable
with respect to Indebtedness under guarantees of trade credit extended to
Plainbridge, Chefmark or Pauls Trucking Corp. in the ordinary course of
business for the purchase of goods by Plainbridge, Chefmark or Pauls Trucking
Corp., as the case may be, for or on behalf of the Borrower;
(xviii) the Borrower or any Subsidiary may remain and become liable with
respect to Indebtedness in respect of leasehold interests assigned by the
Borrower or such Subsidiary to any Person other than the Borrower or any
Subsidiary;
(xix) the Borrower and the Subsidiaries may become and remain liable with
respect to Indebtedness incurred in connection with any Qualified
Sale/Leaseback Transaction; and
(xx) any Special Purpose Subsidiary may become and remain liable with
respect to Indebtedness secured by Liens permitted under Section 6.02(i).
(b) The Borrower will not, and it will not permit any Subsidiary to,
issue any preferred stock or be or become liable in respect of any obligation
(contingent or otherwise) to purchase, redeem, retire, acquire or make any
other payment in respect of any shares of capital stock of the Borrower or
any Subsidiary or any option, warrant or other right to acquire any such
shares of capital stock.
SECTION 6.02. LIENS. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Permitted Encumbrances;
(b) Liens granted pursuant to the Security Documents;
(c) Liens described in Schedule 6.02;
(d) (i) Liens on Real Property Assets consisting of fee interests in
Related Stores (whether fully constructed or under construction) or Liens on
Equipment (including rights of vendors under purchase contracts whereby title
is retained for the purpose of securing the purchase price thereof), in each
case securing the purchase price and/or cost of construction or improvement
thereof or Indebtedness incurred to finance such purchase price and/or cost
of construction or improvement, (ii) Liens on Real Property Assets consisting
of fee interests in Related Stores, in each case which Liens were in
existence at the time of acquisition of such Real Property Assets by the
Borrower or any Subsidiary, and (iii) Liens on Real Property Assets
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consisting of fee interests in Related Stores that are owned by any
Subsidiary (other than any Subsidiary as of the Effective Date), in each case
which Liens were in existence at the time such Subsidiary became a
Subsidiary; provided, however, that in each case (A) with respect to any such
Lien described in clause (i) above, no Event of Default shall have occurred
and be continuing at the time of incurrence of such Lien, (B) with respect to
any such Lien described in clause (i) above encumbering any Real Property
Assets, such Lien was granted and the Indebtedness secured by such Lien was
incurred at a time when such Real Property Assets were excluded from the
definition of the term "Covered Real Property" pursuant to clause (c)(ii) or
(c)(iii) of such definition, (C) with respect to any such Lien on Equipment,
the Indebtedness secured by such Lien was incurred within 270 days after the
acquisition thereof, (D) such Lien is limited to such Real Property Assets or
Equipment and any fixed improvements thereafter erected thereon, (E) with
respect to any such Lien described in clause (ii) or (iii) above, the
Indebtedness secured by such Lien was not incurred in contemplation of the
acquisition by the Borrower or any Subsidiary of the applicable Real Property
Assets or the transaction pursuant to which the applicable Subsidiary became
such a Subsidiary, as the case may be, and (F) the principal amount of the
Indebtedness secured by such Lien (x) shall not exceed the cost of such
property to the Borrower or any Subsidiary and (y) shall not be less than 70%
of the fair market value of such property at the time of incurrence of such
Indebtedness (in the case of any such Lien described in clause (i) above),
40% of the fair market value of such property at the time of acquisition of
the applicable Real Property Assets (in the case of any such Lien described
in clause (ii) above, or 40% of the fair market value of such property at the
time when the Subsidiary that owns the applicable Real Property Assets became
a Subsidiary (in the case of any such Lien described in clause (iii) above);
(e) Liens on any Real Property Assets (other than the Mortgaged Property)
that immediately prior to the incurrence of such Liens constitute Covered
Real Property, which Liens secure Non-Recourse Indebtedness of the Borrower
or any Subsidiary; provided, however, that in each case (i) such Lien is
limited to such Real Property Assets, (ii) the principal amount of the
Indebtedness secured by such Lien shall not be less than 60% of the fair
market value of such Real Property Assets at the time of incurrence of such
Indebtedness and (iii) the Net Proceeds of the Indebtedness secured by such
Lien shall be applied to prepay the Loans in accordance with Section 2.11;
(f) Liens securing Non-Recourse Indebtedness of the Borrower or any
Subsidiary incurred to refinance, in whole or in part, any outstanding
Indebtedness of the Borrower or such Subsidiary that is secured by Liens on
Real Property Assets permitted under subsection (d) or (e) of this Section;
provided, however, that in each case (i) the Liens securing such refinancing
Indebtedness are limited to the Real Property Assets that were subject to the
Liens securing the Indebtedness so refinanced and (ii) the principal amount
of such refinancing Indebtedness shall not be less than 60% of the fair
market value of such Real Property Assets as of the date of such refinancing;
(g) Liens securing Indebtedness of the Borrower or any Subsidiary
incurred to refinance any outstanding Indebtedness of the Borrower or such
Subsidiary that is secured by Liens on Real Property Assets permitted under
paragraph (c) of this Section; provided, however, that in each case (i) such
refinancing Indebtedness is permitted under Section 6.01(a)(v), (ii) the
Liens securing such refinancing Indebtedness are limited to the Real Property
Assets that were subject to the Liens securing the Indebtedness so
refinanced, (iii) the Indebtedness secured by such Lien is Non-Recourse
Indebtedness to the extent that the Indebtedness so refinanced was
Non-Recourse Indebtedness, and (iv) the principal amount of such refinancing
Indebtedness shall not be (1) less than 60% of the fair market value of such
Real Property Assets as of the date of such refinancing or (2) if such
refinancing Indebtedness is not Non-Recourse Indebtedness, greater than 80%
of the fair market value of such Real Property Assets as of the date of such
refinancing;
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(h) Liens securing Refinancing Debt incurred with respect to a Permitted
Permanent Mortgage Financing, provided that such Refinancing Debt is
permitted pursuant to Section 6.01(a)(viii);
(i) Liens securing Indebtedness incurred by any Special Purpose
Subsidiary (i) to finance the purchase of any Real Property Asset and related
Equipment or (ii) pursuant to any Sale/Leaseback Transaction;
(j) Liens in favor of Amerisource Corporation relating to
pharmacy-related inventory located in Related Stores and supplied to the
Borrower by Amerisource Corporation; and
(k) other Liens securing Indebtedness or other obligations in an
aggregate amount not exceeding $10,000,000 at any time outstanding.
SECTION 6.03. FUNDAMENTAL CHANGES. (a) The Borrower will not, and will
not permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be continuing
(i) any Subsidiary may merge into the Borrower in a transaction in which the
Borrower is the surviving corporation, (ii) any Subsidiary may merge into any
Subsidiary Loan Party in a transaction in which the surviving entity is a
Subsidiary Loan Party, (iii) any Subsidiary that is not a Loan Party may
merge into any Subsidiary that is not a Loan Party and (iv) any Subsidiary
may liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is
not materially disadvantageous to the Lenders, provided that any such merger
involving a Person that is not a wholly owned Subsidiary immediately prior to
such merger shall not be permitted unless merger is also permitted by Section
6.04.
(b) The Borrower will not, and will not permit any Subsidiary to, engage
to any material extent in any business other than businesses of the type
conducted by the Borrower and the Subsidiaries on the date of execution of
this Agreement and businesses reasonably related thereto.
SECTION 6.04. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND ACQUISITIONS.
The Borrower will not, and will not permit any Subsidiary to, purchase, hold
or acquire (including pursuant to any merger with any Person that was not a
wholly owned Subsidiary prior to such merger) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other
right to acquire any of the foregoing) of, make or permit to exist any loans
or advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets
of any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments existing on the date hereof and set forth on Schedule
6.04, to the extent such investments would not be permitted under any other
clause (other than clause (i)) of this Section;
(c) investments by the Borrower in the Subsidiaries, provided that the
amount of investments by the Borrower in Subsidiaries that are not Loan
Parties shall not exceed $2,000,000 in the aggregate at any time outstanding;
(d) the Borrower and the Subsidiaries may make intercompany loans to the
extent permitted under Section 6.01(a)(iii);
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(e) Guarantees constituting Indebtedness permitted by Section 6.01,
provided that the amount of Indebtedness that is (i) outstanding with respect
to Subsidiaries that are not Loan Parties and (ii) Guaranteed by any Loan
Party shall not exceed $10,000,000 in the aggregate at any time outstanding;
(f) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(g) the Borrower and the Subsidiaries may make loans and advances to
employees in the ordinary course of business in an aggregate amount not to
exceed at any time outstanding $1,000,000;
(h) the Borrower and the Subsidiaries may make and own investments in an
aggregate amount not to exceed at any time outstanding $10,000,000 consisting
of any deferred portion of the sales price received by the Borrower or any
Subsidiary in connection with any asset sale permitted under Section 6.05; and
(i) the Borrower and the Subsidiaries may make and own other investments
in an aggregate amount not to exceed at any time outstanding $30,000,000.
SECTION 6.05. ASSET SALES. The Borrower will not, and will not permit any
Subsidiary to, sell, transfer, lease or otherwise dispose of any asset,
including any capital stock, nor will the Borrower permit any Subsidiary to
issue any additional shares of its capital stock or other ownership interest
in such Subsidiary, except:
(a) sales of (i) inventory, (ii) used, worn-out, obsolete or surplus
equipment and (iii) Permitted Investments, in each case in the ordinary
course of business;
(b) sales, transfers and dispositions (i) to the Borrower or a Subsidiary
Loan Party or (ii) to a Special Purpose Subsidiary, so long as any sale,
transfer or disposition pursuant to this clause (ii) is for consideration
that is at least equal to the aggregate fair market value of the property
subject thereto (determined at the time of consummation thereof in good faith
by the board of directors of the Borrower);
(c) the Borrower and the Subsidiaries may make Asset Sales, provided that
the aggregate assets sold pursuant to Asset Sales (other than Excluded Asset
Sales) in any Fiscal Year shall not have accounted for more than 20% of the
consolidated revenues of the Borrower and the Subsidiaries for the
immediately preceding Fiscal Year as shown on the consolidated financial
statements of the Borrower and the Subsidiaries for such immediately
preceding Fiscal Year, and provided further that (i) the consideration
received for the related assets (other than the related assets taken pursuant
to any taking of assets described in clause (c) of the definition of the term
"Asset Sale") shall be in an amount at least equal to (A) the fair market
value thereof (taking into account any restrictions on the use of such
related assets that the Borrower or any such Subsidiary may require in
connection with the asset sale in question) or (B) a lower amount if the
Board of Directors of the Borrower or such Subsidiary, as the case may be,
shall determine in good faith that the sale of such related assets for such
lower amount is desirable in order to minimize losses being incurred by the
Borrower or such Subsidiary, as the case may be, with respect to such related
assets and that such sale for such lower amount is in the best interest of
the Borrower or such Subsidiary, as the case may be; (ii) at least 50% of the
consideration received (excluding (A) any non-cash consideration received in
connection with the exchange of assets of the Borrower or any Subsidiary for
similar assets of any third party and (B) any consideration received in the
form of the assumption of liability under any lease pertaining to such
related assets
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by the purchaser thereof) for the related assets (other than the related
assets taken pursuant to any taking of assets described in clause (c) of the
definition of the term "Asset Sale") shall be cash and, after giving effect
to such transaction, the Borrower shall be in compliance with Section 6.04;
and (iii) the Net Proceeds of such Asset Sales shall be applied in the manner
and to the extent required by Section 2.11;
(d) the Borrower and the Subsidiaries may, as lessor or sub-lessor, lease
or sub-lease any Real Property Assets in the ordinary course of business;
(e) the Borrower or any Subsidiary may, in the ordinary course of
business, terminate any lease to which it is a party;
(f) the Borrower or any Subsidiary may make Excluded Asset Sales,
provided that the Net Proceeds of any Excluded Asset Sale in connection with
any Permitted Sale/Leaseback Transaction are used to redeem or repurchase all
or a portion of the Subordinated Notes and the Subordinated Debentures;
(g) the Borrower and the Subsidiaries may make Asset Sales described in
clause (a) of the definition of the term "Asset Sale" and not otherwise
permitted by this Section to the extent that the aggregate fair market value
of such assets sold in any single transaction or related series of
transactions is equal to $1,000 or less; and
(h) the Borrower and the Subsidiaries may enter into any Qualified
Sale/Leaseback Transaction.
SECTION 6.06. SALE/LEASEBACK TRANSACTIONS. The Borrower will not, and
will not permit any of the Subsidiaries (other than any Special Purpose
Subsidiary) to, enter into any arrangement (a "Sale/ Leaseback Transaction"),
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned
or hereafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, provided that the
Borrower and the Subsidiaries may enter into any Permitted Sale/Leaseback
Transaction, any Qualified Sale/Leaseback Transaction or any Sale/Leaseback
Transaction pursuant to which the Borrower or any Subsidiary incurs
Indebtedness permitted under Section 6.01(a)(v).
SECTION 6.07. HEDGING AGREEMENTS. The Borrower will not, and will not
permit any of the Subsidiaries to, enter into any Hedging Agreement, other
than Hedging Agreements entered into in the ordinary course of business to
hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in
the conduct of its business or the management of its liabilities.
SECTION 6.08. RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS. (a)
The Borrower will not, and it will not permit any Subsidiary to, declare or
make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except (i) the Borrower may declare and pay dividends with respect
to its capital stock payable solely in additional shares of its common stock,
(ii) the Borrower's Subsidiaries may declare and pay dividends ratably with
respect to their capital stock, (iii) the Borrower may declare and pay
dividends to Holdings in an aggregate amount not in excess of $100,000 per
annum to the extent required to pay the operating and administrative expenses
(including franchise taxes) of Holdings, Supermarket Holdings and SMG II
Holdings, (iv) so long as no Event of Default shall have occurred and be
continuing or shall be caused thereby, the Borrower may make payments to
Supermarket Holdings in satisfaction of a corresponding portion of the
Borrower's obligations under the Supermarket Holdings Intercompany Note at
such times, in such amounts and to such extent (and only at such times, in
such amounts and to such extent) necessary to enable Supermarket Holdings to
make regularly scheduled payments of principal and interest in respect of any
Supermarket Holdings Subordinated Notes not
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tendered pursuant to the Subordinated Note Exchange Offer in accordance with
the terms of, and only to the extent required by, and subject to the
subordination provisions contained in, the indenture pursuant to which the
Supermarket Holdings Subordinated Notes were issued, as such indenture is in
effect as of the Effective Date, as amended by the Supplemental Supermarket
Holdings Subordinated Note Indenture and (v) so long as no Event of Default
or Default shall have occurred and be continuing or shall be caused thereby,
the Borrower may make payments to Holdings with any Net Proceeds from any
Prepayment Event described in clause (c) of the definition of the term
"Prepayment Event" after the Effective Date to the extent any such Net
Proceeds are not required to be applied to prepay the Loans pursuant to
Section 2.11(b) to enable Holdings to purchase or redeem for cash, or defease
in a manner satisfactory to Administrative Agent, all or any portion of the
Holdings Bonds together with accrued interest thereon and the applicable
prepayment premium required to be paid under the Holdings Bond Indenture, as
such indenture is in effect as of the Effective Date.
(b) The Borrower will not, and it will not permit any Subsidiary to, make
or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash securities or other property) of or in respect
of principal of or interest on any Subordinated Indebtedness, or any payment
or other distribution (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancelation or termination of any
Subordinated Indebtedness, except:
(i) payment of regularly scheduled interest and principal
payments as and when due in respect of any Subordinated
Indebtedness in accordance with the terms of, and only to the
extent required by, and subject to the subordination provisions
contained in, the indenture or other agreement pursuant to which
such Subordinated Indebtedness was issued, as such indenture or
other agreement may be amended from time to time to the extent
permitted under Section 6.11;
(ii) refinancings of Indebtedness to the extent permitted by
Section 6.01(a)(v) and (vii);
(iii) repayments or repurchases of all or a portion of the
Subordinated Notes or the Subordinated Debentures with (A) the
Net Proceeds of Specified Permitted Refinancing Transactions with
respect to any Specified Real Estate not exceeding an aggregate
of $100,000,000 and (B) the Net Proceeds of any Excluded Asset
Sale specified in clause (c) of the definition of such term; and
(iv) sinking fund payments by the Borrower on June 15, 2000,
and June 15, 2001, in an aggregate amount for each such payment
of up to $50,000,000, in each case with respect to the
Subordinated Notes.
SECTION 6.09. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and it
will not permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of
its Affiliates, except (a) transactions that are at prices and on terms and
conditions not less favorable to the Borrower or such Subsidiary than could
be obtained on an arm's-length basis from unrelated third parties, (b)
transactions between or among the Borrower and the Subsidiary Loan Parties,
(c) any Restricted Payment permitted by Section 6.08, (d) transactions under
Spin-Off Agreements described in Existing Credit Agreement or (e) reasonable
and customary fees paid to members of the Boards of Directors of the Borrower
and the Subsidiaries.
SECTION 6.10. RESTRICTIVE AGREEMENTS. The Borrower will not, and it will
not permit any Subsidiary to, directly or indirectly, enter into, incur or
(except for preexisting agreements or arrangements applicable to a property
at the time of its acquisition or the property of a Subsidiary at the time of
such Subsidiary's acquisition) permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of the Borrower or any Subsidiary to create, incur or
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permit to exist any Lien upon any of its property or assets, or (b) the
ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or
advances to the Borrower or any other Subsidiary or to guarantee Indebtedness
of the Borrower or any other Subsidiary, provided that (i) the foregoing
shall not apply to restrictions and conditions imposed by law or by any Loan
Document, (ii) the foregoing shall not apply to restrictions and conditions
existing on the date hereof identified on Schedule 6.10 (but shall apply to
any amendment or modification expanding the scope of any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary
pending such sale, provided such restrictions and conditions apply only to
the Subsidiary that is to be sold and such sale is permitted hereunder, (iv)
clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (v) clause (a) of the foregoing shall
not apply to customary provisions in leases restricting the assignment
thereof.
SECTION 6.11. AMENDMENT OF MATERIAL DOCUMENTS. (a) The Borrower will not,
and it will not permit any Subsidiary to, (i) amend, modify or waive any of
its rights under (A) its certificate of incorporation, by-laws or other
organizational documents or (B) the Spin-Off Agreements, in each case in any
manner that would be reasonably likely to result in a Material Adverse Effect
or (ii) amend, modify or waive any of its rights under any Subordinated
Indebtedness if (A) the effect of such amendment or change is to increase the
interest rate on such Subordinated Indebtedness, change (to earlier dates)
any dates upon which payments of principal or interest are due thereon,
change any event of default or condition to an event of default with respect
thereto (other than to eliminate any such event of default or to increase any
grace period with respect thereto), change the redemption, prepayment or
defeasance provisions thereof, change the subordination provisions thereof
(or of any guaranty thereof) or change any collateral therefor (other than to
release such collateral) or (B) the effect of such amendment or change,
together with all other amendments or changes made, is to increase materially
the obligations of the obligor thereunder or to confer any additional rights
on the holders of such Subordinated Indebtedness (or a trustee or other
representative on their behalf) that would be adverse to the Borrower or the
Lenders.
(b) The Borrower shall not (i) designate any Indebtedness as "Specified
Senior Indebtedness" (as defined in any of the Subordinated Debt Indentures)
for purposes of any of the Subordinated Debt Indentures or (ii) make any
analogous designation of Indebtedness incurred under any Refinancing
Indenture, in each case without the prior written consent of the Required
Lenders.
SECTION 6.12. RESTRICTION ON LEASES. The Borrower shall not, and shall
not permit any Subsidiary to, become liable in any way, whether directly or
by assignment or as a guarantor or other surety, for the obligations of the
lessee under any lease, whether an Operating Lease or a Capital Lease (other
than intercompany leases between the Borrower and its wholly owned
Subsidiaries), unless, immediately after giving effect to the incurrence of
liability with respect to such lease, the Consolidated Rental Payments at the
time in effect during the then current Fiscal Year shall not exceed the
corresponding amount set forth below opposite such Fiscal Year:
<TABLE>
<CAPTION>
MAXIMUM CONSOLIDATED
FISCAL YEAR RENTAL PAYMENTS
---------------------- ---------------------
<S> <C>
1997 $ 111,376,000
1998 $ 116,034,000
1999 and thereafter $ 121,118,000
</TABLE>
SECTION 6.13. SALE OR DISCOUNT OF RECEIVABLES. The Borrower shall not,
and shall not permit any Subsidiary to, directly or indirectly, sell with
recourse, or discount or otherwise sell for less than
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the face value thereof, any of its notes or accounts receivable other than
any Excluded Asset Sale permitted pursuant to Section 6.05.
SECTION 6.14. FISCAL YEAR. The Borrower shall not change the last day of
its Fiscal Year from the Saturday closest to January 31.
SECTION 6.15. CAPITAL EXPENDITURES. The Borrower will not permit the
aggregate amount of Capital Expenditures made by the Borrower and the
Subsidiaries in any Fiscal Year to exceed the amount set forth below opposite
such Fiscal Year:
<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
------------- -------------
<S> <C>
1997 $ 70,000,000
1998 $ 75,000,000
1999 $ 85,000,000
Thereafter $ 95,000,000
</TABLE>
The amount of permitted Capital Expenditures set forth above in respect
of any Fiscal Year shall be increased by the lesser of (a) the amount of
unused Capital Expenditures for the immediately preceding fiscal year (less
an amount equal to any unused Capital Expenditures carried forward to such
preceding fiscal year) and (b) $20,000,000.
SECTION 6.16. LEVERAGE RATIO. The Borrower will not permit the Leverage
Ratio for any four-fiscal-quarter period ending during any period set forth
below to be in excess of the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
PERIOD AMOUNT
-------------------------------------------------- -------------
<S> <C>
Closing Date through First Fiscal Quarter of 1998
Fiscal Year 7.50 to 1.00
Second Fiscal Quarter of 1998 Fiscal Year 7.25 to 1.00
Third Fiscal Quarter of 1998 Fiscal Year through
First Fiscal Quarter of 1999 Fiscal Year 7.00 to 1.00
Second Fiscal Quarter of 1999 Fiscal Year through
Third Fiscal Quarter of 1999 Fiscal Year 6.75 to 1.00
Fourth Fiscal Quarter of 1999 Fiscal Year 6.50 to 1.00
First Fiscal Quarter of 2000 Fiscal Year 6.25 to 1.00
Second Fiscal Quarter of 2000 Fiscal Year 6.00 to 1.00
Third Fiscal Quarter of 2000 Fiscal Year 5.75 to 1.00
Fourth Fiscal Quarter of 2000 Fiscal Year 5.50 to 1.00
Thereafter 5.00 to 1.00
</TABLE>
SECTION 6.17. CONSOLIDATED INTEREST AND RENTAL EXPENSE COVERAGE RATIO.
The Borrower will not permit the ratio of (a) Consolidated EBITDAR of the
Borrower and the Subsidiaries to (b) the sum of (i) Consolidated Interest
Expense and (ii) Consolidated Rental Payments for any four-fiscal-
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quarter period ending during any period set forth below to be less than the
ratio set forth below opposite such period:
<TABLE>
<CAPTION>
PERIOD RATIO
-------------------------------------------------- -------------
<S> <C>
Closing Date through First Fiscal Quarter of 1998
Fiscal Year 1.20 to 1.00
Second Fiscal Quarter of 1998 Fiscal Year through
First Fiscal Quarter of 1999 Fiscal Year 1.25 to 1.00
Second Fiscal Quarter of 1999 Fiscal Year through
First Fiscal Quarter of 2000 Fiscal Year 1.30 to 1.00
Second Fiscal Quarter of 2000 Fiscal Year through
Fourth Fiscal Quarter of 2000 Fiscal Year 1.35 to 1.00
Thereafter 1.40 to 1.00
</TABLE>
SECTION 6.18. MINIMUM CONSOLIDATED EBITDA. The Borro wer will not
permit Consolidated EBITDA of the Borrower and the Subsidiaries for any
four-fiscal-quarter period ending during any period set forth below to be
less than the amount set forth below opposite such period:
<TABLE>
<CAPTION>
PERIOD AMOUNT
-------------------------------------------------- -------------
<S> <C>
Closing Date through Fourth Fiscal Quarter of 1997
Fiscal Year $180,000,000
First Fiscal Quarter of 1998 Fiscal Year through Second
Fiscal Quarter of 1998 Fiscal Year 185,000,000
Third Fiscal Quarter of 1998 Fiscal Year through Fourth
Fiscal Quarter of 1998 Fiscal Year 190,000,000
First Fiscal Quarter of 1999 Fiscal Year through Second
Fiscal Quarter of the 1999 Fiscal Year 195,000,000
Third Fiscal Quarter of 1999 Fiscal Year through Fourth
Fiscal Quarter of 1999 Fiscal Year 200,000,000
First Fiscal Quarter of 2000 Fiscal Year through Second
Fiscal Quarter of 2000 Fiscal Year 215,000,000
Third Fiscal Quarter of 2000 Fiscal Year through Fourth
Fiscal Quarter of 2000 Fiscal Year 230,000,000
Thereafter 250,000,000
</TABLE>
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SECTION 6.19. Senior Debt Leverage Ratio. The Borrower will not permit the
Senior Debt Leverage Ratio for any four-fiscal-quarter period ending during any
period set forth below to be in excess of the ratio set forth below opposite
such period:
<TABLE>
<CAPTION>
PERIOD RATIO
- ----------------------------------------------------------- -------------
<S> <C>
Closing Date through First Fiscal Quarter of 1998 3.15 to 1.00
Fiscal Year
Second Fiscal Quarter of 1998 Fiscal Year through First 3.00 to 1.00
Fiscal Quarter of 1999 Fiscal Year
Second Fiscal Quarter of 1999 Fiscal Year through 2.75 to 1.00
Fourth Fiscal Quarter of 1999 Fiscal Year
Thereafter 2.50 to 1.00
</TABLE>
ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as
the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or any other Loan Document,
when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary Loan Party in any Loan Document or any
amendment or modification thereof or waiver thereunder or any
representation or warranty made in writing by the Borrower or any
Subsidiary Loan Party in any report, certificate, financial statement or
other document furnished pursuant to or in connection with any Loan
Document or any amendment or modification thereof or waiver thereunder,
shall prove to have been incorrect in any material respect when made or
deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.04 (with respect to
the existence of the Borrower) or 5.11 or in Article VI;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent to the Borrower (which notice will be given
at the request of any Lender);
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(f) the Borrower or any Subsidiary Loan Party shall fail to make any
payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become
due and payable (after giving effect to any applicable grace period);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (after giving effect to any applicable grace period) the
holder or holders of any Material Indebtedness or any trustee or agent on
its or their behalf to cause any Material Indebtedness to become due, or
to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity, provided that this clause (g) shall not
apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such
Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Borrower or any Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60 days
or an order or decree approving or ordering any of the foregoing shall be
entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to
the institution of any proceeding or petition described in clause (h) of
this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) make a general assignment for the benefit of creditors
or (v) by action of its board of directors, take any action for the
purpose of effecting any of the foregoing;
(j) the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become
due;
(k) one or more (to the extent not adequately covered by insurance as
to which a solvent and unaffiliated insurance company has acknowledged
coverage) judgments for the payment of money in an aggregate amount in
excess of $10,000,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 60 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by
a judgment creditor to attach or levy upon any assets of the Borrower or
any Subsidiary to enforce any such judgment;
(l) an ERISA Event other than a Specified ERISA Event shall have
occurred that when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the
Borrower and the Subsidiaries in an aggregate amount exceeding
$10,000,000 for all periods;
(m) any Lien purported to be created under any Security Document with
respect to any material portion of the Collateral shall cease to be, or
shall be asserted by any Loan Party not to be, a valid and perfected Lien
on any such material portion of the Collateral, with the priority
required by the applicable Security Document, except (i) as a result of
the sale or other disposition of the applicable Collateral in a
transaction permitted under the Loan Documents or (ii) as a result of the
Administrative Agent's (A) failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it under
the Pledge Agreement or (B) failure to
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<PAGE>
take any other action required to be taken on its part to maintain the
validity and perfection of such Liens;
(n) a Change in Control shall occur; or
(o) the terms of the Holdings Bond Indenture, the Holdings Bonds or
the Redemption Agreement shall be amended or changed, or any payment
consistent with an amendment thereof or change thereto shall be made, and
(i) the effect of such amendment or change is to increase the interest
rate of the Holdings Bonds, change (to earlier dates) any dates upon
which payments of principal or interest, or any cash payments of
interest, are due thereon, change any event of default or condition to an
event of default with respect thereto (other than to eliminate any such
event of default or to increase any grace period with respect thereto),
change the redemption, prepayment or defeasance provisions thereof or
change any collateral therefor (other than to release such collateral) or
(ii) the effect of such amendment or change, together with all other
amendments or changes made, is to increase materially the obligations of
the obligor thereunder or to confer any additional rights on the holders
of the Holdings Bonds (or a trustee or other representative on their
behalf) that would be adverse to Supermarket Holdings, Holdings, the
Borrower or the Lenders;
then, and in every such event (other than an event with respect to the
Borrower described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent
may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or
different times: (i) terminate the Commitments, and thereupon the Commitments
shall terminate immediately, and (ii) declare the Loans then outstanding to
be due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower; and in case of any
event with respect to the Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of
the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated
to the Administrative Agent by the terms of the Loan Documents, together with
such actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary
or other Affiliate thereof as if it were not the Administrative Agent
hereunder.
The Administrative Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be
subject to any fiduciary or other implied duties, regardless of whether a
Default has
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occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated by the Loan
Documents that the Administrative Agent is required to exercise in writing by
the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 9.02), and
(c) except as expressly set forth in the Loan Documents, the Administrative
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of the
Subsidiaries that is communicated to or obtained by the bank serving as
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or wilful misconduct. The Administrative Agent shall not be deemed
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made
in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document, (iv)
the validity, enforceability, effectiveness or genuineness of any Loan
Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any
Loan Document, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to
be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more sub-agents appointed by
the Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through
their respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of
each Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor the Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent that shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent's
resignation hereunder, the provisions of this Article and Section 9.03 shall
continue in effect for the benefit
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of such retiring Administrative Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any
of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 301 Blair Road, A-302, Woodbridge,
New Jersey 07095-0915, Attention of Ron Marshall, Executive Vice
President and Chief Financial Officer (Telecopy No. (908) 499-3100), with
a copy to Marc Strassler, Vice President and General Counsel (Telecopy
No. (908) 499-3460);
(b) if to the Administrative Agent, to The Chase Manhattan Bank, Loan
and Agency Services Group, One Chase Manhattan, 8th Floor, New York, New
York 10081, Attention of Anne Hickey (Telecopy No. (212) 552-7500), with
a copy to The Chase Manhattan Bank, 270 Park Avenue, New York 10017,
Attention of William Rindfuss (Telecopy No. (212) 270-1474);
(c) if to the Issuing Bank, to The Chase Manhattan Bank, Loan and
Agency Services Group, One Chase Manhattan, 8th Floor, New York, New York
10081, Attention of Anne Hickey (Telecopy No. (212) 552-7500), with a
copy to The Chase Manhattan Bank, 270 Park Avenue, New York 10017,
Attention of Ruby Tulloch (Telecopy No. (212) 270-1474);
(d) if to the Swingline Lender, to The Chase Manhattan Bank, Loan and
Agency Services Group, One Chase Manhattan, 8th Floor, New York, New York
10081, Attention of Anne Hickey (Telecopy No. (212) 552-7500), with a
copy to The Chase Manhattan Bank, 270 Park Avenue, New York 10017,
Attention of Ruby Tulloch (Telecopy No. (212) 270-1474); and
(e) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other
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or further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent, the Issuing Bank and the
Lenders hereunder and under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of any Loan Document or consent to any departure by
any Loan Party therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) of this Section, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making
of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, any
Lender or the Issuing Bank may have had notice or knowledge of such Default
at the time.
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of
this Agreement, pursuant to an agreement or agreements in writing entered
into by the Borrower and the Required Lenders or, in the case of any other
Loan Document, pursuant to an agreement or agreements in writing entered into
by the Administrative Agent and the Loan Party or Loan Parties that are
parties thereto, in each case with the consent of the Required Lenders,
provided that no such agreement shall (i) increase the Commitment of any
Lender without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or LC Disbursement or reduce the rate of interest thereon,
or reduce any fees payable hereunder, without the written consent of each
Lender affected thereby, (iii) postpone the scheduled date of payment of the
principal amount of any Loan or LC Disbursement, or any interest thereon, or
any fees payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of any Commitment,
without the written consent of each Lender affected thereby, (iv) change
Section 2.18(b) or (c) in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Lender, (v)
change any of the provisions of this Section or the definition of the term
"Required Lenders" or any other provision of any Loan Document specifying the
number or percentage of Lenders (or Lenders of any Class) required to waive,
amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the written consent of each Lender (or each
Lender of such Class, as the case may be), (vi) release any Subsidiary Loan
Party from its Guarantee under the Guarantee Agreement (except as expressly
provided in the Guarantee Agreement), or limit its liability in respect of
such Guarantee, without the written consent of each Lender, (vii) release all
or substantially all of the Collateral from the Liens of the Security
Documents (except as expressly set forth in the Security Documents), without
the written consent of each Lender, (viii) change any provisions of any Loan
Document in a manner that by its terms adversely affects the rights in
respect of payments due to Lenders holding Loans of any Class differently
than those holding Loans of any other Class, without the written consent of
Lenders holding a majority in interest of the outstanding Loans and unused
Commitments of each affected Class or (ix) change the rights of the Tranche B
Lenders to decline mandatory prepayments as provided in Section 2.11, without
the written consent of Tranche B Lenders holding a majority of the
outstanding Tranche B Loans, and provided further that (A) no such agreement
shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, the Issuing Bank or the Swingline Lender without the
prior written consent of the Administrative Agent, the Issuing Bank or the
Swingline Lender, as the case may be, and (B) any waiver, amendment or
modification of this Agreement that by its terms affects the rights or duties
under this Agreement of the Revolving Lenders (but not the Tranche A Lenders
and Tranche B Lenders), the Tranche A Lenders (but not the Revolving Lenders
and Tranche B Lenders) or the Tranche B Lenders (but not the Revolving
Lenders and Tranche A Lenders) may be effected by an agreement or agreements
in writing entered into by the Borrower and requisite percentage in interest
of the affected Class of Lenders.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and its Affiliates, including (A) expenses incurred in connection with due
diligence and (B) the reasonable fees, charges and disbursements of counsel for
the Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation, execution, delivery and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the
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transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses
incurred by the Administrative Agent, the Issuing Bank or any Lender,
including the reasonable fees, charges and disbursements of any counsel for
the Administrative Agent, the Issuing Bank or any Lender, in connection with
the enforcement of its rights under the Loan Documents, including its rights
under this Section, including all such out-of-pocket expenses incurred during
any workout or restructuring in respect of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent, the Issuing Bank
and each Lender, and each Related Party of any of the foregoing Persons (each
such Person being called an "Indemnitee") against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the reasonable fees, charges and disbursements of any
counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of any Loan Document or any other agreement or instrument contemplated
hereby, the performance by the parties to the Loan Documents of their respective
obligations thereunder or the consummation of the Financing Transactions or any
other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the
use of the proceeds therefrom (including any refusal by the Issuing Bank to
honor a demand for payment under a Letter of Credit if the documents presented
in connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or Release of Hazardous
Materials on or from any Mortgaged Property or any other property currently or
formerly owned or operated by the Borrower or any of the Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of the
Subsidiaries, except to the extent any such actual or alleged presence or
Release of Hazardous Materials, or conditions giving rise to such Environmental
Liability, originate after an Indemnitee has taken possession or control of such
property, or (iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and regardless of whether any Indemnitee is a party thereto,
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
resulted from the gross negligence or wilful misconduct of such Indemnitee or
any Affiliate of such Indemnitee (or of any officer, director, employee, advisor
or agent of such Indemnitee or any of such Indemnitee's Affiliates).
(c) To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent, the Issuing Bank or the Swingline Lender
under paragraph (a) or (b) of this Section, each Lender severally agrees to pay
to the Administrative Agent, the Issuing Bank or the Swingline Lender, as the
case may be, such Lender's pro rata share (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount, provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent, the Issuing Bank or the Swingline
Lender in its capacity as such. For purposes hereof, a Lender's "pro rata share"
shall be determined based upon its share of the sum of the total Revolving
Exposures, outstanding Term Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Financing Transactions, any Loan or Letter of Credit or the use
of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
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SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of Credit) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.)
(b) Any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) to other Lenders, their
Affiliates, a Related Fund of the assigning Lender or another Lender or to any
Federal Reserve Bank without restriction, to other financial institutions or to
any entity that is regularly engaged in making, purchasing or investing in loans
or securities with the consent of the Borrower and the Administrative Agent, in
each case not to be unreasonably withheld, provided that (i) except in the case
of an assignment to a Lender, an Affiliate of a Lender or a Related Fund of the
Assigning Lender or another Lender in circumstances where the Borrower would not
incur increased costs as a result of such assignment, each of the Borrower and
the Administrative Agent (and, in the case of an assignment of all or a portion
of a Revolving Commitment or any Lender's obligations in respect of its LC
Exposure or Swingline Exposure, the Issuing Bank and the Swingline Lender) must
give their prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of an assignment to a Lender, an
Affiliate of a Lender or a Related Fund of the Assigning Lender or another
Lender, or an assignment of the entire remaining amount of the assigning
Lender's Commitment or Loans, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
clause (iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500, and
(v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire, and provided further that
any consent of the Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (h) or (i) of Article VII has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries
in the Register shall be conclusive, and
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the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, the assignee's completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the Administrative
Agent, the Issuing Bank or the Swingline Lender, sell participations to one or
more banks or other entities (a "Participant") in all or a portion of such
Lender's rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it), provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent, the Issuing
Bank 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. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce the Loan Documents and to approve any amendment, modification or waiver
of any provision of the Loan Documents, provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 9.02(b) that affects such Participant. Subject to
paragraph (f) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 9.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.18(c) as
though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment under
Section 2.15 or 2.17 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower's prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as
though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest, provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any
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investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent, the Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation
or warranty at the time any credit is extended hereunder, and shall continue
in full force and effect as long as the principal of or any accrued interest
on any Loan or any fee or any other amount payable under this Agreement is
outstanding and unpaid or any Letter of Credit is outstanding and so long as
the Commitments have not expired or terminated. The provisions of Sections
2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full
force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination
of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now or hereafter existing
under this Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff) that
such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to any Loan
Document, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the Administrative
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Agent, the Issuing Bank or any Lender may otherwise have to bring any action
or proceeding relating to this Agreement or any other Loan Document against
the Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, trustees, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the consent of
the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Borrower. For the purposes of
this Section, "Information" means all information received from the Borrower
relating to the Borrower or its business, other than any such information that
is available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis prior to disclosure by the Borrower, provided that, in the
case of information received from the Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to
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have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as
such Person would accord to its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts that are treated as
interest on such Loan under applicable law (collectively the "Charges"),
shall exceed the maximum lawful rate (the "Maximum Rate") that may be
contracted for, charged, taken, received or reserved by the Lender holding
such Loan in accordance with applicable law, the rate of interest payable in
respect of such Loan hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan but
were not payable as a result of the operation of this Section shall be
cumulated and the interest and Charges payable to such Lender in respect of
other Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been
received by such Lender.
SECTION 9.14. Specified Senior Indebtedness. The Obligations shall
constitute Specified Senior Indebtedness (as defined in each of the Subordinated
Debt Indentures).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
PATHMARK STORES, INC.,
by /s/ Ron Marshall
-----------------------------------------
Name: Ron Marshall
Title: Executive Vice President
THE CHASE MANHATTAN BANK, individually, as
Issuing Bank and as Administrative Agent,
by /s/ William P. Rindfuss
-----------------------------------------
Name: William P. Rindfuss
Title: Vice President
CIBC INC., individually and as Co-Agent,
by /s/ Steven Blumberg
-----------------------------------------
Name: Steven Blumberg
Title: Director
CORESTATES BANK, N.A., individually, as
Issuing Bank and as Co-Agent,
by /s/Thomas J. McDonnell
-----------------------------------------
Name: Thomas J. McDonnell
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST,
by /s/ Jeffrey Maillet
-----------------------------------------
Name: Jeffrey Maillet
Title: Senior Vice President and Director
79
<PAGE>
DEEPROCK & COMPANY,
By: Eaton Vance Management
as Investment Advisor,
by /s/ Scott H. Page
-----------------------------------------
Name: Scott H. Page
Title: Vice President
COMPAGNIE FINANCIERE de CIC et de l'Union
Europeenne,
by /s/ Sean Mounier
-----------------------------------------
Name: Sean Mounier
Title: First Vice President
by /s/ Marcus Edward
-----------------------------------------
Name: Marcus Edward
Title: Vice President
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ Attila Koc
-----------------------------------------
Name: Attila Koc
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by /s/ Michael Richards
-----------------------------------------
Name: Michael Richards
Title: Vice President
SUMMIT BANK,
by /s/ Wayne R. Trotman
-----------------------------------------
Name: Wayne R. Trotman
Title: Vice President, Regional Manager
80
<PAGE>
TRANSAMERICA BUSINESS CREDIT CORPORATION,
by /s/ Perry Vavoules
-----------------------------------------
Name: Perry Vavoules
Title: Senior Vice President
BANKBOSTON, N.A.,
by /s/ Timothy M. Barns
-----------------------------------------
Name: Timothy M. Barns
Title: Division Executive
CITIBANK, N.A.,
by /s/ Hans L. Christensen
-----------------------------------------
Name: Hans L. Christensen
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
by /s/ Janet Williams
-----------------------------------------
Name: Janet Williams
Title: Duly Authorized Signatory
PILGRIM AMERICA PRIME RATE TRUST,
by /s/ Michael J. Bacevich
-----------------------------------------
Name: Michael J. Bacevich
Title: Vice President
PRIME INCOME TRUST,
by /s/ Raphael Scolari
-----------------------------------------
Name: Raphael Scolari
Title: Senior Vice President
81
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY,
by /s/ James R. Dingler
-----------------------------------------
Name: James R. Dingler
Title: Assistant Vice President
SENIOR DEBT PORTFOLIO,
By: Boston Management and Research,
as Investment Advisor,
by /s/ Scott H. Page
-----------------------------------------
Name: Scott H. Page
Title: Vice President
82
