EXHIBIT 10.22
$200,000,000
CREDIT AGREEMENT
AMONG
BJ'S WHOLESALE CLUB, INC.,
THE LENDERS PARTY HERETO,
THE FIRST NATIONAL BANK OF CHICAGO, as Agent
BANKBOSTON, N.A., as Syndication Agent,
FLEET NATIONAL BANK, as Documentation Agent
Dated as of July 9, 1997
Arranged by:
FIRST CHICAGO CAPITAL MARKETS
TABLE OF CONTENTS
Page
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ARTICLE I - DEFINITIONS........................................ 8
ARTICLE II - THE CREDITS....................................... 26
2.1. Description of Facility............................... 26
2.2. Availability of Facility.............................. 26
2.3. Committed Advances.................................... 26
2.3.1. Commitment............................................ 26
2.3.2. Ratable Loans; Types of Advances...................... 27
2.3.3. Minimum Amount of Each Committed Advance.............. 27
2.3.4. Applicable Margin..................................... 27
2.3.5. Method of Selecting Types and Interest Periods for New
Committed Advances.................................... 28
2.3.6. Conversion and Continuation of Outstanding Committed
Advances.............................................. 29
2.4. Competitive Bid Advances.............................. 29
2.4.1. Competitive Bid Option; Repayment of Competitive Bid
Advances.............................................. 29
2.4.2. Competitive Bid Quote Request......................... 30
2.4.3. Invitation for Competitive Bid Quotes................. 30
2.4.4. Submission and Contents of Competitive Bid Quotes..... 31
2.4.5. Notice to Borrower.................................... 32
2.4.6. Acceptance and Notice by Borrower..................... 32
2.4.7. Allocation by the Agent............................... 32
2.5. Method of Borrowing................................... 33
2.6. Swing Line Loans...................................... 33
2.7. Fees.................................................. 36
2.7.1. Facility Fee.......................................... 36
2.7.2. Agent Fees............................................ 36
2.8. Reductions in Aggregate Commitment;
Principal Payments................................... 36
2.8.1. Reductions in Aggregate Commitment.................... 36
2.8.2. Principal Payments.................................... 36
2.10. Rates Applicable After Default........................ 37
2.11. Method of Payment..................................... 37
2.12. Notes; Telephonic Notices............................. 38
2.14. Notification by Agent................................. 38
2.15. Lending Installations................................. 39
2.16. Non-Receipt of Funds by the Agent..................... 39
2.17. Taxes................................................. 39
2.18. Change in Circumstances............................... 41
2.18.1. Yield Protection...................................... 41
2.18.2. Changes in Capital Adequacy Regulations............... 41
2.18.3. Availability of Types of Advances..................... 42
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2.18.4. Funding Indemnification............................... 42
2.18.5. Mitigation of Additional Costs;
Replacement of Lenders............................... 42
2.18.6. Lender Statements; Survival of Indemnity.............. 43
ARTICLE III - THE LETTER OF CREDIT SUBFACILITY................. 44
3.1. Obligation to Issue................................... 44
3.2. Types and Amounts..................................... 44
3.3. Conditions............................................ 44
3.4. Procedure for Issuance of Facility Letters of Credit.. 45
3.5. Reimbursement Obligations; Duties of Issuing Banks.... 46
3.6. Participation......................................... 47
3.7. Payment of Reimbursement Obligations.................. 48
3.8. Compensation for Facility Letters of Credit........... 49
ARTICLE IV - CONDITIONS PRECEDENT.............................. 50
4.1. Initial Advance....................................... 50
4.2. Each Advance or Issuance of a Facility
Letter of Credit..................................... 52
ARTICLE V - REPRESENTATIONS AND WARRANTIES..................... 53
5.1. Corporate Existence and Standing...................... 53
5.2. Authorization and Validity............................ 53
5.3. No Conflict; Government Consent....................... 53
5.4. Financial Statements.................................. 54
5.5. Material Adverse Change............................... 54
5.6. Taxes................................................. 54
5.7. Litigation and Contingent Obligations................. 54
5.8. Subsidiaries.......................................... 55
5.9. ERISA................................................. 55
5.10. Accuracy of Information............................... 55
5.11. Federal Reserve Regulations........................... 55
5.12. Material Agreements................................... 55
5.13. Compliance With Laws.................................. 56
5.14. Ownership of Properties............................... 56
5.15. Investment Company Act................................ 56
5.16. Public Utility Holding Company Act.................... 56
5.17. Insurance............................................. 56
5.18. Solvency.............................................. 56
5.19. Transaction Documents................................. 56
ARTICLE VI - COVENANTS......................................... 57
6.1. Financial Reporting................................... 57
6.2. Use of Proceeds....................................... 59
6.3. Notice of Default..................................... 59
6.4. Conduct of Business................................... 59
6.5. Taxes................................................. 59
6.6. Insurance............................................. 60
6.7. Compliance with Laws.................................. 60
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6.8. Maintenance of Properties............................. 60
6.10. Dividends............................................. 60
6.11. Indebtedness.......................................... 61
6.12. Merger................................................ 62
6.13. Sale of Assets........................................ 62
6.14. Letters of Credit..................................... 63
6.15. Investments and Acquisitions.......................... 63
6.16. Liens................................................. 65
6.17. Affiliates............................................ 67
6.18. Amendments............................................ 67
6.19. Rate Hedging Obligations.............................. 67
6.20. Financial Covenants................................... 67
6.20.1. Funded Debt to Capital Ratio.......................... 68
6.20.2. Fixed Charge Coverage Ratio........................... 68
6.20.3. Tangible Net Worth.................................... 68
6.21. Subsidiary Guaranties................................. 68
6.22. Intercompany Indebtedness............................. 69
ARTICLE VII - DEFAULTS......................................... 69
7.1. ...................................................... 69
7.2. ...................................................... 69
7.3. ...................................................... 69
7.4. ...................................................... 69
7.5. ...................................................... 69
7.6. ...................................................... 70
7.7. ...................................................... 70
7.8. ...................................................... 70
7.9. ...................................................... 70
7.10. ...................................................... 70
7.11. ...................................................... 70
ARTICLE VIII - ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.. 71
8.1. Acceleration.......................................... 71
8.2. Amendments............................................ 71
8.3. Preservation of Rights................................ 72
ARTICLE IX - GENERAL PROVISIONS................................ 73
9.1. Survival of Representations........................... 73
9.2. Governmental Regulation............................... 73
9.3. Taxes................................................. 73
9.4. Headings.............................................. 73
9.5. Entire Agreement...................................... 73
9.6. Several Obligations; Benefits of this Agreement....... 73
9.7. Expenses; Indemnification............................. 74
9.8. Numbers of Documents.................................. 74
9.9. Accounting............................................ 74
9.10. Severability of Provisions............................ 74
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9.11. Nonliability of Lenders............................... 75
9.12. Choice of Law......................................... 75
9.13. Consent to Jurisdiction............................... 75
9.14. Waiver of Jury Trial.................................. 75
9.15. Confidentiality....................................... 75
ARTICLE X - THE AGENT.......................................... 76
10.1. Appointment........................................... 76
10.2. Powers................................................ 76
10.3. General Immunity...................................... 76
10.4. No Responsibility for Loans, Recitals, etc. .......... 76
10.5. Action on Instructions of Lenders..................... 77
10.6. Employment of Agents and Counsel...................... 77
10.7. Reliance on Documents; Counsel........................ 77
10.8. Agent's Reimbursement and Indemnification............. 77
10.9. Rights as a Lender.................................... 78
10.10. Lender Credit Decision................................ 78
10.11. Successor Agent....................................... 78
10.12. Notice of Default..................................... 79
ARTICLE XI - SETOFF; RATABLE PAYMENTS.......................... 79
11.1. Setoff................................................ 79
11.2. Ratable Payments...................................... 79
ARTICLE XII - BENEFIT OF AGREEMENT; ASSIGNMENTS;
PARTICIPATIONS............................................... 80
12.1. Successors and Assigns................................ 80
12.2. Participations........................................ 80
12.2.1. Permitted Participants; Effect........................ 80
12.2.2. Voting Rights......................................... 80
12.2.3. Benefit of Setoff..................................... 81
12.3. Assignments........................................... 81
12.3.1. Permitted Assignments................................. 81
12.3.2. Effect; Effective Date................................ 81
12.4. Dissemination of Information.......................... 82
12.5. Tax Treatment......................................... 82
ARTICLE XIII - NOTICES......................................... 83
13.1. Giving Notice......................................... 83
13.2. Change of Address..................................... 83
ARTICLE XIV - COUNTERPARTS..................................... 83
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EXHIBITS
EXHIBIT "A-1" - COMMITTED NOTE
EXHIBIT "A-2" - COMPETITIVE BID NOTE
EXHIBIT "B" - COMPETITIVE BID QUOTE REQUEST
EXHIBIT "C" - INVITATION FOR COMPETITIVE BID QUOTES
EXHIBIT "D" - COMPETITIVE BID QUOTE
EXHIBIT "E" - FORM OF OPINION
EXHIBIT "F" - LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
EXHIBIT "G" - COMPLIANCE CERTIFICATE
EXHIBIT "H" - ASSIGNMENT AGREEMENT
EXHIBIT "I" - SUBSIDIARY GUARANTY
SCHEDULES
SCHEDULE "1" - PERCENTAGES
SCHEDULE "2" - SUBSIDIARIES AND OTHER INVESTMENTS
SCHEDULE "3" - INDEBTEDNESS AND LIENS
SCHEDULE "4" - EXISTING FACILITY LETTERS OF CREDIT
SCHEDULE "5" - DESCRIPTION OF TRANSACTIONS
SCHEDULE "6" - PRO FORMA AND PRO FORMA ACCOUNTING PRINCIPLES
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CREDIT AGREEMENT
This Agreement, dated as of July 9, 1997, is among BJ's Wholesale Club,
Inc., the Lenders and The First National Bank of Chicago, as Agent. The parties
hereto agree as follows:
R E C I T A L S:
A. The Borrower has requested the Lenders to make financial
accommodations to it in the aggregate principal amount of $200,000,000, the
proceeds of which the Borrower will use for the working capital and general
corporate needs of the Borrower and its Subsidiaries.
B. The Lenders are willing to extend such financial accommodations on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the
Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Absolute Rate" means, with respect to a Loan made by a given Lender for
the relevant Absolute Rate Interest Period, the rate of interest per annum
(rounded to the nearest 1/100 of 1%) offered by such Lender and accepted by the
Borrower pursuant to Section 2.4.6 hereof.
"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Absolute Rate Interest
Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.4 hereof.
"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance or an Absolute Rate Loan, a period of not less than seven (7) and not
more than one hundred eighty (180) days commencing on a Business Day selected by
the Borrower pursuant to this Agreement, but in no event extending beyond the
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Termination Date. If such Absolute Rate Interest Period would end on a day
which is not a Business Day, such Absolute Rate Interest Period shall end on the
next succeeding Business Day.
"Absolute Rate Loan" means a Loan which bears interest at an Absolute Rate.
"Acquisition" means any transaction, or any series of related transactions,
consummated after the Effective Date, by which the Borrower or any of its
Subsidiaries (i) acquires any going business or all or substantially all of the
assets of any firm, corporation or division thereof, whether through purchase of
assets, merger or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions) at
least a majority (in number of votes) of the securities of a corporation which
have ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) or a
majority (by percentage or voting power) of the outstanding partnership
interests of a partnership.
"Active Subsidiary" means a Subsidiary that has total assets of at least
$500,000.
"Advance" means a borrowing hereunder consisting of the aggregate amount of
one or more Loans made on the same Borrowing Date by some or all of the Lenders
to the Borrower of the same Type (or on the same interest basis in the case of
Competitive Bid Advances) and, in the case of Fixed Rate Advances, for the same
Interest Period and includes both a Committed Advance and a Competitive Bid
Advance and the Swing Line Loans.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means The First National Bank of Chicago in its capacity as agent
for the Lenders pursuant to Article X, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article X.
"Aggregate Available Commitment" means at any time the Aggregate Commitment
minus the sum of (a) Facility Letter of Credit Obligations at such time and (b)
the aggregate principal amount of outstanding Loans at such time.
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"Aggregate Commitment" means $200,000,000, as such amount may be reduced
from time to time pursuant to the terms hereof.
"Agreement" means this credit agreement, as it may be amended or modified
and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.4
hereof; provided, however, that for purposes of all computations required to be
made with respect to compliance by the Borrower with Section 6.20, such term
shall mean generally accepted accounting principles as in effect on the date
hereof, applied in a manner consistent with those used in preparing the
Financial Statements.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the sum
of Federal Funds Effective Rate for such day plus 1/2% per annum.
"Alternate Base Rate Advance" means an Advance which bears interest at the
Alternate Base Rate.
"Alternate Base Rate Loan" means a Loan which bears interest at the
Alternate Base Rate.
"Applicable Margin" means, at any date of determination thereof with
respect to any Eurodollar Committed Advance, the facility fees payable pursuant
to Section 2.7.1 hereof and the Facility Letter of Credit Fees, the respective
rates per annum or percentages, as applicable, for such Eurodollar Committed
Advance, facility fees and Facility Letter of Credit Fees calculated in
accordance with the terms of Section 2.3.4 hereof.
"Arranger" means First Chicago Capital Markets, Inc. and its successors.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the Chairman, President, Chief Financial
Officer, Treasurer, Controller or any Vice President-Finance of the Borrower,
acting singly, as such Authorized Officers may be modified from time to time in
writing by the Agent and a then existing Authorized Officer of the Borrower.
"Borrower" means BJ's Wholesale Club, Inc., a Delaware corporation, and its
successors and assigns.
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"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.10 hereof.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
"Capital" means, as of any date of determination, the sum of Net Worth plus
Funded Debt.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Change" is defined in Section 2.18.2 hereof.
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert (a "group"), of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 40% or more of the outstanding shares of
voting stock of the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commercial Letter of Credit" means a trade or commercial Facility Letter
of Credit issued by an Issuing Bank pursuant to Article III.
"Commitment" means, for each Lender, the obligation of such Lender to make
Committed Loans and participate in Facility Letters of Credit not exceeding the
amount set forth opposite its name on Schedule 1 or as set forth in any Notice
of Assignment relating to any assignment which has become effective pursuant to
Section 12.3.2 hereof, as such amount may be modified from time to time pursuant
to the terms hereof.
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"Committed Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Committed Loans made by the Lenders to the Borrower at the
same time, of the same Type and, in the case of Eurodollar Committed Advances,
for the same Interest Period.
"Committed Borrowing Notice" is defined in Section 2.3.5 hereof.
"Committed Loan" means a Loan made by a Lender pursuant to Section 2.3
hereof.
"Committed Note" means a promissory note in substantially the form of
Exhibit "A-1" hereto, with appropriate insertions, duly executed and delivered
to the Agent by the Borrower for the account of a Lender and payable to the
order of such Lender in the amount of its Commitment, including any amendment,
modification, renewal or replacement of such promissory note.
"Competitive Bid Acceptance Notice" is defined in Section 2.4.6 hereof.
"Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of the
Lenders to the Borrower at the same time, at the same interest basis, and for
the same Interest Period.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute Rate
Loan, as the case may be.
"Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.
"Competitive Bid Note" means a promissory note in substantially the form of
Exhibit "A-2" hereto, with appropriate insertions, duly executed and delivered
to the Agent by the Borrower for the account of a Lender and payable to the
order of such Lender, including any amendment, modification, renewal or
replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote substantially in the
form of Exhibit "D" hereto completed and delivered by a Lender to the Agent in
accordance with Section 2.4.4 hereof.
"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of Exhibit "B" hereto completed and delivered by the
Borrower to the Agent in accordance with Section 2.4.2 hereof.
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"Condemnation" is defined in Section 7.8 hereof.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement or take-or-pay contract (but does not include (i) any application for
a Letter of Credit or (ii) obligation of any Person to pay the purchase price of
real estate, subject to the satisfaction of customary conditions precedent,
contracted for in the ordinary course of business or (iii) the indemnification
by Borrower of any liabilities which the TJX Companies, Inc. ("TJX") may incur
with respect to those certain real estate leases of HomeBase, Inc. as provided
for in the Indemnification Agreement dated April 18, 1997 between the Borrower
and TJX, unless Borrower has received written notice from TJX seeking
enforcement of, or payment under, such indemnification).
"Conversion/Continuation Notice" is defined in Section 2.3.6 hereof.
"Convertible Subordinated Debt" means that certain $108,600,000 of 6.5%
Convertible Subordinated Debentures Due 2002 issued pursuant to an Indenture,
dated as of July 1, 1992, between Waban Inc. as issuer and Bank of America
Illinois (f/k/a Continental Bank, National Association), as Trustee.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when and
as said corporate base rate changes. The Corporate Base Rate is a reference rate
and does not necessarily represent the lowest or best rate of interest actually
charged to any customer. First Chicago may make commercial loans or other loans
at rates of interest at, above or below the Corporate Base Rate.
"Current Maturities" means, as of any date of determination, the sum of all
amounts which were due and payable within 12 months prior to such date with
respect to any Indebtedness with an original term in excess of one year (it
being understood that Indebtedness under this Agreement shall not be included),
all determined on a consolidated basis for the Borrower and its Subsidiaries.
"Default" means an event described in Article VII.
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"Distribution" means the distribution by Waban Inc. to its shareholders of
all the outstanding shares of common stock of the Borrower.
"EBITR" means, for any period, earnings before interest expense, income
taxes and Rentals, all determined on a consolidated basis for the Borrower and
its Subsidiaries.
"Effective Date" is defined in Section 4.1 hereof.
"ERISA" means the Employee Retirement Income Security Act of l974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means a Eurodollar Committed Advance or a Eurodollar
Bid Rate Advance, as applicable.
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes setting
forth Competitive Bid Margins pursuant to Section 2.4 hereof.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the rate determined by the Agent to be the
rate at which deposits in U.S. dollars are offered by First Chicago to first-
class banks in the London interbank market at approximately 11 a.m. (London
time) two Business Days prior to the first day of such Eurodollar Interest
Period, in the approximate amount of First Chicago's relevant Eurodollar Loan,
or, in the case of a Eurodollar Bid Rate Advance, the amount of the Eurodollar
Bid Rate Advance requested by the Borrower, and having a maturity approximately
equal to such Eurodollar Interest Period.
"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Lender for the relevant Eurodollar Interest Period, the sum of
(i) the Eurodollar Base Rate and (ii) the Competitive Bid Margin offered by such
Lender and accepted by the Borrower pursuant to Section 2.4.6 hereof.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Competitive Bid Loan which bears
interest at a Eurodollar Bid Rate. "Eurodollar Committed Advance" means an
Advance which bears interest at a Eurodollar Rate requested by the Borrower
pursuant to Section 2.3 hereof.
"Eurodollar Committed Loan" means a Loan which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to Section 2.3 hereof.
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"Eurodollar Interest Period" means, with respect to a Eurodollar Advance, a
period of one, two, three or six months commencing on a Business Day selected by
the Borrower pursuant to this Agreement. Such Eurodollar Interest Period shall
end on (but exclude) the day which corresponds numerically to such date one,
two, three or six months thereafter, provided, however, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding
month, such Eurodollar Interest Period shall end on the last Business Day of
such next, second, third or sixth succeeding month. If a Eurodollar Interest
Period would otherwise end on a day which is not a Business Day, such Eurodollar
Interest Period shall end on the next succeeding Business Day, provided,
however, that if said next succeeding Business Day falls in a new calendar
month, such Eurodollar Interest Period shall end on the immediately preceding
Business Day.
"Eurodollar Loan" means a Eurodollar Committed Loan or a Eurodollar Bid
Rate Loan, as applicable.
"Eurodollar Rate" means, with respect to a Eurodollar Committed Advance for
the relevant Eurodollar Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by
(b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (ii) the Applicable Margin; provided,
however, if the Applicable Margin for Eurodollar Rate Loans adjusts during any
Interest Period, the Eurodollar Rate shall change to give effect to such
adjustment when and as such Applicable Margin adjusts. The Eurodollar Rate
shall be rounded to the next higher multiple of 1/16 of 1% if the rate is not
such a multiple.
"Execution Date" means the date of July 9, 1997.
"Facility Fee" is defined in Section 2.7.1 hereof.
"Facility Letter of Credit" means an irrevocable Letter of Credit issued
(i) prior to the Effective Date and listed on Schedule "4" hereto or (ii) by an
Issuing Bank pursuant to Section 3.1 hereof.
"Facility Letter of Credit Fee" is defined in Section 3.8 hereof.
"Facility Letter of Credit Obligations" means, as at the time of
determination thereof, all liabilities, whether actual or contingent, of the
Borrower with respect to Facility Letters of Credit, including the sum of (a)
the Reimbursement Obligations and (b) the aggregate undrawn face amount of the
then outstanding Facility Letters of Credit.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions
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with members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published for such day (or, if such day is not a Business Day, for
the immediately preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations at approximately 10 a.m. (Chicago time) on such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent in its sole discretion.
"Financial Statement" is defined in Section 5.4 hereof.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"Fixed Charge Coverage Ratio" means a ratio of (i) EBITR for such fiscal
quarter and the three immediately preceding fiscal quarters to (ii) the sum of
interest expense and Rentals for such fiscal quarter and the three immediately
preceding fiscal quarters plus Current Maturities as of the end of such fiscal
quarter, all determined on a consolidated basis for the Borrower and its
Subsidiaries.
"Fixed Rate" means the Eurodollar Rate, the Eurodollar Bid Rate or the
Absolute Rate.
"Fixed Rate Advance" means an Advance which bears interest at a Fixed Rate.
"Fixed Rate Loan" means a Loan which bears interest at a Fixed Rate.
"Funded Debt" means, as of any date of determination, for the Borrower and
its Subsidiaries on a consolidated basis, the sum of (i) the outstanding
principal amount of all Indebtedness plus (ii) the product of eight (8) times
Rentals (for the twelve (12) months prior to the date of determination.
"Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, which are secured by Liens or payable out of specified
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) Capitalized Lease Obligations, (vi) net liabilities under Rate
Hedging Obligations, (vii) unreimbursed draws under Letters of Credit and (viii)
Contingent Obligations.
"Interest Period" means a Eurodollar Interest Period or an Absolute Rate
Interest Period.
15
"Investment" of a Person means any loan, advance (other than advances to
officers and employees made in the ordinary course of business), extension of
credit (other than accounts receivable arising in the ordinary course of
business on terms customary in the trade), deposit account or contribution of
capital by such Person to any other Person or any investment in, or purchase or
other acquisition of, the stock, partnership interests, membership interests,
notes, debentures or other securities of any other Person made by such Person.
"Investment Subsidiary" means Natick Security Corp., a Massachusetts
corporation and a Wholly-Owned Subsidiary of the Borrower, and its successors.
"Invitation for Competitive Bid Quotes" means an Invitation for Competitive
Bid Quotes substantially in the form of Exhibit "C" hereto, completed and
delivered by the Agent to the Lenders in accordance with Section 2.4.3 hereof.
"Issuance Date" is defined in Section 3.4(a)(2) hereof.
"Issuance Notice" is defined in Section 3.4(c) hereof.
"Issuing Bank" means, with respect to each Facility Letter of Credit, First
Chicago or such other Lender selected by the Borrower to issue such Facility
Letter of Credit so long as such other Lender consents to act in such capacity.
"LC Factor" is a fraction (i) the numerator of which is (y) for the initial
payment of the Facility Letter of Credit Fee for any specific Facility Letter of
Credit, the number of days subsequent to the Issuance Date of such Facility
Letter of Credit to and including the first Payment Date and (z) for subsequent
payments of the Facility Letter of Credit Fee for any specific Facility Letter
of Credit, the number of days subsequent to the Payment Date on which the
Facility Letter of Credit Fee was last paid for such Facility Letter of Credit
to and including the next Payment Date, the Termination Date or the expiration
date of such Facility Letter of Credit, as applicable, and (ii) the denominator
of which is 360.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent, any
office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Letter of Credit Request" is defined in Section 3.4(a) hereof.
16
"Level I Status" is defined in Section 2.3.4 hereof.
"Level II Status" is defined in Section 2.3.4 hereof.
"Level III Status" is defined in Section 2.3.4 hereof.
"Level IV Status" is defined in Section 2.3.4 hereof.
"Level V Status" is defined in Section 2.3.4 hereof.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loans" means, collectively, the Swing Line Loans, Fixed Rate Loans and
Alternate Base Rate Loans and "Loan" means use of the Loans.
"Loan Documents" means this Agreement, the Note and the Facility Letters of
Credit.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Agent or the Lenders thereunder.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Net Income" means, for any period, the net income (or loss) of the
Borrower and its Subsidiaries on a consolidated basis for such period determined
in conformity with Agreement Accounting Principles; provided, however, that to
the extent reported as a separate item on the Borrower's financial statements
delivered pursuant to Section 6.1 hereof, there shall be excluded (i) the income
(or loss) of any Affiliate of the Borrower or other Person (other than a
Subsidiary of the Borrower) in which any Person (other than the Borrower or any
of its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to the Borrower, or any of its
Subsidiaries by such Affiliate or other Person during such period and (ii) the
income (or loss) of any Person accrued prior to the date such
17
Person becomes a Subsidiary of the Borrower or is merged into or consolidated
with the Borrower or any of its Subsidiaries or that Person's assets are
acquired by the Borrower or any of its Subsidiaries.
"Net Worth" means the aggregate amount of shareholders equity as determined
from a consolidated balance sheet of the Borrower and its Subsidiaries, prepared
in accordance with Agreement Accounting Principles.
"Non-Excluded Taxes" is defined in Section 2.19 hereof.
"Notes" means, collectively, the Competitive Bid Notes, the Committed Notes
and the Swing Line Note; and "Note" means any one of the Notes.
"Notice of Assignment" is defined in Section 12.3.2 hereof.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Notes, the Facility Letter of Credit Obligations, all accrued and unpaid
fees and all expenses, reimbursements, indemnities and other obligations of the
Borrower to the Lenders or to any Lender, the Agent or any indemnified party
hereunder arising under the Loan Documents.
"Participants" is defined in Section 12.2.1 hereof.
"Payment Date" means the last day of each March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Percentage" means, for each Lender the percentage set forth opposite its
name on Schedule "1" attached hereto, as such percentage (and such schedule) may
be modified from time to time pursuant to the terms hereof, including but not
limited to the provisions of Section 12.3.2 hereof. Ratable and ratably, as
used herein, shall have correlative meanings.
"Permitted Investments" means Investments in any of the following:
(i) Short-term obligations of, or fully guaranteed by, the United States of
America;
(ii) Commercial paper rated A-2 or better by Standard and Poor's
Corporation or P-2 or better by Moody's Investors Service, Inc. and securities
commonly known as "short-term bank notes" issued by any Lender denominated in
United States dollars which at the time of purchase have been rated and the
ratings
18
for which are not less than P-2 if rated by Moody's Investors Services,
Inc., and not less than A-2 if rated by Standard and Poor's Corporation;
(iii) Demand deposit accounts maintained in the ordinary course of
business;
(iv) Certificates of deposit issued by and time deposits with commercial
banks (whether domestic or foreign) having capital and surplus in excess of
$100,000,000;
(v) Tax-free government securities rated "A" or better as rated by Standard
and Poor's Corporation or Moody's Investors Service, Inc. and government
securities mutual funds which have a weighted average life of less than two (2)
years;
(vi) Corporate debt securities rated "A" or better as rated by Standard and
Poor's Corporation or Moody's Investors Service, Inc. that mature within two (2)
years from the date the Investment is made by the Borrower or any of its
Subsidiaries;
(vii) Collateralized mortgage obligations rated "A" or better as rated
by Standard and Poor's Corporation or Moody's Investors Service, Inc. with an
average life less than two (2) years; provided that after giving effect to any
such Investment, the aggregate cost of all such Investments does not exceed
$25,000,000;
(viii) Money market preferred stock investments rated "A" or better as
rated by Standard and Poor's Corporation or Moody's Investors Service, Inc.;
provided that after giving effect to any such Investment, the aggregate cost of
all such Investments does not exceed $25,000,000;
(ix) Repurchase agreements relating to a security which is rated "A" or
better as rated by Standard and Poor's Corporation or Moody's Investors Service,
Inc. that mature within two (2) years from the date the Investment is made by
the Borrower or any of its Subsidiaries; provided that after giving effect to
any such Investment, the aggregate cost of all such Investments does not exceed
$25,000,000; and
(x) Tax free government securities rated "SP2" or better by Standard and
Poor's Corporation or "MIG2" or better by Moody's Investors Service, Inc. with
an average life of less than two (2) years; provided, that after giving effect
to any such Investment, the aggregate cost of all such Investments does not
exceed $25,000,000.
"Person" means any natural person, corporation, firm, joint venture,
limited liability company, partnership, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
19
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
"Pro Forma" is defined in Section 5.4 hereof.
"Pro Forma Accounting Principles" means Agreement Accounting Principles as
modified as set forth in Schedule "6" hereto to reflect pro forma adjustments
required due to the Transactions.
"Prior Agreement" means the Credit Agreement dated as of April 4, 1995
among Waban Inc., The First National Bank of Chicago, as agent, and the Lenders
party thereto, as amended through the Effective Date.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Purchasers" is defined in Section 12.3.1 hereof.
"Rate Hedging Agreements" of a Person means (i) any and all agreements,
devices or arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange transactions,
including, but not limited to, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate
options, puts and warrants, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any of the foregoing.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under Rate Hedging
Agreements. "Real Estate Subsidiary" means any Wholly-Owned Subsidiary of the
Borrower existing on the Effective Date or formed after the Effective Date (A)
for the purpose of (i) purchasing, developing and/or carrying real estate or
lending money to the Borrower which is secured by real estate or (ii) acting as
a holding company for Subsidiaries which purchase, develop and/or carry real
estate, (B) which conducts no business other than that which is incidental to
(i) purchasing, developing and/or carrying real estate or lending money to the
Borrower which is secured by real estate and (C) which owns no significant
assets other than real estate, Subsidiaries which are Real Estate Subsidiaries
or mortgages on real estate owned by the Borrower.
20
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation G" means Regulation G of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by Persons other than banks, brokers and dealers for
the purpose of purchasing or carrying margin stocks applicable to such Persons.
"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of such Board of Governors relating
to the extension of credit by securities brokers and dealers for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and shall include any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by the specified lenders for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Reimbursement Obligations" means, at any time, the aggregate of the
obligations of the Borrower to the Lenders, the Issuing Banks and the Agent in
respect of all unreimbursed payments or disbursements made by the Lenders, the
Issuing Banks and the Agent under or in respect of the Facility Letters of
Credit.
"Rentals" means all rental expense of the Borrower and its Subsidiaries
under operating leases.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice
21
requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Required Lenders" means Lenders whose Commitments, in the aggregate, are
equal to at least 60% of the Aggregate Commitment or, if the Aggregate
Commitment has been terminated, Lenders in the aggregate holding at least 60% of
the sum of (i) the aggregate unpaid principal amount of the outstanding Advances
plus (ii) the Facility Letter of Credit Obligations.
"Reserve Requirement" means, with respect to a Eurodollar Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Risk-Based Capital Guidelines" is defined in Section 2.18.2 hereof.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Senior Notes" means the certain $12,000,000 9.58% unsecured senior notes
due May 31, 1998.
"Senior Subordinated Debt" means that certain $100,000,000 of 11% Senior
Subordinated Notes due May 15, 2004 issued pursuant to an Indenture, dated as of
May 11, 1994, between Waban Inc., as Issuer and The First National Bank of
Boston, as Trustee.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Solvent" means, when used with respect to a Person, that (a) the fair
saleable value of the assets of such Person is in excess of the total amount of
the present value of its liabilities (including for purposes of this definition
all liabilities (including loss reserves as determined by such Person), whether
or not reflected on a balance sheet prepared in accordance with Agreement
Accounting Principles and whether direct or indirect, fixed or contingent,
secured or unsecured, disputed or undisputed), (b) such Person is able to pay
its debts or obligations in the ordinary course as they mature and (c) such
Person does not have unreasonably small capital to carry out its business as
conducted and as proposed to be conducted. "Solvency" shall have a correlative
meaning.
"Standby Letter of Credit" means a Facility Letter of Credit which is not a
Commercial Letter of Credit.
22
"Status" means, at any date of determination thereof, whichever of Level I
Status, Level II Status, Level III Status, Level IV Status or Level V Status
exists at such date.
"Subordinated Indebtedness" means the Convertible Subordinated Debt and the
Senior Subordinated Debt.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, limited liability company, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled or of
which such Person, directly or indirectly, is the general partner. Unless
otherwise expressly provided, all references herein to a "Subsidiary" shall mean
a Subsidiary of the Borrower.
"Subsidiary Guaranty" means that certain Guaranty, in the form of Exhibit I
hereto, to be executed and delivered by the applicable Subsidiaries in favor of
the Agent, on behalf of the Lenders, as and when required by Section 6.21
hereof, as the same may be amended, supplemented or otherwise modified from time
to time.
"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which represents more than 10% of the
consolidated assets of the Borrower and its Subsidiaries as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as at
the beginning of the twelve-month period ending with the month in which such
determination is made.
"Swing Line Bank" means First Chicago.
"Swing Line Loan" means a Loan made by the Swing Line Bank pursuant to
Section 2.6 hereof.
"Swing Line Note" means a promissory note substantially in the form of
Exhibit A-3 hereto, with appropriate insertions, duly executed and delivered to
the Agent by the Borrower and payable to the order of the Swing Line Bank in the
amount of $10,000,000, including any amendment, modification, renewal or
replacement of such promissory note.
"Swing Line Option" means the ability of the Swing Line Bank to make Swing
Line Loans hereunder, if it chooses to do so in its sole discretion, in an
aggregate amount at any one time outstanding not to exceed $10,000,000, as the
same may be terminated or permanently reduced from time to time hereunder. The
Swing Line Option will automatically and permanently terminate on the
Termination Date.
23
"Tangible Net Worth" means Net Worth minus Intangible Assets. For
purposes of this definition "Intangible Assets" means the amount (to the extent
reflected in determining Net Worth) of (i) all write-ups (other than write-ups
resulting from foreign currency translations or from increases in the value of
Permitted Investments owned by the Borrower or the Investment Subsidiary)
subsequent to January 25, 1997 in the book value of any asset owned by the
Borrower or a consolidated Subsidiary, (ii) all investments in unconsolidated
Subsidiaries and all equity investments in Persons which are not Subsidiaries
and (iii) all unamortized debt discount and expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible items.
"Termination Date" means July 9, 2002, or such earlier date on which the
Agreement is terminated by the parties hereto.
"Trademark Subsidiaries" means Natick Corporation, a Delaware corporation,
and any other Wholly-Owned Subsidiary of the Borrower formed after the Effective
Date for the purpose of (i) owning trademarks and/or other intellectual property
and whose income is primarily derived from royalties received from the Borrower
and its Subsidiaries for the use of such trademarks and/or other intellectual
property and/or (ii) owning and operating retail stores in states in which the
Borrower has determined there are advantages to operating retail stores in such
state through a Wholly-Owned Subsidiary.
"Transactions" shall mean (i) the repayment of the Senior Notes, (ii) the
retirement or defeasance of the Senior Subordinated Debt, (iii) the redemption
or conversion of the Convertible Subordinated Debt into the Common Stock of
Waban Inc. and (iv) the Distribution.
"Transaction Documents" means the documents pursuant to which the
Transactions occur and includes, without limitation the Separation and
Distribution Agreement between Waban Inc. and the Borrower, Services Agreement
between Waban Inc. and the Borrower, Tax Sharing Agreement between Waban Inc.
and the Borrower, Employee Benefit Agreement between Waban Inc. and the
Borrower, and Proxy Statement/Prospectus dated June 6, 1997.
"Transferee" is defined in Section 12.4 hereof.
"Type" means, with respect to any Loan or Advance, its nature as an
Alternate Base Rate Advance or Loan, Eurodollar Committed Advance or Loan,
Eurodollar Bid Rate Advance or Loan or Absolute Rate Advance or Loan.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested nonforfeitable benefits under all Single Employer Plans exceeds
the fair
24
market value of all such Plan assets allocable to such benefits, all determined
as of the then most recent valuation date for such Plans.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Unfunded Swing Line Loans" is defined in Section 2.6(d) hereof.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which (other than director qualifying shares)
shall at the time be owned or controlled, directly or indirectly, by such Person
or one or more Wholly-Owned Subsidiaries of such Person, or (ii) any
partnership, limited liability company, association, joint venture or similar
business organization 100% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references to a "Wholly-Owned Subsidiary" shall mean a
Wholly-Owned Subsidiary of the Borrower.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Description of Facility. Upon the terms and subject to the
conditions set forth in this Credit Agreement, the Lenders hereby grant to the
Borrower a revolving credit facility pursuant to which: (i) each Lender
severally agrees to make Committed Loans to the Borrower in accordance with
Section 2.3; and (ii) each Lender may, in its sole discretion, make bids to make
Competitive Bid Loans to the Borrower in accordance with Section 2.4; provided
that in no event may the sum of the aggregate principal amount of all
outstanding Advances plus the amount of Facility Letter of Credit Obligations
exceed the Aggregate Commitment.
2.2. Availability of Facility. Subject to all of the terms and
conditions of this Agreement, the facility is available from the Effective Date
to the Termination Date, and the Borrower may borrow, repay and reborrow at any
time prior to the Termination Date.
2.3. Committed Advances.
2.3.1. Commitment. From and including the Effective Date and prior
to the Termination Date, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Committed Loans to the Borrower
from time to time in amounts not to exceed in the aggregate at any one time
outstanding (after
25
giving effect to the intended use of proceeds of any Committed Advance used to
repay any outstanding Reimbursement Obligations or Swing Line Loans) an amount
equal to such Lender's Percentage of the Aggregate Available Commitment. The
Commitments to lend hereunder shall expire on the Termination Date.
2.3.2. Ratable Loans; Types of Advances. Each Committed Advance
hereunder shall consist of Loans made from the several Lenders ratably in
proportion to the ratio that their respective Commitments bear to the Aggregate
Commitment. The Committed Advances may be Alternate Base Rate Advances or
Eurodollar Committed Advances, or a combination thereof, selected by the
Borrower in accordance with Sections 2.3.5 and 2.3.6; provided, however, that
there shall not be more than six Eurodollar Committed Advances outstanding at
any one time. Committed Advances shall be evidenced by the Committed Notes.
2.3.3. Minimum Amount of Each Committed Advance. Each Committed
Advance shall be in the minimum amount of $3,000,000 (and in multiples of
$500,000 if in excess thereof); provided, however, that any Alternate Base Rate
Advance may be in the amount of the unused Aggregate Available Commitment.
2.3.4. Applicable Margin. The Applicable Margin set forth below
with respect to each Committed Advance and for Facility Fees and Facility Letter
of Credit Fees payable hereunder, shall be subject to adjustment (upwards or
downwards, as appropriate) based on the Borrower's Status as at the end of each
fiscal quarter in accordance with the table set forth below. The Borrower's
Status as at the last day of each fiscal quarter shall be determined from the
then most recent annual or quarterly financial statements of the Borrower
delivered with the compliance certificate required pursuant to Section 6.1(iii)
(collectively, the "Financials"). The adjustment, if any, to the Applicable
Margin shall take place on, and be effective from and after, the fifth Business
Day following the date on which the Agent has received the Financials. In the
event that the Borrower shall at any time fail to furnish to the Lenders the
Financials within the time limitations specified by Section 6.1, then the
Borrower's Status shall be Level V Status from the date of such failure until
five Business Days after such Financials are so delivered. Notwithstanding
anything to the contrary contained herein, the Borrower's Status from the
Execution Date until the delivery of the audited Financials required pursuant to
Section 6.1(a) hereof, shall be Level III Status, unless the Borrower's Status
becomes Level IV or Level V Status as determined from the quarterly Financials
delivered pursuant to Section 6.1.
Applicable Margin Level I Level II Level III Level IV Level V
Status Status Status Status Status
Eurodollar Rate 250% 275% 300% 375% 450%
Facility Letter
of Credit Fee 250% 275% 300% 375% 450%
Facility Fee 100% 125% 150% 175% 200%
26
For purposes of this Agreement, the Borrower's Status will be determined based
on the following definitions:
"Level I Status" exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the Financials, the Fixed Charge Coverage
Ratio is greater than or equal to 3.50 to 1.0.
"Level II Status" exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the Financials, (i) the requirements
necessary to achieve Level I Status shall not have been satisfied and (ii) the
Fixed Charge Coverage Ratio is greater than or equal to 3.00 to 1.0.
"Level III Status" exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the Financials, (i) the requirements
necessary to achieve Level II status shall not have been satisfied and (ii) the
Fixed Charge Coverage Ratio is greater than or equal to 2.50 to 1.0.
"Level IV Status" exists any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the Financials, (i) the requirements
necessary to achieve Level III status shall not have been satisfied and (ii) the
Fixed Charge Coverage Ratio is greater than or equal to 2.00 to 1.0.
"Level V Status" exists at any date if the requirements necessary to
achieve Level I Status, Level II Status, Level III Status or Level IV Status
shall not have been satisfied.
2.3.5. Method of Selecting Types and Interest Periods for New
Committed Advances. The Borrower shall select the Type of Committed Advance,
and in the case of each Eurodollar Committed Advance the Interest Period
applicable thereto, for each such Committed Advance; provided, however, that for
a period of forty-five (45) days after the Effective Date (or for such shorter
period as the Agent may agree), the Borrower will keep all of the Loans in a
Eurodollar Advance with a one month Interest Period and with the same maturity
date, or in a combination of Alternate Base Rate Advances and one Eurodollar
Advance meeting the qualifications set forth above. The Borrower shall give
the Agent irrevocable notice (a "Committed Borrowing Notice") not later than
10:00 a.m. (Chicago time) on the Borrowing Date for each Alternate Base Rate
Advance and three Business Days before the Borrowing Date for each Eurodollar
Committed Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Committed Advance,
(ii) the aggregate amount of such Committed Advance,
27
(iii) the Type of Committed Advance selected, and
(iv) in the case of each Eurodollar Committed Advance, the
Interest Period applicable thereto.
2.3.6. Conversion and Continuation of Outstanding Committed
Advances. Alternate Base Rate Advances shall continue as Alternate Base Rate
Advances unless and until such Alternate Base Rate Advances are converted into
Eurodollar Committed Advances. Each Eurodollar Committed Advance shall continue
as a Eurodollar Committed Advance until the end of the then applicable Interest
Period therefor, at which time such Eurodollar Committed Advance shall be
automatically converted into an Alternate Base Rate Advance unless such
Eurodollar Committed Advance is paid by the Borrower or the Borrower shall have
given the Agent a Conversion/Continuation Notice requesting that, at the end of
such Interest Period, such Eurodollar Committed Advance continue as a Eurodollar
Committed Advance for the same or another Interest Period. Subject to the terms
of Section 2.3.3, the Borrower may elect from time to time to convert all or any
part of an Alternate Base Rate Advance into a Eurodollar Committed Advance. The
Borrower shall give the Agent irrevocable notice (a "Conversion/Continuation
Notice") of each conversion of an Alternate Base Rate Advance or continuation of
a Eurodollar Committed Advance not later than 10:00 a.m. (Chicago time) at least
three Business Days prior to the date of the requested conversion or
continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Committed Advance
which is to be converted or continued; and
(iii) the amount and Type(s) of Committed Advance(s) into
which such Committed Advance is to be converted or continued and, in the case of
a conversion into or continuation of a Eurodollar Committed Advance, the
duration of the Interest Period applicable thereto.
2.4. Competitive Bid Advances.
2.4.1. Competitive Bid Option; Repayment of Competitive Bid
Advances. In addition to Committed Advances pursuant to Section 2.3, but
subject to all of the terms and conditions of this Agreement (including, without
limitation, the limitation set forth in Section 2.1 as to the maximum aggregate
principal amount of all outstanding Advances hereunder), the Borrower may, as
set forth in this Section 2.4, request the Lenders, prior to the Termination
Date, to make offers to make Competitive Bid Advances to the Borrower. Each
Lender may, but shall have no obligation to, make such offers and the Borrower
may, but shall have no obligation
28
to, accept any such offers in the manner set forth in this Section 2.4. No
Lender shall at any time be liable for the Competitive Bid Loans of any other
Lender made hereunder. Competitive Bid Advances shall be evidenced by the
Competitive Bid Notes. Each Competitive Bid Advance shall be repaid in full by
the Borrower on the last day of the Interest Period applicable thereto.
2.4.2. Competitive Bid Quote Request. When the Borrower wishes to
request offers to make Competitive Bid Loans under this Section 2.4, the
Borrower shall transmit to the Agent by telecopy a Competitive Bid Quote Request
so as to be received no later than (x) 10:00 a.m., Chicago time, at least five
Business Days prior to the Borrowing Date proposed therein, in the case of a
Eurodollar Auction, or (y) 9:00 a.m., Chicago time, at least one Business Day
prior to the Borrowing Date proposed therein, in the case of an Absolute Rate
Auction, specifying in accordance with all of the terms of this Credit
Agreement:
(i) the proposed Borrowing Date for the proposed Competitive Bid
Advance;
(ii) the aggregate principal amount of such Competitive Bid
Advance;
(iii) whether the Competitive Bid Quotes requested are to set
forth a Competitive Bid Margin or an Absolute Rate, or both; and
(iv) the Interest Period applicable thereto.
The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period and for a Eurodollar Auction and an Absolute Rate Auction in a
single Competitive Bid Quote Request. No Competitive Bid Quote Request shall be
given within five Business Days (or upon reasonable prior notice to the Lenders,
such other number of days as the Borrower and the Agent may agree) of any other
Competitive Bid Quote Request. Each Competitive Bid Quote Request shall be in a
minimum amount of $5,000,000 or a larger multiple of $1,000,000. A Competitive
Bid Quote Request that does not conform substantially to the format of Exhibit
"B" hereto shall be rejected, and the Agent shall promptly notify the Borrower
of such rejection by telecopy.
2.4.3. Invitation for Competitive Bid Quotes. Promptly upon
receipt of a Competitive Bid Quote Request that is not rejected pursuant to
Section 2.4.2, the Agent shall send to each of the Lenders by telecopy an
Invitation for Competitive Bid Quotes which shall constitute an invitation by
the Borrower to each Lender to submit Competitive Bid Quotes offering to make
the Competitive Bid Loans to which such Competitive Bid Quote Request relates in
accordance with this Section 2.4.
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2.4.4. Submission and Contents of Competitive Bid Quotes.
(a) Each Lender may, in its sole discretion, submit a Competitive Bid
Quote containing an offer or offers to make Competitive Bid Loans in response to
any Invitation for Competitive Bid Quotes. Each Competitive Bid Quote must
comply with the requirements of this Section 2.4.4 and must be submitted to the
Agent by telecopy at its offices specified in or pursuant to Article XIII not
later than (i) (A) 12:45 p.m., Chicago time, in the case of First Chicago and
(B) 1:00 p.m., Chicago time, in the case of each other Lender, at least four
Business Days prior to the proposed Borrowing Date in the case of a Eurodollar
Auction, or (ii) (A) 8:45 a.m., Chicago time, in the case of First Chicago and
(B) 9:00 a.m., Chicago time, in the case of each other Lender, on the proposed
Borrowing Date in the case of an Absolute Rate Auction (or, in any such case
upon reasonable prior notice to the Lenders, such other time and date as the
Borrower and the Agent may agree; provided that First Chicago shall always be
required to submit its Competitive Bid Quotes not less than fifteen minutes
prior to the other Lenders). Subject to Articles IV and VIII, any Competitive
Bid Quote so made shall be irrevocable except with the written consent of the
Agent given on the instructions of the Borrower.
(b) Each Competitive Bid Quote shall in any case specify: (i) the
proposed Borrowing Date, which shall be the same as that set forth in the
applicable Invitation for Competitive Bid Quotes; (ii) the principal amount of
the Competitive Bid Loan for which each such offer is being made, (1) which
principal amount may be greater than, less than or equal to the Commitment of
the quoting Lender, but in no case greater than the unutilized Aggregate
Available Commitment, (2) which principal amount must be at least $5,000,000 and
in integral multiples of $1,000,000, and (3) which principal amount may not
exceed the principal amount of Competitive Bid Loans for which offers were
requested; (iii) in the case of a Eurodollar Auction, the Competitive Bid Margin
offered for each such Competitive Bid Loan; (iv) the minimum or maximum amount,
if any, of the Competitive Bid Loan which may be accepted by the Borrower; (v)
in the case of an Absolute Rate Auction, the Absolute Rate offered for each such
Competitive Bid Loan; (vi) the applicable Interest Period; and (vii) the
identity of the quoting Lender.
(c) The Agent shall reject any Competitive Bid Quote that: (i) is not
substantially in the form of Exhibit "D" hereto or does not specify all of the
information required by Section 2.4.4(b); (ii) contains qualifying, conditional
or similar language, other than any such language contained in Exhibit "D"
hereto; (iii) proposes terms other than or in addition to those set forth in the
applicable Invitation for Competitive Bid Quotes; or (iv) arrives after the time
set forth in Section 2.4.4(a).
(d) If any Competitive Bid Quote shall be rejected pursuant to Section
2.4.4(c), then the Agent shall notify the Borrower and the relevant Lender of
such rejection as soon as practicable.
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2.4.5. Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (i) of any Competitive Bid Quote submitted by a Lender
that is in accordance with Section 2.4.4 and (ii) of any Competitive Bid Quote
that is in accordance with Section 2.4.4 and amends, modifies or is otherwise
inconsistent with a previous Competitive Bid Quote submitted by such Lender with
respect to the same Competitive Bid Quote Request. Any such subsequent
Competitive Bid Quote shall be disregarded by the Agent unless such subsequent
Competitive Bid Quote specifically states that it is submitted solely to correct
a manifest error in such former Competitive Bid Quote. The Agent's notice to
the Borrower shall specify the aggregate principal amount of Competitive Bid
Loans for which offers have been received for each Interest Period specified in
the related Competitive Bid Quote Request and the respective principal amounts
and Competitive Bid Margins or Absolute Rates, as the case may be, so offered.
2.4.6. Acceptance and Notice by Borrower. Subject to the receipt
of the notice from the Agent referred to in Section 2.4.5, not later than (i)
10:00 a.m. (Chicago time) at least three Business Days prior to the proposed
Borrowing Date, in the case of a Eurodollar Auction or (ii) 10:00 a.m. (Chicago
time) on the proposed Borrowing Date, in the case of an Absolute Rate Auction,
the Borrower shall notify the Agent of the Borrower's acceptance or rejection of
the offers so notified to it pursuant to Section 2.4.5; provided, however, that
the failure by the Borrower to give such notice to the Agent shall be deemed to
be a rejection by the Borrower of all such offers. In the case of acceptance,
such notice (a "Competitive Bid Acceptance Notice") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted. The
Borrower may accept or reject any Competitive Bid Quote in whole or in part
(subject to the terms of Section 2.4.4(b)(iv)); provided that:
(i) the aggregate principal amount of each Competitive Bid Advance may
not exceed the applicable amount set forth in the related Competitive Bid Quote
Request;
(ii) acceptance of offers may only be made on the basis of ascending
Competitive Bid Margins or Absolute Rates, as the case may be; and
(iii) the Borrower may not accept any offer of the type
described in Section 2.4.4(c) or that otherwise fails to comply with the
requirements of this Agreement for the purpose of obtaining a Competitive Bid
Loan under this Agreement.
2.4.7. Allocation by the Agent. If offers are made by two or more
Lenders with the same Competitive Bid Margins or Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
offers are permitted to be accepted for the related Interest Period, the
principal amount of Competitive Bid Loans in respect of which such offers are
accepted shall
31
be allocated by the Agent among such Lenders as nearly as possible (in such
multiples as the Agent may deem appropriate) in proportion to the aggregate
principal amount of such offers; provided, however, that no Lender shall be
allocated a portion of any Competitive Bid Advance which is less than the
minimum amount which such Lender has indicated that it is willing to accept.
Allocations by the Agent of the amounts of Competitive Bid Loans shall be
conclusive in the absence of manifest error. The Agent shall promptly, but in
any event on the same Business Day in the case of Eurodollar Bid Rate Advances,
and by 11:00 a.m. (Chicago time) on the same Business Day in the case of
Absolute Rate Advances, notify each Lender of its receipt of a Competitive Bid
Acceptance Notice and the aggregate principal amount of each Competitive Bid
Advance allocated to each participating Lender.
2.5. Method of Borrowing. On each Borrowing Date, each Lender shall
make available its Loan or Loans, if any, not later than noon, Chicago time, in
funds immediately available to the Agent, in Chicago, Illinois at its address
specified pursuant to Article XIII. The Agent will make the funds so received
from the Lenders available to the Borrower at the Agent's aforesaid address.
Notwithstanding the foregoing provisions of this Section 2.5, to the extent that
a Loan made by a Lender matures on the Borrowing Date of a requested Loan, such
Lender shall apply the proceeds of the Loan it is then making to the repayment
of principal of the maturing Loan.
2.6. Swing Line Loans.
(a) On the terms and subject to the conditions and relying upon the
representations and warranties of the Borrower herein set forth, the Swing Line
Bank may, in its sole discretion at any time and from time to time from and
including the Effective Date to but excluding the earlier of the Termination
Date and the termination of the Commitments or the Swing Line Option, in
accordance with the terms hereof, make Swing Line Loans to the Borrower in an
aggregate principal amount at any time outstanding not to exceed the least of
(i) the amount of the Swing Line Option, (ii) an amount equal to the Aggregate
Available Commitment at such time and (iii) an amount equal to the Commitment of
First Chicago as set forth on Schedule I less the sum of (a) the aggregate
outstanding principal amount of Loans made by First Chicago plus, (b) its
Percentage interest in all Facility Letter of Credit Obligations ("Swing Line
Availability"). All Swing Line Loans shall be in a minimum amount of $750,000
and in any integral multiple of $500,000 if in excess thereof and shall bear
interest at the Alternate Base Rate. In no event shall any Swing Line Loan be
made hereunder if (i) the Agent or the Swing Line Bank shall have received
notice from any Lender prior to making any such Swing Line Loan that a condition
specified in Section 4.1 or 4.2 has not been satisfied and (ii) such condition
shall not have been subsequently waived in compliance with Section 8.2.
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(b) The Borrower shall give the Swing Line Bank (with a copy to the
Agent) telephonic, written or telecopy notice (in the case of telephonic notice,
such notice shall be promptly confirmed in writing or by telecopy) not later
than 1:00 p.m., Chicago time, on a day of a proposed Swing Line Loan. Such
notice shall be delivered on a Business Day, shall be irrevocable and shall
refer to this Agreement and shall specify the requested Borrowing Date (which
shall be a Business Day) and amount of such Swing Line Loan. The Swing Line
Bank may, in its sole discretion by 2:00 p.m., Chicago time, on the requested
Borrowing Date, make the requested Swing Line Loan by crediting the principal
amount thereof, in immediately available funds, to the account of the Borrower
maintained with the Swing Line Bank, unless such Loan shall not occur on such
date because any condition precedent herein specified shall not have been met or
the Swing Line Bank elects in its sole discretion not to make such Swing Line
Loan.
(c) Notwithstanding the occurrence of any Default or noncompliance
with the conditions precedent set forth in Article IV, if (i) any Swing Line
Loans aggregating $2,000,000 or more shall remain outstanding at 10:00 a.m.,
Chicago time, on the fifth Business Day following the Borrowing Date thereof and
if by such time on such fifth Business Day the Agent shall have received neither
(A) a Borrowing Notice delivered by the Borrower pursuant to Section 2.12
requesting that Alternate Base Rate Loans be made pursuant to Section 2.3 on the
immediately succeeding Business Day in an amount at least equal to the aggregate
principal amount of such Swing Line Loans nor (B) any other notice satisfactory
to the Swing Line Bank indicating the Borrower's intent to repay all such Swing
Line Loans on or before the immediately succeeding Business Day with funds
obtained from other sources, or (ii) on any date the Swing Line Bank in its sole
discretion shall so request with respect to the outstanding Swing Line Loans,
the Agent shall be deemed to have received a Borrowing Notice from the Borrower
pursuant to Section 2.9 requesting that a Committed Advance of Alternate Base
Rate Loans be made pursuant to Section 2.3 on such immediately succeeding
Business Day in an amount equal to the aggregate principal amount of and
interest on such Swing Line Loans, and the procedures set forth in Section 2.9
shall be followed in making such Alternate Base Rate Loans, provided that the
proceeds of such Alternate Base Rate Loans received by the Agent shall be
immediately delivered to the Swing Line Bank and applied to the direct repayment
of the Swing Line Loans. Effective on the day such Committed Loans are made,
the Swing Line Loans so paid shall no longer be outstanding as Swing Line Loans
and shall be outstanding as Committed Loans of the Lenders bearing interest at a
rate determined by reference to the Alternate Base Rate, in accordance with the
provisions of this Article II. The Borrower authorizes the Agent and the Swing
Line Bank to charge the Borrower's account maintained with the Swing Line Bank
(up to the amount available in such account) in order to immediately pay the
amount of such Swing Line Loans to the extent amounts received from the Lenders
are not sufficient to repay in full such Swing Line Loans and interest accrued
thereon. If any portion of any such amount paid (or deemed
33
paid) to the Swing Line Bank should be recovered by or on behalf of the Borrower
from the Swing Line Bank in the event of the bankruptcy or reorganization of the
Borrower or otherwise, the loss of the amount so recovered shall be ratably
shared among all Lenders in the manner contemplated by Section 11.2.
(d) If, for any reason (including, without limitation, the occurrence
of a Default described in Sections 7.6 or 7.7, Alternate Base Rate Loans may not
be, or are not, made pursuant to paragraph (c) of this Section to repay Swing
Line Loans as required by such paragraph, effective on the date such Alternate
Base Rate Loans would otherwise have been made, (i) each Lender severally,
unconditionally and irrevocably agrees that it shall, without regard to the
occurrence of any Default, purchase a participating interest in such Swing Line
Loans ("Unrefunded Swing Line Loans") in an amount equal to the amount of
Alternate Base Rate Loans which would otherwise have been made by such Lender
pursuant to paragraph (c) of this Section 2.6 and (ii) each Unrefunded Swing
Line Loan shall commence accruing interest at the Alternative Base Rate. Each
Lender will immediately transfer to the Agent, in immediately available funds,
the amount of its participation, and the proceeds of such participation shall be
distributed by the Agent to the Swing Line Bank in such amount as will reduce
the amount of the participating interest retained by the Swing Line Bank in the
Swing Line Loans to the amount of the Alternate Base Rate Loans which were to
have been made by the Swing Line Bank pursuant to paragraph (c) of this Section
2.6. In the event a Lender fails to make available to the Swing Line Bank the
amount of such Lender's participation as provided in this paragraph (d), the
Swing Line Bank shall be entitled to recover such amount on demand from such
Lender together with interest at the customary rate set by the Swing Line Bank
for correction of errors among banks for one Business Day and thereafter at the
Alternate Base Rate then in effect. All payments in respect of Unrefunded Swing
Line Loans and participations therein shall be made in accordance with Section
2.11.
(e) Each Lender's obligation to make Committed Loans pursuant to
paragraph (c) of this Section 2.6 and to purchase participating interests
pursuant to paragraph (d) of this Section 2.6 shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any setoff, counterclaim, recoupment, defense or other right
which such Lender or the Borrower may have against the Swing Line Bank, the
Borrower or any other Person, as the case may be, for any reason whatsoever;
(ii) the occurrence or continuance of a Default; (iii) any adverse change in the
condition (financial or otherwise) of the Borrower or any of its Subsidiaries;
(iv) any breach of this Agreement by the Borrower, any of its Subsidiaries or
any Lender other than a funding by the Swing Line Lender in breach of the last
sentence of Section 2.6(a) or a funding by the Swing Line Lender in excess of
the Swing Line Availability (but in such event only to the extent of such
overfunding); or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
34
2.7. Fees. In addition to the Facility Letter of Credit Fees and
issuance fees identified in Section 3.8, the Borrower agrees to pay the
following fees:
2.7.1. Facility Fee. The Borrower agrees to pay to the Agent for
the account of each Lender, for the period from the Execution Date to and
including the Termination Date, a facility fee (the "Facility Fee") in an amount
equal to the product of (i) such Lender's Commitment (whether or not used or
available) times (ii) the percentage indicated as the Applicable Margin for the
Facility Fee times (iii) a fraction (A) the numerator of which is (y) for the
initial payment of the Facility Fee, the number of days subsequent to the
Execution Date to and including the first Payment Date and (z) for all other
payments of the Facility Fee, the number of days subsequent to the Payment Date
on which the Facility Fee was last paid to and including the next Payment Date
or Termination Date, as applicable, and (B) the denominator of which is 360,
payable in arrears on each Payment Date hereafter, on the Termination Date and
on the effective date of any termination of the obligations of the Lenders to
make Loans and participate in Facility Letters of Credit hereunder.
2.7.2. Agent Fees. The Borrower agrees to pay certain fees to the
Agent and the Arranger on the dates and in the amounts set forth in that certain
fee letter between Waban Inc., the Borrower, the Agent and the Arranger dated
June 13, 1997, as it may be amended from time to time.
2.8. Reductions in Aggregate Commitment; Principal Payments.
2.8.1. Reductions in Aggregate Commitment. The Borrower may
permanently reduce the Aggregate Commitment in whole, or in part ratably among
the Lenders in a minimum aggregate amount of $5,000,000 and multiple amounts of
$5,000,000, upon at least three Business Days' written notice to the Agent,
which notice shall specify the amount of any such reduction; provided, however,
that the amount of the Aggregate Commitment may not be reduced below the sum of
(i) the aggregate principal amount of the outstanding Advances plus (ii) the
Facility Letter of Credit Obligations.
2.8.2. Principal Payments.
(i) Optional Payments. The Borrower may from time to time pay,
without penalty or premium, all outstanding Alternate Base Rate Advances, or, in
a minimum aggregate amount of $1,000,000 or any integral multiple of $1,000,000
in excess thereof, any portion of the outstanding Alternate Base Rate Advances
upon one Business Day's prior notice to the Agent. A Eurodollar Committed
Advance may be paid in full by the Borrower upon three Business Days' prior
written notice to the Agent; provided that the Borrower compensates the Lenders
as required pursuant to Section 2.18.4. A Fixed Rate Advance, other than a
Eurodollar Committed Advance
35
(as described above), may not be paid prior to the last day of the applicable
Interest Period.
(ii) Termination. Any outstanding Advances and all other unpaid
Obligations shall be paid in full by the Borrower on the Termination Date.
2.9. Changes in Interest Rate, etc. Alternate Base Rate Advances (including
Swing Line Loans) shall bear interest on the outstanding principal amount
thereof, for each day from and including the date such Advance is made or is
converted from a Eurodollar Committed Advance into an Alternate Base Rate
Advance pursuant to Section 2.3.6 to but excluding the date it becomes due or is
converted into a Eurodollar Committed Advance pursuant to Section 2.3.6 hereof,
at a rate per annum equal to the Alternate Base Rate for such day. Changes in
the rate of interest on that portion of any Advance maintained as an Alternate
Base Rate Advance will take effect simultaneously with each change in the
Alternate Base Rate. Each Fixed Rate Advance shall bear interest from and
including the first day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest rate determined
as applicable to such Fixed Rate Advance. No Interest Period may end after the
Termination Date.
2.10. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Sections 2.3.5 or 2.3.6, during the continuance of a
Default or Unmatured Default no Advance may be made as, converted into or
continued as a Eurodollar Committed Advance unless otherwise consented to by the
Required Lenders. During the continuance of a Default the Required Lenders may,
at their option, by notice to the Borrower, declare that (i) each Fixed Rate
Advance shall bear interest for the remainder of the applicable Interest Period
at the rate otherwise applicable to such Interest Period plus 2% per annum and
(ii) each Alternate Base Rate Advance shall bear interest at a rate per annum
equal to the Alternate Base Rate otherwise applicable to the Alternate Base Rate
Advance plus 2% per annum. While any such declaration is in effect, interest
shall be payable in accordance with Section 2.13 and on demand.
2.11. Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XIII, or at any other Lending Installation of the Agent specified in
writing by the Agent to the Borrower, by noon (Chicago time) on the date when
due and shall be applied ratably (other than with respect to Swing Line Loans)
by the Agent among the Lenders. Each payment delivered to the Agent for the
account of any Lender shall be delivered promptly by the Agent to such Lender in
the same type of funds that the Agent received at its address specified pursuant
to Article XIII or at any Lending Installation specified in a notice received by
the Agent from such Lender. The Agent is hereby authorized to charge the
account of the Borrower maintained with First Chicago for each payment of
principal, interest and fees as it becomes due hereunder.
36
2.12. Notes; Telephonic Notices. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Notes; provided, however, that neither the failure to
so record nor any error in such recordation shall affect the Borrower's
obligations under such Notes. The Borrower hereby authorizes the Lenders and the
Agent to extend, convert or continue Advances, effect selections of Types of
Advances and to transfer funds, and authorizes the Issuing Bank to issue
Facility Letters of Credit, based on telephonic notices made by any person or
persons the Agent or any Lender in good faith believes to be acting on behalf of
the Borrower. The Borrower agrees to deliver promptly to the Agent a written
confirmation, if such confirmation is requested by the Agent or any Lender, of
each telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the Agent
and the Lenders, the records of the Agent and the Lenders shall govern absent
manifest error.
2.13. Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Alternate Base Rate Advance shall be payable on the last day of each month,
commencing with the first such date to occur after the date hereof, on any date
on which the Alternate Base Rate Advance is repaid (including, with respect to
Swing Line Loans, pursuant to Section 2.6(c) hereof), whether due to
acceleration or otherwise, and at maturity. Interest accrued on that portion of
the outstanding principal amount of any Alternate Base Rate Advance converted
into a Eurodollar Committed Advance on a day other than the last day of each
month shall be payable on the date of conversion. Interest accrued on each
Fixed Rate Advance shall be payable on the last day of its applicable Interest
Period, on any date on which the Fixed Rate Advance is prepaid, whether by
acceleration or otherwise, and at maturity. Interest accrued on each Fixed Rate
Advance having an Interest Period longer than three months shall also be payable
on the last day of each three-month interval during such Interest Period.
Interest and fees shall be calculated for actual days elapsed on the basis of a
360-day year. Interest shall be payable for the day an Advance is made but not
for the day of any payment on the amount paid if payment is received prior to
noon (Chicago time) at the place of payment. If any payment of principal of or
interest on an Advance shall become due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and, in the case
of a principal payment, such extension of time shall be included in computing
interest in connection with such payment.
2.14. Notification by Agent. Promptly after receipt thereof, the
Agent will notify each Lender of the contents of each Aggregate Commitment
reduction notice, Committed Borrowing Notice, Competitive Bid Acceptance Notice,
Conversion/Continuation Notice, Letter of Credit Request, Issuance Notice and
repayment notice received by it hereunder. The Agent will notify each Lender
affected thereby of the interest rate applicable to each Fixed Rate Advance
promptly
37
upon determination of such interest rate and will give each Lender prompt notice
of each change in the Alternate Base Rate.
2.15. Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Agent and the Borrower, designate a Lending Installation through
which Loans will be made by it and for whose account Loan payments are to be
made.
2.16. Non-Receipt of Funds by the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or its share of the unreimbursed amount pursuant to Section
3.6(b) or its share of Unfunded Swing Line Loans or (ii) in the case of the
Borrower, a payment of principal, interest or fees to the Agent for the account
of the Lenders, that it does not intend to make such payment, the Agent may
assume that such payment has been made. The Agent may, but shall not be
obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If the Borrower has not in fact
made such payment to the Agent, the Lenders shall, on demand by the Agent, repay
to the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to the Federal Funds Effective Rate for such day. If any
Lender has not in fact made such payment to the Agent, such Lender or the
Borrower shall, on demand by the Agent, repay to the Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to (a)
in the case of payment by a Lender, the Federal Funds Effective Rate for such
day, or (b) in the case of payment by the Borrower, the interest rate applicable
to the relevant Loan.
2.17. Taxes.
(a) Any payments made by the Borrower under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes or any other tax based upon net income imposed
on the Agent or any Lender by the jurisdiction in which the Agent or such Lender
is incorporated or has its principal place of business. If any such non-
excluded taxes,
38
levies, imposts, duties, charges, fees, deductions or withholdings ("Non-
Excluded Taxes") are required to be withheld from any amounts payable to the
Agent or any Lender hereunder, the amounts so payable to the Agent or such
Lender shall be increased to the extent necessary to yield to the Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in or
pursuant to this Agreement; provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the U.S. or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this Section 2.17. Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as practicable
thereafter the Borrower shall send to the Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agent and the Lenders for
any incremental taxes, interest or penalties that may become payable by any
Agent or any Lender as a result of any such failure. The agreements in this
Section 2.17 shall survive the termination of this Agreement and the payment of
all other amounts payable hereunder.
(b) At least five Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any Lender, each
Lender that is not incorporated under the laws of the United States of America,
or a state thereof, agrees that it will deliver to each of the Borrower and the
Agent two duly completed copies of United States Internal Revenue Service Form
1001 or 4224, certifying in either case that such Lender is entitled to receive
payments under this Agreement and the Notes without deduction or withholding of
any United States federal income taxes. Each Lender which so delivers a Form
1001 or 4224 further undertakes to deliver to each of the Borrower and the Agent
two additional copies of such form (or a successor form) on or before the date
that such form expires (currently, three successive calendar years for Form 1001
and one calendar year for Form 4224) or becomes obsolete or after the occurrence
of any event requiring a change in the most recent forms so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such Lender
is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes, unless an
event (including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises the Borrower and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.
39
2.18. Change in Circumstances.
2.18.1. Yield Protection. If any law or any governmental or quasi-
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law), or any interpretation thereof, or the compliance of
any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation to any
tax, duty, charge or withholding on or from payments due from the Borrower
(excluding federal taxation of the overall net income of any Lender or
applicable Lending Installation), or changes the basis of taxation of payments
to any Lender in respect of its Loans, its interest in the Facility Letters of
Credit or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Fixed Rate Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation of
making, funding, issuing, participating in or maintaining loans or letters of
credit or reduces any amount receivable by any Lender or any applicable Lending
Installation in connection with loans or letters of credit, or requires any
Lender or any applicable Lending Installation to make any payment calculated by
reference to the amount of loans held, letters of credit issued or participated
in or interest received by it, by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loans, its interest in the Facility Letters of Credit, and its
Commitment; provided, however, that the Borrower shall not be liable for any
such increased expense incurred or reduction in an amount received which the
applicable Lender knew or reasonably should have known arose with respect to any
period of time more than 120 days prior to the date that such Lender makes
demand therefor.
2.18.2. Changes in Capital Adequacy Regulations. If a Lender
determines the amount of capital required to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such
40
Lender determines is attributable to this Agreement, its Loans, its interest in
the Facility Letters of Credit, or its obligation to make Loans, participate in
or issue Facility Letters of Credit hereunder (after taking into account such
Lender's policies as to capital adequacy). "Change" means (i) any change after
the Execution Date in the Risk-Based Capital Guidelines or (ii) any adoption of
or change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the Execution Date which affects the amount of capital required or
expected to be maintained by any Lender or any Lending Installation or any
corporation controlling any Lender. "Risk-Based Capital Guidelines" means (i)
the risk-based capital guidelines in effect in the United States on the
Execution Date, including transition rules, and (ii) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the Execution Date.
2.18.3. Availability of Types of Advances. If any Lender determines
that maintenance of any of its Eurodollar Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation or directive,
whether or not having the force of law, the Agent shall suspend the availability
of the affected Type of Advance and require any Eurodollar Advances of the
affected Type to be repaid; or if the Required Lenders determine that (i)
deposits of a type or maturity appropriate to match fund Eurodollar Advances are
not available, the Agent shall suspend the availability of the affected Type of
Advance with respect to any Eurodollar Advances made after the date of any such
determination, or (ii) an interest rate applicable to a Type of Advance does not
accurately reflect the cost of making a Eurodollar Advance of such Type, then,
if for any reason whatsoever the provisions of Section 2.18.1 are inapplicable,
the Agent shall suspend the availability of the affected Type of Advance with
respect to any Eurodollar Advances made after the date of any such
determination.
2.18.4. Funding Indemnification. If any payment of a Fixed Rate
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a Fixed
Rate Advance is not made on the date specified by the Borrower for any reason
other than default by the Lenders, the Borrower will indemnify each Lender for
any loss or cost incurred by it resulting therefrom, including, without
limitation, any loss or cost in liquidating or employing deposits acquired to
fund or maintain the Fixed Rate Advance.
2.18.5. Mitigation of Additional Costs; Replacement of Lenders. If,
in respect of any Lender, circumstances arise which would or would upon the
giving of notice result in:
41
(i) an increase in the liability of the Borrower to such Lender
under Sections 2.18.1 or 2.18.2;
(ii) the unavailability of a Type of Committed Advance under
Section 2.18.3; or
(iii) a Lender being incapable of receiving payments without
deduction or withholding of United States federal income tax;
then, without in any way limiting, reducing or otherwise qualifying the
Borrower's obligations under any of the Sections referred to above in this
Section 2.18.5, such Lender shall promptly upon becoming aware of such
circumstances notify the Agent thereof and such Lender shall, in consultation
with the Agent and the Borrower and to the extent that it can do so without
disadvantaging itself, take such reasonable steps as may be reasonably available
to it to mitigate the effects of such circumstances (including, without
limitation, the designation of an alternate Lending Installation or the transfer
of its Loans to another Lending Installation). If and so long as a Lender has
been unable to take, or has not taken, steps acceptable to the Borrower to
mitigate the effect of the circumstances in question, such Lender shall be
obliged, at the request of the Borrower, to assign all its rights and
obligations hereunder to another Person nominated by the Borrower with the
approval of the Agent (which shall not be unreasonably withheld) and willing to
participate in the facility in place of such Lender; provided that such Person
satisfies all of the requirements of this Agreement including, but not limited
to, providing the forms required by Sections 2.16 and 12.3.2 and, except with
the consent of the selling Lender, such Person purchases such rights and
obligations for an amount not less than the par value of the Obligations which
are owed to such Lender. Notwithstanding any such assignment, the obligations of
the Borrower under Sections 2.18.1, 2.18.2 and 9.7 shall survive any such
assignment and be enforceable by such Lender.
2.18.6. Lender Statements; Survival of Indemnity. Each Lender shall
deliver a written statement of such Lender as to the amount due, if any, under
Sections 2.18.1, 2.18.2 or 2.18.4. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such amount
and shall be final, conclusive and binding on the Borrower in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Loan shall be calculated as though each Lender
funded its Eurodollar Loan through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Loan, whether in fact that is the case or
not. Unless otherwise provided herein, the amount specified in the written
statement shall be payable on demand after receipt by the Borrower of the
written statement; provided, however, that no amount shall be payable by the
Borrower pursuant to Section 2.18.1, 2.18.2 or 2.18.4 with respect to
42
any period commencing more than 120 days before the applicable Lender knew or
reasonably should have known that amounts are owed to it pursuant to such
Sections. The obligations of the Borrower under Sections 2.18.1, 2.18.2 and
2.18.4 shall survive payment of the Obligations and termination of this
Agreement.
ARTICLE III
THE LETTER OF CREDIT SUBFACILITY
3.1. Obligation to Issue. On the terms and subject to the conditions
of this Agreement and relying upon the representations and warranties of the
Borrower herein set forth, each Issuing Bank hereby agrees to issue for the
account of the Borrower through such of the Issuing Bank's branches as it and
the Borrower may jointly agree, one or more Facility Letters of Credit in
accordance with this Article III, from time to time during the period,
commencing on the Effective Date and ending on the date five (5) Business Days
prior to the Termination Date.
3.2. Types and Amounts. The issuance of a Facility Letter of Credit
shall be subject to the following conditions:
(a) the aggregate maximum amount then available for drawing under
Letters of Credit issued by such Issuing Bank, after giving effect to the
Facility Letter of Credit requested hereunder, shall not exceed any limit
imposed by law or regulation upon such Issuing Bank;
(b) after giving effect thereto, the sum of (a) the aggregate unpaid
principal balance of the Advances plus (b) the Facility Letter of Credit
Obligations does not exceed the Aggregate Commitment as then in effect;
(c) it does not have an expiration date later than five (5) Business
Days prior to the Termination Date;
(d) it does not have an expiration date more than twelve (12) months
after the date of its issuance; provided, that it may provide for the renewal
thereof for additional twelve (12) month periods so long as no renewal shall
extend beyond the date provided in Section 3.2(c); or
(e) the Facility Letter of Credit Obligations, after giving effect to
any Facility Letter of Credit requested hereunder, do not exceed $50,000,000.
3.3. Conditions. In addition to being subject to the satisfaction of
the conditions contained in Section 4.2, the obligation of an Issuing Bank to
issue any Facility Letter of Credit is subject to the satisfaction in full of
the following conditions:
43
(a) the Borrower shall have delivered to such Issuing Bank at such
times and in such manner as such Issuing Bank may reasonably prescribe such
documents and materials as may be required pursuant to the terms of the proposed
Facility Letter of Credit (it being understood that if any inconsistency exists
between such documents and the Loan Documents, the terms of the Loan Documents
shall control) and the proposed Facility Letter of Credit shall be reasonably
satisfactory to the Issuing Bank as to form and content;
(b) as of the date of issuance, no order, judgment or decree of any
court, arbitrator or Governmental Authority shall purport by its terms to enjoin
or restrain such Issuing Bank from issuing the requested Facility Letter of
Credit and no law, rule or regulation applicable to that Issuing Bank and no
request or directive (whether or not having the force of law) from any
governmental authority with jurisdiction over that Issuing Bank shall prohibit
or request that such Issuing Bank refrain from the issuance of Letters of Credit
generally or the issuance of the requested Facility Letter or Credit in
particular; and
(c) the Issuing Bank and the Borrower having agreed on the fee
referred to in Section 3.8(b).
3.4. Procedure for Issuance of Facility Letters of Credit.
(a) The Borrower shall give the Issuing Bank and the Agent at least
two (2) Business Days' prior written notice of any requested issuance of a
Facility Letter of Credit under this Agreement (a "Letter of Credit Request")
(except that, in lieu of such written notice, the Borrower may give the Issuing
Bank and the Agent telephonic notice of such request if confirmed in writing by
delivery to the Issuing Bank and the Agent (i) immediately (A) of a telecopy of
the written notice required hereunder which has been signed by an Authorized
Officer or (B) of a telex containing all information required to be contained in
such written notice and (ii) promptly (but in no event later than the requested
date of issuance) of the written notice required hereunder containing the
original signature of an Authorized Officer); such notice shall be irrevocable
and shall specify:
(1) the stated amount of the Facility Letter of Credit requested
(which stated amount shall not be less than $500,000);
(2) the effective date (which day shall be a Business Day) of
issuance of such requested Facility Letter of Credit (the "Issuance Date");
(3) the date on which such requested Facility Letter of Credit
is to expire (which date shall be a Business Day and shall in no event be later
than the earlier of five (5) Business Days prior to the Termination Date and a
date which is twelve (12) months after the Issuance Date);
44
(4) the name of the Issuing Bank chosen by the Borrower as the
issuer of the requested Facility Letter of Credit;
(5) the purpose for which such Facility Letter of Credit is to
be issued; and
(6) the Person for whose benefit the requested Facility Letter
of Credit is to be issued.
At the time such request is made, the Borrower shall also provide the Agent and
the Issuing Bank with a copy of the form of the Facility Letter of Credit it is
requesting be issued. Such notice, to be effective, must be received by such
Issuing Bank and the Agent not later than 2:00 p.m. (Chicago time) on the last
Business Day on which notice can be given under this Section 3.4(a).
(b) Subject to the terms and conditions of this Article III and
provided that the applicable conditions set forth in Section 4.2 hereof have
been satisfied, such Issuing Bank shall, on the Issuance Date, issue a Facility
Letter of Credit on behalf of the Borrower in accordance with the Issuing Bank's
usual and customary business practices unless the Issuing Bank has actually
received (i) written notice from the Borrower specifically revoking the Letter
of Credit Request with respect to such Facility Letter of Credit, (ii) written
notice from a Lender, which complies with the provisions of Section 3.6(a) or
(iii) written or telephonic notice from the Agent stating that the issuance of
such Facility Letter of Credit would violate Section 3.2.
(c) Each Issuing Bank shall give the Agent and the Borrower written or
telex notice, or telephonic notice confirmed promptly thereafter in writing, of
the issuance of a Facility Letter of Credit (the "Issuance Notice").
(d) An Issuing Bank shall not extend or amend any Facility Letter of
Credit or allow any Facility Letter of Credit to be automatically extended
unless the requirements of this Agreement are met as though a new Facility
Letter of Credit was being requested and issued.
3.5. Reimbursement Obligations; Duties of Issuing Banks.
(a) (i) Each Issuing Bank shall promptly notify the Borrower and the
Agent of any draw under a Facility Letter of Credit and the Borrower shall
reimburse such Issuing Bank in accordance with Section 3.7; and
(ii) any Reimbursement Obligation with respect to any Facility Letter
of Credit shall bear interest from the date of the relevant drawings under the
pertinent Facility Letter of Credit until payment in full is received by the
pertinent
45
Issuing Bank at (A) the Alternate Base Rate until the next succeeding
Business Day and (B) the Default interest rate for Alternate Base Rate Advances
calculated in accordance with Section 2.10 for each day thereafter.
(b) Any action taken or omitted to be taken by an Issuing Bank under
or in connection with any Facility Letter of Credit, if taken or omitted in the
absence of willful misconduct or gross negligence, shall not put that Issuing
Bank under any resulting liability to any Lender or, assuming that such Issuing
Bank has complied with the procedures specified in Section 3.4, all conditions
to the issuance of a Facility Letter of Credit have been satisfied and such
Lender has not given a notice contemplated by Section 3.6(a) that continues in
full force and effect, relieve that Lender of its obligations hereunder to that
Issuing Bank. In determining whether to pay under any Facility Letter of
Credit, an Issuing Bank shall have no obligation relative to the Lenders other
than to confirm that any documents required to be delivered under such Facility
Letter of Credit appear to have been delivered in compliance and that they
appear to comply on their face, with the requirements of such Facility Letter of
Credit.
3.6. Participation.
(a) Immediately upon (i) the Effective Date for those Facility Letters
of Credit issued prior to such date and (ii) issuance by an Issuing Bank of any
Facility Letter of Credit in accordance with the procedures set forth in Section
3.4, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received from that Issuing Bank, without recourse, representation
or warranty, an undivided interest and participation equal to its Percentage in
such Facility Letter of Credit (including, without limitation, all obligations
of the Borrower with respect thereto) and any security therefor or guaranty
pertaining thereto; provided, that a Letter of Credit issued by any Issuing Bank
shall not be deemed to be a Facility Letter of Credit for purposes of this
Section 3.6 if (A) such Letter of Credit has an expiration date which is later
than five (5) Business Days prior to the Termination Date or (B) such Issuing
Bank shall have received written notice from any Lender on or before the
Business Day prior to the date of its issuance of such Letter of Credit that one
or more of the conditions to the issuance of a Facility Letter of Credit is not
then satisfied, and, in the event an Issuing Bank receives such a notice, it
shall have no further obligation to issue any Facility Letter of Credit until
such notice is withdrawn by that Lender or it receives a notice from the Agent
that such condition has been effectively waived in accordance with the
provisions of this Agreement.
(b) In the event that any Issuing Bank makes any payment under any
Facility Letter of Credit and the Borrower shall not have repaid such amount to
such Issuing Bank pursuant to Section 3.7 hereof, such Issuing Bank shall
promptly notify the Agent, which shall promptly notify each Lender, of such
failure, and each Lender shall promptly and unconditionally pay to the Agent for
the account of such
46
Issuing Bank the amount of such Lender's Percentage of the unreimbursed amount
of such payment, and the Agent shall promptly pay such amount to the Issuing
Bank. The failure of any Lender to make available to the Agent for the account
of any Issuing Bank its Percentage of the unreimbursed amount of any such
payment shall not relieve any other Lender of its obligation hereunder to make
available to the Agent for the account of such Issuing Bank its Percentage of
the unreimbursed amount of any payment on the date such payment is to be made,
but no Lender shall be responsible for the failure of any other Lender to make
available to the Agent its Percentage of the unreimbursed amount of any payment
on the date such payment is to be made.
(c) Whenever an Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, it shall promptly pay
to the Agent and the Agent shall promptly pay to each Lender which has funded
its participating interest therein, in immediately available funds, an amount
equal to such Lender's Percentage thereof.
(d) Upon the request of the Agent or any Lender, an Issuing Bank shall
furnish to such Agent or Lender copies of any Facility Letter of Credit to which
that Issuing Bank is party and such other documentation as may reasonably be
requested by the Agent or Lender.
(e) The obligations of a Lender to make payments to the Agent for the
account of each Issuing Bank with respect to a Facility Letter of Credit shall
be absolute, unconditional and irrevocable, not subject to any counterclaim,
set-off, qualification or exception whatsoever and shall be made in accordance
with the terms and conditions of this Agreement under all circumstances.
3.7. Payment of Reimbursement Obligations.
(a) The Borrower agrees to pay to each Issuing Bank the amount of all
Reimbursement Obligations, interest and other amounts payable to such Issuing
Bank under or in connection with any Facility Letter of Credit immediately when
due (and in any event shall reimburse an Issuing Bank for drawings under a
Facility Letter of Credit issued by it no later than the next succeeding
Business Day after the payment by that Issuing Bank), irrespective of any claim,
set-off, defense or other right which the Borrower or any Subsidiary may have at
any time against any Issuing Bank or any other Person, under all circumstances,
including without limitation any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
47
(ii) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against a beneficiary named in a Facility
Letter of Credit or any transferee of any Facility Letter of Credit (or any
Person for whom any such transferee may be acting), the Agent, the Issuing Bank,
any Lender, or any other Person, whether in connection with this Agreement, any
Facility Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between the Borrower or any
Subsidiary and the beneficiary named in any Facility Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Facility Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Loan Documents; or
(v) the occurrence of any Default or Unmatured Default.
(b) In the event any payment by the Borrower or any Subsidiary
received by an Issuing Bank with respect to a Facility Letter of Credit and
distributed by the Agent to the Lenders on account of their participations is
thereafter set aside, avoided or recovered from that Issuing Bank in connection
with any receivership, liquidation, reorganization or bankruptcy proceeding,
each Lender which received such distribution shall, upon demand by that Issuing
Bank, contribute such Lender's Percentage of the amount set aside, avoided or
recovered together with interest at the rate required to be paid by that Issuing
Bank upon the amount required to be repaid by it.
3.8. Compensation for Facility Letters of Credit.
(a) The Borrower shall pay to the Agent, for the ratable account of
the Lenders, based upon the Lenders' respective Percentages, a fee (the
"Facility Letter of Credit Fee") (i) with respect to each Standby Letter of
Credit, in an amount equal to the product of the average daily undrawn amount of
such Standby Letter of Credit times the percentage indicated as the Applicable
Margin for the Facility Letter of Credit Fee times the LC Factor, for the period
from the Issuance Date thereof to but including the final expiration date
thereof and (ii) with respect to each Commercial Letter of Credit, 50% of an
amount equal to the product of the average daily undrawn amount of such
Commercial Letter of Credit times the percentage indicated on the Applicable
Margin for the Facility Letter of Credit Fee times the LC Factor, for the period
from the Issuance Date thereof to but including the final expiration date
thereof. The Facility Letter of Credit Fee shall be due and payable in arrears
on each Payment Date and, to the extent any such fees are then due and unpaid,
on the Termination Date. The Agent shall promptly remit such Facility
48
Letter of Credit Fees, when paid, to the other Lenders in accordance with their
Percentages thereof.
(b) Each Issuing Bank shall have the right to receive solely for its
own account such amounts as it and the Borrower may agree, in writing, to pay to
such Issuing Bank with respect to issuance fees for any Facility Letter of
Credit. In addition, each Issuing Bank shall be entitled to receive its usual
and customary costs and fees of issuing, fronting and servicing Facility Letters
of Credit.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Advance. The Lenders shall not be required to make the
initial Advance and, if the initial Advance shall not have been made, an Issuing
Bank shall not be obligated to issue any Facility Letter of Credit hereunder
unless the Borrower has furnished to the Agent with sufficient copies for the
Lenders the following items (and the date upon which all such items shall have
been so furnished is referred to as the "Effective Date"):
(i) Copies of the certificate of incorporation of the Borrower,
together with all amendments, and certificates of good standing for the Borrower
and each of Natick Realty, Inc., the Trademark Subsidiary and the Investment
Subsidiary, all certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of the
Borrower, of its by-laws and of its Board of Directors' resolutions (and
resolutions of other bodies, if any are deemed necessary by counsel for any
Lender) authorizing the execution of the Loan Documents.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify by name and title and
bear the signature of the officers of the Borrower authorized to sign the Loan
Documents and, to make borrowings and request Facility Letters of Credit
hereunder, upon which certificate the Agent and the Lenders shall be entitled to
rely until informed of any change in writing by the Borrower.
(iv) A completed compliance certificate, in substantially the form of
Exhibit "G" attached hereto, signed by the chief financial officer of the
Borrower and dated as of the Effective Date.
49
(v) A written opinion or opinions of the Borrower's counsel, addressed
to the Lenders covering in substance those items contained in Exhibit "E"
hereto.
(vi) Notes payable to the order of each of the Lenders.
(vii) Fully executed originals of this Agreement.
(viii) Written money transfer instructions, in substantially the
form of Exhibit "F" hereto, addressed to the Agent and signed by an Authorized
Officer, together with such other related money transfer authorizations as the
Agent may have reasonably requested.
(ix) Evidence that concurrently with the initial Advance hereunder,
the Prior Agreement is terminated and all amounts due and payable thereunder
paid.
(x) Payment of all fees described in Section 2.7, which are required
to be paid on or prior to the Effective Date.
(xi) Evidence satisfactory to the Agent that the Distribution and the
other Transactions have occurred in accordance with Schedule 5 hereto.
(xii) A written solvency certificate from American Appraisal
Associates Inc. in form and content satisfactory to the Agent, dated July 10,
1997, with respect to the value, Solvency and other factual information of, or
relating to, as the case may be, the Borrower on a consolidated basis, after
giving effect to the Distribution and the other Transactions.
(xiii) The Agent and the Lenders shall have received (i) the Pro
Forma, which must not be materially less favorable, in the Agent's and Required
Lenders' reasonable judgment, than the projections previously provided to them
and which must demonstrate, in their reasonable judgment, together with all
other information then available to the Agent and the Required Lenders, that the
Borrower and its Subsidiaries can repay their debts and satisfy their respective
other obligations as and when due, and can comply with the financial covenants
set forth herein and (ii) such information as the Agent and the Required Lenders
may reasonably request to confirm the tax, legal and business assumptions made
in such pro forma financial statements.
(xiv) A certificate, dated the Effective Date, signed by an Authorized
Officer of the Borrower, in form and substance satisfactory to the Agent, to the
effect that: (i) on such date (both before and after giving effect to the
consummation of the Transactions contemplated hereby and the making of the Loans
hereunder) no Default or Unmatured Default has occurred and is continuing; (ii)
no injunction or
50
temporary restraining order which would prohibit the making of the Loans, or
other litigation which could reasonably be expected to have a Material
Adverse Effect is pending or, to the best of such Person's knowledge,
threatened; (iii) the Transaction Documents are in full force and effect and
no material term or condition thereof has been amended, modified or waived
after the execution thereof except with the written consent of the Agent;
and (v) the Transactions have been consummated in accordance with the
Transaction Documents and Schedule 5.
(xv) Such other documents as any Lender or its counsel may have
reasonably requested.
4.2. Each Advance or Issuance of a Facility Letter of Credit. The
Lenders shall not be required to make any Advance (other than an Advance that,
after giving effect thereto and to the application of the proceeds thereof, does
not increase the aggregate amount of outstanding Advances) and an Issuing Bank
shall not be obligated to issue any Facility Letter of Credit, unless on the
applicable Borrowing Date or Issuance Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are
true and correct as of such Borrowing Date or Issuance Date except to the extent
any such representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall be true and correct on
and as of such earlier date (other than the representation and warranty made
under Section 5.4, which shall be deemed to refer to the most recent annual
audited financial statements furnished to the Lenders pursuant to Section 6.1(i)
hereof).
(iii) All legal matters incident to the making of such Advance or
issuance of such Facility Letter of Credit shall be satisfactory to the Lenders
and their counsel.
Each Borrowing Notice with respect to each such Advance and each Letter of
Credit Request with respect to each Facility Letter of Credit shall constitute a
representation and warranty by the Borrower that the conditions contained in
Sections 4.2(i) and (ii) have been satisfied. Any Lender or Issuing Bank may
require a duly completed compliance certificate in substantially the form of
Exhibit "G" hereto as a condition to making an Advance or issuing a Facility
Letter of Credit.
This Agreement shall terminate on July 30, 1997 if the conditions set forth
in Sections 4.1 and 4.2 are not met on or prior to such date.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence and Standing. The Borrower and each of its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted, except where the failure to have such requisite authority
would not have a Material Adverse Effect.
5.2. Authorization and Validity. The Borrower has the corporate
power and authority and legal right to execute and deliver the Loan Documents
and to perform its obligations thereunder. The execution, delivery and
performance by the Borrower of the Loan Documents has been, and the Transaction
Documents will be by the Effective Date, duly authorized by proper corporate
proceedings, and the Loan Documents constitute, and the Transaction Documents
will, on the Effective Date, constitute, legal, valid and binding obligations of
the Borrower enforceable against the Borrower in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution and
delivery by the Borrower of the Loan Documents and the Transaction Documents,
nor the consummation of the transactions therein contemplated, nor compliance
with the provisions thereof violated or will violate any law, rule, regulation
(including Regulations G, T, U and X), order, writ, judgment, injunction, decree
or award binding on the Borrower or any of its Subsidiaries or the Borrower's or
any Subsidiary's articles of incorporation or by-laws or the provisions of any
indenture, instrument or agreement to which the Borrower or any of its
Subsidiaries is a party or is subject, or by which it, or its Property, is
bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien in, of or on the Property of the Borrower or
a Subsidiary pursuant to the terms of any such indenture, instrument or
agreement. No order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
any of the Loan Documents or the Transaction Documents which have not previously
or contemporaneously herewith been obtained or obtained by the Effective Date.
52
5.4. Financial Statements. (a) The January 25, 1997 consolidated
financial statements of Waban Inc. and its Subsidiaries, (b) the unaudited
consolidated financial statements of Waban Inc. and its Subsidiaries through
April 26, 1997 and the pro forma consolidated financial statements of the
Borrower and its Subsidiaries dated January 25, 1997 (collectively, the
"Financial Statements") heretofore delivered to the Lenders were prepared in
accordance with generally accepted accounting principles in effect on the date
such statements were prepared and fairly present the consolidated financial
condition and operations of Waban Inc. and its Subsidiaries and the Borrower and
its Subsidiaries, as applicable, at such date and the consolidated results of
their operations for the period then ended. The estimated pro forma balance
sheet of the Borrower and its Subsidiaries on a consolidated basis as of July
26, 1997 is attached hereto as Schedule 6. Schedule 6 will be updated by August
31, 1997 by the actual pro forma balance sheet (the "Pro Forma") of the Borrower
and its Subsidiaries on a consolidated basis as of July 26, 1997. As of the
Execution Date, the estimated pro forma is, and the Pro Forma upon delivery will
be, complete and accurate and fairly represent the Borrower's and the
Subsidiaries' assets, liabilities, financial condition on a consolidated basis
in accordance with Agreement Accounting Principles, consistently applied, and
taking into account the Distribution and the other Transactions and actions
contemplated by the Loan Documents and Transaction Documents. The Pro Forma
will not differ from the estimated pro forma in such a manner as to constitute a
Material Adverse Effect.
5.5. Material Adverse Change. Other than the Distribution and the
other Transactions, since January 25, 1997, there has been no change in the
business, Property, prospects, condition (financial or otherwise) or results of
operations of the Borrower and its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect. No Default or Unmatured Default
exists.
5.6. Taxes. The Borrower and its Subsidiaries have filed all United
States federal tax returns and all other tax returns which are required to be
filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided. The United States income tax returns of the
Borrower and its Subsidiaries have been audited by the Internal Revenue Service
through the fiscal year ended January 1992, for which no tax liens have been
filed and no claims are being asserted. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of any taxes or other
governmental charges are adequate.
5.7. Litigation and Contingent Obligations. Except as disclosed to
the Lenders in writing prior to the Execution Date, there is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting the
Borrower or any of its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect.
53
The Borrower has no material contingent obligations not provided for or
disclosed in the Financial Statements.
5.8. Subsidiaries. As of the Effective Date, Schedule "2" hereto
contains an accurate list of all of the Subsidiaries of the Borrower after
giving effect to the Distribution, setting forth their respective jurisdictions
of incorporation and the percentage of their respective capital stock owned by
the Borrower or other Subsidiaries. All of the issued and outstanding shares of
capital stock of such Subsidiaries have been duly authorized and issued and are
fully paid and non-assessable.
5.9. ERISA. There are no Unfunded Liabilities for any Single
Employer Plans in excess of $250,000. Neither the Borrower nor any other member
of the Controlled Group has incurred, or is reasonably expected to incur, any
withdrawal liability to Multiemployer Plans. Each Plan complies in all material
respects with all applicable requirements of law and regulations, no Reportable
Event has occurred with respect to any Plan, neither the Borrower nor any other
members of the Controlled Group has withdrawn from any Plan or initiated steps
to do so, and no steps have been taken to reorganize or terminate any Plan for
which the Borrower or other member of the Controlled Group has any Unfunded
Liability.
5.10. Accuracy of Information. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein not
misleading.
5.11. Federal Reserve Regulations. Neither the Borrower nor any
Subsidiary is engaged, directly or indirectly, principally, or as one of its
important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying Margin Stock. No
part of the proceeds of any Loan will be used in a manner which would violate,
or result in a violation of, Regulation T, Regulation U or Regulation X.
Neither the making of any Advance hereunder nor the use of the proceeds thereof
will violate or be inconsistent with the provisions of Regulation G, Regulation
T, Regulation U or Regulation X. Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of the Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge, or other restriction
hereunder.
5.12. Material Agreements. Other than as contemplated by the
Transaction Documents, neither the Borrower nor any Subsidiary is a party to any
agreement or instrument or subject to any charter or other corporate restriction
which could reasonably be expected to have a Material Adverse Effect. Neither
the Borrower nor any Subsidiary is in default in the performance, observance or
fulfillment of any of
54
the obligations, covenants or conditions contained in (i) any agreement to which
it is a party, which default could reasonably be expected to have a Material
Adverse Effect or (ii) any agreement or instrument evidencing or governing
Indebtedness.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have
complied in all material respects with all applicable material statutes, rules,
regulations, orders and restrictions of any Governmental Authority having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property. Neither the Borrower nor any Subsidiary has received
any notice to the effect that its operations are not in material compliance with
any of the requirements of applicable federal, state and local environmental,
health and safety statutes and regulations or the subject of any federal or
state investigation evaluating whether any remedial action is needed to respond
to a release of any toxic or hazardous waste or substance into the environment,
which non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.
5.14. Ownership of Properties. On the Effective Date and thereafter,
the Borrower and its Subsidiaries will have good title to or a valid leasehold
interest in, free of all Liens other than those permitted by Section 6.16, all
of the Property and assets reflected in the financial statements as owned by it.
5.15. Investment Company Act. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
5.16. Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
5.17. Insurance. The property and casualty insurance program carried
by the Borrower is adequate for its business needs.
5.18. Solvency. As of the Effective Date, after giving effect to the
consummation of the transactions contemplated by the Loan Documents and the
Transaction Documents and the payment of all fees, costs and expenses payable by
the Borrower with respect to the transactions contemplated by the Loan Documents
and the Transaction Documents, each of the Borrower or its Subsidiaries and each
Subsidiary is Solvent.
5.19. Transaction Documents. The Borrower has delivered to each of
the Lenders true, complete and correct copies of the Transaction Documents as in
existence on the Execution Date (including all schedules, exhibits, annexes,
55
amendments, supplements, modifications, and all other documents delivered
pursuant thereto or in connection therewith). Such Transaction Documents shall
not be amended, waived, supplemented or modified in a manner which would result
in a Material Adverse Effect. Neither the Borrower nor any other party thereto
is in default in the performance of or compliance with any provisions thereof
the results of which would have a Material Advance Effect.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Lenders:
(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by Coopers & Lybrand L.L.P. or other
independent certified public accountants, acceptable to the Lenders, prepared in
accordance with Agreement Accounting Principles on a consolidated basis for
itself and the Subsidiaries, including balance sheets as of the end of such
period, related profit and loss and reconciliation of surplus statements, and a
statement of cash flows, accompanied by any management letter prepared by said
accountants.
(ii) Within 50 days after the close of (i) the first three quarterly
periods of each of its fiscal years, for itself and the Subsidiaries, a
consolidated unaudited balance sheet as at the close of each such period and
consolidated profit and loss and reconciliation of surplus statements and a
statement of cash flows for the period from the beginning of such fiscal year to
the end of such quarter, all certified by its chief financial officer and (ii)
the fourth fiscal quarter of each of its fiscal years, for itself and its
Subsidiaries, a consolidated unaudited balance sheet as of the close of such
period and a consolidated profit and loss statement for such fiscal year all
certified by its chief financial officer.
(iii) Together with the financial statements required under each of
clause (i) and (ii) hereof, a compliance certificate in substantially the form
of Exhibit "G" hereto signed by its chief financial officer showing the
calculations necessary to determine compliance with this Agreement and stating
that no Default or Unmatured Default exists, or if any Default or Unmatured
Default exists, stating the nature and status thereof.
56
(iv) Within 270 days after the close of each fiscal year, a statement
of the Unfunded Liabilities of each Single Employer Plan, if any, certified as
correct by an actuary enrolled under ERISA.
(v) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect to any Plan,
a statement, signed by the chief financial officer of the Borrower, describing
said Reportable Event and the action which the Borrower proposes to take with
respect thereto.
(vi) As soon as possible and in any event within 10 days after receipt
by the Borrower, a copy of (a) any notice or claim to the effect that the
Borrower or any of its Subsidiaries is or may be liable to any Person as a
result of the release by the Borrower, any of its Subsidiaries, or any other
Person of any toxic or hazardous waste or substance into the environment, (b)
any notice alleging any violation of any federal, state or local environmental,
health or safety law or regulation by the Borrower or any of its Subsidiaries
and (c) any notice of any event or occurrence or the assertion or commencement
of any claims, actions, or other proceeding or against or affecting the Borrower
or any Subsidiary which, in the case of clause (a), (b) or (c) could reasonably
be expected to have a Material Adverse Effect.
(vii) As soon as available, but in any event on or before the last day
of the first fiscal quarter of each fiscal year of the Borrower, a copy of the
plan and forecast (including a one year projected consolidated balance sheet,
income statement and funds flow statement) of the Borrower and its Subsidiaries
for such fiscal year.
(viii) For any fiscal quarter during which the Borrower has created
a new Subsidiary or terminated the existence of any existing Subsidiary as may
be permitted hereunder, together with the financial statements required
hereunder covering such period, a certificate signed by an Authorized Officer
attaching a revised Schedule "2" which modifies the list of Subsidiaries
contained therein to show any such additions and deletions (which revised
Schedule shall replace the old Schedule and shall be deemed to have become part
of the Agreement), the delivery of which shall be deemed to be a representation
and warranty of the Borrower as to the accuracy of such revised Schedule.
(ix) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy statements so
furnished.
(x) Promptly upon the filing thereof, copies (excluding exhibits) of
all registration statements and annual, quarterly, monthly or other regular
reports which the Borrower or any of its Subsidiaries files with the Securities
and Exchange Commission.
57
(xi) Together with each delivery of financial statements required by
subsection 6.1(i) above, the Borrower shall deliver to the Lenders a certificate
of the accountants who performed the audit in connection with such statements
(i) stating that in making the audit necessary to the issuance of a report on
such financial statements, they have obtained no knowledge of any Default or
Unmatured Default, or, if such accountants have obtained knowledge of a Default
or Unmatured Default, specifying the nature and period of existence thereof and
(ii) setting forth the calculation of the covenants set forth in Section 6.20
hereof. Such accountants shall not be liable by reason of any failure to obtain
knowledge of any Default or Unmatured Default which would not be disclosed in
the ordinary course of an audit.
(xii) Within fifty days after the end of each fiscal quarter of the
Borrower in which Facility Letters of Credit have been issued, expired or
terminated, a certificate of an Authorized Officer of the Borrower certifying
the number of Facility Letters of Credit outstanding and the amount of the
undrawn face amount of each such Facility Letter of Credit.
(xiii) Such other information (including non-financial information)
as the Agent or any Lender may from time to time reasonably request.
6.2. Use of Proceeds. The Borrower will use the Facility Letters of
Credit and the proceeds of the Advances for general corporate purposes and to
repay outstanding Advances and Reimbursement Obligations. The Borrower will
not, nor will it permit any Subsidiary to, use any of the Facility Letters of
Credit or the proceeds of the Advances to purchase or carry any "margin stock"
(as defined in Regulation U).
6.3. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence of
any Default or Unmatured Default and of any other development, financial or
otherwise, which could reasonably be expected to have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each
Active Subsidiary to, carry on and conduct its business in substantially the
same manner and in substantially the same fields of enterprise as it is
presently conducted and to do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted, except
where the failure to conduct business, remain incorporated or have such
requisite authority would not have a Material Adverse Effect.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to,
pay when due all taxes, assessments and governmental charges and levies upon it
or its income, profits or Property, except those which are being contested in
good faith by
58
appropriate proceedings and with respect to which adequate reserves have been
set aside.
6.6. Insurance. The Borrower will, and will cause each Subsidiary
to, maintain with financially sound and reputable insurance companies (and/or
through a self insurance program) insurance on all their Property in such
amounts (and/or with such reserves) and covering such risks as is consistent
with sound business practice, and the Borrower will furnish to any Lender upon
request full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply in all material respects with all material laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject.
6.8. Maintenance of Properties. The Borrower will, and will cause
each Subsidiary to, do all things necessary to maintain, preserve, protect and
keep its Property which is used or useful in the business of the Borrower or any
of its Subsidiaries in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each
Subsidiary to, permit the Lenders, by their respective representatives and
agents, to inspect any of the Property, corporate books and financial records of
the Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each Subsidiary
with, and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Lenders may designate.
6.10. Dividends. The Borrower will not, nor will it permit any
Subsidiary to, declare or pay any dividends on its capital stock (other than
dividends payable in its own capital stock) or redeem, repurchase or otherwise
acquire or retire any of its capital stock at any time outstanding, except that
(i) any Subsidiary may declare and pay dividends to the Borrower or to a Wholly-
Owned Subsidiary and (ii) the Borrower may (a) purchase or otherwise acquire
shares of its capital stock with the proceeds received from the issue of new
shares of its capital stock, (b) repurchase for cash shares of common stock
issued under the Borrower's 1997 Replacement Stock Incentive Plan, 1997 Stock
Incentive Plan or the 1997 Director Stock Option Plan, as from time to time in
effect, provided that the aggregate amount of repurchases permitted by this
clause shall not exceed $2,000,000 in the aggregate during the term of this
Agreement, and (c) so long as prior to and after giving effect thereto no
Default or Unmatured Default shall exist, repurchase shares of its common stock
in a so-called open market purchase program or similar transaction; provided
that the
59
aggregate amount of repurchases permitted by this clause shall not exceed
$50,000,000 in the aggregate during the term of this Agreement.
6.11. Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(i) The Loans and the Reimbursement Obligations.
(ii) Indebtedness existing on the Effective Date and described in
Schedule "3" hereto.
(iii) Contingent Obligations (a) by endorsement of instruments for
deposit or collection in the ordinary course of business, (b) to purchase real
property from another Person or guaranties incurred in the ordinary course of
business in connection with the purchase or lease of stores or distribution
centers, provided that (A) not less than eighty percent (80%) of the total
square footage of each such store or distribution center so purchased or leased
shall be utilized by the Borrower and its Subsidiaries and (B) the aggregate
amount of such Contingent Obligations pursuant to this clause (b) at any time
outstanding shall not exceed $30,000,000 and (c) consisting of guaranties
incurred by the Borrower to support operating leases and/or Indebtedness
incurred by any Subsidiary permitted by Section 6.11 (vii) or (viii).
(iv) Bankers' acceptances utilized in the ordinary course of business
to purchase inventory.
(v) Indebtedness of one or more special purpose Wholly-Owned
Subsidiaries in connection with a transfer by the Borrower or a Wholly-Owned
Subsidiary of interests in accounts or notes receivable on a limited recourse
basis, provided that (a) such transfer qualifies as a sale under generally
accepted accounting principles and (b) any such Indebtedness, at any time
outstanding, does not exceed $50,000,000 in the aggregate.
(vi) Capitalized Lease Obligations due from the Borrower or any Real
Estate Subsidiary not to exceed, at any time outstanding, $50,000,000 in the
aggregate.
(vii) Indebtedness, at any time outstanding, of the Borrower or any
Real Estate Subsidiary incurred in the ordinary course of business in connection
with the financing of real property in an amount not to exceed $75,000,000 in
the aggregate.
(viii) Indebtedness, at any time outstanding, of the Trademark
Subsidiaries to the Borrower in an aggregate amount not to exceed ten percent
(10%)
60
of an amount equal to (i) the book value of the Borrower's consolidated assets
less (ii) the book value of real estate owned by the Real Estate Subsidiaries.
(ix) So long as the aggregate unpaid principal balance of the Advances
is less than $25,000,000, Indebtedness of the Investment Subsidiary owed to the
Borrower.
(x) Indebtedness owed by the Borrower to any Subsidiary.
(xi) Indebtedness subordinated to the Obligations on terms and
conditions reasonably satisfactory to the Required Lenders in an aggregate
amount not to exceed $150,000,000 at any time outstanding.
(xii) Additional Indebtedness, at any time outstanding, not to exceed
$50,000,000 in the aggregate; provided that no more than $25,000,000 of such
Indebtedness may be incurred by or exist at the Borrower's Subsidiaries.
6.12. Merger. The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person, except that:
(i) a Subsidiary may merge with and into the Borrower or a Wholly-
Owned Subsidiary;
(ii) the Borrower may merge or consolidate with any Person which is in
a business related to the Borrower's business; and
(iii) any Subsidiary of the Borrower may merge or consolidate with or
into another Person in a transaction constituting (A) a disposition of assets by
the Borrower so long as such disposition is permitted by Section 6.13 hereof or
(B) an Acquisition so long as such Acquisition is permitted by Section 6.15,
provided that in each such case, (a) immediately after giving effect thereto, no
event shall occur and be continuing that constitutes a Default or Unmatured
Default and, (b) in the case of any such merger or consolidation to which the
Borrower is a party, the Borrower is the surviving corporation.
6.13. Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property, to any other
Person except:
(i) for sales of inventory in the ordinary course of business and
obsolete, worn out or no longer useful equipment in the ordinary course of
business;
(ii) that (A) any Subsidiary may sell, lease or otherwise dispose of
assets to any other Subsidiary or to the Borrower, (B) the Borrower may transfer
61
liquor licenses owned by the Borrower or other permits obtained by the Borrower
and used in the operation of any of the stores to any such Subsidiary and (C)
the Borrower may transfer or sell operating assets to a Trademark Subsidiary in
the ordinary course of business consistent with the past practices of Waban
Inc.;
(iii) for any transfer of an interest in accounts or notes receivable
on a limited recourse basis, provided that such transfer qualifies as a sale
under generally accepted accounting principles;
(iv) for leases, sales or other dispositions of its Property that,
together with all other Property of the Borrower and its Subsidiaries previously
leased, sold or disposed of (other than dispositions permitted under clauses
(i), (ii) and (iii) above) as permitted by this Section during the twelve-month
period ending with the month in which any such lease, sale or other disposition
occurs, do not constitute a Substantial Portion of the Property of the Borrower
and its Subsidiaries;
provided that in each such case, immediately after giving effect thereto, no
event shall have occurred and be continuing that constitutes a Default or an
Unmatured Default.
6.14. Letters of Credit. The Borrower will not, nor will it permit
any Subsidiary to, apply for or become liable upon any Letter of Credit, except
for: (i) Facility Letters of Credit; (ii) other standby Letters of Credit,
provided that the aggregate amount of issued but undrawn standby Letters of
Credit (which are not Facility Letters of Credit) and all unreimbursed drawings
thereunder shall not at any time exceed $25,000,000; and (iii) commercial
Letters of Credit utilized in the ordinary course of business to purchase
inventory, provided that the aggregate amount of issued but undrawn commercial
Letters of Credit shall not at any time exceed ten percent (10%) of the value of
the Borrower's consolidated merchandise inventory.
6.15. Investments and Acquisitions. The Borrower will not, nor will
it permit any Subsidiary to,
(a) make or suffer to exist any Investments (including without
limitation, loans and advances to, and other Investments in, Subsidiaries), or
commitments therefor, or to create any Subsidiary or to become or remain a
partner in any partnership or joint venture, except:
(i) Investments in Subsidiaries made prior to the Effective Date
and described in Schedule "2" hereto.
(ii) Permitted Investments.
62
(iii) Investments consisting of loans to participants, or the
purchase of securities of the Borrower from participants, made pursuant to the
provisions of any employee benefit plan, including without limitation the
Borrower's 1997 Replacement Stock Incentive Plan, 1997 Stock Incentive Plan or
the 1997 Director Stock Option Plan;
(iv) Investments consisting of stock or other securities acquired in
connection with the satisfaction or enforcement of Indebtedness or other claims
due or owing to the Borrower or any Subsidiary or as security for any such
Indebtedness or claim;
(v) Loans made by the Borrower in connection with the development of
new retail establishments or distribution centers for the Borrower; provided
that the aggregate outstanding amount of all such loans, as and when any such
loan is made, shall not exceed five percent (5%) of the Borrower's consolidated
assets as of the last day of the most recently ended fiscal quarter of the
Borrower.
(vi) So long as the aggregate unpaid principal balance of the Advances
is less than $25,000,000, Investments made by the Borrower in the Investment
Subsidiary for the purpose of making Permitted Investments.
(vii) Investments made by any Subsidiary in the Borrower.
(viii) Investments in Trademark Subsidiaries; provided that
when aggregated with Investments made pursuant to clause 6.15(a)(i) hereof, (A)
the aggregate amount of all such Investments shall not exceed twenty five
percent (25%) of an amount equal to (i) the book value of the Borrower's
consolidated assets less (ii) the book value of real estate owned by the Real
Estate Subsidiaries and (B) the aggregate amount of all such Investments in any
individual Trademark Subsidiary shall not exceed an amount equal to fifteen
percent (15%) of an amount equal to (i) the book value of the Borrower's
consolidated assets less (ii) the book value of real estate owned by the Real
Estate Subsidiaries.
(ix) Investments made by the Borrower or any Trademark Subsidiary in
any Real Estate Subsidiary, so long as, for any such Real Estate Subsidiary, the
sum of such Investments plus any other Indebtedness of such Real Estate
Subsidiary does not exceed 105% of the acquisition cost of the real estate owned
by such Real Estate Subsidiary.
(x) Investments made by means of a merger or consolidation
permitted by Section 6.12 hereof.
(xi) For the Borrower only: any Investment consisting of (A) the
acquisition of stock or other equity interests which constitutes an Acquisition
63
permitted pursuant to the terms of Section 6.15(b); (B) the creation of any new
Subsidiary to act as the purchaser in an Acquisition permitted pursuant to the
terms of Section 6.15(b); and (C) an Investment in a Subsidiary for the purpose
of facilitating an Acquisition permitted pursuant to the terms of Section
6.15(b), provided, however, that the aggregate amount of such Investments made
since the Effective Date is less than thirty percent (30%) of Net Worth.
(xii) The creation of any new Wholly-Owned Subsidiary.
(xiii) Investments in one or more special purpose entities
made in connection with a transfer by the Borrower or a Wholly-Owned Subsidiary
of interests in accounts or notes receivable on a limited recourse basis,
provided that (a) such transfer qualifies as a sale under generally accepted
accounting principles and (b) any such Investments, at any time outstanding, do
not exceed $50,000,000 in the aggregate.
(xiv) Additional Investments, at any time outstanding, not to
exceed $10,000,000 in the aggregate.
(b) make any Acquisition of any Person, except for an Acquisition: (i)
for which the board of directors of the Person being acquired has approved the
terms of the Acquisition, (ii) the purchase price of which (including the
aggregate amount of (i) assumed liabilities for borrowed money, (ii) deferred
compensation and (iii) non-compete and earn-out payments), when added to the
purchase price of all other Acquisitions made during the same fiscal year, is
less than twenty five percent (25%) of the Borrower's consolidated assets as of
the beginning of such fiscal year, (iii) the giving effect to which will not
cause a Default or an Unmatured Default and (iv) for which the Borrower has
previously provided the Lenders with (a) financial information with respect to
the entity to be acquired (including historical financial statements, pro-forma
statements after giving effect to the Acquisition and projections) and (b) to
the extent available, a detailed description of the entity to be acquired, its
products, markets served and customer concentrations.
6.16. Liens. The Borrower will not, nor will it permit any Subsidiary
to, create, incur, or suffer to exist any Lien in, of or on the Property of the
Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies on
its Property if the same shall not at the time be delinquent or thereafter can
be paid without penalty, or are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with generally
accepted principles of accounting shall have been set aside on its books.
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(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Borrower or the Subsidiaries.
(v) Liens existing on the Effective Date and described in Schedule "3"
hereto.
(vi) Liens incurred in connection with purchase money financing of
Property in the ordinary course of business, provided that such Liens shall
attach solely to the Property acquired and any improvement thereon and shall not
attach to any other Property.
(vii) Liens existing on Property acquired by the Borrower or any of
its Subsidiaries at the time of its Acquisition, so long as such Lien was not
created in contemplation of such Acquisition.
(viii) Liens resulting from commitments of the Borrower and its
Subsidiaries under Capitalized Leases.
(ix) Liens incurred in connection with any transfer of an interest in
accounts or notes receivable, that at the time of such transfer, qualified as a
sale under generally accepted accounting principles.
(x) Liens under leases of personalty or real estate to which the
Borrower and any of its Subsidiaries is a party, provided that such Liens (A) do
not attach to inventory held for sale in leased stores or warehouses except only
after bankruptcy, insolvency or similar events to the extent of any landlord's
lien, (B) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit by the Borrower or any of its Subsidiaries, and
(C) do not in the aggregate materially detract from the value of the Property of
the Borrower and its Subsidiaries or materially impair the use thereof in the
operation of their respective businesses.
(xi) Liens incidental to the conduct of the business of the Borrower
or any of its Subsidiaries which do not cover accounts receivable, cover only de
minimis amounts of inventory sold to the Borrower and its Subsidiaries by
certain
65
suppliers to secure the amounts owing such suppliers for the same, are
not incurred in connection with the borrowing of money or the obtaining of
advances or credits or in connection with the acquisition of real property or
machinery or equipment except incidental to the acquisition of business
properties as a whole or as a going concern, and which do not in the aggregate
materially detract from the value of the Property of the Borrower or any of its
Subsidiaries or materially impair the use thereof in the operation of their
respective businesses.
(xii) Liens granted by any Subsidiary to the Borrower or a Wholly-
Owned Subsidiary to secure loans from the Borrower or such Wholly-Owned
Subsidiary, which loans were permitted by Section 6.15(a) and Liens on real
estate granted by the Borrower to any Real Estate Subsidiary which secure
Indebtedness permitted by Section 6.11(x) in an aggregate amount at any time
outstanding not in excess of $20,000,000.
(xiii) Liens on real property which relate to Indebtedness
permitted by Section 6.11(vii).
(xiv) In addition to Liens otherwise permitted by this Section 6.16,
Liens on assets of the Borrower and its Subsidiaries securing obligations not
exceeding $10,000,000 in the aggregate at any time outstanding.
6.17. Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate (other than the Borrower or a Wholly-Owned Subsidiary
with respect to transactions other than the sale, transfer or other disposition
of assets) except (i) in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary
than the Borrower or such Subsidiary would obtain in a comparable arms-length
transaction or (ii) as set forth in the Transaction Documents.
6.18. Amendments. The Borrower will not, and will not permit any
Subsidiary to make any material waiver, termination or amendment to any of the
Transaction Documents.
6.19. Rate Hedging Obligations. The Borrower will not, and will not
permit any Subsidiary to, enter into or remain liable upon any Rate Hedging
Obligations, except for Rate Hedging Obligations in a notional amount not to
exceed $50,000,000.
6.20. Financial Covenants. On and subsequent to the Effective Date,
the Borrower shall maintain, for itself and its Subsidiaries on a consolidated
basis, each of the following financial covenants, each calculated in accordance
with (i) Pro Forma
66
Accounting Principles from the Effective Date until the end of the fiscal
quarter ending April 25, 1998 and (ii) Agreement Accounting Principles
thereafter.
6.20.1. Funded Debt to Capital Ratio. The Borrower shall maintain,
on a consolidated basis, as of the end of each fiscal quarter a ratio of Funded
Debt to Capital not exceeding .60 to 1.0.
6.20.2. Fixed Charge Coverage Ratio. The Borrower shall maintain,
on a consolidated basis, as of the end of each fiscal quarter a Fixed Charge
Coverage Ratio greater than 1.75 to 1.0.
6.20.3. Tangible Net Worth. The Borrower shall maintain, on a
consolidated basis, at all times a Tangible Net Worth that is greater than or
equal to the sum of (i) $355,000,000 plus (ii) 50% of the Borrower's quarterly
Net Income, if positive, for each fiscal quarter ending after the Effective Date
plus (iii) 50% of the aggregate net proceeds of any equity offering received by
the Borrower after the Effective Date.
6.21. Subsidiary Guaranties. If the Subsidiaries (other than
the Real Estate Subsidiaries) have assets which in the aggregate have a book
value equal to or greater than twenty-five percent (25%) of an amount equal to
(i) the book value of the Borrower's total consolidated assets less (ii) the
book value of real estate owned by the Real Estate Subsidiaries, each determined
on a consolidated basis as at the end of any fiscal quarter, the Borrower shall
cause all Subsidiaries other than the Real Estate Subsidiaries to deliver to the
Agent, on behalf of the Lenders, within 30 days after the end of any such fiscal
quarter (i) an executed guaranty in substantially the form attached hereto as
Exhibit "I" or a joinder agreement in substantially the form attached to such
guaranty and (ii) an opinion of counsel to such Subsidiaries that such guaranty
has been duly executed and delivered and is a legal, valid and binding
obligation of such Subsidiaries enforceable in accordance with its terms
(subject to customary exceptions). If any Subsidiary (other than a Real Estate
Subsidiary) has assets which in the aggregate have a book value equal to or
greater than fifteen percent (15%) of an amount equal to (i) the book value of
the Borrower's total consolidated assets less (ii) the book value of real estate
owned by the Real Estate Subsidiaries, each determined on a consolidated basis
as at the end of any fiscal quarter, the Borrower shall cause such Subsidiary to
deliver to the Agent, on behalf of the Lenders, within 30 days after the end of
any such fiscal quarter (i) an executed guaranty in substantially the form
attached hereto as Exhibit "I" or a joinder agreement in substantially the form
attached to such guaranty and (ii) an opinion of counsel to such Subsidiary that
such guaranty has been duly executed and delivered and is a legal, valid and
binding obligation of such Subsidiary enforceable in accordance with its terms
(subject to customary exceptions).
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6.22. Intercompany Indebtedness. After the occurrence and during the
continuance of a Default or an Unmatured Default, the Borrower will not prepay,
defease or in substance defease, purchase, redeem, retire or otherwise acquire,
any Indebtedness owed to any Subsidiary.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
7.1. Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent
under or in connection with this Agreement, any Loan, any Facility Letter of
Credit, or any certificate or information delivered in connection with this
Agreement or any other Loan Document shall be materially false on the date when
made.
7.2. Nonpayment of principal of any Note when due, nonpayment of any
Reimbursement Obligation when due, or nonpayment of interest upon any Note or of
any fee or other obligations under any of the Loan Documents within five days
after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
Sections 6.2, 6.3, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.18, 6.19, 6.20,
6.21 or 6.22.
7.4. The breach by the Borrower (other than a breach which
constitutes a Default under Sections 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement which is not remedied within 20 days after written
notice from the Agent or any Lender.
7.5. Failure of the Borrower or any of its Subsidiaries to pay any
Indebtedness with a principal amount in excess of $10,000,000 when due; or the
default by the Borrower or any of its Subsidiaries in the performance of any
material term, provision or condition contained in any agreement under which any
Indebtedness with a principal amount in excess of $10,000,000 was created or is
governed, or any other material event shall occur or material condition shall
exist (and in each case shall be continuing), the effect of which is to cause,
or to permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due prior to its stated maturity; or any Indebtedness
with a principal amount in excess of $10,000,000 of the Borrower or any of its
Subsidiaries shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the stated maturity
thereof; or the Borrower or any of its Subsidiaries shall
68
not pay, or admit in writing its inability to pay, its debts generally as they
become due.
7.6. The Borrower or any of its Active Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any of its Property which constitutes a Substantial Portion, (iv)
institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any corporate
action to authorize or effect any of the foregoing actions set forth in this
Section 7.6 or (vi) fail to contest in good faith any appointment or proceeding
described in Section 7.7.
7.7. Without the application, approval or consent of the Borrower or
any of its Active Subsidiaries, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any of its Active
Subsidiaries or any of its Property which constitutes a Substantial Portion, or
a proceeding described in Section 7.6(iv) shall be instituted against the
Borrower or any of its Active Subsidiaries and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of 60 consecutive days.
7.8. Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of (each a
"Condemnation"), all or any portion of the Property of the Borrower and its
Subsidiaries which, when taken together with all other Property of the Borrower
and its Subsidiaries so condemned, seized, appropriated, or taken custody or
control of, during the twelve-month period ending with the month in which any
such Condemnation occurs, constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within 30
days to pay, bond or otherwise discharge any judgment or order for the payment
of money, which is not stayed on appeal or otherwise being appropriately
contested in good faith and which, when added to all other similar judgments or
orders for the payment of money, exceeds $10,000,000.
7.10. Any Change in Control shall occur.
7.11. Subsequent to the execution of the Subsidiary Guaranty, the
Subsidiary Guaranty shall fail to remain in full force or effect or any action
shall be taken to
69
discontinue or to assert the invalidity or unenforceability of the Subsidiary
Guaranty, or any Subsidiary shall fail to comply with any of the terms or
provisions of the Subsidiary Guaranty or any Subsidiary denies that it has any
further liability under the Subsidiary Guaranty or gives notice to such effect.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Sections 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans and of an Issuing Bank to issue Facility Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Agent or any Lender.
If any other Default occurs, the Required Lenders may terminate or suspend the
obligations of the Lenders to make Loans and of an Issuing Bank to issue
Facility Letters of Credit hereunder, or declare the Obligations to be due and
payable, or both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which the Borrower hereby expressly waives. In addition to the foregoing
following the occurrence and during the continuance of a Default, so long as any
Facility Letter of Credit has not been fully drawn and has not been cancelled or
expired by its terms, upon demand by the Agent the Borrower shall pay to the
Agent, for the benefit of the Lenders, cash in an amount equal to the aggregate
undrawn face amount of all outstanding Facility Letters of Credit and all fees
and other amounts due or which may become due with respect thereto, to be
applied to such Obligations. If any such Facility Letter of Credit is
subsequently cancelled or expires by its terms without having been fully drawn,
the Agent and the Lenders shall promptly account to the Borrower for any amount
required to be paid to the Borrower on account thereof.
If, within 30 days after acceleration of the maturity of the Obligations or
termination of the obligations of the Lenders to make Loans and of an Issuing
Bank to issue Facility Letters of Credit hereunder as a result of any Default
(other than any Default as described in Sections 7.6 or 7.7 with respect to the
Borrower) and before any judgment or decree for the payment of the Obligations
due shall have been obtained or entered, all Lenders (in their sole discretion)
shall so direct, the Agent shall, by notice to the Borrower, rescind and annul
such acceleration and/or termination.
8.2. Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default
70
hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender directly or indirectly affected thereby:
(i) Extend the maturity of any Loan or Note or forgive all or any
portion of the principal amount thereof, or reduce the rate or extend the time
of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Extend the Termination Date, or reduce the amount or extend the
payment date for, the mandatory payments required under Section 2.8.2(ii), or
increase the amount of any Commitment of any Lender hereunder, or permit the
Borrower to assign its rights under this Agreement.
(iv) Amend (a) this Section 8.2 or (b) Sections 3.2, 3.4(b), 3.6(a),
7.6 or 7.7.
(v) Increase the maximum drawable amount or extend the expiration date
of any outstanding Facility Letter of Credit (other than in accordance with
Article III) or reduce the principal amount of or extend the time of payment of
any Reimbursement Obligation or fee associated with any Facility Letter of
Credit.
(vi) Release any guarantor of any Obligations or, release collateral,
if any, with a book value in excess of $5,000,000 in the aggregate during the
term hereof securing any Obligations.
(vii) Increase the amount of the Swing Line Option or extend the date
in Section 2.6(c) on which the Agent shall be deemed to have received a
Borrowing Notice to refund the Swing Line Loan.
No amendment or waiver of any provision of the Agreement relating to the Swing
Line Loan shall be effective without the consent of the Swing Line Bank. No
amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 12.3.2 without obtaining the consent of any
other party to this Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders or
the Agent to exercise any right under the Loan Documents shall impair such right
or be construed to be a waiver of any Default or an acquiescence therein, and
the making of a Loan or the issuance of a Facility Letter of Credit
notwithstanding the existence of a Default or the inability of the Borrower to
satisfy the conditions precedent to such Loan or Facility Letter of Credit shall
not constitute any waiver or acquiescence.
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Any single or partial exercise of any such right shall not preclude other or
further exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by the Lenders
required pursuant to Section 8.2, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents or by law
afforded shall be cumulative and all shall be available to the Agent and the
Lenders until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and warranties
of the Borrower contained in this Agreement shall survive delivery of the Notes
and the making of the Loans and the issuance of the Facility Letters of Credit
herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, no Lender shall be obligated to extend credit
to the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Taxes. Any taxes (excluding federal income taxes or state
income taxes on the overall net income of any Lender) or other similar
assessments or charges made by any governmental or revenue authority in respect
of the Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.
9.4. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.5. Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, each Subsidiary, the Agent and
the Lenders and supersede all prior agreements and understandings among the
Borrower, each Subsidiary, the Agent and the Lenders relating to the subject
matter thereof.
9.6. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder, but no Lender shall be responsible for the failure of any
other Lender to perform its obligations hereunder. This Agreement shall not be
construed so as to
72
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
9.7. Expenses; Indemnification. The Borrower shall reimburse the
Agent and the Arranger for any reasonable costs, internal charges and out-of-
pocket expenses (including attorneys' fees and time charges of attorneys for the
Agent or the Arranger, which attorneys may be employees of the Agent or the
Arranger) paid or incurred by the Agent or the Arranger in connection with the
preparation, negotiation, execution, delivery, review, syndication amendment,
modification, and administration of the Loan Documents. The Borrower also
agrees to reimburse the Agent, the Arranger and the Lenders for any reasonable
costs, internal charges and out-of-pocket expenses (including attorneys' fees
and time charges of attorneys for the Agent, the Arranger and the Lenders, which
attorneys may be employees of the Agent or the Arranger or the Lenders) paid or
incurred by the Agent, the Arranger or any Lender in connection with the
collection and enforcement of the Loan Documents. The Borrower further agrees
to indemnify the Agent, the Arranger and each Lender, its directors, officers
and employees (each, an "indemnified party") against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not
the Agent, the Arranger or any Lender is a party thereto, collectively, the
"losses") which any of them may pay or incur arising out of or relating to this
Agreement, the other Loan Documents, the Transaction Documents, the transactions
contemplated hereby or thereby, the direct or indirect application or proposed
application of the proceeds of any Loan or the use or intended use of any
Facility Letter of Credit hereunder or the issuance or performance under or the
participation in any Facility Letter of Credit, except that the Borrower shall
not be liable for any portion of the losses resulting from the gross negligence
or wilful misconduct of any indemnified party as determined in a final judgment
by a court of competent jurisdiction. The obligations of the Borrower under
this Section shall survive the termination of this Agreement.
9.8. Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.
9.9. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.10. Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that
73
provision in any other jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
9.11. Nonliability of Lenders. The relationship between the Borrower
and the Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
the Borrower. Neither the Agent nor any Lender undertakes any responsibility to
the Borrower to review or inform the Borrower of any matter in connection with
any phase of the Borrower's business or operations.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING
A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS,
BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR
ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN CHICAGO, ILLINOIS.
9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
9.15. Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Borrower or any Subsidiary pursuant to
this Agreement in confidence, except for disclosure (i) to its Affiliates and
other
74
Lenders and their respective Affiliates, (ii) to legal counsel, accountants, and
other professional advisors to that Lender or to a Transferee, (iii) to
regulatory officials, (iv) to any Person as requested pursuant to or as required
by law, regulation, or legal process, (v) to any Person in connection with any
legal proceeding to which that Lender is a party, and (vi) permitted by Section
12.4; provided that in connection with any disclosure pursuant to clauses (i),
(ii) or (vi), such Lender shall instruct such Persons to treat the information
in a confidential manner.
ARTICLE X
THE AGENT
10.1. Appointment. The First National Bank of Chicago is hereby
appointed Agent hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Agent to act as the agent of such Lender.
The Agent agrees to act as such upon the express conditions contained in this
Article X. The Agent shall not have a fiduciary relationship in respect of the
Borrower or any Lender by reason of this Agreement.
10.2. Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
10.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, any Subsidiary,
the Lenders or any Lender for any action taken or omitted to be taken by it or
them hereunder or under any other Loan Document or in connection herewith or
therewith except for its or their own gross negligence or willful misconduct.
10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent
nor any of its directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into, or verify (i) any statement,
warranty or representation made in connection with any Loan Document or any
borrowing hereunder; (ii) the performance or observance of any of the covenants
or agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent; (iv) the validity,
effectiveness or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith; or (v) the value, sufficiency,
creation, perfection or priority of any interest in any collateral security. The
Agent shall have no duty to disclose to the Lenders information that is not
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required to be furnished by the Borrower to the Agent at such time, but is
voluntarily furnished by the Borrower to the Agent (either in its capacity as
Agent or in its individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and on all holders of
Notes. The Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute any of
its duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (i) for any amounts not reimbursed by the Borrower for which the
Agent is entitled to reimbursement by the Borrower under the Loan Documents,
(ii) for any other reasonable expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery, administration
and enforcement of the Loan Documents and (iii) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents, provided that no Lender shall
be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent. The
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obligations of the Lenders under this Section 10.8 shall survive payment of the
Obligations and termination of this Agreement.
10.9. Rights as a Lender. In the event the Agent is a Lender
(including its capacity as an Issuing Bank), the Agent shall have the same
rights and powers hereunder and under any other Loan Document as any Lender and
may exercise the same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, at any time when the Agent is a Lender, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent
may accept deposits from, lend money to, and generally engage in any kind of
trust, debt, equity or other transaction, in addition to those contemplated by
this Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person. The Agent, in its individual capacity, is
not obligated to remain a Lender; provided that at any time that the Agent is
not a Lender, the Agent agrees to resign in accordance with Section 10.11 upon
the request of the Borrower or the Required Lenders.
10.10. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
10.11. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required Lenders shall have
the right to appoint, on behalf of the Borrower and the Lenders, a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent's giving notice of its
intention to resign, then the resigning Agent may appoint, on behalf of the
Borrower and the Lenders, a successor Agent. If the Agent has resigned and no
successor Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and the Borrower shall make all payments in respect of the
Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $100,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become
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vested with all the rights, powers, privileges and duties of the resigning
Agent. Upon the effectiveness of the resignation of the Agent, the resigning
Agent shall be discharged from its duties and obligations hereunder and under
the Loan Documents. After the effectiveness of the resignation of an Agent, the
provisions of this Article X shall continue in effect for the benefit of such
Agent in respect of any actions taken or omitted to be taken by it while it was
acting as the Agent hereunder and under the other Loan Documents.
10.12. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default hereunder unless the Agent
has received written notice from a Lender or the Borrower referring to this
Agreement describing such Default or Unmatured Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Lenders.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any rights
of the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender to or for the credit or account of the Borrower may be offset and
applied toward the payment of the Obligations owing to such Lender, whether or
not the Obligations, or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its share of any Advance or Reimbursement
Obligation (other than payments received pursuant to Sections 2.18.1, 2.18.2 or
2.18.4) in a greater proportion than that received by any other Lender (other
than with respect to Swing Line Loans), such Lender agrees, promptly upon
demand, to purchase a portion of that Advance or Reimbursement Obligation held
by the other Lenders so that after such purchase each Lender will hold its
ratable proportion of that Advance or Reimbursement Obligation. If any Lender,
whether in connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligations or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral or other protection ratably in proportion to their
Commitments. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.
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ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower, the
Subsidiaries and the Lenders and their respective successors and assigns, except
that (i) neither the Borrower nor any Subsidiary shall have the right to assign
its rights or obligations under the Loan Documents and (ii) any assignment by
any Lender must be made in compliance with Section 12.3. Notwithstanding clause
(ii) of this Section, any Lender may at any time, without the consent of the
Borrower or the Agent, assign all or any portion of its rights under this
Agreement and its Notes to a Federal Reserve Bank; provided, however, that no
such assignment shall release the transferor Lender from its obligations
hereunder. The Agent may treat the payee of any Note as the owner thereof for
all purposes hereof unless and until such payee complies with Section 12.3 in
the case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with the Agent. Any assignee or
transferee of a Note agrees by acceptance thereof to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
12.2. Participations.
12.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
interest in Facility Letters of Credit, any Commitment of such Lender or any
other interest of such Lender under the Loan Documents. In the event of any
such sale by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Borrower under
this Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
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modification or waiver with respect to any Loan, Facility Letter of Credit or
Commitment in which such Participant has an interest which forgives principal,
interest or fees or reduces the interest rate or fees payable with respect to
any such Loan, Facility Letter of Credit or Commitment, postpones any date fixed
for any regularly scheduled payment of principal of, or interest or fees on, any
such Loan, Facility Letter of Credit or Commitment, releases any guarantor of
any such Loan or Facility Letter of Credit or releases any substantial portion
of collateral, if any, securing any such Loan or Facility Letter of Credit.
12.2.3. Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in Section 11.1
in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under the Loan Documents, provided that each
Lender shall retain the right of setoff provided in Section 11.1 with respect to
the amount of participating interests sold to each Participant. The Lenders
agree to share with each Participant, and each Participant, by exercising the
right of setoff provided in Section 11.1, agrees to share with each Lender, any
amount received pursuant to the exercise of its right of setoff, such amounts to
be shared in accordance with Section 11.2 as if each Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities (excluding entities registered under the
Investment Company Act of 1940) with a net worth and/or capital and surplus of
at least $500,000,000 ("Purchasers") all or any part of its rights and
obligations under the Loan Documents; provided, however, that (i) any such
assignment shall be in a minimum amount of at least $5,000,000 or, if less, the
total amount of such Lender's Commitment hereunder and (ii) if a Default has
occurred and is continuing, the restriction against assignments to entities
registered under the Investment Company Act of 1940 shall not apply. Such
assignment shall be substantially in the form of Exhibit "H" hereto or in such
other form as may be agreed to by the parties thereto. The consent of the
Borrower and the Agent shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate
thereof; provided, however, that if a Default has occurred and is continuing,
the consent of the Borrower shall not be required. Such consent shall not be
unreasonably withheld.
12.3.2. Effect; Effective Date. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Annex "I" to Exhibit
"H" hereto (a "Notice of Assignment"), together with any consents required by
Section 12.3.1, and (ii) payment of a $3,500 fee to the Agent for processing
such assignment, such
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assignment shall become effective on the effective date specified in such Notice
of Assignment. The Notice of Assignment shall contain a representation by the
Purchaser to the effect that none of the consideration used to make the purchase
of the Commitment, Facility Letters of Credit and Loans under the applicable
assignment agreement are "plan assets" as defined under ERISA and that the
rights and interests of the Purchaser in and under the Loan Documents will not
be "plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and no further consent or action
by the Borrower, the Lenders or the Agent shall be required to release the
transferor Lender with respect to the Percentage of the Aggregate Commitment,
Facility Letters of Credit and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this Section 12.3.2,
the transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that replacement Notes are issued to such transferor Lender and
new Notes or, as appropriate, replacement Notes, are issued to such Purchaser,
in each case in principal amounts reflecting their Commitment, as adjusted
pursuant to such assignment. In addition, within a reasonable time after the
effective date of any assignment, the Agent shall, and is hereby authorized and
directed to, revise Schedule "1" reflecting the revised Percentages of each of
the Lenders and shall distribute such revised Schedule "1" to each of the
Lenders and the Borrower and such revised Schedule "1" shall replace the old
Schedule "1" and become part of this Agreement.
12.4. Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person acquiring
an interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries; provided
that each Transferee and prospective Transferee agrees in writing, prior to such
disclosure, to be bound by Section 9.15 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.17(b).
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ARTICLE XIII
NOTICES
13.1. Giving Notice. Except as otherwise permitted by Section 2.6(a)
with respect to borrowing notices for Swing Line Loans, Section 2.12 with
respect to Borrowing Notices, and Section 3.4(a) with respect to a Letter of
Credit Request, all notices and other communications provided to any party
hereto under this Agreement or any other Loan Document shall be in writing or by
telex or by facsimile and addressed or delivered to such party at its address
set forth below its signature hereto or at such other address as may be
designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted (answerback confirmed in the case of telexes).
13.2. Change of Address. The Borrower, the Agent and any Lender may
each change the address for service of notice upon it by a notice in writing to
the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Agent and the Lenders
and each party has notified the Agent by telex or telephone, that it has taken
such action.
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In Witness Whereof, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
BJ'S WHOLESALE CLUB, INC.
By: /s/ Frank D. Forward
-----------------------
Print Name: Frank D. Forward
----------------
Title: Treasurer
---------------------
One Mercer Road
P.O. Box 9600
Natick, Massachusetts 01760
Phone: (508) 651-6500
Fax: (508) 651-6623
Attention: Frank D. Forward,
Executive Vice President and Chief
Financial Officer
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ John D. Runger
-----------------------
Print Name: John D. Runger
---------------
Title: Managing Director
--------------------
One First National Plaza
Chicago, Illinois 60670
Phone: (312) 732-7101
Fax: (312) 732-1117
Attention: John D. Runger, Vice President
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BANKBOSTON, N.A., Individually and as
Syndication Agent
By: /s/ Linda Thomas
-----------------------
Print Name: Linda Thomas
---------------
Title: Director
--------------------
100 Federal Street
Mail Stop 01-09-04
Boston, Massachusetts 02110
Phone: (617) 434-7000
Fax: (617) 434-7980
FLEET NATIONAL BANK, Individually and
as Documentation Agent
By: /s/ Gerry Sheehan
----------------------
Print Name: Gerry Sheehan
--------------
Title: Assistant Vice President
------------------------
One Federal Street
Mail Code MAOF-0320
Boston, Massachusetts
Phone: (617) 346-0609
Fax: (617) 346-0580
FIRST UNION NATIONAL BANK
By: Mark M. Harden
-----------------------
Print Name: Mark M. Harden
---------------
Title: Vice President
--------------------
One First Union Center
DC-5
Charlotte, North Carolina 28288-0745
Phone: (704) 383-7629
Fax: (704) 374-2802
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