1
EXHIBIT 10.1
CREDIT AGREEMENT
among
MONRO MUFFLER BRAKE, INC.,
Borrower
THE CHASE MANHATTAN BANK,
Agent
FLEET NATIONAL BANK,
Syndication Agent
and
THE LENDERS NAMED HEREIN,
Lenders
SENIOR SECURED CREDIT FACILITY
SEPTEMBER 15, 1998
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TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS AND TERMS...........................................................................1
1.1 Definitions.....................................................................................1
1.2 Number and Gender of Words.....................................................................12
1.3 Accounting Principles..........................................................................12
SECTION 2 COMMITMENT.....................................................................................12
2.1 Facilities A and B.............................................................................12
2.1.1 Facility A............................................................................12
2.1.2 Facility B.............................................................................13
2.2 Borrowing Procedure............................................................................13
2.3 LC Subfacility.................................................................................14
2.4 Swing Line Subfacility.........................................................................16
2.5 Termination....................................................................................17
SECTION 3 TERMS OF PAYMENT...............................................................................17
3.1 Notes and Payments.............................................................................17
3.2 Interest and Principal Payments................................................................17
3.3 Interest Options...............................................................................19
3.4 Quotation of Rates.............................................................................19
3.5 Default Rate...................................................................................19
3.6 Interest Recapture.............................................................................19
3.7 Interest Calculations..........................................................................20
3.8 Maximum Rate...................................................................................20
3.9 Interest Periods...............................................................................20
3.10 Conversions....................................................................................20
3.11 Order of Application...........................................................................21
3.12 Sharing of Payments, Etc.......................................................................21
3.13 Offset.........................................................................................21
3.14 Booking Borrowings.............................................................................21
3.15 Basis Unavailable or Inadequate for LIBOR......................................................21
3.16 Additional Costs...............................................................................22
3.17 Change in Laws.................................................................................22
3.18 Funding Loss...................................................................................23
3.19 Foreign Lenders................................................................................23
SECTION 4 FEES...........................................................................................23
4.1 Treatment of Fees..............................................................................23
4.2 Intentionally Omitted..........................................................................23
4.3 LC Fees........................................................................................23
4.4 Facility A Commitment Fee......................................................................24
SECTION 5 SECURITY.......................................................................................24
5.1 Intentionally Omitted..........................................................................24
5.2 Collateral.....................................................................................24
5.3 Additional Security and Guaranties.............................................................24
5.4 Financing Statements...........................................................................24
SECTION 6 CONDITIONS PRECEDENT...........................................................................24
SECTION 7 REPRESENTATIONS AND WARRANTIES.................................................................25
(i)
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7.1 Purpose of Credit Facility.....................................................................25
7.2 Corporate Existence, Good Standing, Authority and Compliance...................................25
7.3 Subsidiaries...................................................................................25
7.4 Authorization and Contravention................................................................25
7.5 Binding Effect.................................................................................25
7.6 Financial Statements; Fiscal Year..............................................................26
7.7 Litigation.....................................................................................26
7.8 Taxes..........................................................................................26
7.9 Environmental Matters..........................................................................26
7.10 Employee Plans.................................................................................26
7.11 Properties; Liens..............................................................................26
7.12 Location; Real Estate Interests................................................................26
7.13 Government Regulations.........................................................................27
7.14 Transactions with Affiliates...................................................................27
7.15 Debt...........................................................................................27
7.16 Material Agreements............................................................................27
7.17 Insurance......................................................................................27
7.18 Labor Matters..................................................................................27
7.19 Solvency.......................................................................................27
7.20 Trade Names....................................................................................27
7.21 Intellectual Property..........................................................................27
7.22 Full Disclosure................................................................................28
7.23 Year 2000......................................................................................28
SECTION 8 AFFIRMATIVE COVENANTS..........................................................................28
8.1 Items to be Furnished..........................................................................28
8.2 Use of Proceeds................................................................................29
8.3 Books and Records..............................................................................29
8.4 Inspections....................................................................................29
8.5 Taxes..........................................................................................29
8.6 Payment of Obligations.........................................................................29
8.7 Expenses.......................................................................................29
8.8 Maintenance of Existence, Assets, and Business.................................................30
8.9 Insurance......................................................................................30
8.10 Preservation and Protection of Rights..........................................................30
8.11 Environmental Laws.............................................................................30
8.12 Subsidiaries...................................................................................30
8.13 Indemnification................................................................................30
8.14 Further Assurances.............................................................................31
8.15 Change of Control..............................................................................31
(ii)
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SECTION 9 NEGATIVE COVENANTS.............................................................................31
9.1 Taxes..........................................................................................31
9.2 Payment of Obligations.........................................................................31
9.3 Employee Plans.................................................................................31
9.4 Debt and Debt Instruments......................................................................31
9.5 Liens..........................................................................................31
9.6 Transactions with Affiliates...................................................................31
9.7 Compliance with Laws and Documents.............................................................32
9.8 Loans, Advances and Investments................................................................32
9.9 Dividends and Distributions....................................................................32
9.10 Sale of Assets.................................................................................32
9.11 Mergers and Dissolutions.......................................................................32
9.12 Assignment.....................................................................................33
9.13 Fiscal Year and Accounting Methods.............................................................33
9.14 New Businesses.................................................................................33
9.15 Government Regulations.........................................................................33
9.16 Leases; Sale-Leasebacks........................................................................33
9.17 Subsidiaries...................................................................................33
SECTION 10 FINANCIAL COVENANTS............................................................................33
SECTION 11 DEFAULT........................................................................................34
11.1 Payment of Obligation..........................................................................34
11.2 Covenants......................................................................................34
11.3 Debtor Relief..................................................................................34
11.4 Judgments and Attachments......................................................................34
11.5 Government Action..............................................................................35
11.6 Misrepresentation..............................................................................35
11.7 [Intentionally Omitted]........................................................................35
11.8 Material Adverse Event. ......................................................................35
11.9 Default Under Other Agreements.................................................................35
11.10 LCs............................................................................................35
11.11 Validity and Enforceability of Loan Papers.....................................................35
11.12 Employee Benefit Plans.........................................................................35
SECTION 12 RIGHTS AND REMEDIES............................................................................35
12.1 Remedies Upon Default..........................................................................35
12.2 Company Waivers. .............................................................................36
12.3 Performance by Agent...........................................................................36
12.4 Not in Control.................................................................................36
12.5 Course of Dealing..............................................................................36
12.6 Cumulative Rights..............................................................................36
12.7 Application of Proceeds........................................................................36
12.8 Diminution in Value of Collateral..............................................................37
12.9 Certain Proceedings............................................................................37
12.10 Change of Control..............................................................................37
(iii)
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SECTION 13 AGREEMENT AMONG LENDERS........................................................................37
13.1 Agent..........................................................................................37
13.2 Expenses.......................................................................................38
13.3 Proportionate Absorption of Losses.............................................................38
13.4 Delegation of Duties; Reliance.................................................................38
13.5 Limitation of Agent's Liability................................................................39
13.6 Default; Collateral............................................................................40
13.7 Limitation of Liability........................................................................40
13.8 Relationship of Lenders........................................................................40
13.9 Collateral Matters.............................................................................40
13.10 Benefits of Agreement..........................................................................41
SECTION 14 MISCELLANEOUS..................................................................................41
14.1 Headings.......................................................................................41
14.2 Nonbusiness Days; Time.........................................................................41
14.3 Communications.................................................................................41
14.4 Form and Number of Documents...................................................................41
14.5 Exceptions to Covenants........................................................................41
14.6 Survival.......................................................................................41
14.7 Governing Law..................................................................................41
14.8 Invalid Provisions.............................................................................41
14.9 Venue; Service of Process; Jury Trial..........................................................42
14.10 Amendments, Consents, Conflicts and Waivers....................................................42
14.11 Multiple Counterparts..........................................................................43
14.12 Successors and Assigns; Participations.........................................................43
14.13 Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances....................45
14.14 Confidentiality................................................................................45
14.15 Entirety.......................................................................................45
(iv)
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(v)
7
(vi)
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SCHEDULES AND EXHIBITS
----------------------
Schedule 1 Parties, Addresses, Committed Sums and Wiring Information
Schedule 6 Conditions Precedent
Schedule 7.2 Jurisdictions of Incorporation and Business
Schedule 7.3 Corporate Structure
Schedule 7.7 Litigation
Schedule 7.9 Environmental Matters
Schedule 7.11 Permitted Liens
Schedule 7.12 Chief Executive Office, Location of Material Assets and Real Estate Interests
7.12A Monro Stores
7.12B Speedy Stores
Schedule 7.14 Transactions with Affiliates
Schedule 7.15 Permitted Debt
Schedule 7.16 Material Agreements
Schedule 9.10 Existing Sale\Leaseback Properties
Exhibit A Facility A Note
Exhibit B Facility B Note
Exhibit B-1 Swing Line Note
Exhibit C LC Request
Exhibit D Borrowing Request
Exhibit E Conversion Request
Exhibit F Compliance Certificate
Annex I Financial Covenants Calculation Worksheet
Exhibit G Assignment
(vii)
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CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT is entered into as of September 15, 1998, among
Monro Muffler Brake, Inc., a New York corporation ("BORROWER"), Lenders (defined
below), The Chase Manhattan Bank, as Agent for itself and the other Lenders, and
Fleet National Bank, as Syndication Agent.
Borrower has requested Lenders to extend credit not to exceed an
aggregate principal amount of $102,767,300, to be allocated as follows:
a. A revolving facility of $77,767,300, to be funded by Lenders
("FACILITY A") and
b. A term loan in a principal amount of $25,000,000, to be funded
by Lenders ("FACILITY B").
Lenders are willing to extend the requested credit on the terms and conditions
of this Agreement. Accordingly, the undersigned agree as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 Definitions. As used in the Loan Papers:
ABR means, for any day, the higher of (a) Federal Funds Rate plus fifty
(50) basis points, or (b) Prime Rate.
ABR BORROWING means a Borrowing bearing interest at the sum of the ABR
plus the Applicable Margin.
ACCOUNTANTS mean Pricewaterhouse Coopers, LLP or other firm of
independent public accountants of nationally recognized standing retained by
Borrower or any other firm acceptable to the Lenders.
ACQUISITION means the acquisition of certain assets by Borrower
pursuant to the APA.
ADJUSTED DEBT means Funded Debt, plus the product of eight (8) times
Rental Payments.
AFFILIATE means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether as
general partner, through ownership of a Control Percentage of such Person or the
general partner of such Person, by contract or otherwise.
AGENT means The Chase Manhattan Bank, a national banking association,
and its successor or successors as administrative agent for Lenders under this
Agreement.
AGREEMENT means this Credit Agreement, as amended, supplemented or
restated from time to time in accordance with SECTION 14.10.
APA means the Asset Purchase Agreement, dated as of April 13, 1998
among Borrower, Speedy Muffler King, Inc., Bloor Automotive, Inc., Speedy Car-X,
Inc., Speedy (U.S.A.), Inc., Speedy Holding Corp., as amended, supplemented or
modified prior to the Closing Date.
APPLICABLE MARGIN means at all times during the applicable periods set
forth below: (a) with respect to all LIBOR Borrowings, the applicable percentage
set forth below in the column entitled "Applicable Margin for LIBOR Borrowings",
(b) with respect to all ABR Borrowings, the applicable percentage set forth
below in the column entitled "Applicable Margin for ABR Borrowings" and (c) with
respect to the Commitment Fee, the applicable percentage set forth below in the
column entitled "Applicable Margin for Commitment Fee".
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===========================================================================================================
Applicable Applicable
Margin Margin Applicable
for LIBOR for ABR Margin
Period Borrowings Borrowings for Commitment Fee
===========================================================================================================
Level I: When the AD (less than) 2.50x 75bp 0bp 20bp
- -----------------------------------------------------------------------------------------------------------
Level II: When the AD (greater than) 2.50x 100bp 0bp 25bp
- -----------------------------------------------------------------------------------------------------------
Level III: When the AD (greater than) 3.00x 125bp 0bp 30bp
- -----------------------------------------------------------------------------------------------------------
Level IV: When the AD (greater than) 3.50x 150bp 25bp 37.5bp
- -----------------------------------------------------------------------------------------------------------
Level V: When the AD (greater than) 4.00x 175bp 50bp 37.5bp
Level VI: When the AD (greater than) 4.50x 212.5bp 75bp 50bp
===========================================================================================================
Definition: "AD" is the abbreviation for Adjusted Debt/EBITDAR Ratio.
If equity or equity related securities of the Borrower in the amount of
$25,000,000 are not in place within ninety (90) days after the Closing Date, the
Applicable Margin for LIBOR Borrowings and ABR Borrowings set forth above shall
increase by 12.5 basis points in every level as indicated in the table above; if
such equity or equity related securities are not in place within one hundred
eighty (180) days after the Closing Date, the Applicable Margin for LIBOR
Borrowings and ABR Borrowings set forth above shall increase by an additional
12.5 basis points as indicated in the table above. Upon receipt of the proceeds
derived from the placement of equity or equity related securities of the
Borrower in the amount of $25,000,000 and application of such proceeds in
accordance with SECTION 3.2(B), the increase in the Applicable Margin for LIBOR
Borrowings and ABR Borrowings as set forth in this paragraph will no longer be
applicable and the Applicable Margin set forth in the table above shall
automatically be reinstated commencing on the next Business Day following
receipt of such prepayment.
Notwithstanding anything to the contrary above, commencing on the Closing Date
until six (6) months from the Closing Date, the Applicable Margin will be
calculated at Level V, as adjusted in accordance with the above paragraph with
respect to the equity or equity related securities. Commencing at the end of six
(6) months from the Closing Date, the Applicable Margin will be calculated based
on Adjusted Debt to EBITDAR Ratio as set forth in this Agreement.
Adjusted Debt and EBITDAR are calculated for the most recently-completed Four
Quarter Period and the ratio of Adjusted Debt to EBITDAR is calculated as of the
last day of such Four Quarter Period. The Applicable Margin, as adjusted to
reflect such calculations, shall become effective on the date of receipt by the
Agent of the Compliance Certificate applicable to such Four Quarter Period. If
Borrower fails to timely furnish to Agent the Current Financials and any related
Compliance Certificate or, if for some other reason, a new Applicable Margin for
a current period cannot be calculated, then the Applicable Margin in effect on
the last day of the last Four Quarter Period for which the ratio of Adjusted
Debt to EBITDAR was calculated shall remain in effect until a new Applicable
Margin can be calculated, which new Applicable Margin shall become effective as
provided in the immediately preceding sentence.
ARRANGER means Chase Securities, Inc. as Arranger and book manager.
BORROWER is defined in the preamble to this Agreement.
BORROWING means (without duplication) any amount disbursed by (a) one
or more Lenders to or on behalf of Borrower under the Loan Papers, whether such
amount constitutes an original disbursement of funds, the continuation of an
amount outstanding under Facility A or Facility B or under the Swing Line
Subfacility or the financing of a LC
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reimbursement obligation under Facility A or (b) any Lender in accordance with,
and to satisfy the obligations of any Company under, any Loan Paper.
BORROWING DATE means for any Borrowing the date for which funds are
requested by Borrower.
BORROWING REQUEST means a request substantially in the form of the
attached EXHIBIT D.
BUSINESS DAY means (a) for all purposes, any day other than Saturday,
Sunday, and any other day that commercial banks are authorized by Law to be
closed in New York, New York and (b) for purposes of any LIBOR Rate Borrowing, a
day that satisfies the requirements of clause (a) and is a day that commercial
banks are open for domestic or international business in London.
CAPEX means, for any Four Quarter Period, capital expenditures for
fixed or capital assets that are required to be capitalized on a balance sheet
prepared in accordance with GAAP minus any net proceeds of allowable
sale/leasebacks permitted by SECTION 9.16.
CAPITALIZED LEASE means any lease the obligation for Rental Payments
with respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its subsidiaries in accordance with GAAP.
CASH EQUIVALENTS means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government of any agency thereof, (b) certificates of deposit,
time deposits, overnight bank deposits, bankers acceptances and repurchase
agreements of any commercial bank which has capital and surplus in excess of
$100,000,000 having maturities of one year or less from the date of acquisition,
(c) commercial paper of an issuer rated at least A-2 by Standard & Poor's
Ratings Group or P-2 by Moody's Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency if both of the two
named rating agencies cease publishing ratings of investments, (d) money market
accounts or funds with or issued by "Qualified Issuers", (e) repurchase
obligations with a term of not more than 90 days for underlying securities of
the types described in clause (a) above entered into with any bank meeting the
qualifications specified in clause (b) above, (f) demand deposit accounts
maintained in the ordinary course of business with any bank, or with any bank
that is not a bank, not in excess of $100,000 in the aggregate on deposit with
any such bank, and (g) marketable securities of the same or similar type as
owned by Borrower as of July 31, 1998, the aggregate actual purchase price of
which shall not exceed $100,000 at any time.
CHANGE OF CONTROL shall mean the occurrence of one or more of the
following: (a) until Borrower hires a Chief Executive Officer, members of the
Ownership Group ceasing to own in the aggregate, directly or indirectly,
beneficially or of record, at least (i) sixty percent (60%) of the Preferred
Stock, issued and outstanding at any time or (ii) fifteen percent (15%) of the
Common Stock, issued and outstanding at any time, or (b) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any person or
group, other than the Ownership Group, of (i) shares representing more than
thirty-five percent (35%) of the Common Stock, issued and outstanding at any
time or (ii) more than sixty percent (60%) of the Preferred Stock, issued and
outstanding at any time, or (c) the occupancy of a majority of the seats (other
than vacant seats) on the board of directors of Borrower or any Subsidiary of
Borrower by persons who were neither (i) nominated by the board of directors of
Borrower nor (ii) appointed by directors so nominated. As used in this
definition of "Change of Control," terms defined in the Securities Exchange Act
of 1934 or the rules of the Securities and Exchange Commission thereunder as in
effect on the date hereof shall have the respective meanings ascribed to them
therein.
CLOSING DATE means the date this Agreement and the Loan Papers are
fully executed and delivered.
CODE means the Internal Revenue Code of 1986, as amended from time to
time, and related rules and regulations promulgated thereunder by the Internal
Revenue Service.
COLLATERAL is defined in SECTION 5.2.
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COMMITMENT FEE is defined in SECTION 4.4.
COMMITMENT USAGE means, at any time, for each Lender, the sum of its
Facility A Commitment Usage and its Facility B Principal Debt.
COMMITTED SUM means, with respect to each Lender, the several
obligation of such Lender to lend to Borrower one or more Borrowings in the
aggregate principal amounts (which amount is subject to reduction and
cancellation as provided in this Agreement) stated beside such Lender's name for
Facility A and Facility B on SCHEDULE 1 as most recently amended under this
Agreement.
COMMON STOCK means the Borrower's common stock, $.01 par value per
share.
COMPANY OR COMPANIES means, at any time, Borrower and each of its
Subsidiaries.
COMPLIANCE CERTIFICATE means a certificate substantially in the form of
the attached EXHIBIT F and signed by a Responsible Officer.
CONTROL PERCENTAGE means, with respect to any Person (a) in the case of
a corporation, the percentage of the outstanding capital stock of such Person
having ordinary voting power which gives the direct or indirect holder of such
stock the power to elect a majority of the Board of Directors of such Person and
(b) in the case of a limited partnership, the percentage of the outstanding
limited partnership interests of such Person which gives the direct or indirect
holder of such limited partnership interests the power to remove the general
partner or partners of such Person or to take actions reserved for the limited
partners under the applicable limited partnership act.
CONVERSION REQUEST means a request substantially in the form of the
attached EXHIBIT E.
CURRENT FINANCIALS means, at any time, the consolidated Financial
Statements of Borrower and its Subsidiaries most recently delivered to Agent
under SECTIONS 8.1(A) or 8.1(B), as the case may be.
DEBT means (without duplication), for any Person, (a) indebtedness of
such Person for borrowed money; (b) obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (c) obligations of such
Person to pay the deferred purchase price of property or services; (d)
obligations of such Person as lessee under Capitalized Leases required to be
capitalized under GAAP; (e) reimbursement obligations in respect of bonds or
letters of credit; (f) obligations of such Person under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) of such
Person to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness of others of the kinds referred to in
clauses (a) through (e) above; and (g) indebtedness of others of the kinds
referred to in clauses (a) through (f) secured by any Lien on or in respect of
any property of such Person whether or not assumed by such Person; provided,
however, that all trade accounts payable and accrued expenses incurred in the
ordinary course of business of such Person and not overdue shall be excluded
from the foregoing.
DEBTOR RELIEF LAWS means Title 11 of the United States Code and all
other applicable state or federal liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments or similar Laws affecting creditors' Rights in effect from time to
time.
DEFAULT is defined in SECTION 11.
DEFAULT RATE means an annual rate of interest equal from day to day to
the lesser of (a) (i) for the principal of all Borrowings, the applicable
interest rate for such Borrowing plus 2%, or (ii) the then-existing ABR plus 2%
of all fees, interest and other amounts due hereunder and (b) the Maximum Rate.
DISTRIBUTION means, with respect to any shares of any capital stock or
other equity securities or other interests issued by a Person, (a) the
retirement, redemption, purchase or other acquisition for value of those
securities by such Person, (b) the declaration or payment of any dividend on or
with respect to those securities by such Person (except
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distributions in the form of such securities), (c) any loan or advance by that
Person to, or other investment by that Person in, the holder of any of those
securities, and (d) any other payment by that Person with respect to those
securities.
DOLLARS and $ means lawful money of the United States of America.
EBITDAR means, as determined, on a rolling twelve month basis and in
respect of any Person the sum of (i) the Net Income of such Person, plus (ii)
the Interest Expense of such Person for such period as determined in accordance
with GAAP and as such item is reported on such Person's financial statements,
(iii) the income tax expense of such Person for such period, (iv) the amount
reported as the depreciation of the assets of such Person for such period,
computed in accordance with GAAP, and as such item is used in the computation of
such Person's Net Income for such period, (v) the amount reported as the
amortization of intangibles for such Person for such period, computed in
accordance with GAAP, and as such item is used in the computation of such
Person's Net Income for such period, and (vi) Rental Payments.
EMPLOYEE PLAN means an employee pension benefit plan covered by Title
IV of ERISA and established or maintained by any Company.
ENVIRONMENTAL LAW means any Law that relates to the pollution or
protection of the environment or to Hazardous Substances.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and related rules and regulations.
FACILITIES means, collectively, Facility A and Facility B.
FACILITY A is defined in the preamble to this Agreement.
FACILITY A COMMITMENT USAGE means, at any time, the sum of (a) the
Facility A Principal Debt, whether under the Swing Line Subfacility or
otherwise, plus (b) the LC Exposure.
FACILITY A COMMITTED SUM means, at any time, the sum of all Committed
Sums for all Lenders under Facility A (as reduced or cancelled under this
Agreement) then in effect.
FACILITY A MATURITY DATE means the earlier of (a) September 15, 2003,
and (b) the effective date that Lenders' commitments to lend under Facility A
are otherwise cancelled or terminated in accordance with this Agreement.
FACILITY A NOTE means a promissory note substantially in the form of
the attached EXHIBIT A.
FACILITY A PRINCIPAL DEBT means, at any time, the unpaid principal
balance of all Borrowings under Facility A.
FACILITY B is defined in the preamble to this Agreement.
FACILITY B COMMITTED SUM means, at any time, the sum of all Committed
Sums for all Lenders under Facility B (as reduced or cancelled under this
Agreement) then in effect.
FACILITY B MATURITY DATE means the earlier of (a) September 15, 2003 or
(b) the acceleration of maturity of Facility B in accordance with SECTION 12 of
this Agreement.
FACILITY B NOTE means a promissory note substantially in the form of
the attached EXHIBIT B.
FACILITY B PRINCIPAL DEBT means, at any time, the unpaid principal
balance of all Borrowings under Facility B.
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FEDERAL FUNDS RATE means, on any day, the weighted average (rounded
upwards, if necessary, to the nearest 0.01%) equal to the rates on overnight
federal funds transactions with member banks of the Federal Reserve System
arranged by federal funds brokers as published by the Federal Reserve Bank of
New York on the next successive Business Day; provided, however, that (i) if
such day is not a Business Day, the Federal Funds Rate for such day shall be the
rate for such transactions on the next preceding Business Day as published on
the next successive Business Day or, (ii) if those rates are not published for
any Business Day, the Federal Fund Rate shall be the average of the quotations
at approximately 10:00 a.m. on such Business Day received by Agent from three
federal funds brokers of recognized standing selected by Agent in its reasonable
discretion.
FINANCIAL HEDGE means a swap, collar, floor, cap, or other contract
between any Company and any Lender or another Person reasonably acceptable to
Majority Lenders, which is intended to reduce or eliminate the risk of
fluctuations in interest rates and which is legal and enforceable under
applicable Law.
FINANCIAL STATEMENTS of a Person means balance sheets, profit and loss
statements, reconciliations of capital and surplus, and statements of cash flow
prepared (a) according to GAAP, (b) except as stated in SECTION 1.3, in
comparative form to prior year-end figures or corresponding periods of the
preceding fiscal year, as applicable, and (c) on a consolidated basis if that
Person had any consolidated Subsidiaries during the applicable period.
FIXED COVERAGE RATIO means, as determined, on a rolling twelve month
basis the ratio of (a) EBITDAR minus CAPEX for such period, to (b) (i) Rental
Payments, plus (ii) Interest Expense due in respect of Debt for such period of
Borrower and its Subsidiaries on a consolidated basis determined in accordance
with GAAP.
FOUR QUARTER PERIOD means a period of four full consecutive fiscal
quarter-annual periods, taken together as one accounting period; provided,
however, for the (a) first fiscal quarter period following the Closing Date and
ending on December 31, 1998, the income statement times four (4) annualized
shall be utilized; (b) second fiscal quarter period following the Closing Date
and ending March 31, 1999, the six (6) months income statement times two (2)
annualized shall be utilized; and (c) third fiscal quarter period following the
Closing Date and ending June 30, 1999, the nine (9) months income statement
divided by three (3) then multiplied times four (4) annualized shall be
utilized.
FUNDED DEBT means, when determined, on a rolling twelve-month basis,
calculated using the month-end balance for each month on a consolidated basis
for the Companies in accordance with GAAP: (a) indebtedness of such Person for
borrowed money; (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, and (c) obligations of such Person as lessee
under Capitalized Leases; excluding notes generated in the ordinary course of
business payable within one year not to exceed $1,000,000, trade payables and
accrued expenses; provided however, the calculation for the period commencing
with the Closing Date and ending twelve months thereafter, shall be based on the
average of the month-end balance for the months elapsed since the Closing Date.
FUNDING LOSS means, without duplication, (a) the administrative or
reemployment costs customarily charged by any Lender (consistent with such
Lender's policies with respect to its other customers) when (i) Borrower fails
or refuses (for any reason other than Lender's failure to comply with this
Agreement) to take any Borrowing that it has requested under this Agreement, or
(ii) Borrower prepays or pays any Borrowing or converts any Borrowing to a
Borrowing of another Type, in each case, before the last day of the applicable
Interest Period, plus (b) an amount equal to the excess, if any, of the amount
of interest that would have accrued on the Borrowing at the elected interest
rate during the remainder of the applicable Interest Period (but for such
failure, refusal, payment, prepayment or conversion) over the amount of interest
that would accrue on the same Type of Borrowing for an interest period of the
same duration as the remainder of the applicable Interest Period.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable from time to time,
applied on a basis consistent with those used in preparation of the audited
consolidated financial statements referred to in PARAGRAPH (F) of SCHEDULE 6
(except for changes concurred in by Borrower's Accountants).
15
HAZARDOUS SUBSTANCE means any substance (a) the presence of which
requires removal, remediation, or investigation under any Environmental Law, or
(b) that is defined or classified as a hazardous waste, hazardous material,
pollutant, contaminant or toxic or hazardous substance under any Environmental
Law.
INTEREST EXPENSE means, in respect of a Person, for any Four Quarter
Period, all interest paid or accrued and amortization of debt discount with
respect to all Funded Debt of such Person for such period (after giving effect
to the net cost associated with all interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements, or other financial arrangements
designed to protect such Person against fluctuations in interest rates) and
after giving credit for interest income and construction period interest income.
INTEREST PERIOD is determined in accordance with SECTION 3.9.
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions and
interpretations of any Tribunal, as in effect from time to time.
LC means a letter of credit (in such form as shall be customary in
respect of obligations of a similar nature) issued by Agent under this Agreement
and under an LC Agreement.
LC AGREEMENT means a letter of credit application and reimbursement
agreement (in form and substance satisfactory to Agent) submitted by Borrower to
Agent for a letter of credit for the account of any Company.
LC EXPOSURE means, at any time, (without duplication) the sum of (a)
the aggregate undrawn and uncancelled portions of all outstanding LCs plus (b)
the aggregate unpaid reimbursement obligations of Borrower under drawings or
drafts under any LC, excluding Borrowings to fund such reimbursement obligations
under SECTION 2.3(C).
LC REQUEST means a request substantially in the form of the attached
EXHIBIT C.
LEASE FACILITY FUND has the meaning set forth in SECTION 2.1.1.
LENDER LIENS means Liens in favor of Lenders, or Agent on behalf of
Lenders, securing any of the Obligation.
LENDERS means the financial institutions named on the attached SCHEDULE
1 or on the most recently amended SCHEDULE 1, if any, delivered by Agent under
this Agreement, and, subject to this Agreement, their respective successors and
assigns (but not any Participant who is not otherwise a party to this
Agreement).
LIBOR RATE BORROWING means a Borrowing bearing interest at the sum of
the LIBOR Rate plus the Applicable Margin.
LIBOR RATE means, for any LIBOR Rate Borrowing, for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; divided by one minus the
Reserve Percentage (expressed as a decimal) applicable to the relevant Interest
Period. If for any reason such rate is not available, the term "LIBOR Rate"
shall mean, for any LIBOR Rate Borrowing for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds prior
to the claims of other creditors or the owners.
LITIGATION means any action by or before any Tribunal.
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LOAN PAPERS means (a) this Agreement, certificates and reports
delivered under this Agreement, and exhibits and schedules to this Agreement,
(b) the Notes and all agreements, documents and instruments in favor of Agent or
Lenders (or Agent on behalf of Lenders) ever delivered in connection with or
under this Agreement or otherwise delivered in connection with all or any part
of the Obligation, (c) all LCs and LC Agreements, (d) any Financial Hedge
between any Company and any Lender, and (e) all renewals, extensions and
restatements of, and amendments and supplements to, any of the foregoing.
MAJORITY LENDERS means any combination of Lenders holding at least (a)
66-2/3% of the Total Commitment, if no Principal Debt or LC Exposure is
outstanding, or (b) 66-2/3% of the Total Commitment Usage if any Principal Debt
or LC Exposure is outstanding.
MATERIAL ADVERSE EVENT means any circumstance or event that,
individually or collectively with other circumstances or events, reasonably is
expected to result in any (a) impairment of the ability of any Company to
perform any of its payment or other material obligations under any Loan Paper,
(b) impairment of the ability of Agent or any Lender to enforce (i) any of the
material obligations of any Company under this Agreement or (ii) any of their
respective Rights under the Loan Papers, or (c) material and adverse effect on
the business, assets, property or condition (financial or otherwise) of the
Companies as a whole as represented to Lenders in the Current Financials.
MATERIAL AGREEMENT means, for any Person, any agreement (excluding
purchase orders for material or inventory in the ordinary course of business) to
which that Person is a party, by which that Person is bound, or to which any
assets of that Person may be subject, and that is not cancelable by that Person
upon thirty (30) or fewer days' notice without liability for further payment
other than nominal penalty, and that requires that Person to pay more than
$1,000,000 during any 12-month period.
MATURITY DATE means, as applicable, the Facility A Maturity Date, the
Facility B Maturity Date or the Swing Line Maturity Date.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for a Lender, the
maximum non-usurious amount and the maximum non-usurious rate of interest that,
under applicable Law, such Lender is permitted to contract for, charge, take,
reserve or receive on the Obligation.
MINORITY INTERESTS means any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law) that are
not owned by the Borrower and/or one or more of its Wholly-Owned Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests constituting
preferred stock at the voluntary or involuntary liquidating value of such
preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus applicable
thereto adjusted, if necessary, to reflect any changes from the book value of
such common stock required by the foregoing method of valuing Minority Interests
in Preferred Stock.
MULTIEMPLOYER PLAN means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to which any Company
(or any Person that, for purposes of Title IV of ERISA, is a member of
Borrower's controlled group or is under common control with Borrower within the
meaning of Section 414 of the Code) is making, or has made, or is accruing, or
has accrued, an obligation to make contributions.
NET INCOME means, in respect of a Person, the net income of such Person
computed in accordance with GAAP and as such item is reported from time to time
on such Person's statement of income and retained earnings (or similar
statement) (after deduction for payment of all taxes).
NON-U.S. LENDER is defined in SECTION 3.19.
NOTES means all outstanding and unpaid Facility A Notes, Facility B
Notes and the Swing Line Note.
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OBLIGATION means all present and future indebtedness and obligations,
and all renewals, increases and extensions thereof, or any part thereof, now or
hereafter owed to Agent or any Lender by any Company under any Loan Paper,
together with all interest accruing thereon, fees, costs and expenses
(including, without limitation, all attorneys' fees and expenses incurred in the
enforcement or collection thereof) payable under the Loan Papers or in
connection with the protection of Rights under the Loan Papers.
OWNERSHIP GROUP means Peter J. Solomon, Donald Glickman, Richard
Solomon and their spouses or lineal descendants, or any estate of such parties
or any trust of which any of the foregoing are the exclusive beneficiaries.
PARTICIPANT is defined in SECTION 14.12(B).
PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof, established under ERISA.
PERMITTED DEBT means Debt described on the attached SCHEDULE 7.15.
PERMITTED LIENS means Liens described on the attached SCHEDULE 7.11.
PERSON means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof, or any trustee, receiver, custodian or similar official.
POTENTIAL DEFAULT means the occurrence of any event or the existence of
any circumstance that would, upon notice or lapse of time or both, become a
Default.
PREFERRED STOCK means the Borrower's Class C Convertible Preferred
Stock, $1.50 par value per share.
PRIME RATE means, for any day, the rate of interest announced publicly
from time to time by Chase, after taking into account such factors as Agent
shall in its sole discretion deem appropriate, as its prime rate in effect at
its principal office in New York, New York automatically fluctuating upward and
downward with and at the time specified in each such announcement without
special notice to Borrower or any other Person. However, Agent's prime rate may
(i) be one of several interest rates, (ii) serve as a basis upon which effective
rates of interest are from time to time calculated for loans referring to the
prime rate, and (iii) not be Agent's lowest lending interest rate. Agent may
from time to time make various loans at rates of interest having no relationship
to such prime rate.
PRINCIPAL DEBT means, at any time, the unpaid principal balance of all
Borrowings.
PRO RATA and PRO RATA PART means, when determined for any Lender, (a)
if there is no Principal Debt or LC Exposure, the proportion (stated as a
percentage) that such Lender's Committed Sum bears to the Total Commitment, or
(b) if there is any Principal Debt or LC Exposure, the proportion (stated as a
percentage) that the sum of (i) the Principal Debt owed to such Lender and (ii)
and (without duplication) the LC Exposure of such Lender, bears to the (x)
aggregate Principal Debt owed to and (y) (without duplication) the LC Exposure
of all Lenders.
PURCHASER is defined in SECTION 14.12(C).
QUALIFIED ISSUER means any commercial bank (a) which has capital and
surplus in excess of $100,000,000 and (b) the outstanding long term debt
securities of which are rated at least A-2 by Standard & Poors Ratings Group or
at least P-2 by Moody's Investors Service, Inc., or carry an equivalent rating
by a nationally recognized rating agency if both of the two named rating
agencies cease publishing ratings of investments.
REGULATION D means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
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REGULATION U means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
RENTAL PAYMENTS means, as determined, on a rolling twelve month basis
ending on the last day of the accounting period covered by the consolidated
financial statements of Borrower and its Subsidiaries, and delivered pursuant to
this Agreement, the dollar amount of the fixed payments which Borrower or its
Subsidiaries are required to make by the terms of any lease to its landlords
during such period; (a) excluding, however (i) rentals under Capitalized Leases,
(ii) maintenance, repairs, taxes and other similar charges included in such
payments, and (iii) amounts constituting step rent in accordance with GAAP, and
(b) less (x) rental income and (y) amortization of deferred gains on
sale-leasebacks, such amortization not to exceed $1,000,000 for purposes hereto;
provided however, the calculation for the period commencing with the Closing
Date and ending twelve months thereafter, shall be based on (1) the Four Quarter
Period for all lease or ground lease payments which the Borrower or its
Subsidiaries are required to make to Brazos Automotive Properties, L.P., as
lessor under the operating lease with Monro Leasing, LLC, and (2) the average of
all lease or ground lease payments which Borrower or its Subsidiaries are
required to make in connection with properties acquired under the APA.
REPORTABLE EVENT means an event described in Section 4043 of ERISA
excluding any such event for which the notice requirement is waived under
applicable regulations of the PBGC.
REPRESENTATIVES means representatives, officers, directors, employees,
attorneys and agents.
RESERVE PERCENTAGE means, for all Lenders of a LIBOR Rate Borrowing for
the relevant Interest Period, the weighted average of the Reserve Requirements,
if any, incurred by each Lender on its Pro Rata Part of such Borrowing.
RESERVE REQUIREMENT means, with respect to any LIBOR Rate Borrowing for
the relevant Interest Period, the maximum aggregate reserve requirements
(including all basic, supplemental, emergency, special, marginal and other
reserves required by applicable Law) applicable to a member bank of the Federal
Reserve System for eurocurrency fundings or liabilities.
RESPONSIBLE OFFICER means the chairman, president, senior
vice-president, executive vice-president, chief executive officer or chief
financial officer of Borrower.
RIGHTS means rights, remedies, powers, privileges and benefits.
SECURITY DOCUMENTS means, collectively, any security agreement, pledge
agreement, mortgage, deed of trust or other agreement or document, together with
all related financing statements and stock powers, in form and substance
satisfactory to Agent and its legal counsel, executed and delivered by any
Person in connection with this Agreement to create a Lender Lien on any of its
real or personal property, as amended, supplemented or restated from time to
time.
SOLVENT means, as to a Person, that (a) the aggregate fair market value
of its assets exceeds its liabilities, (b) it has sufficient cash flow to enable
it to pay its Debts as they mature, and (c) it does not have unreasonably small
capital to conduct its businesses.
SUBSIDIARY of any Person means any entity of which at least 50% (in
number of votes) of the stock (or equivalent interests) is owned of record or
beneficially, directly or indirectly, by that Person.
SWING LINE BORROWING means any Borrowing under the Swing Line
Subfacility.
SWING LINE MATURITY DATE means the earlier of (a) September 15, 2003 or
(b) the date of the acceleration of maturity of the Swing Line Subfacility in
accordance with Section 12.
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SWING LINE NOTE means a promissory note substantially in the form of
the attached EXHIBIT B-1, as amended, supplemented, and restated.
SWING LINE SUBFACILITY means the facility under Facility A described in
SECTION 2.4.
SYNDICATION AGENT means Fleet National Bank, and its successors or
successors as syndication agent under this Agreement.
TANGIBLE ASSETS of any Person means, as of the date of any
determination thereof, the total amount of all assets of such Person (less
depreciation, depletion and other properly deductible valuation reserves) after
deducting the following: good will, patents, trade names, trade marks,
copyrights, franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets (other than prepaid insurance and
deferred taxes), any write up in the book value of any asset resulting from a
revaluation thereof subsequent to December 31, 1998, and such other assets as
are properly classified as "intangible assets" in accordance with GAAP.
TANGIBLE NET WORTH means as of the date of any determination thereof,
the sum of the capital stock of all classes, paid-in-capital and surplus
accounts (net of treasury shares) plus (or minus in the case of a deficit) the
retained earnings of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP, after elimination of Minority
Interests, less all assets which are not Tangible Assets.
TAXES means, for any Person, taxes, assessments or other governmental
charges or levies imposed upon it, its income, or any of its properties,
franchises or assets.
TOTAL COMMITMENT means, at any time, the sum of the Facility A
Committed Sum and the Facility B Committed Sum.
TOTAL COMMITMENT USAGE means, at any time, the sum of (a) the Facility
A Commitment Usage and (b) the Facility B Principal Debt.
TRIBUNAL means any (a) local, state, or federal judicial, executive, or
legislative instrumentality, (b) private arbitration board or panel having
binding authority with respect to any party to be bound thereby pursuant to a
written agreement entered into by such party, or (c) central bank.
TYPE means any type of Borrowing determined with respect to the
applicable interest option.
UCP means the Uniform Customs and Practices for Documentary Credit
(1993 version), International Chamber of Commerce Publication No. 500 (as
amended or modified from time to time).
WHOLLY-OWNED SUBSIDIARY means a Subsidiary owned 100% by Borrower.
1.2 NUMBER AND GENDER OF WORDS. The singular includes the plural where
appropriate and vice versa, and words of any gender include each other gender
where appropriate.
1.3 ACCOUNTING PRINCIPLES. Unless otherwise stated, (a) GAAP determines
all accounting and financial terms and compliance with financial covenants, (b)
all accounting principles applied in a current period must be consistent in all
material respects with those applied during the preceding comparable period,
unless (i) the Borrower shall have objected in writing to determining such
compliance on such basis within ten (10) days of delivery to the Agent of the
financial statements relating to such period, or (ii) the Majority Lenders shall
so object in writing within thirty (30) days after receipt of such financial
statements, in either of which events such calculations shall be made on a basis
consistent with those used in the preparation of the latest financial statements
as to which such objection shall not have been made (which, if objection is made
in respect of the first financial statements delivered under SECTION 8.1 hereof,
shall mean the Current Financials), and (c) the Borrower shall deliver to the
Agent at the same time as the delivery of any annual or quarterly financial
statement under SECTION 8.1 hereof (i) a description in reasonable detail
20
of any material variation between the application of accounting principles
employed in the preparation of such statement and the application of accounting
principles employed in the preparation of the next preceding annual or quarterly
financial statements as to which no objection has been made in accordance with
the last sentence of PARAGRAPH (A) above and (ii) reasonable estimates of the
difference between such statements arising as a consequence thereof.
SECTION 2 COMMITMENT.
2.1 FACILITIES A AND B. Subject to the provisions in the Loan Papers,
each Lender severally and not jointly agrees to lend to Borrower under Facility
A and under Facility B on the following conditions:
2.1.1 FACILITY A. Each Lender agrees to lend to Borrower its
Pro Rata Part of one or more Borrowings under Facility A which Borrower
may borrow, repay and reborrow under this Agreement;
(a) Each Borrowing under Facility A must occur on a
Business Day and no later than the Business Day immediately
preceding the Facility A Maturity Date;
(b) Each Borrowing must be in an amount not less
than (i) $1,000,000 or a greater integral multiple of $100,000
(if an ABR Borrowing other than a Swing Line Borrowing) or
(ii) $2,000,000 or a greater integral multiple of $100,000 (if
a LIBOR Rate Borrowing);
(c) When determined, (i) the Facility A Commitment
Usage may not exceed the Facility A Committed Sum, (ii) no
Lender's Pro Rata Part of the Facility A Commitment Usage may
exceed such Lender's Facility A Committed Sum, and (iii) the
Facility A Commitment Usage, when aggregated with the Facility
B Principal Debt may not exceed the Total Commitment;
(d) The Borrower shall make a Borrowing under
Facility A on the Closing Date in an amount sufficient to
refinance its existing revolving credit facility with The
Chase Manhattan Bank, as Agent; and
(e) The principal amount of $2,512,300 of the
Facility A Committed Sum shall be available to Borrower from
the date hereof until March 15, 1999, (the "LEASE FACILITY
FUND") at which time the Facility A Committed Sum shall be
permanently reduced by the Lease Facility Fund and no amounts
of the Lease Facility Fund may be drawn by Borrower
thereafter. Borrowings from the Lease Facility Fund shall be
used solely for the purchase by Borrower of certain designated
properties approved by Agent and subject to the lease
agreements between Monro Leasing, LLC, a Delaware limited
liability company, and a Wholly Owned Subsidiary of Borrower,
as Lessee, and Brazos Automotive Properties, L.P., as Lessor.
2.1.2 FACILITY B. Each Lender agrees to lend to Borrower its
Pro Rata Part of one Borrowing under Facility B, a term loan under
which Borrower may borrow and may repay or prepay under the terms of
this Agreement, but under which a Borrowing, after it has been paid or
prepaid, may not be reborrowed.
Borrowings are subject to the following conditions:
(a) The Borrowing under Facility B must occur on
the Closing Date;
(b) The Borrowing must be in an amount equal to the
Facility B Committed Sum; and
(c) The Facility B Principal Debt may not exceed
the Facility B Committed Sum.
2.2 BORROWING PROCEDURE. The following procedures apply to Borrowings
other than Swing Line Borrowings (see SECTION 2.4) and drawings under an LC (see
SECTION 2.3):
21
(a) Borrower may request a Borrowing by submitting to Agent
a Borrowing Request. The Borrowing Request must be received by Agent no
later than (i) 12:00 noon on the third Business Day preceding the
Borrowing Date for any LIBOR Rate Borrowing or (ii) 11:00 a.m. on the
Borrowing Date for any ABR Borrowing. Agent shall promptly notify each
Lender of its receipt of any Borrowing Request and its contents. A
Borrowing Request is irrevocable and binding on Borrower.
(b) By 2:00 p.m. on the applicable Borrowing Date, each
Lender shall remit its Pro Rata Part of each requested Borrowing by
wire transfer to Agent pursuant to Agent's wire transfer instructions
on SCHEDULE 1 (or as otherwise directed by Agent) in funds that are
available for immediate use by Agent. Subject to receipt of such funds,
Agent shall make such funds available to Borrower as directed in the
Borrowing Request (unless it has actual knowledge that any applicable
condition precedent either has not been satisfied by Borrower or has
been waived by Majority Lenders).
(c) Absent contrary written notice from a Lender, Agent may
assume that each Lender has made its Pro Rata Part of the requested
Borrowing available to Agent on the applicable Borrowing Date, and
Agent may, in reliance upon such assumption (but is not required to),
make available to Borrower a corresponding amount. If a Lender fails to
make its Pro Rata Part of any requested Borrowing available to Agent on
the applicable Borrowing Date, Agent may recover the applicable amount
on demand (i) from that Lender, together with interest at the Federal
Funds Rate for the period commencing on the date the amount was made
available to Borrower by Agent and ending on (but excluding) the date
Agent recovers the amount from that Lender, or (ii), if that Lender
fails to pay its amount upon demand, then from Borrower, together with
interest at an annual interest rate equal to the rate applicable to the
requested Borrowing for the period commencing on the Borrowing Date and
ending on (but excluding) the date Agent recovers the amount from
Borrower. No Lender is responsible for the failure of any other Lender
to make its Pro Rata Part of any Borrowing.
2.3 LC SUBFACILITY.
(a) Subject to the terms and conditions of this Agreement
and applicable Law, Agent agrees to issue LCs under Facility A upon
Borrower's delivery of an LC Request and a duly executed LC Agreement,
each of which must be received by Agent no later than 12:00 noon on the
third Business Day before the requested LC is to be issued; provided
that the LC Exposure may not exceed $7,000,000 and the Facility A
Commitment Usage may not exceed the Facility A Commitment Sum. Each LC
must expire no later than the earlier of five (5) days before the
Facility A Maturity Date and one (1) year after such LC's issuance
(provided that, LCs may, if so requested by Borrower, be self-extending
with up to one hundred twenty (120) days cancellation notice by Agent
to beneficiary).
(b) Immediately upon Agent's issuance of any LC, Agent shall
be deemed to have sold and transferred to each other Lender, and each
other Lender shall be deemed irrevocably and unconditionally to have
purchased and received from Agent, without recourse or warranty, an
undivided interest and participation (to the extent of such Lender's
Pro Rata Part of the Facility A Commitment Sum) in the LC and all
applicable Rights of Agent in the LC (other than Rights to receive
certain fees provided for in SECTION 4.3). Agent agrees to provide a
copy of each LC to each other Lender promptly after issuance. However,
Agent's failure to promptly send to Lenders a copy of an issued LC
shall not affect the rights and obligations of Agent and Lenders under
this Agreement.
(c) To induce Agent to issue and maintain LCs, and to induce
Lenders to participate in issued LCs, Borrower agrees to pay or
reimburse Agent (i) within one (1) Business Day after Borrower receives
notice from Agent that any draft or draw request has been properly
presented under any LC, or, if the draft of draw request is for payment
at a future date, within one (1) Business Day before the payment date
specified in the draw request, the amount paid or to be paid by Agent
and (ii) promptly, upon demand, the amount of any additional fees Agent
customarily charges for the application and issuance of an LC, for
confirming, negotiating or amending LC Agreements, for honoring drafts
and draw requests, and taking similar action in
22
connection with letters of credit. If Borrower does not timely pay or
reimburse Agent for any drafts or draw requests paid or to be paid,
Agent shall fund Borrower's reimbursement obligations as an ABR
Borrowing under Facility A and the proceeds of the Facility A ABR
Borrowing shall be advanced directly to Agent to pay Borrower's unpaid
reimbursement obligations. If funds cannot be advanced under Facility A
for the immediately preceding sentence to fund the reimbursement
obligations as a Borrowing under Facility A, then Borrower's
reimbursement obligation shall constitute a demand obligation.
Borrower's reimbursement obligations shall accrue interest (x) at the
ABR plus the Applicable Margin from the date Agent pays the applicable
draft or draw request through the date Agent is paid or reimbursed by
Borrower and, (y) if funds are not advanced under Facility A, at the
Default Rate from the date Agent pays the applicable draft or draw
request through the date Agent is paid or reimbursed by Borrower.
Borrower's obligations under this SECTION 2.3(C) are absolute and
unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defense to payment that Borrower may have at
any time against Agent or any other Person. Agent shall promptly
distribute reimbursement payments received from Borrower to all Lenders
according to their Pro Rata Part of the Facility A Commitment Sum.
(d) Agent shall promptly notify Borrower of the date and
amount of any draft or draw request presented for honor under any LC
(but failure to give notice will not affect Borrower's obligations
under this Agreement). Agent shall pay the requested amount upon
presentment of a draft or draw request unless presentment on its face
does not comply with the terms of the applicable LC. When making
payment, Agent may disregard (i) any default or potential default that
exists under any other agreement and (ii) obligations under any other
agreement that have or have not been performed by the beneficiary or
any other Person (and Agent is not liable for any of those
obligations). Borrower's reimbursement obligations to Agent and
Lenders, and each Lender's obligations to Agent, under this SECTION 2.3
are absolute and unconditional irrespective of, and Agent is not
responsible for, (1) the validity, enforceability, sufficiency,
accuracy or genuineness of documents or endorsements (even if they are
in any respect invalid, unenforceable, insufficient, inaccurate,
fraudulent or forged), (2) any dispute by any Company with or any
Company's claims, setoffs, defenses, counterclaims or other Rights
against Agent, any Lender or any other Person, or (iii) the occurrence
of any Potential Default or Default.
(e) If Borrower fails to reimburse Agent as provided in
SECTION 2.3(C) and funds are not advanced under Facility A to satisfy
the reimbursement obligations, Agent shall promptly notify each Lender
of Borrower's failure, of the date and amount paid, and of each
Lender's Pro Rata Part of the unreimbursed amount. Each Lender shall
promptly and unconditionally make available to Agent in immediately
available funds its Pro Rata Part of the unpaid reimbursement
obligation. Such funds are due and payable to Agent before the close of
business on (i) the Business Day Agent gives notice to each Lender of
Borrower's reimbursement failure if the notice is received by a Lender
before 2:00 p.m. in the time zone where such Lender's office listed on
SCHEDULE 1 is located, or (ii) on the next succeeding Business Day
after the Business Day Agent gives notice to each Lender of Borrower's
reimbursement failure, if notice is received after 2:00 p.m. in the
time zone where such Lender's office listed on SCHEDULE 1 is located.
All amounts payable by any Lender accrue interest at the Federal Funds
Rate from the day the applicable draft or draw is paid by Agent to (but
not including) the date the amount is paid by the Lender to Agent.
(f) Borrower acknowledges that each LC is deemed issued upon
delivery to the beneficiary or Borrower. If Borrower requests that any
LC be delivered to Borrower rather than the beneficiary, and Borrower
subsequently cancels that LC, Borrower agrees to return it to Agent
together with Borrower's written certification that it has never been
delivered to the beneficiary. If any LC is delivered to the beneficiary
under Borrower's instructions, Borrower's cancellation is ineffective
without Agent's receipt of the LC and the beneficiary's written consent
to the cancellation.
(g) Agent agrees with each Lender that it will examine all
documents with reasonable care to ascertain that they appear on their
face to be in accordance with the terms and conditions of the LC. Each
Lender and Borrower agree that, in paying any draft or draw under any
LC, Agent has no responsibility to obtain any document (other than any
documents expressly required by the respective LC) or to ascertain or
23
inquire as to any document's validity, enforceability, sufficiency,
accuracy or genuineness or the authority of any Person delivering it.
Neither Agent nor its Representatives will be liable to any Lender or
any Company for any LC's use or for any beneficiary's acts or
omissions. Any action, inaction, error, delay or omission taken or
suffered by Agent or any of its Representatives in connection with any
LC, applicable draws, drafts or documents, or the transmission,
dispatch or delivery of any related message or advice, if in conformity
with applicable Laws and in accordance with the standards of care
specified in the UCP, is binding upon the Companies and Lenders. Agent
is not liable to any Company or any Lender for any action taken or
omitted by Agent or its Representative in connection with any LC in the
absence of gross negligence or willful misconduct.
(h) On the Facility A Maturity Date, upon a termination
under SECTION 2.5, during the continuance of a Default under SECTION
11.3, or upon any demand by Agent during the continuance of any other
Default, Borrower shall provide to Agent, for the benefit of Lenders,
cash collateral in an amount equal to the then-existing LC Exposure.
Any cash collateral provided by Borrower to Agent in accordance with
this SECTION 2.3(H) shall be deposited by Agent in an interest bearing
cash collateral account maintained with Agent at the office of Agent
and invested in obligations issued or guaranteed by the United States
and, upon the surrender of any LC, Agent shall deliver the appropriate
funds on deposit in such collateral account to Borrower together with
interest accrued on such funds.
(i) BORROWER SHALL PROTECT, INDEMNIFY, PAY, AND SAVE AGENT,
EACH LENDER AND THEIR RESPECTIVE REPRESENTATIVES HARMLESS FROM AND
AGAINST ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, DAMAGES, LOSSES,
COSTS, CHARGES AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES)
WHICH ANY OF THEM MAY INCUR OR BE SUBJECT TO AS A CONSEQUENCE OF THE
ISSUANCE OF ANY LC, ANY DISPUTE ABOUT IT, ANY CANCELLATION OF ANY LC BY
BORROWER, OR THE FAILURE OF AGENT TO HONOR A DRAFT OR DRAW REQUEST
UNDER ANY LC AS A RESULT OF ANY ACT OR OMISSION (WHETHER RIGHT OR
WRONG) OF ANY PRESENT OR FUTURE TRIBUNAL. HOWEVER, NO PERSON IS
ENTITLED TO INDEMNITY UNDER THE FOREGOING FOR ITS OWN GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT. THE PROVISIONS OF AND UNDERTAKINGS AND
INDEMNIFICATION SET FORTH IN THIS PARAGRAPH SHALL SURVIVE THE
SATISFACTION AND PAYMENT OF THE OBLIGATION AND TERMINATION OF THIS
AGREEMENT.
(j) Although referenced in any LC, terms of any particular
agreement or other obligation to the beneficiary are not incorporated
into this Agreement in any manner. The fees and other amounts payable
with respect to each LC are as provided in this Agreement, drafts and
draws under each LC are part of the Obligation, and the terms of this
Agreement control any conflict between the terms of this Agreement and
any LC Agreement.
2.4 SWING LINE SUBFACILITY.
(a) For the convenience of the parties, the Agent, solely
for its own account, may make any requested Borrowing of not less than
$500,000 (or a greater integral multiple of $100,000) directly to
Borrower as a Swing Line Borrowing without requiring each other Lender
to fund its Pro Rata Part thereof unless and until SECTION 2.4(B) is
applicable. Swing Line Borrowings are subject to the following
conditions:
(i) Each Swing Line Borrowing must occur on a
Business Day before the Swing Line Maturity Date;
(ii) When determined, (x) the aggregate Swing Line
Debt outstanding may not exceed $2,000,000, (y) the Facility A
Commitment Usage may not exceed the Facility A Committed Sum
and (z) the Facility A Commitment Usage, when aggregated with
the Facility B Principal Debt, may not exceed the Total
Commitment;
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(iii) On any date when Borrowings equal to or in
excess of $2,000,000 are funded under Facility A, all or a
portion of the proceeds of those Borrowings shall be used to
repay in full all indebtedness then outstanding under the
Swing Line Subfacility;
(iv) Each Swing Line Borrowing is deemed an ABR
Borrowing; and
(v) Each Borrowing under the Swing Line
Subfacility is available and may be prepaid on same-day
telephonic notice from Borrower to Agent, if notice is
received by Agent before 11:00 a.m.
(b) If Borrower fails to repay any Swing Line Borrowing within
two (2) Business Days after demand by Agent (or upon the earliest to
occur of a Default, the Facility A Termination Date, or the date when
the aggregate Committed Sums of all Lenders under the entire Facility A
are cancelled), Agent shall promptly notify each Lender of Borrower's
failure and the unpaid amount. No later than the close of business on
the date Agent gives notice (if notice is given before 12:00 noon on
any Business Day, or, if made at any other time, on the next Business
Day following the date of notice), each Lender shall irrevocably and
unconditionally purchase and receive from Agent a ratable participation
in such Swing Line Borrowing and shall make available to Agent in
immediately available funds its Pro Rata Part of such unpaid amount,
together with interest from the date when its payment was due to, but
not including, the date of payment, at the Federal Funds Rate. If a
Lender does not promptly pay its amount upon Agent's demand, and until
Lender makes the required payment, Agent is deemed to continue to have
outstanding a Swing Line Borrowing in the amount of the Lender's unpaid
obligation. Borrower shall make each payment of all or any part of any
Swing Line Borrowing to Agent for the ratable benefit of Agent and
those Lenders who have funded their participations in Swing Line
Borrowings under this SECTION 2.4(b) (but all interest accruing on
Swing Line Borrowings before the funding date of any participation is
payable solely to Agent for its own account).
2.5 TERMINATION. Without premium or penalty, and upon giving
at least ten (10) Business Days prior written and irrevocable notice to
Agent, Borrower may terminate all or part of the unused portion of the
Facility A Committed Sum. Each partial termination must be in an amount
of not less than $5,000,000 or a greater integral multiple of
$1,000,000, and shall be Pro Rata among all Lenders. Once terminated,
the Committed Sum for Facility A may not be increased or reinstated.
SECTION 3 TERMS OF PAYMENT.
3.1 NOTES AND PAYMENTS.
(a (i) The Facility A Principal Debt shall be evidenced
by the Facility A Notes, one payable to each Lender in the stated
principal amount of its Committed Sum for Facility A.
(ii) The Facility B Principal Debt shall be
evidenced by the Facility B Notes, one payable to each Lender in the
stated principal amount of its Committed Sum for Facility B.
(iii) Principal Debt under the Swing Line Subfacility
shall be evidenced by a Swing Line Note payable to the Agent in the
stated principal amount of $2,000,000.
(b Borrower must make each payment and prepayment on the
Obligation, without offset, counterclaim, or deduction, to Agent's
principal office in New York, New York, in funds that will be available
for immediate use by Agent by 12:00 noon on the day due. Payments
received after such time shall be deemed received on the next Business
Day. Agent shall pay to each Lender any payment to which that Lender is
entitled on the same day Agent receives the funds from Borrower if
Agent receives the payment or prepayment before 12:00 noon, and
otherwise before 12:00 noon on the following Business Day. If and to
the extent that Agent does not make payments to Lenders when due,
unpaid amounts shall accrue interest at the Federal Funds Rate from the
due date until (but not including) the payment date.
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3.2 INTEREST AND PRINCIPAL PAYMENTS.
(a INTEREST PAYMENTS. Accrued interest on each Borrowing
is due and payable on the last day of its respective Interest Period.
If any Interest Period with respect to a LIBOR Rate Borrowing is a
period greater than three (3) months, then accrued interest is also due
and payable on the date three (3) months after the commencement of the
Interest Period. Accrued interest on each ABR Borrowing is due and
payable on each March 31, June 30, September 30, and December 31
(commencing September 30, 1998) and on the Maturity Date.
(b PRINCIPAL PAYMENTS.
(i The Facility A Principal Debt is due and
payable on the Facility A Maturity Date.
(ii Principal payments on the Facility B Note
are due and payable as follows: (a) commencing on September 30, 1999
and continuing quarterly thereafter on each December 31, March 31, June
30, and September 30 thereafter through June 30, 2001 in quarterly
payments, each in the amount of $1,250,000, (b) commencing on September
30, 2001 and continuing quarterly thereafter on each December 31, March
31, June 30, and September 30 thereafter until the Facility B Maturity
Date in quarterly payments, each in the amount of $1,875,000, (c) on
the Facility B Maturity Date when the entire unpaid principal balance
shall be due and payable.
(c MANDATORY REDUCTION.
(i The Facility A Committed Sums and Facility B
Committed Sums, as applicable, shall be permanently reduced to
the amounts specified below on the corresponding reduction
date set forth below:
MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS: The
following amounts shall be applied to prepay the Facilities.
(1) 100% of the net proceeds of any sale
or issuance of equity of the
Borrower, except as provided in
CLAUSE (3) below or for Securities
issued pursuant to employee stock
options or similar plans;
(2) 100% of the net proceeds of any sale
or other disposition by the Borrower
or any of its subsidiaries of any
assets (except for sales permitted
under Section 9.10);
(3) 100% of the first $25,000,000 of net
proceeds resulting from the issuance
by Borrower of convertible preferred
securities or subordinated debt, and
75% of the net proceeds of any
subordinated debt issued thereafter,
shall be applied FIRST, to the
prepayment of Facility B Principal
Debt and reduction of Facility B
Committed Sum and, SECOND, to the
prepayment of Facility A Principal
Debt and reduction of Facility A
Committed Sum, each in accordance
with this SECTION 3.2(C).
All such proceeds shall be applied in the
following priority: (A) first, to the
permanent reduction of the Facility B
Principal Debt and such amount shall be
applied ratably to each remaining principal
payment so that the Facility B Note matures
on the Facility B Maturity Date, and (B)
second, all remaining proceeds shall be
applied to the reduction of the Facility A
Principal Debt and shall permanently reduce
the Facility A Committed Sum.
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(ii The Facility B Committed Sum shall be
permanently reduced on the last day of each calendar quarter
by an amount necessary to satisfy the scheduled reduction with
a final payment to be made on the Facility B Maturity Date
equal to all amounts then outstanding under Facility B.
(d MANDATORY PREPAYMENT. If (i) the Facility A Commitment
Usage ever exceeds the Facility A Committed Sum, (ii) the Facility B
Principal Debt ever exceeds the Facility B Committed Sum, (iii) the sum
of the Facility A Principal Debt and the Facility B Principal Debt,
together with the LC Exposure, ever exceeds the Total Commitment, (iv)
Borrower's property becomes the subject of a casualty or condemnation,
the proceeds of which exceed $500,000 in the aggregate, then Borrower
shall prepay (1) the Principal Debt under Facility A or Facility B, as
the case may be, in at least the amount of the excess described in (i)
through (iii) above, (2) the Principal Debt under Facility A by the
amount of proceeds of sales described in SECTION 3.2(C)(I)(2) above,
and (3) the Principal Debt under Facility A by the amount of proceeds
of casualty or condemnation described in (iv) above, together with (x)
all accrued and unpaid interest on the principal amount so prepaid and
(y) any resulting Funding Loss; provided, however, that Borrower shall
not be required to make any prepayment required by this SECTION3.2(D)
until the last day of the Interest Period with respect to such
Principal Debt so long as an amount equal to such prepayment is
deposited by Borrower in a cash collateral account with Agent to be
held in such account on terms reasonably satisfactory to Agent..
(e VOLUNTARY PREPAYMENT. Borrower may voluntarily repay or
prepay all or any part of the Principal Debt at any time without
premium or penalty, subject to the following conditions:
(i Agent must receive Borrower's written payment
notice by (A) 12:00 noon on the third Business Day preceding
the date of payment of a LIBOR Rate Borrowing and (B) 11:00
a.m. on the date of payment of an ABR Borrowing which shall
specify the payment date, the facility or the subfacility
under this Agreement being paid and the Type and amount of the
Borrowing(s) to be paid, and which shall constitute an
irrevocable and binding obligation of Borrower to make a
repayment or prepayment on the designated date;
(ii each partial repayment or prepayment must be
in a minimum amount of at least $2,000,000 or a greater
integral multiple of $100,000 (if a LIBOR Rate Borrowing), or
$1,000,000 or a greater integral multiple of $100,000 (if an
ABR Borrowing other than under the Swing Line Subfacility) or
$500,000 or a greater multiple (if a Borrowing under the Swing
Line Subfacility);
(iii all accrued interest on the portion of the
Obligation being prepaid must also be paid in full on the date
of payment; and
(iv Borrower shall pay any related Funding Loss
upon demand.
3.3 INTEREST OPTIONS. Except as specifically otherwise provided,
Borrowings bear interest at an annual rate equal to the lesser of (a) the ABR
plus the Applicable Margin or LIBOR plus the Applicable Margin (in each case as
designated or deemed designated by Borrower and, in the case of LIBOR Rate
Borrowings, for the Interest Period designated by Borrower), as the case may be,
and (b) the Maximum Rate. Each change in the ABR and Maximum Rate is effective,
without notice to Borrower or any other Person, upon the effective date of
change.
3.4 QUOTATION OF RATES. A Responsible Officer of Borrower may call
Agent before delivering a Borrowing Request to receive an indication of the
interest rates then in effect, but the indicated rates do not bind Agent or
Lenders or affect the interest rate that is actually in effect when Borrower
delivers its Borrowing Request or on the Borrowing Date.
3.5 DEFAULT RATE. If permitted by Law, all past-due Principal Debt,
Borrower's past-due payment and reimbursement obligations in connection with
LCs, and past-due interest accruing on any of the foregoing, bears
27
interest from the date due (stated or by acceleration) at the Default Rate until
paid, regardless whether payment is made before or after entry of a judgment.
3.6 INTEREST RECAPTURE. If the designated interest rate applicable
to any Borrowing exceeds the Maximum Rate, the interest rate on that Borrowing
is limited to the Maximum Rate, but, to the extent permitted by applicable Laws,
any subsequent reductions in the designated rate shall not reduce the interest
rate thereon below the Maximum Rate until the total amount of accrued interest
equals the amount of interest that would have accrued if that designated rate
had always been in effect. If at maturity (stated or by acceleration), or at
final payment of the Notes, the total interest paid or accrued is less than the
interest that would have accrued if the designated rates had always been in
effect, then, at that time and to the extent permitted by applicable Law,
Borrower shall pay an amount equal to the difference between (a) the lesser of
the amount of interest that would have accrued if the designated rates had
always been in effect and the amount of interest that would have accrued if the
Maximum Rate had always been in effect, and (b) the amount of interest actually
paid or accrued on the Notes.
3.7 INTEREST CALCULATIONS.
(a Interest will be calculated on the basis of actual
number of days elapsed (including the first day but excluding the last
day) but computed as if each calendar year consisted of three hundred
sixty (360) days for LIBOR Rate Borrowings (unless the calculation
would result in an interest rate greater than the Maximum Rate, in
which event interest will be calculated on the basis of a year of 365
or 366 days, as the case may be), and 365 or 366 days, as the case may
be, for ABR Borrowings. All interest rate determinations and
calculations by Agent are conclusive and binding absent manifest error.
(b The provisions of this Agreement relating to calculation
of the ABR and LIBOR Rates are included only for the purpose of
determining the rate of interest or other amounts to be paid under this
Agreement that are based upon those rates.
3.8 MAXIMUM RATE. Regardless of any provision contained in any
Loan Paper or any document related thereto, it is the intent of the parties to
this Agreement that neither Agent nor any Lender contract for, charge, take,
reserve, receive or apply, as interest on all or any part of the Obligation any
amount in excess of the Maximum Rate or the Maximum Amount or receive any
unearned interest in violation of any applicable Law, and, if Lenders ever do
so, then any excess shall be treated as a partial repayment or prepayment of
principal and any remaining excess shall be refunded to Borrower. In determining
if the interest paid or payable exceeds the Maximum Rate, Borrower and Lenders
shall, to the maximum extent permitted under applicable Law, (a) treat all
Borrowings as but a single extension of credit (and Lenders and Borrower agree
that is the case and that provision in this Agreement for multiple Borrowings is
for convenience only), (b) characterize any nonprincipal payment as an expense,
fee or premium rather than as interest, (c) exclude voluntary repayments or
prepayments and their effects, and (d) amortize, prorate, allocate and spread
the total amount of interest throughout the entire contemplated term of the
Obligation. However, if the Obligation is paid in full before the end of its
full contemplated term, and if the interest received for its actual period of
existence exceeds the Maximum Amount, Lenders shall refund any excess (and
Lenders may not, to the extent permitted by Law, be subject to any penalties
provided by any Laws for contracting for, charging, taking, reserving or
receiving interest in excess of the Maximum Amount).
3.9 INTEREST PERIODS. When Borrower requests any LIBOR Rate
Borrowing, Borrower may elect the applicable interest period (each an "INTEREST
PERIOD"), which may be, at Borrower's option, one (1) , two (2) , three (3) or
six (6) months for LIBOR Rate Borrowings, subject to the following conditions:
(a) the initial Interest Period for a LIBOR Rate Borrowing commences on the
applicable Borrowing Date or conversion date, and each subsequent Interest
Period applicable to any Borrowing commences on the day when the next preceding
applicable Interest Period expires; (b) if any Interest Period for a LIBOR Rate
Borrowing begins on a day for which there exists no numerically corresponding
Business Day in the calendar month at the end of the Interest Period ("ENDING
CALENDAR MONTH"), then the Interest Period ends on the next succeeding Business
Day of the Ending Calendar Month, unless there is no succeeding Business Day in
the Ending Calendar Month in which case the Interest Period ends on the next
preceding Business Day of the Ending Calendar Month; (C) no Interest Period for
any portion of Principal Debt may extend beyond
28
the scheduled repayment date for that portion of Principal Debt; and (d) there
may not be in effect at any one time more than six (6) Interest Periods under
Facility A.
3.10 CONVERSIONS. Borrower may (a) on the last day of the
applicable Interest Period convert all or part of a LIBOR Rate Borrowing to an
ABR Borrowing (b) at any time convert all or part of an ABR Borrowing to a LIBOR
Rate Borrowing, and (c) elect a new Interest Period for a LIBOR Rate Borrowing.
Any such conversion is subject to the dollar limits and denominations of SECTION
2.1 and may be accomplished by delivering a Conversion Request to Agent no later
than (i) 12:00 noon on the third Business Day before the conversion date for
conversion to a LIBOR Rate Borrowing and the last day of the Interest Period,
for the election of a new Interest Period, and (ii) 11:00 a.m. on the last day
of the Interest Period for conversion to an ABR Borrowing. Absent Borrower's
notice of conversion or election of a new Interest Period, a LIBOR Rate
Borrowing shall be converted to an ABR Borrowing when the applicable Interest
Period expires.
3.11 ORDER OF APPLICATION.
(a If no Default or Potential Default exists, any payment
shall be applied to the Obligation in the order and manner as provided
in this Agreement.
(b If a Default or Potential Default exists, any payment
(including proceeds from the exercise of any Rights) shall be applied
in the following order: (i) to all fees and expenses for which Agent or
Lenders have not been paid or reimbursed in accordance with the Loan
Papers (and if such payment is less than all unpaid or unreimbursed
fees and expenses, then the payment shall be paid against unpaid and
unreimbursed fees and expenses in the order of incurrence or due date);
(ii) to accrued interest on the Principal Debt; (iii) to the Principal
of Debt outstanding under the Swing Line Subfacility; (iv) to any LC
reimbursement obligations that are due and payable and that remain
unfunded by any Borrowing under Facility A; (v) to the remaining
Obligation in the order and manner Majority Lenders deem appropriate;
and (vi) as a deposit with Agent, for the benefit of Lenders, as
security for and payment of any subsequent LC reimbursement
obligations.
3.12 SHARING OF PAYMENTS, ETC.. If any Lender obtains any amount
(whether voluntary, involuntary or otherwise, including, without limitation, as
a result of exercising its Rights under SECTION 3.13) that exceeds its combined
Pro Rata Part of the Total Commitment Usage, then that Lender shall purchase
from the other Lenders participations that will cause the purchasing Lender to
share the excess amount ratably with each other Lender. If all or any portion of
any excess amount is subsequently recovered from the purchasing Lender, then the
purchase shall be rescinded and the purchase price restored to the extent of the
recovery. Borrower agrees that any Lender purchasing a participation from
another Lender under this section may, to the fullest extent permitted by Law,
exercise all of its Rights of payment (including the Right of offset) with
respect to that participation as fully as if that Lender were the direct
creditor of Borrower in the amount of that participation.
3.13 OFFSET. If a Default exists, each Lender is entitled, but is
not obligated, to exercise (for the benefit of all Lenders in accordance with
SECTION 3.12) the Rights of offset and banker's Lien against each and every
account and other property, or any interest therein, that any Company may now or
hereafter have with, or which is now or hereafter in the possession of, that
Lender to the extent of the full amount of the Obligation owed to it.
3.14 BOOKING BORROWINGS. To the extent permitted by Law, any Lender
may make, carry or transfer its Borrowings at, to, or for the account of any of
its branch offices or the office of any of its Affiliates. However, no Affiliate
is entitled to receive any greater payment under SECTION 3.16 than the
transferor Lender would have been entitled to receive with respect to those
Borrowings.
3.15 BASIS UNAVAILABLE OR INADEQUATE FOR LIBOR. If, on or before
any date when LIBOR Rate is to be determined for a Borrowing, Agent or any
Lender determines (and Majority Lenders agree with that determination) that the
basis for determining the applicable rate is not available or that the resulting
rate does not accurately reflect the cost to Lenders of making or converting
Borrowings at that rate for the applicable Interest Period, then Agent shall
29
promptly notify Borrower and Lenders of that determination (which is conclusive
and binding on Borrower absent manifest error) and the applicable Borrowing
shall bear interest at the sum of the ABR plus the Applicable Margin. Until
Agent notifies Borrower that those circumstances no longer exist, Lenders'
commitments under this Agreement to make, or to convert to, LIBOR Rate
Borrowings (as the case may be) will be suspended.
3.16 ADDITIONAL COSTS.
With respect to any Law, requirement, request, directive or
change affecting banking institutions generally:
(a With respect to any LIBOR Rate Borrowing or ABR
Borrowing, if (i) any change in present Law or any future Law imposes,
modifies, or deems applicable (or if compliance by any Lender with any
such requirement of any Tribunal results in) any such requirement that
any reserves (including, without limitation, any marginal, emergency,
supplemental or special reserves) be maintained, and (ii) those
reserves reduce any sums receivable by that Lender under this Agreement
or increase the costs incurred by that Lender in advancing or
maintaining any portion of any LIBOR Rate Borrowing, or ABR Borrowing,
then (unless the effect is already reflected in the rate of interest
then applicable under this Agreement) that Lender (through Agent) shall
deliver to Borrower a certificate setting forth in reasonable detail
the basis and calculation of the amount necessary to compensate it for
its reduction or increase (which certificate is conclusive and binding
absent manifest error), and Borrower shall promptly pay that amount to
that Lender upon demand. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the
satisfaction and payment of the Obligation and termination of this
Agreement.
(b With respect to any Borrowing or LC, if any change in
present Law or any future Law regarding capital adequacy or compliance
by Agent (as issuer of LCs) or any Lender with any request, directive
or requirement now existing or hereafter imposed by any Tribunal
regarding capital adequacy, or any change in its written policies or in
the risk category of this transaction, reduces the rate of return on
its capital as a consequence of its obligations under this Agreement to
a level below that which it otherwise could have achieved (taking into
consideration its policies with respect to capital adequacy) by an
amount deemed by it to be material (and it may, in determining the
amount, use reasonable assumptions and allocations of costs and
expenses and use any reasonable averaging or attribution method), then
(unless the effect is already reflected in the rate of interest then
applicable under this Agreement) Agent or that Lender (through Agent)
shall notify Borrower and deliver to Borrower a certificate setting
forth in reasonable detail the calculation of the amount necessary to
compensate it (which certificate is conclusive and binding absent
manifest error), and Borrower shall promptly pay that amount to Agent
or that Lender upon demand. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the
satisfaction and payment of the Obligation and termination of this
Agreement.
(c Any Taxes payable by Agent or any Lender or ruled (by a
Tribunal) payable by Agent or any Lender in respect of this Agreement
or any other Loan Paper shall, if permitted by Law, be paid by
Borrower, together with interest and penalties, if any (except for
(i)(1) Taxes imposed on or measured by the net income of Agent or that
Lender (2) franchise or similar taxes of the Agent or that Lender and
(3) amounts requested to be withheld for Taxes pursuant to the last
sentence of SECTION 3.19 and (ii) and except for interest and penalties
incurred as a result of the gross negligence or willful misconduct of
Agent or any Lender). Agent or that Lender (through Agent) shall notify
Borrower and deliver to Borrower a certificate setting forth in
reasonable detail the basis and calculation of the amount of payable
Taxes, which certificate is conclusive and binding (absent manifest
error), and Borrower shall promptly pay that amount to Agent for its
account or the account of that Lender, as the case may be. If Agent or
that Lender subsequently receives a refund of the Taxes paid to it by
Borrower, then the recipient shall promptly pay the refund to Borrower.
3.17 CHANGE IN LAWS. If any Law makes it unlawful for any Lender to
make or maintain any Borrowing based on the LIBOR Rate Borrowings, then that
Lender shall promptly notify Borrower and Agent, and (a) as to undisbursed
funds, that requested Borrowing shall be made as an ABR Borrowing subject to the
higher of the Prime Rate and the Federal Funds Rate plus 1%, and (b), as to any
outstanding Borrowing, (i) if maintaining the Borrowing
30
until the last day of the applicable Interest Period is unlawful, the Borrowing
shall be converted to an ABR Borrowing as of the date of notice, and Borrower
shall pay any related Funding Loss, or (ii) if not prohibited by Law, the
Borrowing shall be converted to an ABR Borrowing as of the last day of the
applicable Interest Period, or (iii) if any conversion will not resolve the
unlawfulness, Borrower shall promptly prepay the Borrowing, without penalty,
together with any related Funding Loss.
3.18 FUNDING LOSS. BORROWER AGREES TO INDEMNIFY EACH LENDER
AGAINST, AND PAY TO IT UPON DEMAND, ANY FUNDING LOSS OF THAT LENDER. When any
Lender demands that Borrower pay any Funding Loss, that Lender shall deliver to
Borrower and Agent a certificate setting forth in reasonable detail the basis
for imposing Funding Loss and the calculation of the amount, which calculation
is conclusive and binding absent manifest error. The provisions of and
undertakings and indemnification set forth in this paragraph shall survive the
satisfaction and payment of the Obligation and termination of this Agreement.
3.19 FOREIGN LENDERS. Each Lender that is organized under the Laws
of any jurisdiction other than the United States of America or any State thereof
(a "NON-U.S. LENDER") (a) represents to Agent and Borrower that (i) no Taxes are
required to be withheld by Agent or Borrower with respect to any payments to be
made to it in respect of the Obligation and (ii) it has furnished to Agent and
Borrower two duly completed copies of U.S. Internal Revenue Service Form 4224,
Form 1001, Form W-8, or any other tax form acceptable to Agent and Borrower
(wherein it claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments under the Loan Papers) or, in the case
of a Non-U.S. Lender claiming exemption from U.S. federal tax under Section
871(h) or 881(c) of the Code with respect to payments of "portfolio interest",
Form W-8 or successor applicable form (and, if such Non-U.S. Lender delivers
copies of Form W-8, a certificate representing that such Non-U.S. Lender is not
a bank for purposes of Section 881(c) of the Code, is not a ten percent (10%)
shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the
Code and is not a controlled foreign corporation related to the Borrower within
the meaning of Section 864(d)(4) of the Code), and (b) covenants to (i) provide
Agent and Borrower a new tax form upon the expiration or obsolescence of any
previously delivered form according to Law, duly executed and completed by it,
and (ii) comply from time to time with all Laws with regard to the withholding
tax exemption. If any of the foregoing is not true or the applicable forms are
not provided, then Borrower and Agent (without duplication) may deduct and
withhold from interest payments under the Loan Papers United States federal
income tax at the full rate applicable under the Code. The Borrower shall not be
required to indemnify or pay any additional amounts to any Non-U.S. Lender in
respect of U.S. federal income tax pursuant to this Agreement to the extent that
the obligation to pay U.S. federal income tax would not have occurred but for
the failure of such Non-U.S. Lender to deliver the forms or other certifications
required pursuant to this SECTION 3.19.
SECTION 4 FEES.
4.1 TREATMENT OF FEES. The fees described in this SECTION 4 (a)
are not compensation for the use, detention, or forbearance of money, (b) are in
addition to, and not in lieu of, interest and expenses otherwise described in
this Agreement, (c) are payable in accordance with SECTION 3.1, (d) are
non-refundable, (e) to the fullest extent permitted by Law, bear interest, if
not paid when due, at the Default Rate, and (f) are calculated on the basis of
actual number of days (including the first day but excluding the last day)
elapsed, but computed as if each calendar year consisted of three hundred sixty
(360) days, unless computation would result in an interest rate in excess of the
Maximum Rate in which event the computation is made on the basis of a year of
365 or 366 days, as the case may be. The fees described in this SECTION 4 are in
all events subject to the provisions of SECTION 3.8 of this Agreement.
4.2 INTENTIONALLY OMITTED
4.3 LC FEES. As a condition to the issuance or extension of a LC,
Borrower shall pay to Agent (and such payment shall accompany each LC Request) a
fee equal to (a) one-eighth of one percent (0.125%) multiplied by (b) the face
amount of the LC, payable quarterly in arrears. Borrower shall also pay a
commission on all outstanding LC's at a per annum rate equal to the Applicable
Margin with respect to LIBOR Rate Borrowings on the face amount of each L.C.
Such commission shall be payable quarterly in arrears to Agent for ratable
distribution among the
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Lenders participating in Facility A. Borrower also agrees to pay on demand and
solely for the account of Agent, any and all additional customary LC fees
including those relating to confirming, negotiating or amending LCs.
4.4 FACILITY A COMMITMENT FEE. Borrower shall pay to Agent for the
account of each Lender a commitment fee, payable as it accrues on each March 31,
June 30, September 30, and December 31 (commencing September 30, 1998), and on
the Facility A Maturity Date, equal to the Applicable Margin times the amount by
which (a) such Lender's Facility A Committed Sum exceeds (b) such Lender's
average daily Facility A Commitment Usage, in each case during the calendar
quarter ending on such date. If there is any change in the Applicable Margin
during any quarter, the average daily amount shall be computed and multiplied by
the Applicable Margin separately for each period that such Applicable Margin was
in effect during such quarter.
SECTION 5 SECURITY.
5.1 INTENTIONALLY OMITTED.
5.2 COLLATERAL. Full and complete payment of the Obligation is
secured by all of the property (together with proceeds thereof and any
additional collateral ever furnished under SECTION 5.3, the "COLLATERAL")
described in the following Security Documents: a security agreement in respect
of all accounts receivable, inventory, escrow accounts and other personal
property of the Borrower, a pledge agreement executed by the Borrower of all
owned capital stock of any Subsidiary, provided that the pledge as respects the
capital stock of a foreign Subsidiary shall be limited to sixty-five percent
(65%) of such Subsidiary's capital stock, and a negative pledge agreement of the
Borrower not to encumber any real property, whether owned or leased, with any
Liens not agreed to by Agent.
5.3 ADDITIONAL SECURITY AND GUARANTIES. Agent may, without notice
or demand and without affecting any Person's obligations under the Loan Papers,
from time to time (a) receive and hold additional collateral from any Person for
the payment of all or any part of the Obligation and exchange, enforce or
release all or any part of that collateral and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligation and
release any endorser or guarantor, or any Person who has given any other
security for the payment of all or any part of the Obligation, or any other
Person in any way obligated to pay all or any part of the Obligation.
5.4 FINANCING STATEMENTS. Borrower will execute, or cause to be
executed, financing statements, stock powers and other writings in the form and
content reasonably required by Agent, and Borrower will pay all costs of filing
any financing, continuation or termination statements, or other action taken by
Agent relating to the Collateral, including, without limitation, costs and
expenses of any Lien search reasonably required by Agent.
SECTION 6 CONDITIONS PRECEDENT. Lenders will not be obligated to fund
the initial Borrowing and Agent will not be obligated to issue the initial LC,
unless Agent has timely received (a) a Borrowing Request or LC Request (together
with the applicable duly executed LC Agreement), as the case may be, and (b) all
of the items described on the attached SCHEDULE 6. In addition, Lenders will not
be obligated to fund (as opposed to continue or convert) any Borrowing, and
Agent will not be obligated to issue any LC, as the case may be, unless on the
applicable Borrowing Date, issue date, or creation date (and after giving effect
to the requested Borrowing or LC), as the case may be: (i) Agent shall have
timely received a Borrowing Request or LC Request (together with the applicable
duly executed LC Agreement), as the case may be; (ii) Agent shall have received
any applicable LC fee; (iii) all of the representations and warranties of the
Borrower in the Loan Papers are true and correct in all material respects
(unless they speak to a specific date or are based on facts which have changed
by transactions contemplated or permitted by this Agreement); (iv) no Default or
Potential Default exists; and (v) the funding of the Borrowing, issuance of the
LC, as the case may be, is permitted by Law. Upon Agent's request, Borrower
shall deliver to Agent evidence substantiating any of the matters in the Loan
Papers that are necessary to enable Borrower to qualify for the Borrowing or LC,
as the case may be. Each condition precedent in this Agreement (including,
without limitation, those on the attached SCHEDULE 6) is material to the
transactions contemplated by this Agreement, and time is of the essence with
respect to each condition precedent. Subject to the prior approval of Majority
Lenders, Lenders may fund any Borrowing, and Agent may issue any LC, without all
conditions being satisfied, but, to the extent permitted by Law, that funding
and issuance shall not be deemed to be a waiver of the requirement that each
condition precedent be
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satisfied as a prerequisite for any subsequent funding or issuance, unless
Majority Lenders specifically waive each item in writing.
SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants
to Agent and Lenders as follows:
7.1 PURPOSE OF CREDIT FACILITY. Borrower will use proceeds of
Facility A Borrowings and LCs for working capital and general corporate purposes
of the Companies, to refinance certain indebtedness of Borrower and to finance
the Acquisition and proceeds of Facility B Borrowings to finance the Acquisition
and for general corporate purposes. No Company is engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any "margin stock" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended. No part of
the proceeds of any LC draft or drawing, or Borrowing will be used, directly or
indirectly, for a purpose that violates any Law, including without limitation,
the provisions of Regulation U.
7.2 CORPORATE EXISTENCE, GOOD STANDING, AUTHORITY AND COMPLIANCE.
Each Company is duly organized, validly existing and in good standing under the
Laws of the jurisdiction in which it is incorporated or organized as identified
on the attached SCHEDULE 7.2 or on the most recently amended SCHEDULE 7.2.
Except where failure is not a Material Adverse Event, each Company (a) is duly
qualified to transact business and is in good standing as a foreign corporation
or other entity in each jurisdiction where the nature and extent of its business
and properties require due qualification and good standing (those jurisdictions
being identified on the attached SCHEDULE 7.2 or on the most recently amended
SCHEDULE 7.2, (b) possesses all requisite authority, permits and power to
conduct its business as is now being, or is contemplated by this Agreement to
be, conducted, and (C) is in compliance with all applicable Laws, except in each
case where the failure to so qualify, to possess such authority, permits or
power or to comply with such Law would not cause a Material Adverse Event.
7.3 SUBSIDIARIES. As of the date of this Agreement, Borrower has no
Subsidiaries except as disclosed on the attached SCHEDULE 7.3 or on the most
recently amended SCHEDULE 7.3 reflecting changes to the schedule as a result of
transactions permitted by this Agreement. All of the outstanding shares of
capital stock (or similar voting interests) of those Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and are owned of record
and beneficially as set forth thereon, free and clear of any Liens,
restrictions, claims or Rights of another Person, other than Permitted Liens,
and are not subject to any warrant, option or other acquisition Right of any
Person or subject to any transfer restriction except for restrictions imposed by
securities Laws and general corporate Laws.
7.4 AUTHORIZATION AND CONTRAVENTION. The execution and delivery by
each Company of each Loan Paper or related document to which it is a party and
the performance by it of its obligations thereunder (a) are within its corporate
power, (b) have been duly authorized by all necessary corporate action, (c)
require no action by or filing with any Tribunal (other than any action or
filing that has been taken or made on or before the date of this Agreement or
which would not cause a Material Adverse Event), (d) do not violate any
provision of its charter or bylaws, (e) do not violate any provision of Law or
order of any Tribunal applicable to it, other than violations that individually
or collectively are not a Material Adverse Event, (f) do not violate any
Material Agreements to which it is a party, other than a violation which would
not cause a Material Adverse Event, or (g) do not result in the creation or
imposition of any Lien (other than the Lender Liens) on any asset of any
Company.
7.5 BINDING EFFECT. Upon execution and delivery by all parties
thereto, each Loan Paper will constitute a legal and binding obligation of each
Company party thereto, enforceable against it in accordance with its terms,
except as enforceability may be limited by applicable Debtor Relief Laws and
general principles of equity.
7.6 FINANCIAL STATEMENTS; FISCAL YEAR. The Current Financials were
prepared in accordance with GAAP and present fairly, in all material respects,
the consolidated financial condition, results of operations, and cash flows of
the Companies as of, and for the portion of the fiscal year ending on the date
or dates thereof (subject only to normal year-end adjustments). All material
liabilities of the Companies as of the date or dates of the Current Financials
are reflected therein or in the notes thereto. Except for transactions directly
related to, or specifically contemplated by,
33
the Loan Papers, no subsequent material adverse changes have occurred in the
consolidated financial condition of the Companies from that shown in the Current
Financials, nor has any Company incurred any subsequent material liability. The
fiscal year of each Company ends on March 31.
7.7 LITIGATION. Except as disclosed on the attached SCHEDULE 7.7 or
the most recently amended SCHEDULE 7.7, no Company is subject to, or aware of
the threat of, any Litigation that is reasonably likely to be determined
adversely to any Company or, if so adversely determined, is a Material Adverse
Event. Except as permitted under SECTION 11.4, no outstanding and unpaid
judgments against any Company exist.
7.8 TAXES. All Tax returns of each Company required to be filed have
been filed (or extensions have been granted) before delinquency, except for
returns for which the failure to file is not a Material Adverse Event, and all
Taxes imposed upon each Company that are due and payable have been paid before
delinquency, other than Taxes for which the criteria for Permitted Liens have
been satisfied or for which nonpayment is not a Material Adverse Event.
7.9 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 7.9 or on
the most recently amended SCHEDULE 7.9, (a) no Company knows of any
environmental condition or circumstance materially adversely affecting any
Company's properties taken as a whole or operations, (b) no Company has received
any report of any Company's material violation of any Environmental Law, (c) no
Company knows that any Company is under any obligation to remedy any material
violation of any Environmental Law, or (d) no facility of any Company is used
for, or to the knowledge of any Company has been used for, storage, treatment or
disposal of any Hazardous Substance, excluding the storage of Hazardous
Substances in amounts commonly and lawfully used in automotive repair shops
which have been handled in compliance with applicable Environmental Law. Except
as disclosed in Schedule 7.9, each Company has taken prudent steps to determine
that its properties and operations do not violate any Environmental Law, other
than violations that are not, individually or in the aggregate, a Material
Adverse Event, except where such condition, circumstance, violation or
non-compliance would not reasonably be expected to have a monetary impact or
cost to the Borrower equal to or in excess of five percent (5%) of the
Borrower's pre-tax income during the preceding Four Quarter Period, such amount
not to exceed $1,000,000.
7.10 EMPLOYEE PLANS. Except where occurrence or existence is not a
Material Adverse Event, (a) no Employee Plan has incurred an "accumulated
funding deficiency" (as defined in section 302 of ERISA or section 412 of the
Code), (b) no Company has incurred liability under ERISA to the PBGC in
connection with any Employee Plan (other than required insurance premiums, all
of which have been paid), (c) no Company has withdrawn in whole or in part from
participation in a Multiemployer Plan, (d) no Company has engaged in any
"prohibited transaction" (as defined in section 406 of ERISA or section 4975 of
the Code), and (e) no Reportable Event has occurred, excluding events for which
the notice requirement is waived under applicable PBGC regulations.
7.11 PROPERTIES; LIENS. Each Company has good and marketable title to
all its property reflected on the Current Financials (except for property that
is obsolete or that has been disposed in the ordinary course of business or,
after the date of this Agreement, as otherwise permitted by SECTION 9.10 or
SECTION 9.11). Except for Permitted Liens, no Lien exists on any property of any
Company, and the execution, delivery, performance or observance of the Loan
Papers will not require or result in the creation of any Lien (other than Lender
Liens) on any Company's property.
7.12 LOCATION; REAL ESTATE INTERESTS. Each Company's chief executive
office is located at the address on the attached SCHEDULE 7.12 or on the most
recently amended SCHEDULE 7.12. Each Company's books and records concerning
accounts and accounts receivable are located at its chief executive office, and
all of its inventory (other than inventory on consignment, in transit or in the
possession of a subcontractor of any Company) is in its possession and, together
with the Company's other material assets, are located, until sold in the
ordinary course of business, at one or more of the locations on the attached
SCHEDULE 7.12 or on the most recently amended SCHEDULE 7.12. Except as described
on the attached SCHEDULE 7.12, or on the most recently amended SCHEDULE 7.12, no
Company has any ownership, leasehold, or other interest in real estate.
7.13 GOVERNMENT REGULATIONS. No Company is subject to regulation under
the Investment Company Act of 1940, as amended, or the Public Utility Holding
Company Act of 1935, as amended.
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7.14 TRANSACTIONS WITH AFFILIATES. Except as disclosed on the attached
SCHEDULE 7.14 other than the most recently amended SCHEDULE 7.14 (if the
disclosures are approved by Majority Lenders), no Company is a party to a
material transaction with any of its Affiliates (excluding other Companies),
other than transactions in the ordinary course of business and upon fair and
reasonable terms not materially less favorable than it could obtain or could
become entitled to in an arm's-length transaction with a Person that was not its
Affiliate. For purposes of this SECTION 7.14, a transaction is "material" if it
requires any Company to pay more than $1,000,000 during the term of the
governing agreement.
7.15 DEBT. No Company is an obligor on any Funded Debt, other than
Permitted Debt.
7.16 MATERIAL AGREEMENTS. No Company is a party to any Material
Agreement, other than the Loan Papers and the Material Agreements described on
the attached SCHEDULE 7.16. All described Material Agreements are in full force
and effect, and no default or potential default exists on the part of any
Company thereunder that is a Material Adverse Event.
7.17 INSURANCE. Each Company maintains with financially sound,
responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which it operates) insurance
concerning its properties and businesses against casualties and contingencies
and of types and in amounts (and with co-insurance and deductibles) as is
customary in the case of similar businesses.
7.18 LABOR MATTERS. No actual or threatened strikes, labor disputes,
slow downs, walkouts, or other concerted interruptions of operations by the
employees of any Company that are a Material Adverse Event exist. Hours worked
by and payment made to employees of the Companies have not been in violation of
the Fair Labor Standards Act or any other applicable Law dealing with labor
matters, other than any violations, individually or collectively, that are not a
Material Adverse Event. All payments due from any Company for employee health
and welfare insurance have been paid or accrued as a liability on its books,
other than any nonpayments that are not, individually or collectively, a
Material Adverse Event.
7.19 SOLVENCY. On each Borrowing Date, each Company is, and after
giving effect to the requested Borrowing will be, Solvent.
7.20 TRADE NAMES. No Company has used or transacted business under any
other corporate or trade name in the five-year period preceding the initial
Borrowing Date, except as disclosed on the attached SCHEDULE 7.20.
7.21 INTELLECTUAL PROPERTY. Each Company owns or has the right to use
all material licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications and trade names necessary to continue to
conduct its businesses as presently conducted by it and proposed to be conducted
by it immediately after the date of this Agreement. Each Company is conducting
its business without infringement or claim of infringement of any license,
patent, copyright, service mark, trademark, trade name, trade secret or other
intellectual property right of others, other than any infringements or claims
that, if successfully asserted against or determined adversely to any Company,
would not, individually or collectively, constitute a Material Adverse Event. To
the knowledge of any Company, no infringement or claim of infringement by others
of any material license, patent, copyright, service mark, trademark, trade name,
trade secret or other intellectual property of any Company exists.
7.22 FULL DISCLOSURE. All information previously furnished, furnished
on the date of this Agreement, and furnished in the future, by any Company to
Agent in connection with the Loan Papers (a) was, is, and will be, true and
accurate in all material respects or based on reasonable estimates on the date
the information is stated or certified, and (b) did not, does not, and will not,
fail to state any fact the omission of which would otherwise make any such
information materially misleading.
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7.23 YEAR 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the Borrower's and its
Subsidiaries' computer systems and (b) equipment containing embedded microchips
(including systems and equipment supplied by others or with which Borrower's or
its Subsidiaries' systems interface) and the testing of all such systems and
equipment, as so reprogrammed, will be completed by October 1, 1999; provided,
however, Borrower shall provide to Agent a status report on the efforts of
Borrower and its Subsidiaries to complete the foregoing reprogramming by July 1,
1999. The cost to the Borrower and its Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Borrower and its Subsidiaries (including, without limitation, reprogramming
errors and the failure of others' systems or equipment) will not result in a
Default or a Material Adverse Event.
SECTION 8 AFFIRMATIVE COVENANTS. So long as Lenders are committed to fund
any Borrowings and Agent is committed to issue LCs under this Agreement, and
thereafter until the Obligation is paid in full, Borrower covenants and agrees
as follows:
8.1 ITEMS TO BE FURNISHED. Borrower shall cause the following to be
furnished to Agent:
(a) Promptly after preparation, and no later than one
hundred (100) days after the last day of each fiscal year of Borrower,
Financial Statements showing the consolidated financial condition and
results of operations of the Companies as of, and for the year ended
on, that last day, accompanied by:
(i) the unqualified opinion of Borrower's
Accountants, based on an audit using generally accepted
auditing standards, that the Financial Statements were
prepared in accordance with GAAP and present fairly, in all
material respects, the consolidated financial condition and
results of operations of the Companies,
(ii) a certificate from the accounting firm to
Agent indicating that during its audit it obtained no
knowledge of any Default or Potential Default or, if it
obtained knowledge, the nature and period of existence
thereof, and
(iii) a Compliance Certificate with respect to the
Financial Statements.
(b) Promptly after preparation, and no later than fifty
(50) days after the last day of the first three fiscal quarters of
Borrower, Financial Statements showing the consolidated financial
condition and results of operations of the Companies for the fiscal
quarter and for the period from the beginning of the current fiscal
year to the last day of the fiscal quarter, subject to ordinary
year-end adjustments, accompanied by a Compliance Certificate with
respect to the Financial Statements.
(c) Within thirty (30) days after the end of each fiscal
year of Borrower (commencing with the fiscal year ending March 31,
1999, in the case of financial projections, and commencing with the
fiscal year ending March 31, 1999, in the case of financial budgets),
financial projections for the succeeding three (3) fiscal years and the
financial budget for the next succeeding fiscal year, accompanied by a
certificate executed by a Responsible Officer certifying that the
projections and budget were prepared by Borrower based on assumptions
that, in light of the historical performance of the Companies and their
prospects for the future, are reasonable as of the date prepared.
(d) Promptly after receipt, a copy of each interim or
special audit report and management letter issued by Borrower's
Accountants with respect to any Company or its financial records.
(e) Notice, promptly after Borrower knows or has reason
to know, of (i) the existence and status of any Litigation that, if
determined adversely to any Company, would be a Material Adverse Event,
(ii) any change in any material fact or circumstance represented or
warranted by any Company in any Loan Paper, (iii) the receipt by any
Company of notice of any violation or alleged violation of ERISA or any
Environmental Law (which individually or collectively with other
violations or allegations could constitute
36
a Material Adverse Event), or (iv) a Default or Potential Default,
specifying the nature thereof and what action the Companies have taken,
are taking, or propose to take.
(f) Promptly after filing, copies of all material reports
or filings filed by or on behalf of any Company with any Tribunal.
(g) Promptly upon reasonable request by Agent or Majority
Lenders (through Agent), information (not otherwise required to be
furnished under the Loan Papers) respecting the business affairs,
assets and liabilities of the Companies and opinions, projections,
certifications and documents in addition to those mentioned in this
Agreement.
8.2 USE OF PROCEEDS. Borrower shall use the proceeds of Borrowings
only for the purposes represented in this Agreement.
8.3 BOOKS AND RECORDS. Borrower will, and will cause each other
Company to maintain books, records and accounts necessary to prepare financial
statements in accordance with GAAP.
8.4 INSPECTIONS. Upon reasonable request and reasonable prior
notice, Borrower will, and will cause each other Company to allow Agent or any
Lender (or their Representatives) to inspect any of its properties, to review
reports, files and other records and to make and take away copies, to conduct
tests or investigations, and to discuss any of its affairs, conditions and
finances with its other creditors, directors, officers, employees or
representatives from time to time, during reasonable business hours.
8.5 TAXES. Borrower will, and will cause each other Company to
promptly pay when due any and all Taxes, other than Taxes which are being
contested in good faith by lawful proceedings diligently conducted, against
which reserve or other provision required by GAAP has been made, and in respect
of which levy and execution of any Lien have been and continue to be stayed.
8.6 PAYMENT OF OBLIGATIONS. Borrower will, and will cause each
other Company, to promptly pay (or renew and extend) all of its material
obligations as they become due (unless the obligations are being contested in
good faith by appropriate proceedings).
8.7 EXPENSES. Borrower shall promptly pay, within five (5) days
following the receipt of an invoice therefor setting forth the amount thereof
(a) all costs, fees and expenses paid or incurred by Agent and Arranger in
connection with the arrangement, syndication and negotiation of the Facilities
and the negotiation, preparation, delivery and execution of the Loan Papers and
any related amendment, waiver or consent (including in each case, without
limitation, the reasonable fees and expenses of Agent's and Arranger's counsel)
and (b) all costs, fees and expenses of Lenders, Agent and Arranger incurred by
Agent, Arranger or any Lender in connection with the enforcement of the
obligations of any Company arising under the Loan Papers or the exercise of any
Rights arising under the Loan Papers (including, but not limited to, reasonable
attorneys' fees, expenses and costs paid or incurred in connection with any
workout or restructure and any action taken in connection with any Debtor Relief
Laws), all of which shall be a part of the Obligation and shall bear interest,
if not paid upon demand, at the Default Rate until repaid.
8.8 MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Except as
otherwise permitted by SECTION 9.11, Borrower will, and will cause each other
Company to (a) maintain its corporate existence and good standing in its state
of incorporation and its authority to transact business in all other states
where failure to maintain its authority to transact business is a Material
Adverse Event; (b) maintain all licenses, permits and franchises necessary for
its business where failure to do so is a Material Adverse Event; (c) keep all of
its assets that are useful in and necessary to its business in good working
order and condition (ordinary wear and tear excepted) and make all necessary
repairs and replacements.
8.9 INSURANCE. Borrower will, and will cause each other Company
to, maintain with financially sound, responsible and reputable insurance
companies or associations (or, as to workers' compensation or similar insurance,
with an insurance fund or by self-insurance authorized by the jurisdictions in
which it operates) insurance concerning
37
its properties and businesses against casualties and contingencies and of types
and in amounts (and with co-insurance and deductibles) as is customary in the
case of similar businesses similarly situated, which insurance may provide for
reasonable deductibility from coverage thereof. Borrower shall, and shall cause
each other Company to, deliver to Agent certificates of insurance for each
policy of insurance and evidence of payment of all premiums which certificates
of insurance shall name Agent as an additional insured, secured party, mortgagee
and loss payee and which provide Agent with at least thirty (30) days notice of
cancellation or reduction in coverage. If any insurance policy covered by an
insurance certificate previously delivered to Agent is altered or canceled, then
Borrower shall cause to be promptly delivered to Agent a replacement certificate
(in form and substance satisfactory to Agent).
8.10 PRESERVATION AND PROTECTION OF RIGHTS. Borrower will, and will
cause each other Company to, perform the acts and duly authorize, execute,
acknowledge, deliver, file and record any additional writings as Agent or
Majority Lenders may reasonably deem necessary or appropriate to perfect and
maintain the Lender Liens and preserve and protect the Rights of Agent and
Lenders under any Loan Paper.
8.11 ENVIRONMENTAL LAWS. Borrower will, and will cause each other
Company to, (a) conduct its business so as to comply with all applicable
Environmental Laws and shall promptly take corrective action to remedy any
non-compliance with any Environmental Law, except where failure to comply or
take action would not have a monetary impact or cost to the Borrower equal to or
in excess of five percent (5%) of the Borrower's pre-tax income during the
preceding Four Quarter Period, or would otherwise be a Material Adverse Event,
such amount in no event to exceed $1,000,000, and (b) establish and maintain a
management system designed to ensure compliance with applicable Environmental
Laws and minimize financial and other risks to each Company arising under
applicable Environmental Laws or as the result of environmentally related
injuries to Persons or property. Borrower shall deliver reasonable evidence of
compliance with the foregoing covenant to Agent within thirty (30) days after
any request from Majority Lenders.
8.12 SUBSIDIARIES. Borrower shall pledge to Agent for the benefit of
Lenders all stock of each Person that becomes a Subsidiary of Borrower after the
date of this Agreement (whether as a result of acquisition, creation or
otherwise) within ten (10) days after becoming a Subsidiary of Borrower.
8.13 INDEMNIFICATION. BORROWER WILL, AND WILL CAUSE EACH OTHER
COMPANY TO, JOINTLY AND SEVERALLY, INDEMNIFY, PROTECT AND HOLD AGENT, ARRANGER
AND LENDERS AND THEIR RESPECTIVE PARENTS, SUBSIDIARIES, REPRESENTATIVES,
SUCCESSORS AND ASSIGNS (INCLUDING ALL OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS)(COLLECTIVELY, THE "INDEMNIFIED PARTIES") HARMLESS FROM AND AGAINST ANY
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, CLAIMS AND PROCEEDINGS AND ALL COSTS, EXPENSES (INCLUDING,
WITHOUT LIMITATION, ALL ATTORNEYS' FEES AND LEGAL EXPENSES WHETHER OR NOT SUIT
IS BROUGHT) AND DISBURSEMENTS OF ANY KIND OR NATURE (THE "INDEMNIFIED
LIABILITIES") THAT MAY AT ANY TIME BE IMPOSED ON, INCURRED BY OR ASSERTED
AGAINST THE INDEMNIFIED PARTIES, IN ANY WAY RELATING TO OR ARISING OUT OF (A)
THE DIRECT OR INDIRECT RESULT OF THE VIOLATION BY ANY COMPANY OF ANY
ENVIRONMENTAL LAW, (B) ANY COMPANY'S GENERATION, MANUFACTURE, PRODUCTION,
STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL OR PRESENCE IN
CONNECTION WITH ITS PROPERTIES OF A HAZARDOUS SUBSTANCE (INCLUDING, WITHOUT
LIMITATION, (I) ALL DAMAGES OF ANY USE, GENERATION, MANUFACTURE, PRODUCTION,
STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL OR PRESENCE, OR (II)
THE COSTS OF ANY ENVIRONMENTAL INVESTIGATION, MONITORING, REPAIR, CLEANUP OR
DETOXIFICATION AND THE PREPARATION AND IMPLEMENTATION OF ANY CLOSURE, REMEDIAL
OR OTHER PLANS), OR (C) THE LOAN PAPERS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN. HOWEVER, ALTHOUGH EACH INDEMNIFIED PARTY HAS THE RIGHT TO BE
INDEMNIFIED UNDER THE LOAN PAPERS FOR ITS OWN ORDINARY NEGLIGENCE, NO
INDEMNIFIED PARTY HAS THE RIGHT TO BE INDEMNIFIED UNDER THE LOAN PAPERS FOR ITS
OWN FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. THE PROVISIONS OF AND
UNDERTAKINGS AND INDEMNIFICATION SET FORTH IN THIS PARAGRAPH SHALL SURVIVE THE
SATISFACTION AND PAYMENT OF THE OBLIGATION AND TERMINATION OF THIS AGREEMENT.
38
8.14 FURTHER ASSURANCES. The Borrower shall, and shall cause each
Guarantor to, do such further things and execute such additional documents
(including, without limitation, the perfection of security interest, in
after-acquired property) as are reasonably requested by Lenders or the Agent.
8.15 CHANGE OF CONTROL. Borrower shall promptly, but in any event
within five (5) Business Days, give written notice to Agent upon obtaining
knowledge of the occurrence of a Change of Control.
SECTION 9 NEGATIVE COVENANTS. So long as Lenders are committed to fund
Borrowings and the Agent is committed to issue LCs under this Agreement, and
thereafter until the Obligation is paid in full, Borrower covenants and agrees
as follows:
9.1 TAXES. Borrower may not and may not permit any Company to use
any portion of the proceeds of any Borrowing to pay the wages of employees,
unless a timely payment to or deposit with the United States of America of all
amounts of Tax required to be deducted and withheld with respect to such wages
is also made.
9.2 PAYMENT OF OBLIGATIONS. Borrower may not and may not permit any
Company to voluntarily prepay principal of, or interest on, any Debt other than
the Obligation, if a Default or Potential Default exists.
9.3 EMPLOYEE PLANS. Except where a Material Adverse Event would not
result, Borrower may not and may not permit any Company to permit any of the
events or circumstances described in SECTION 7.10 to exist or occur.
9.4 DEBT AND DEBT INSTRUMENTS. Borrower may not and may not permit
any Company to create, incur or suffer to exist any Funded Debt, other than
Permitted Debt, nor materially modify any Debt that is subordinate to the
Obligations or any document or instrument evidencing such Debt.
9.5 LIENS. Borrower may not and may not permit any Company to (a)
create, incur or suffer or permit to be created or incurred or to exist any Lien
upon any of its assets other than Permitted Liens or (b) enter into or permit to
exist any arrangement or agreement that directly or indirectly prohibits any
Company from creating or incurring any Lien on any of its assets, other than the
Loan Papers and leases that place a Lien prohibition on only the leased
property.
9.6 TRANSACTIONS WITH AFFILIATES. Except as disclosed on the
attached SCHEDULE 7.14, or on the most recently amended SCHEDULE 7.14, (if the
disclosures are approved by Majority Lenders), Borrower may not and may not
permit any Company to enter into any material transaction with any of its
Affiliates (excluding other Companies), other than transactions in the ordinary
course of business and upon fair and reasonable terms not materially less
favorable than it could obtain or could become entitled to in an arm's-length
transaction with a Person that was not its Affiliate. For purposes of this
SECTION 9.6, a transaction is "material" if it requires any Company to pay more
than $1,000,000 during the term of the agreement governing such transaction.
9.7 COMPLIANCE WITH LAWS AND DOCUMENTS. Borrower may not and may not
permit any Company to (a) violate the provisions of any Laws applicable to it or
of any Material Agreement to which it is a party if that violation alone, or
when aggregated with all other violations, would be a Material Adverse Event,
(b) violate the provisions of its charter or bylaws, or (c) repeal, replace or
amend any provision of its charter or bylaws if that action would be a Material
Adverse Event.
9.8 LOANS, ADVANCES AND INVESTMENTS. Except as permitted by SECTION
9.9 or SECTION 9.11, Borrower may not and may not permit any Company to make any
loan, advance, extension of credit or capital contribution to, make any
investment in, or purchase or commit to purchase any stock or other securities
or evidences of Debt of, or interests in, any other Person; provided, however,
that Borrower or a Company may make an advance to, investment in or purchase
from another Person if (1) (a) such action results in the acquisition of such
Person by Borrower or such Company, (b) such action results in the Borrower's
direct or indirect ownership of new stores, (c) the Person being acquired is in
a line of business which is substantially the same as or complimentary to the
Borrower's principal line of business, and (d) immediately after giving effect
to such acquisition, the Companies shall be in compliance with
39
all covenants under ARTICLE 10 and shall not be in Default or Potential Default
under this Agreement; provided, further, that if any acquisition is in excess of
an aggregate cost to the Borrower or such Company of more than $5,000,000, the
Borrower shall provide to the Lenders evidence of compliance with all covenants
in this Agreement prior to the consummation of such acquisition or (2) such
action is for investments in Cash Equivalents.
9.9 DIVIDENDS AND DISTRIBUTIONS. Borrower may not and may not permit
any Company to declare, make or pay any Distribution other than Distributions
declared, made or paid by (a) Borrower wholly in the form of its capital stock,
(b) any other Company to Borrower, or (c) Borrower on its planned issuance of
$25,000,000 in convertible preferred shares; provided that such shares are
issued by Borrower at the then market rate for similar such securities. Borrower
may not and may not permit any Company to enter into or permit to exist any
arrangement or agreement (other than the Loan Papers) that prohibits it from
paying dividends or other distributions to its shareholders.
9.10 SALE OF ASSETS. Borrower may not and may not permit any Company
to sell, assign, lease, transfer or otherwise dispose of any of its assets,
other than (a) sales of inventory in the ordinary course of business, (b) the
sale, discount or transfer of delinquent accounts receivable in the ordinary
course of business for purposes of collection, (c) occasional sales, leases or
other dispositions of immaterial assets for consideration not less than fair
market value, (d) sales, leases or other dispositions of assets that are
obsolete or have negligible fair market value, (e) sales of equipment for a fair
and adequate consideration (but if replacement equipment is necessary for the
proper operation of the business of the seller, the seller must promptly replace
the sold equipment), (f) sale and leasebacks of real property which do not in
the aggregate exceed forty percent (40%) of the Borrower's capital expenditures
in the applicable fiscal year, (g) sale, lease or other disposition by a Company
of its assets to the Borrower, (h) sales of assets having an aggregate fair
market value not exceeding $2,000,000 during any fiscal year of Borrower and
sold for a price which is within a fair market value for such assets, or (i) as
disclosed on the attached SCHEDULE 9.10.
9.11 MERGERS AND DISSOLUTIONS. Borrower may not and may not permit
any Company to merge or consolidate with any other Person or liquidate, wind up
or dissolve (or suffer any liquidation or dissolution); provided, however, if
after giving effect thereto, no Default shall have occurred and be continuing
(a) any Person (other than Monro Leasing, LLC) may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (b) any Person
other than the Borrower may merge into any Subsidiary of the Borrower (other
than Monro Leasing, LLC) in a transaction in which the surviving entity is such
Subsidiary and (c) any Subsidiary of the Borrower (other than Monro Leasing,
LLC) may liquidate or dissolve so long as the Borrower determines in good faith
that such liquidation or dissolution is in the best interest of the Borrower.
9.12 ASSIGNMENT. Borrower may not and may not permit any Company to
assign or transfer any of its Rights, duties, or obligations under any of the
Loan Papers.
9.13 FISCAL YEAR AND ACCOUNTING METHODS. Borrower may not and may not
permit any Company to change its fiscal year or its method of accounting (other
than immaterial changes in methods or as required or permitted by GAAP).
9.14 NEW BUSINESSES. Borrower may not and may not permit any Company
to engage in any business except the businesses in which they are presently
engaged and any other reasonably related business.
9.15 GOVERNMENT REGULATIONS. Borrower may not and may not permit any
Company to conduct its business in a way that it becomes regulated under the
Investment Company Act of 1940, as amended, or the Public Utility Holding
Company Act of 1935, as amended.
9.16 LEASES; SALE-LEASEBACKS. Except as otherwise provided herein the
Borrower will not, and will not permit any Subsidiary to, enter into any
arrangement whereby the Borrower or any such Subsidiary shall sell or transfer
property owned by the Borrower or such Subsidiary and then or thereafter as
Lessee rent or lease such property (any such arrangement being herein referred
to as a "sale-leaseback") other than (i) a sale-leaseback solely with the
Borrower or a Wholly-Owned Subsidiary, (ii) sale-leasebacks of equipment
pursuant to an off-balance sheet transaction with Fleet National Bank existing
on the date hereof (and extensions and renewals thereof), or (iii) a lease for
temporary period,
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not in excess of three (3) months, to permit the orderly relocation of
operations carried on in or at a facility subsequent to the sale thereof and
prior to the surrender of possession thereof, unless (x) such sale-leaseback
transaction is completed within one hundred eighty (180) days of the date of
acquisition of the property involved, and (y) such sale-leaseback is entered
into in compliance with any applicable limitations hereof and (z) at the time of
consummation thereof and after giving effect thereto no Default or Potential
Default exists.
9.17 SUBSIDIARIES. Permit any Person other than a Company to acquire,
directly or indirectly, beneficially or of record, shares representing more than
20% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of any Subsidiary of the Borrower.
SECTION 10 FINANCIAL COVENANTS. So long as Lenders are committed to fund
Borrowings and Agent is committed to issue LCs under this Agreement, and
thereafter until the Obligation is paid and performed in full, Borrower
covenants and agrees to comply with the following financial covenants as
calculated on the last day of each fiscal quarter period and certified by
Borrower in the most recent Compliance Certificate delivered to Agent, on behalf
of the Lenders, from time to time in accordance with the terms of this
Agreement:
============================================================================================================
Maximum Minimum EBITDAR less
Adjusted Debt/EBITDAR CAPEX to Interest Minimum Tangible
Expense plus Rental Net Worth
Payments
============================================================================================================
At 12/31/98 Not greater than 5.30 to 1.0 Not less than .85 to 1.0 $70,000,000 at 12/31/98
- ------------------------------------------------------------------------------------------------------------
At 3/31/99 thru 06/30/99 Not greater than 5.30 to 1.0 Not less than .85 to 1.0 $70,000,000 at 3/31/99
- ------------------------------------------------------------------------------------------------------------
At 9/30/99 thru 12/31/99 Not greater than 4.70 to 1.0 Not less than .85 to 1.0 $70,000,000 at 9/30/99
- ------------------------------------------------------------------------------------------------------------
At 3/31/00 thru 12/31/00 Not greater than 4.25 to 1.0 Not less than 1.30 to 1.0 $80,000,000 at 3/31/00
- ------------------------------------------------------------------------------------------------------------
At 3/31/01 thru 12/31/01 Not greater than 3.85 to 1.0 Not less than 1.50 to 1.0 $92,600,000 at 3/31/01
- ------------------------------------------------------------------------------------------------------------
At 3/31/02 and thereafter Not greater than 3.55 to 1.0 Not less than 1.70 to 1.0 $110,000,000 at 3/31/02
- ------------------------------------------------------------------------------------------------------------
Notwithstanding the foregoing covenants, upon receipt of the proceeds
from the issuance of at least $25,000,000 of equity or equity related securities
to the Borrower, the following covenants shall apply:
===============================================================================================================
Maximum Minimum EBITDAR less
Adjusted Debt/EBITDAR CAPEX to Interest Minimum Tangible
Expense plus Rental Payments Net Worth
- ---------------------------------------------------------------------------------------------------------------
At 12/31/98 Not greater than 4.60 to 1.0 Not less than 1.00 to 1.0 $95,000,000 at 12/31//98
- ---------------------------------------------------------------------------------------------------------------
At 3/31/99 thru 06/30/99 Not greater than 4.60 to 1.0 Not less than 1.00 to 1.0 $95,000,000 at 3/31/99
- ---------------------------------------------------------------------------------------------------------------
At 9/30/99 thru 12/31/99 Not greater than 4.10 to 1.0 Not less than 1.00 to 1.0 $95,000,000 at 9/30/99
- ---------------------------------------------------------------------------------------------------------------
At 3/31/00 thru 12/31/00 Not greater than 3.70 to 1.0 Not less than 1.40 to 1.0 $105,000,000 at 3/31/00
- ---------------------------------------------------------------------------------------------------------------
At 3/31/01 thru 12/31/01 Not greater than 3.35 to 1.0 Not less than 1.70 to 1.0 $117,600,000 at 3/31/01
- ---------------------------------------------------------------------------------------------------------------
41
- ---------------------------------------------------------------------------------------------------------------
At 3/31/02 and thereafter Not greater than 3.05 to 1.0 Not less than 1.90 to 1.0 $135,000,000 at 3/31/02
- ---------------------------------------------------------------------------------------------------------------
SECTION 11 DEFAULT. The term "DEFAULT" means the occurrence of any one or
more of the following events:
11.1 PAYMENT OF OBLIGATION. The failure of any Company to pay any
part of the Obligation within five (5) Business Days after it becomes due and
payable under the Loan Papers.
11.2 COVENANTS. The failure of Borrower (and, if applicable, any
other Company) to punctually and properly perform, observe and comply with:
(a) Any covenant or agreement contained in SECTIONS 8.2,
9.2, 9.9, 9.10, 9.11, 9.12, OR 9.16;
(b) Any covenant or agreement contained in SECTION 8.1(A)
AND (B), 8.3, 8.4, 8.8, 9.3, 9.4, 9.8, 9.13, 9.14, 9.15 or 9.17, and
failure continues for ten (10) days after the first to occur of (i)
Borrower knows of or (ii) Borrower receives notice from Agent of, such
failure; or
(c) Any other covenant or agreement contained in any Loan
Paper (other than the covenants to pay the Obligation and the covenants
in CLAUSES (A) AND (B) preceding), and failure continues for thirty
(30) days after the first to occur of (i) Borrower knows of or (ii)
Borrower receives notice from Agent of, such failure.
11.3 DEBTOR RELIEF. Any Company (a) is not Solvent, (b) fails to
pay its Debts generally as they become due, (c) voluntarily seeks, consents to,
or acquiesces in the benefit of any Debtor Relief Law, or (d) becomes a party to
or is made the subject of any proceeding provided for by any Debtor Relief Law,
other than as a creditor or claimant, that could suspend or otherwise adversely
affect the Rights of Agent or any Lender granted in the Loan Papers (unless, if
the proceeding is involuntary, the applicable petition is dismissed within sixty
(60) days after its filing).
11.4 JUDGMENTS AND ATTACHMENTS. Any Company fails, within sixty
(60) days after entry, to pay, bond or otherwise discharge any judgment or order
for the payment of money in excess of $1,000,000 (individually or collectively)
or any warrant of attachment, sequestration or similar proceeding against any
Company's assets having a value (individually or collectively) of $1,000,000,
which is neither (a) stayed on appeal nor (b) diligently contested in good faith
by appropriate proceedings and adequate reserves have been set aside on its
books in accordance with GAAP.
11.5 GOVERNMENT ACTION. (a) A final non-appealable order is issued
by any Tribunal (including, but not limited to, the United States Justice
Department) seeking to cause any Company to divest a significant portion of its
assets under any antitrust, restraint of trade, unfair competition, industry
regulation or similar Laws, or (b) any Tribunal condemns, seizes or otherwise
appropriates, or takes custody or control of all or any substantial portion of
the assets of any Company.
11.6 MISREPRESENTATION. Any material representation or warranty
made by any Company contained in any Loan Paper at any time proves to have been
materially incorrect when made.
11.7 [Intentionally Omitted]
11.8 MATERIAL ADVERSE EVENT. A Material Adverse Event occurs and is
continuing.
11.9 DEFAULT UNDER OTHER AGREEMENTS. (a) Any Company fails to pay
when due (after lapse of any applicable grace period) any Debt in excess
(individually or collectively) of $1,000,000; (b) any default exists under any
agreement to which a Company is a party, the effect of which is to cause, or to
permit any Person (other than a Company) to cause, an amount in excess
(individually or collectively) of $1,000,000 to become due and payable by
42
any Company before its stated maturity; (c) any Debt in excess (individually or
collectively) of $1,000,000 is declared to be due and payable or required to be
prepaid by any Company before its stated maturity; or (d) a default occurs under
any lease agreement between any Company and Brazos Automotive Properties, L.P.
11.10 LCS. Agent is served with, or becomes subject to, a court
order, injunction, or other process or decree restraining or seeking to restrain
it from paying any amount under any LC and either (a) a drawing has occurred
under the LC and Borrower has refused to reimburse Agent for payment or (b) the
expiration date of the LC has occurred but the right of any beneficiary
thereunder to draw under the LC has been extended past the expiration date in
connection with the pendency of the related court action or proceeding and
Borrower has failed to deposit with Agent cash collateral in an amount equal to
Agent's maximum exposure under the LC.
11.11 VALIDITY AND ENFORCEABILITY OF LOAN PAPERS. Except in
accordance with its terms or as otherwise expressly permitted by this Agreement,
any Loan Paper at any time after its execution and delivery ceases to be in full
force and effect in any material respect or is declared by a Tribunal to be null
and void or its validity or enforceability is contested in writing by any
Company party thereto or any Company denies in writing that it has any further
liability or obligations under any Loan Paper to which it is a party.
11.12 EMPLOYEE BENEFIT PLANS. Any of the following exists with
respect to any Employee Plan of any Company: (a) a Reportable Event; (b)
disqualification or involuntary termination proceedings; (c) voluntary
termination proceedings are initiated while a funding deficiency (as determined
under section 412 of the Code) exists; (d) withdrawal liability exists with
respect to a Multiemployer Plan; (e) a trustee is appointed by any federal
district court or the PBGC to administer an Employee Plan; (f) termination
proceedings are initiated by the PBGC; (g) failure by any Company to promptly
notify Agent upon its receipt of notice of any proceeding or other actions that
may result in termination of an Employee Plan if the proceeding or termination
would constitute a Material Adverse Event.
SECTION 12 RIGHTS AND REMEDIES.
12.1 REMEDIES UPON DEFAULT.
(a) If a Default (i) occurs under SECTION 11.3(C) or (ii)
occurs and is continuing under SECTION 11.3(A), (B) OR (D), the
commitment to extend credit under this Agreement automatically
terminates, the entire unpaid balance of the Obligation automatically
becomes due and payable without any action of any kind whatsoever, and
Borrower must provide cash collateral in an amount equal to the
then-existing LC Exposure.
(b) If a Default occurs and is continuing, subject to the
terms of SECTION 13.5(B), Agent may (with the consent of, and must,
upon the request of, Majority Lenders), do any one or more of the
following: (i) if the maturity of the Obligation has not already been
accelerated under SECTION 12.1(a), declare the entire unpaid balance of
all or any part of the Obligation immediately due and payable,
whereupon it is due and payable; (ii) terminate the commitments of
Lenders to extend credit under this Agreement; (iii) reduce any claim
to judgment; (iv) to the extent permitted by Law, exercise (or request
each Lender to, and each Lender is entitled to, exercise) the Rights of
offset or banker's Lien against the interest of any Company in and to
every account and other property of any Company that are in the
possession of Agent or any Lender to the extent of the full amount of
the Obligation (and to the extent permitted by Law, each Company is
deemed directly obligated to each Lender in the full amount of the
Obligation for this purpose); (v) demand Borrower to provide cash
collateral in an amount equal to the LC Exposure then existing; and
(vi) exercise any and all other legal or equitable Rights afforded by
the Loan Papers, the Laws of the State of New York, or any other
applicable jurisdiction.
(c) If, in reliance on SECTION 13.5(B), Agent refuses to take
any action under SECTION 12.1(B) at the request of Majority Lenders,
then Majority Lenders may take that action.
12.2 COMPANY WAIVERS. To the extent permitted by Law, each Company
waives presentment and demand for payment, protest, notice of intention to
accelerate, notice of acceleration and notice of protest and nonpayment, and
43
agrees that its liability with respect to all or any part of the Obligation is
not affected by any renewal or extension in the time of payment of all or any
part of the Obligation, by any indulgence, or by any release or change in any
security for the payment of all or any part of the Obligation.
12.3 PERFORMANCE BY AGENT. If any covenant, duty or agreement of any
Company is not performed in accordance with the terms of the Loan Papers, Agent
may, while a Default exists, at its option (but subject to the approval of
Majority Lenders), perform or attempt to perform that covenant, duty or
agreement on behalf of that Company (and any amount expended by Agent in its
performance or attempted performance is payable by the Companies, jointly and
severally, to Agent on demand, becomes part of the Obligation, and bears
interest at the Default Rate from the date of Agent's expenditure until paid).
However, neither Agent nor any Lender assumes or shall have, except by its
express written consent, any liability or responsibility for the performance of
any covenant, duty or agreement of any Company.
12.4 NOT IN CONTROL. None of the covenants or other provisions
contained in any Loan Paper shall, or shall be deemed to, give Agent or Lenders
the Right to exercise control over the assets (including, without limitation,
real property), affairs, or management of any Company; the power of Agent and
Lenders is limited to the Right to exercise the remedies provided in this
SECTION 12.
12.5 COURSE OF DEALING. The acceptance by Agent or Lenders of any
partial payment on the Obligation shall not be deemed to be a waiver of any
Default then existing. No waiver by Agent, Majority Lenders or Lenders of any
Default shall be deemed to be a waiver of any other then-existing or subsequent
Default. No delay or omission by Agent, Majority Lenders or Lenders in
exercising any Right under the Loan Papers will impair that Right or be
construed as a waiver thereof or any acquiescence therein, nor will any single
or partial exercise of any Right preclude other or further exercise thereof or
the exercise of any other Right under the Loan Papers or otherwise.
12.6 CUMULATIVE RIGHTS. All Rights available to Agent, Majority
Lenders, and Lenders under the Loan Papers are cumulative of and in addition to
all other Rights granted to Agent, Majority Lenders, and Lenders at law or in
equity, whether or not the Obligation is due and payable and whether or not
Agent, Majority Lenders, or Lenders have instituted any suit for collection,
foreclosure, or other action in connection with the Loan Papers.
12.7 APPLICATION OF PROCEEDS. Any and all proceeds ever received by
Agent or Lenders from the exercise of any Rights pertaining to the Obligation
shall be applied to the Obligation according to SECTION 3.11.
12.8 DIMINUTION IN VALUE OF COLLATERAL. Neither Agent nor any Lender
has any liability or responsibility whatsoever for any diminution in or loss of
value of any collateral now or hereafter securing payment or performance of all
or any part of the Obligation (other than diminution in or loss of value caused
by its gross negligence or willful misconduct).
12.9 CERTAIN PROCEEDINGS. Borrower will promptly execute and deliver,
or cause the execution and delivery of, all applications, certificates,
instruments, registration statements and all other documents and papers Agent or
Majority Lenders reasonably request in connection with the obtaining of any
consent, approval, registration, qualification, permit, license or authorization
of any Tribunal or other Person necessary or appropriate for the effective
exercise of any Rights under the Loan Papers. Because Borrower agrees that
Agent's and Majority Lenders' remedies at Law for failure of Borrower to comply
with the provisions of this paragraph would be inadequate and that failure would
not be adequately compensable in damages, Borrower agrees that the covenants of
this paragraph may be specifically enforced.
12.10 CHANGE OF CONTROL. The Majority Lenders shall, upon the
happening of a Change of Control, have the privilege of declaring the Notes to
be due and payable on a date not earlier than sixty (60) days from the date of
the exercise of said privilege. The Notes then outstanding shall thereupon
become due and payable on the date specified in the notice sent to Borrower by
Agent including all Principal Debt plus accrued interest thereon to the Maturity
Date and any amounts owed by Borrower to Agent or the Lenders pursuant to this
Credit Agreement or the other Loan Papers.
44
SECTION 13 AGREEMENT AMONG LENDERS.
13.1 AGENT.
(a) Each Lender appoints Agent (and Agent accepts appointment)
as its nominee and agent, in its name and on its behalf: (i) to act as
its nominee and on its behalf in, under and in accordance with all Loan
Papers; (ii) to arrange the means whereby its funds are to be made
available to Borrower under the Loan Papers; (iii) to take any action
that it properly requests under the Loan Papers (subject to the
concurrence of other Lenders as may be required under the Loan Papers);
(iv) to receive all documents and items to be furnished to it under the
Loan Papers; (v) to be the secured party, mortgagee, beneficiary,
recipient and similar party in respect of any collateral for the
benefit of Lenders; (vi) to promptly distribute to it all material
information, requests, documents and items received from Borrower under
the Loan Papers; (vii) to promptly distribute to it its ratable part of
each payment or prepayment (whether voluntary, as proceeds of
collateral upon or after foreclosure, as proceeds of insurance thereon,
or otherwise) in accordance with the terms of the Loan Papers
(including without limitation, environmental notices, notices of
default and all financial statements and Compliance Certificates); and
(viii) to deliver to the appropriate Persons requests, demands,
approvals and consents received from it. However, Agent may not be
required to take any action that exposes it to personal liability or
that is contrary to any Loan Paper or applicable Law.
(b) If the initial or any successor Agent ever ceases to be a
party to this Agreement or if the initial or any successor Agent ever
resigns (whether voluntarily or at the request of Majority Lenders),
then Majority Lenders shall appoint the successor Agent from among the
Lenders with Commitment Sums of at least $10,000,000 (other than the
resigning Agent). If Majority Lenders fail to appoint a successor Agent
within thirty (30) days after the resigning Agent has given notice of
resignation or Majority Lenders have removed the resigning Agent, then
the resigning Agent may, on behalf of Lenders and with the consent of
the Borrower, which shall not be unreasonably withheld or delayed,
appoint a successor Agent, which must be a commercial bank having a
combined capital and surplus of at least $1,000,000,000 (as shown on
its most recently published statement of condition). Upon its
acceptance of appointment as successor Agent, the successor Agent
succeeds to and becomes vested with all of the Rights of the prior
Agent, and the prior Agent is discharged from its duties and
obligations of Agent under the Loan Papers (but, when used in
connection with LCs issued and outstanding before the appointment of
the successor Agent, "Agent" shall continue to refer solely to The
Chase Manhattan Bank), and each Lender shall execute such documents as
any Lender, the resigning or removed Agent, or the successor Agent
reasonably request to reflect the change. After any Agent's resignation
or removal as Agent under the Loan Papers, the provisions of this
SECTION 13 inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under the Loan Papers.
(c) Agent, in its capacity as a Lender, has the same Rights
under the Loan Papers as any other Lender and may exercise those Rights
as if it were not acting as Agent; the term "Lender" shall, unless the
context otherwise indicates, include Agent; and Agent's resignation or
removal shall not impair or otherwise affect any Rights that it has or
may have in its capacity as an individual Lender. Each Lender and
Borrower agree that Agent is not a fiduciary for Lenders or for
Borrower but simply is acting in the capacity described in this
Agreement to alleviate administrative burdens for Borrower and Lenders,
that Agent has no duties or responsibilities to Lenders or Borrower
except those expressly set forth in the Loan Papers, and that Agent in
its capacity as a Lender has all Rights of any other Lender.
(d) Agent may now or hereafter be engaged in one or more loan,
letter of credit, leasing or other financing transactions with
Borrower, act as trustee or depositary for Borrower, or otherwise be
engaged in other transactions with Borrower (collectively, the "OTHER
ACTIVITIES") not the subject of the Loan Papers. Without limiting the
Rights of Lenders specifically set forth in the Loan Papers, Agent is
not responsible to account to Lenders for those other activities, and
no Lender shall have any interest in any other activities, any present
or future guaranties by or for the account of Borrower that are not
contemplated or included in the Loan Papers, any present or future
offset exercised by Agent in respect of those other activities, any
present or future property taken as security for any of those other
activities, or any property now or hereafter in
45
Agent's possession or control that may be or become security for the
obligations of Borrower arising under the Loan Papers by reason of the
general description of indebtedness secured or of property contained in
any other agreements, documents, or instruments related to any of those
other activities (but, if any payments in respect of those guaranties
or that property or the proceeds thereof is applied by Agent to reduce
the Obligation, then each Lender is entitled to share ratably in the
application as provided in the Loan Papers).
13.2 EXPENSES. Each Lender shall pay its Pro Rata Part of any
reasonable expenses (including, without limitation, court costs, reasonable
attorneys' fees and other costs of collection) incurred by Agent (while acting
in such capacity) in connection with any of the Loan Papers if Agent is not
reimbursed from other sources within thirty (30) days after incurrence. Each
Lender is entitled to receive its Pro Rata Part of any reimbursement that it
makes to Agent if Agent is subsequently reimbursed from other sources.
13.3 PROPORTIONATE ABSORPTION OF LOSSES. Except as otherwise provided
in the Loan Papers, nothing in the Loan Papers gives any Lender any advantage
over any other Lender insofar as the Obligation is concerned or to relieve any
Lender from ratably absorbing any losses sustained with respect to the
Obligation (except to the extent unilateral actions or inactions by any Lender
result in Borrower or any other obligor on the Obligation having any credit,
allowance, setoff, defense, or counterclaim solely with respect to all or any
part of that Lender's Pro Rata Part of the Obligation).
13.4 DELEGATION OF DUTIES; RELIANCE. Lenders may perform any of their
duties or exercise any of their Rights under the Loan Papers by or through
Agent, and Lenders and Agent may perform any of their duties or exercise any of
their Rights under the Loan Papers by or through their respective
Representatives. Agent, Lenders and their respective Representatives (a) are
entitled to rely upon (and shall be protected in relying upon) any written or
oral statement believed by it or them to be genuine and correct and to have been
signed or made by the proper Person and, with respect to legal matters, upon
opinion of counsel selected by Agent or that Lender (but nothing in this CLAUSE
(A) permits Agent to rely on (i) oral statements if a writing is required by
this Agreement or (ii) any other writing if a specific writing is required by
this Agreement), (b) are entitled to deem and treat each Lender as the owner and
holder of its Pro Rata Part of the Principal Debt for all purposes until,
subject to SECTION 14.12, written notice of the assignment or transfer is given
to and received by Agent (and any request, authorization, consent or approval of
any Lender is conclusive and binding on each subsequent holder, assignee or
transferee of or Participant in that Lender's Pro Rata Part of the Principal
Debt until that notice is given and received), (c) are not deemed to have notice
of the occurrence of a Default unless a responsible officer of Agent, who
handles matters associated with the Loan Papers and transactions thereunder, has
actual knowledge or Agent has been notified by a Lender or Borrower, and (d) are
entitled to consult with legal counsel (including counsel for Borrower),
independent accountants, and other experts selected by Agent and are not liable
for any action taken or omitted to be taken in good faith by it in accordance
with the advice of counsel, accountants, or experts.
13.5 LIMITATION OF AGENT'S LIABILITY.
(a) Neither Agent nor any of its Representatives will be
liable for any action taken or omitted to be taken by it or them under
the Loan Papers in good faith and believed by it or them to be within
the discretion or power conferred upon it or them by the Loan Papers or
be responsible for the consequences of any error of judgment (except
for fraud, gross negligence or willful misconduct), and neither Agent
nor any of its Representatives has a fiduciary relationship with any
Lender by virtue of the Loan Papers (but nothing in this Agreement
negates the obligation of Agent to account for funds received by it for
the account of any Lender).
(b) Unless indemnified to its satisfaction, Agent may not be
compelled to do any act under the Loan Papers or to take any action
toward the execution or enforcement of the powers thereby created or to
prosecute or defend any suit in respect of the Loan Papers. If Agent
requests instructions from Lenders, or Majority Lenders, as the case
may be, with respect to any act or action in connection with any Loan
Paper, Agent is entitled to refrain (without incurring any liability to
any Person by so refraining) from that act or action unless and until
it has received instructions. In no event, however, may Agent or any of
its Representatives be required to take any action that it or they
determine could incur for it or them criminal or onerous civil
46
liability. Without limiting the generality of the foregoing, no Lender
has any right of action against Agent as a result of Agent's acting or
refraining from acting under this Agreement in accordance with
instructions of Majority Lenders, or, if unanimity is required, in
accordance with instructions of all Lenders.
(c) Agent is not responsible to any Lender or any Participant
for, and each Lender represents and warrants that it has not relied
upon Agent in respect of, (i) the creditworthiness of any Company and
the risks involved to that Lender, (ii) the effectiveness,
enforceability, genuineness, validity or due execution of any Loan
Paper (other than by Agent), (iii) any representation, warranty,
document, certificate, report or statement made therein (other than by
Agent) or furnished thereunder or in connection therewith, (iv) the
adequacy of any collateral now or hereafter securing the Obligation or
the existence, priority or perfection of any Lien now or hereafter
granted or purported to be granted on the collateral under any Loan
Paper, or (v) the observance of or compliance with any of the terms,
covenants or conditions of any Loan Paper on the part of any Company.
EACH LENDER AGREES TO INDEMNIFY AGENT AND ITS REPRESENTATIVES AND HOLD
THEM HARMLESS FROM AND AGAINST (BUT LIMITED TO SUCH LENDER'S PRO RATA
PART OF) ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES AND
REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER THAT MAY BE
IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THEM IN ANY WAY RELATING
TO OR ARISING OUT OF THE LOAN PAPERS OR ANY ACTION TAKEN OR OMITTED BY
THEM UNDER THE LOAN PAPERS IF AGENT AND ITS REPRESENTATIVES ARE NOT
REIMBURSED FOR SUCH AMOUNTS BY ANY COMPANY. ALTHOUGH AGENT AND ITS
REPRESENTATIVES HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT
FOR ITS OR THEIR OWN ORDINARY NEGLIGENCE, AGENT AND ITS REPRESENTATIVES
DO NOT HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR
THEIR OWN FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
13.6 DEFAULT; COLLATERAL. If Agent receives notice of a Default
from Borrower or any Lender, Agent shall notify Lenders of such Default and
Lenders agree to promptly confer in order that Majority Lenders or Lenders, as
the case may be, may agree upon a course of action for the enforcement of the
Rights of Lenders. Unless and until Agent receives directions from Majority
Lenders, Agent shall refrain from taking any action (without incurring any
liability to any Person for so refraining), provided that, unless and until the
Agent has received such directions, the Agent may, at its option, take such
actions as it deems appropriate without the direction of the Majority Lenders in
circumstances where the ability of Lenders to recover the Obligation may
otherwise be materially impaired. In actions with respect to any property of
Borrower, Agent is acting for the ratable benefit of each Lender. Agent shall
hold, for the ratable benefit of all Lenders, any security it receives for the
Obligation or any guaranty of the Obligation it receives upon or in lieu of
foreclosure.
13.7 LIMITATION OF LIABILITY. No Lender or any Participant will
incur any liability to any other Lender or Participant except for acts or
omissions in bad faith, and neither Agent nor any Lender or Participant will
incur any liability to any other Person for any act or omission of any other
Lender or any Participant.
13.8 RELATIONSHIP OF LENDERS. The Loan Papers, and the documents
delivered in connection therewith, do not create a partnership or joint venture
among Agent and Lenders or among Lenders.
13.9 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs Agent to enter into the
Security Documents for the ratable benefit of Lenders. Each Lender
agrees that any action taken by Agent concerning any Collateral with
the consent of, or at the request of, Majority Lenders in accordance
with the provisions of this Agreement, the Security Documents or the
other Loan Papers, and the exercise by Agent (with the consent of, or
at the request of, Majority Lenders) of powers concerning the
Collateral set forth in any Loan Paper, together with other reasonably
incidental powers, shall be authorized and binding upon all Lenders.
(b) Agent is authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from any Lender, from
time to time before a Default or Potential Default, to take any action
with respect to any Collateral or Security Documents that may be
necessary to perfect and maintain perfected the Lender Liens upon the
Collateral granted by the Security Documents.
47
(c) Agent has no obligation whatsoever to any Lender or to any
other Person to assure that the Collateral exists or is owned by any
Company or is cared for or protected.
(d) Agent shall exercise the same care and prudent judgment
with respect to the Collateral and the Security Documents as it
normally and customarily exercises in respect of similar collateral and
security documents.
(e) Lenders irrevocably authorize Agent, at its option and in
its discretion, to release any Lender Lien upon any Collateral (i) upon
full payment of the Obligation; (ii) constituting property being sold
or disposed of as permitted under SECTION 9.10, if Agent determines
that the property being sold or disposed is being sold or disposed in
accordance with the requirements and limitations of SECTION 9.10 and
Agent concurrently receives all mandatory prepayments with respect
thereto, if any, in accordance with SECTION 9.10; (iii) constituting
property in which no Company owned any interest at the time the Lender
Lien was granted or at any time thereafter; (iv) constituting property
leased to any Company under a lease that has expired or been terminated
in a transaction permitted under this Agreement or is about to expire
and that has not been, and is not intended by that Company to be,
renewed; (v) consisting of an instrument evidencing Debt pledged to
Agent (for the benefit of Lenders), if the Debt evidenced thereby has
been paid in full; or (vi) if approved, authorized or ratified in
writing by Majority Lenders subject to SECTION 14.10(B)(VI). Upon
request by Agent at any time, Lenders will confirm in writing Agent's
authority to release particular types or items of Collateral under this
SECTION 13.9(E).
13.10 BENEFITS OF AGREEMENT. None of the provisions of this SECTION
13 inure to the benefit of any Company or any other Person other than Agent and
Lenders; consequently, no Company or any other Person is entitled to rely upon,
or to raise as a defense, in any manner whatsoever, the failure of Agent or any
Lender to comply with these provisions.
SECTION 14 MISCELLANEOUS.
14.1 HEADINGS. The headings, captions and arrangements used in any
of the Loan Papers are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify or modify the terms of the Loan Papers,
nor affect the meaning thereof.
14.2 NONBUSINESS DAYS; TIME. Any payment or action that is due
under any Loan Paper on a non-Business Day may be delayed until the
next-succeeding Business Day (but interest shall continue to accrue on any
applicable payment until payment is in fact made) unless the payment concerns a
LIBOR Rate Borrowing, in which case if the next-succeeding Business Day is in
the next calendar month, then such payment shall be made on the next-preceding
Business Day. Unless otherwise indicated, all time references (e.g., 10:00 a.m.)
are to New York, New York time.
14.3 COMMUNICATIONS. Unless otherwise specifically provided,
whenever any Loan Paper requires or permits any consent, approval, notice,
request, demand or other communication from one party to another, communication
must be in writing (which may be by telex or telecopy) to be effective and shall
be deemed to have been given (a) if by telex, when transmitted to the
appropriate telex number and the appropriate answerback is received, (b) if by
telecopy, when transmitted to the appropriate telecopy number (and all
communications sent by telecopy must be confirmed promptly thereafter by
telephone; but any requirement in this parenthetical shall not affect the date
when the telecopy shall be deemed to have been delivered), (c) if by mail, on
the third Business Day after it is enclosed in an envelope and properly
addressed, stamped, sealed, certified mail, return receipt requested, and
deposited in the appropriate official postal service, or (d) if by any other
means, when actually delivered. Until changed by notice pursuant to this
Agreement, the address (and telecopy number) for each party to a Loan Paper is
set forth on the attached SCHEDULE 1.
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14.4 FORM AND NUMBER OF DOCUMENTS. The form, substance, and number
of counterparts of each writing to be furnished under this Agreement must be
satisfactory to Agent and its counsel.
14.5 EXCEPTIONS TO COVENANTS. Borrower may not and may not permit
any Company to take or fail to take any action that is permitted as an exception
to any of the covenants contained in any Loan Paper if that action or omission
would result in the breach of any other covenant contained in any Loan Paper.
14.6 SURVIVAL. All covenants, agreements, undertakings,
representations and warranties made in any of the Loan Papers survive all
closings under the Loan Papers and, except as otherwise indicated, are not
affected by any investigation made by any party.
14.7 GOVERNING LAW. Except as expressly provided in a Loan Paper,
the Laws (other than conflict-of-laws provisions) of the State of New York and
of the United States of America govern the Rights and duties of the parties to
the Loan Papers and the validity, construction, enforcement and interpretation
of the Loan Papers.
14.8 INVALID PROVISIONS. Any provision in any Loan Paper held to be
illegal, invalid or unenforceable is fully severable; the appropriate Loan Paper
shall be construed and enforced as if that provision had never been included;
and the remaining provisions shall remain in full force and effect and shall not
be affected by the severed provision. Agent, Lenders, and each Company party to
the affected Loan Paper agree to negotiate, in good faith, the terms of a
replacement provision as similar to the severed provision as may be possible and
be legal, valid and enforceable. However, if the provision held to be illegal,
invalid or unenforceable is a material part of this Agreement, such invalid,
illegal or unenforceable provision shall be, to the extent permitted by Law,
replaced by a clause or provision judicially construed and interpreted to be as
similar in substance and content to the original terms of such illegal, invalid
or unenforceable clause or provision as the context thereof would reasonably
allow, so that such clause or provision would thereafter be legal, valid and
enforceable.
14.9 VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY TO ANY LOAN
PAPER, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS (AND IN THE CASE OF
BORROWER, FOR EACH OTHER COMPANY), (a) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF NEW YORK, (b)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING
OUT OF OR IN CONNECTION WITH THE LOAN PAPERS AND THE OBLIGATION BROUGHT IN
DISTRICT COURTS OF NEW YORK, NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK, (c) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY
LITIGATION BROUGHT IN ANY OF THE AFOREMENTIONED COURTS HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM, (d) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THOSE COURTS IN ANY LITIGATION BY THE MAILING OF COPIES THEREOF BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND-DELIVERY, OR
BY DELIVERY BY A NATIONALLY RECOGNIZED COURIER SERVICE, AND SERVICE SHALL BE
DEEMED COMPLETE UPON DELIVERY OF THE LEGAL PROCESS AT ITS ADDRESS SET FORTH IN
THIS AGREEMENT, (e) IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING AGAINST ANY
PARTY TO ANY LOAN PAPER ARISING OUT OF OR IN CONNECTION WITH THE LOAN PAPERS OR
THE OBLIGATION MAY BE BROUGHT IN ONE OF THE AFOREMENTIONED COURTS, AND (f)
IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
LOAN PAPER. The scope of each of the foregoing waivers is intended to be
all-encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including, without limitation,
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Borrower (for itself and on behalf of each other Company)
acknowledges that these waivers are a material inducement to Agent's and each
Lender's agreement to enter into a business relationship, that Agent and each
Lender has already relied on these waivers in entering into this Agreement, and
that Agent and each Lender will continue to rely on each of these waivers in
related future dealings. Borrower (for itself and on behalf of each other
Company) further warrants and represents that it has reviewed these waivers with
its legal counsel, and that it knowingly and voluntarily agrees to each waiver
following consultation with legal counsel. THE WAIVERS IN THIS
49
SECTION 14.9 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, SUPPLEMENTS, OR REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN PAPER.
In the event of Litigation, this Agreement may be filed as a written consent to
a trial by the court.
14.10 AMENDMENTS, CONSENTS, CONFLICTS AND WAIVERS.
(a) Unless otherwise specifically provided, (i) this
Agreement may be amended only by an instrument in writing executed by
Borrower, Agent and Majority Lenders and supplemented only by documents
delivered or to be delivered in accordance with the express terms of
this Agreement, and (ii) the other Loan Papers may only be the subject
of an amendment, modification or waiver that has been approved by
Majority Lenders and Borrower.
(b) Any amendment, consent or waiver under this Agreement or
any Loan Paper that purports to accomplish any of the following must be
in writing and executed by Borrower and Agent and executed (or
approved, as the case may be) by each Lender: (i) extend the due date
or decrease the amount of any scheduled payment of the Obligation
beyond the date specified in the Loan Papers; (ii) decrease any rate or
amount of interest, fees or other sums payable to Agent or Lenders
under this Agreement (except such reductions as are contemplated by
this Agreement); (iii) change the definition of "APPLICABLE MARGIN,"
COMMITMENT USAGE," "COMMITTED SUM," "FACILITY A COMMITTED SUM,"
"FACILITY B COMMITTED SUM," "MAJORITY LENDERS," "MATURITY DATE," "TERM
CONVERSION DATE", "FACILITY A MATURITY DATE," "FACILITY B MATURITY
DATE," "TOTAL COMMITMENT USAGE" or "TOTAL COMMITMENT"; (iv) increase or
decrease any one or more Lenders' Committed Sums except as provided in
this Agreement; (v) except as permitted by SECTION 9.10, consent to the
release of all or a material portion of the Collateral under the
Security Documents; (vi) change the provisions of SECTION 13 to the
detriment of any Lender; (vii) change any provision requiring ratable
distributions to Lenders; (viii) subject any Lender to a greater
obligation than expressly provided in this Agreement; or (ix) change
this CLAUSE (B) or any other matter specifically requiring the consent
of all Lenders under this Agreement.
(c) Any conflict or ambiguity between the terms and
provisions of this Agreement and terms and provisions in any other Loan
Paper is controlled by the terms and provisions of this Agreement.
(d) No course of dealing or any failure or delay by Agent, any
Lender, or any of their respective Representatives with respect to
exercising any Right of Agent or any Lender under this Agreement
operates as a waiver thereof. A waiver must be in writing and signed by
Agent and Lenders (or Majority Lenders, if permitted under this
Agreement) to be effective, and a waiver will be effective only in the
specific instance and for the specific purpose for which it is given.
14.11 MULTIPLE COUNTERPARTS. Any Loan Paper may be executed in a
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which constitute, collectively, one agreement; but, in
making proof of thereof, it shall not be necessary to produce or account for
more than one counterpart. Each Lender need not execute the same counterpart of
this Agreement so long as identical counterparts are executed by Borrower, each
Lender, and Agent. This Agreement shall become effective when counterparts of
this Agreement have been executed and delivered to Agent by each Lender, Agent
and Borrower, or, in the case only of Lenders, when Agent has received
telecopied, telexed or other evidence satisfactory to it that each Lender has
executed and is delivering to Agent a counterpart of this Agreement.
14.12 SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) Each Loan Paper binds and inures to the benefit of the
parties thereto, any intended beneficiary thereof, and each of their
respective successors and permitted assigns. No Lender may transfer,
pledge, assign, sell any participation in, or otherwise encumber its
portion of the Obligation except as permitted by this SECTION 14.12.
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(b) Subject to the provisions of this section and in
accordance with applicable Law, any Lender may, in the ordinary course
of its commercial banking business, at any time sell to one or more
Persons (each a "PARTICIPANT") participating interests in its portion
of the Obligation. The selling Lender shall remain a "Lender" under
this Agreement (and the Participant shall not constitute a "Lender"
under this Agreement) and its obligations under this Agreement shall
remain unchanged. The selling Lender shall remain solely responsible
for the performance of its obligations under the Loan Papers and shall
remain the holder of its share of the Principal Debt for all purposes
under this Agreement. Borrower and Agent shall continue to deal solely
and directly with the selling Lender in connection with that Lender's
Rights and obligations under the Loan Papers. Participants have no
Rights under the Loan Papers, other than certain voting Rights as
provided below. Subject to the following, each Lender may obtain (on
behalf of its Participants) the benefits of SECTION 3 with respect to
all participations in its part of the Obligation outstanding from time
to time so long as Borrower is not obligated to pay any amount in
excess of the amount that would be due to that Lender under SECTION 3
calculated as though no participations have been made. No Lender may
sell any participating interest under which the Participant has any
Rights to approve any amendment, modification or waiver of any Loan
Paper, except to the extent the amendment, modification or waiver
extends the due date for payment of any principal, interest or fees due
under the Loan Papers, reduces the interest rate or the amount of
principal or fees applicable to the Obligation (except reductions
contemplated by this Agreement), or releases a material portion of the
Collateral, if any, for the Obligation (other than releases of
collateral permitted by SECTION 13.9(E)). However, if a Participant is
entitled to the benefits of SECTION 3 or a Lender grants Rights to its
Participants to approve amendments to or waivers of the Loan Papers
respecting the matters described in the previous sentence, then that
Lender must include a voting mechanism in the relevant participation
agreement whereby a majority of its portion of the Obligation (whether
held by it or participated) shall control the vote for all of that
Lender's portion of the Obligation. Except in the case of the sale of a
participating interest to another Lender, the relevant participation
agreement shall prohibit the Participant from transferring, pledging,
assigning, selling participations in, or otherwise encumbering its
portion of the Obligation.
(c) Subject to the provisions of this section, any Lender
may at any time, in the ordinary course of its commercial banking
business, (i) without the consent of Borrower or Agent, assign all or
any part of its Rights and obligations under the Loan Papers to any of
its Affiliates (each a "Purchaser") and (ii) if no Default exists, upon
the prior written consent of Borrower and Agent (which will not be
unreasonably withheld), assign to any other Person that is not a
business competitor of any Company (each of which is also a
"PURCHASER") a proportionate part (not less than the greater of (x)
$5,000,000 or (y) its remaining balance, and an integral multiple of
$1,000,000) of all or any part of its Rights and obligations under the
Loan Papers; provided, however, that such assigning Lender must retain
an obligation hereunder to fund at least $5,000,000 of the Facilities,
unless otherwise agreed by the Borrower and Agent (such consent not to
be unreasonably withheld). In each case, the Purchaser shall assume
those Rights and obligations under an assignment agreement
substantially in the form of the attached EXHIBIT G. Each assignment
under this SECTION 14.12 (C) shall include a ratable interest in the
assigning Lender's Rights and obligations under both Facility A and
Facility B. Upon (i) delivery of an executed copy of the assignment
agreement to Borrower and Agent and (ii) payment of a fee of $2,500
from the transferee to Agent, from and after the assignment's effective
date (which shall be after the date of delivery), the Purchaser shall
for all purposes be a Lender party to this Agreement and shall have all
the Rights and obligations of a Lender under this Agreement to the same
extent as if it were an original party to this Agreement with
commitments as set forth in the assignment agreement, and the
transferor Lender shall be released from its obligations under this
Agreement to a corresponding extent, and, except as provided in the
following sentence, no further consent or action by Borrower, Lenders
or Agent shall be required. Upon the consummation of any transfer to a
Purchaser under this CLAUSE (C), the then-existing SCHEDULE 1 shall
automatically be deemed to reflect the name, address, and Committed Sum
of such Purchaser, Agent shall deliver to Borrower and Lenders an
amended SCHEDULE 1 reflecting those changes, Borrower shall execute and
deliver to each of the transferor Lender and the Purchaser a Facility A
Note and a Facility B Note in the face amount of its respective
Committed Sum under Facility A and Facility B following transfer, and,
upon receipt of its new Facility A Note and Facility B Note, the
transferor Lender shall return to Borrower the Facility A Note and
Facility B Note previously delivered to it under this
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Agreement. A Purchaser is subject to all the provisions in this section
as if it were a Lender signatory to this Agreement as of the date of
this Agreement.
(d) Any Lender may at any time, without the consent of
Borrower or Agent, assign all or any part of its Rights under the Loan
Papers to a Federal Reserve Bank without releasing the transferor
Lender from its obligations thereunder.
(e) Notwithstanding any contrary provision in this
Agreement, a Lender may not sell or participate any of its interests
for a purchase price that, directly or indirectly, reflects a discount
from face value, without first offering the sale or participation to
the other Lenders on a Pro Rata basis (which must be accepted or
rejected within five (5) Business Days after the offer).
14.13 DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. Each Company's obligations under the Loan Papers remain in full
force and effect until the Total Commitment is terminated and the Obligation is
paid in full (except for provisions under the Loan Papers which by their terms
expressly survive payment of the Obligation and termination of the Loan Papers).
If at any time any payment of the principal of or interest on any Note or any
other amount payable by Borrower or any other obligor on the Obligation under
any Loan Paper is rescinded or must be restored or returned upon the insolvency,
bankruptcy or reorganization of Borrower or otherwise, the obligations of each
Company under the Loan Papers with respect to that payment shall be reinstated
as though the payment had been due but not made at that time.
14.14 CONFIDENTIALITY. Borrower and Lenders agree to keep all
information concerning the structure and documentation of this Agreement
confidential, including without limitation all information of a confidential
nature received by them from Borrower pursuant to this Agreement; provided,
however, that such information may be disclosed: (a) to directors, officers,
employees, agents, representatives or outside counsel of Borrower or of the
Agent or any Lender or any Affiliate of any Lender; (b) to any auditor,
government official or examiner; (c) pursuant to any subpoena or other order of
any court or administrative agency or otherwise as may be required by applicable
law, rule or regulation; (d) to any other Person if reasonably incidental to the
administration of the credit facility provided herein; (e) in connection with
any litigation to which such Lender or any of its Affiliates may be a party; (f)
to the extent necessary in connection with the exercise of any remedy under this
Agreement or any other Loan Paper; (g) subject to provisions substantially
similar to those contained in this SECTION 14.14 to any actual or proposed
participant or assignee; or (h) to any assignee of or participant in, or
prospective assignee of or participant in, any Lender's Borrowings or its
Committed Sum or any part thereof under any credit agreement who, in each case
set forth in CLAUSES (A) through (H), agrees in writing to be bound by the terms
of this Section; and provided further, that no confidentiality obligation shall
attach to any information which (1) is or becomes publicly known, through no
wrongful act on the part of any Person who shall have received such information,
(2) is rightfully received by such Person from a third party, (3) is
independently developed by such Person, or (4) is explicitly approved for
release by Borrower.
14.15 ENTIRETY. THIS AGREEMENT AND THE OTHER WRITTEN LOAN PAPERS
(EACH AS AMENDED IN WRITING FROM TIME TO TIME) EXECUTED BY ANY COMPANY, ANY
LENDER OR AGENT REPRESENT THE FINAL AGREEMENT AMONG THE COMPANIES, LENDERS AND
AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
52
EXECUTED as of the day and year first mentioned.
MONRO MUFFLER BRAKE, INC.,
a New York corporation, as Borrower
By: /s/ Catherine D'Amico
--------------------------------------------
Catherine D'Amico, Senior Vice President
And Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Agent and a Lender
By: /s/ Philip M. Hendrix
--------------------------------------------
Philip M. Hendrix, Vice President
FLEET NATIONAL BANK,
as Syndication Agent and a Lender
By: /s/ Martin K. Birmingham
--------------------------------------------
Name: Martin K. Birmingham
--------------------------------------------
Title: Vice President
-----------------------------------------
MANUFACTURERS AND TRADERS TRUST COMPANY,
as a Lender
By: /s/ J. Theodore Smith
--------------------------------------------
Name: J. Theodore Smith
------------------------------------------
Title: Vice President
-----------------------------------------
53
KEYBANK, NA,
as a Lender
By: /s/ Timothy Beers
------------------------------------------
Name: Timothy Beers
----------------------------------------
Title: Vice President
---------------------------------------
MARINE MIDLAND BANK,
as a Lender
By: /s/ Richard L. Ford
------------------------------------------
Name: Richard L. Ford
----------------------------------------
Title: Vice President
---------------------------------------
STATE STREET BANK & TRUST CO.,
as a Lender
By: /s/ David G. Case
------------------------------------------
Name: David G. Case
----------------------------------------
Title: Vice President
---------------------------------------
NATIONAL CITY BANK,
as a Lender
By: /s/ Joseph D. Robison
------------------------------------------
Name: Joseph D. Robison
----------------------------------------
Title: Vice President
---------------------------------------
USTRUST,
as a Lender
By: /s/ Daniel G. Eastman
------------------------------------------
Name: Eastman, D. G.
----------------------------------------
Title: Vice President
---------------------------------------