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CREDIT AGREEMENT
dated as of
November 15, 2005
and
among
THE GREAT ATLANTIC & PACIFIC
TEA COMPANY, INC.,
and
The Other Borrowers Party Hereto,
as Borrowers
and
The Lenders Party Hereto,
and
BANK OF AMERICA, N.A.,
as Administrative Agent and Collateral Agent
___________________________
JPMORGAN CHASE BANK, N.A.,
as Syndication Agent
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Documentation Agent
and
BANC OF AMERICA SECURITIES LLC
as Lead Arranger
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions........................................................1
SECTION 1.01 Defined Terms.......................................1
SECTION 1.02 Classification of Loans and Borrowings.............27
SECTION 1.03 Terms Generally....................................27
SECTION 1.04 Accounting Terms; GAAP.............................28
SECTION 1.05 Borrowing Base Adjustments.........................28
ARTICLE II The Credits......................................................29
SECTION 2.01 Commitments........................................29
SECTION 2.02 Increase in Total Commitments......................29
SECTION 2.03 Loans and Borrowings...............................30
SECTION 2.04 Requests for Borrowings............................31
SECTION 2.05 Swingline Loans....................................32
SECTION 2.06 Letters of Credit..................................32
SECTION 2.07 Funding of Borrowings..............................37
SECTION 2.08 Interest Elections.................................37
SECTION 2.09 Termination or Reduction of Commitments............39
SECTION 2.10 Repayment of Loans; Evidence of Debt...............39
SECTION 2.11 Prepayment of Loans................................40
SECTION 2.12 Fees...............................................41
SECTION 2.13 Interest...........................................42
SECTION 2.14 Alternate Rate of Interest.........................43
SECTION 2.15 Increased Costs....................................43
SECTION 2.16 Break Funding Payments.............................45
SECTION 2.17 Taxes..............................................45
SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing
of Setoffs.......................................47
SECTION 2.19 Mitigation Obligations; Replacement of Lenders.....49
ARTICLE III Representations and Warranties..................................49
SECTION 3.01 Organization; Powers...............................50
SECTION 3.02 Authorization; Enforceability......................50
SECTION 3.03 Governmental Approvals; No Conflicts...............50
SECTION 3.04 Financial Condition; No Material Adverse Change....50
SECTION 3.05 Properties.........................................51
SECTION 3.06 Litigation and Environmental Matters...............51
SECTION 3.07 Compliance with Laws and Agreements................51
SECTION 3.08 Investment and Holding Company Status..............52
SECTION 3.09 Taxes..............................................52
SECTION 3.10 Employee Benefit Plans.............................52
SECTION 3.11 Disclosure.........................................52
SECTION 3.12 Subsidiaries.......................................52
SECTION 3.13 Insurance..........................................52
SECTION 3.14 Labor Matters......................................53
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SECTION 3.15 Security Documents.................................53
SECTION 3.16 Federal Reserve Regulations........................54
ARTICLE IV Conditions.......................................................54
SECTION 4.01 Effective Date.....................................54
SECTION 4.02 Each Credit Event..................................57
ARTICLE V Affirmative Covenants.............................................58
SECTION 5.01 Financial Statements and Other Information.........58
SECTION 5.02 Notices of Material Events.........................60
SECTION 5.03 Information Regarding Collateral...................60
SECTION 5.04 Existence; Conduct of Business.....................61
SECTION 5.05 Payment of Obligations.............................61
SECTION 5.06 Maintenance of Properties..........................62
SECTION 5.07 Insurance..........................................62
SECTION 5.08 Casualty and Condemnation..........................63
SECTION 5.09 Books and Records; Inspection and Audit Rights.....63
SECTION 5.10 Compliance with Laws...............................64
SECTION 5.11 Use of Proceeds and Letters of Credit..............64
SECTION 5.12 Additional Subsidiaries............................64
SECTION 5.13 [Reserved].........................................64
SECTION 5.14 Further Assurances.................................64
SECTION 5.15 Cash Management....................................64
SECTION 5.16 Priority of Claims Waivers.........................67
SECTION 5.17 Benefit Plans Payments.............................68
ARTICLE VI Negative Covenants...............................................68
SECTION 6.01 Indebtedness; Certain Equity Securities............68
SECTION 6.02 Liens..............................................69
SECTION 6.03 Fundamental Changes................................71
SECTION 6.04 Investments, Loans, Advances, Guarantees and
Acquisitions.....................................71
SECTION 6.05 Asset Sales........................................72
SECTION 6.06 Sale and Leaseback Transactions....................73
SECTION 6.07 Hedging Agreements.................................73
SECTION 6.08 Restricted Payments; Certain Payments of
Indebtedness.....................................73
SECTION 6.09 Transactions with Affiliates.......................74
SECTION 6.10 Restrictive Agreements.............................74
SECTION 6.11 Amendment of Material Documents....................75
SECTION 6.12 Minimum EBITDA Covenant............................75
SECTION 6.13 Limitation on Change in Fiscal Year................75
ARTICLE VII Events of Default...............................................76
SECTION 7.01 Events of Default..................................76
ARTICLE VIII The Agents.....................................................79
ARTICLE IX Miscellaneous....................................................81
SECTION 9.01 Notices............................................81
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SECTION 9.02 Waivers; Amendments................................81
SECTION 9.03 Expenses; Indemnity; Damage Waiver.................83
SECTION 9.04 Successors and Assigns.............................84
SECTION 9.05 Survival...........................................87
SECTION 9.06 Counterparts; Integration; Effectiveness...........87
SECTION 9.07 Severability.......................................87
SECTION 9.08 Right of Setoff....................................88
SECTION 9.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE
OF PROCESS.......................................88
SECTION 9.10 WAIVER OF JURY TRIAL...............................89
SECTION 9.11 Headings...........................................89
SECTION 9.12 Confidentiality....................................89
SECTION 9.13 Interest Rate Limitation...........................90
SECTION 9.14 Patriot Act........................................90
SECTION 9.15 Foreign Asset Control Regulations..................91
SECTION 9.16 Additional Waivers.................................91
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SCHEDULES:
Schedule A -- Priming Jurisdictions
Schedule B -- Distribution Centers
Schedule C -- Financial and Collateral Reports
Schedule 1.01 -- Additional Investments
Schedule 2.01 -- Commitments
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 3.15(b) -- UCC Filings
Schedule 3.15(c) -- Intellectual Property Filings
Schedule 5.15(a) -- DDA Accounts
Schedule 5.15(b) -- Credit Card Arrangements
Schedule 5.15(c) -- Third Party Insurance Payors
Schedule 5.15(d)(iv) -- Blocked Accounts
Schedule 5.15(i) -- Disbursement Accounts
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.04 -- Existing Investments
Schedule 6.10 -- Existing Restrictions
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Borrowing Base Certificate
Exhibit C -- Form of Guarantee Agreement
Exhibit D -- Form of Indemnity, Subrogation and Contribution
Agreement
Exhibit E -- Form of Perfection Certificate
Exhibit F -- Form of Pledge Agreement
Exhibit G -- Form of Security Agreement
Exhibit H -- Form of Joinder Agreement
Exhibit I -- Form of Opinion General Counsel of the Company
Exhibit J -- Form of Opinion of Cahill Gordon & Reindel LLP
Exhibit K -- Form of Credit Card Notification
Exhibit L -- Form of Insurance Provider Notification
Exhibit M -- Form of Blocked Account Agreement
Exhibit N -- Form of Coinstar Notification
Exhibit O -- Form of DDA Notification
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CREDIT AGREEMENT dated as of November 15, 2005, among THE GREAT ATLANTIC &
PACIFIC TEA COMPANY, INC., a Maryland corporation, the other BORROWERS
party hereto, the LENDERS party hereto, BANK OF AMERICA, N.A., as
Administrative Agent and Collateral Agent, JPMORGAN CHASE BANK, N.A., as
Syndication Agent and WACHOVIA BANK, NATIONAL ASSOCIATION, as Documentation
Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Additional Commitment Lender" has the meaning set forth in Section
2.02(a).
"Additional Investments" means those investments specified on Schedule 1.01
hereto.
"Adjusted LIBO Rate" means, for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the
LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Bank of America, N.A., in its capacity as
administrative agent for the Lenders hereunder, together with its successors and
assigns.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affected Eurodollar Loan" has the meaning set forth in Section 2.11(d).
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agent" means each of the Administrative Agent and the Collateral Agent.
"Agent's Account" has the meaning set forth in Section 5.15(f).
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds
Effective Rate in effect on such day plus fifty bps (0.50%). Any change in the
Alternate Base Rate due to a change in the Prime
1
Rate or the Federal Funds Effective Rate shall be effective from and including
the effective date of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"Applicable Advance Rate" means as to each investment constituting an
Eligible Additional Investment, the percentage specified on Schedule 1.01
hereto.
"Applicable Margin" means, for any Interest Payment Date with respect to
any ABR Loan or Eurodollar Loan, as the case may be, the applicable rate per
annum set forth below under the caption "ABR Loans" or "Eurodollar Loans", as
the case may be, based upon the Average Daily Facility Usage for the immediately
preceding fiscal quarter:
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Level Average Daily Facility Usage ABR Loans Eurodollar
Spread
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1 Less than or equal to 33.33% zero bps (0.00%) one hundred bps (1.00%)
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2 Greater than 33.33% but less than
or equal to 66.67% zero bps (0.00%) one hundred twenty five bps (1.25%)
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3 Greater than 66.67% zero bps (0.00%) one hundred fifty bps (1.50%)
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Except as provided in the following sentence, the Applicable Margin shall be
adjusted quarterly as of the first day of each fiscal quarter of the Company,
based upon the Average Daily Facility Usage for the immediately preceding fiscal
quarter. Upon the occurrence and during the continuance of an Event of Default,
at the option of the Administrative Agent or at the direction of the Required
Lenders, the Applicable Margin shall be immediately increased to the percentages
set forth in Level 3 (even if the Average Daily Facility Usage for another Level
have been met) and interest shall be determined in the manner set forth in
Section 2.13(c).
"Applicable Percentage" means, with respect to a Lender in respect of its
Commitment or any extension of credit thereunder, the percentage of the total
Commitments represented by such Lender's Commitment. If the Commitments have
terminated or expired, the Applicable Percentage shall be determined based upon
the Commitments most recently in effect.
"Appraised Value" means the net appraised orderly liquidation value (which
is expressed as a percentage) of (a) the Borrowers' Eligible Inventory as set
forth in the Borrowers' inventory stock ledger or (b) the Borrowers' Scripts, as
the case may be, as determined from time to time by an independent appraiser
reasonably satisfactory to the Administrative Agent.
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Availability Period" means, with respect to any Lender or its Commitment,
the period from and including the Effective Date to but excluding the earlier of
the Maturity Date and the date of termination of such Commitment.
2
"Availability Reserves" means such reserves as the Administrative Agent
from time to time determines in the Administrative Agent's reasonable credit
judgment as being appropriate (a) to reflect the impediments to the Agents'
ability to realize upon the Collateral or (b) to reflect costs, expenses and
other amounts that the Agents may incur or be required to pay to realize upon
the Collateral. Availability Reserves may include (but are not limited to)
reserves based on (i) the aggregate dollar amount represented by gift
certificates then outstanding and entitling the holder thereof to use all or a
portion thereof to pay all or a portion of the purchase price for any Inventory
as of such day, (ii) the Reserve for Leasehold Obligations, (iii) the PACA
Liability Reserve (to the extent Inventory subject to PACA is included in the
Borrowing Base), (iv) the maximum aggregate amount (giving effect to any netting
agreements) that the Company and its Subsidiaries would be required to pay under
any Hedging Agreements secured by the Security Documents the obligations under
which constitute Obligations if such Hedging Agreements were terminated,
determined as of the most recent date for which financial statements have been
delivered pursuant to Section 5.01(a), (b) or (c), and (v) outstanding Taxes and
other governmental charges, including, ad valorem, real estate, personal
property, sales, and other Taxes (in each case to the extent such Taxes or other
governmental charges are due and payable (except if being contested in good
faith in appropriate proceedings and for which adequate reserves have been
taken) and entitle any Person to a Lien on any Collateral that has priority
over, or is otherwise superior in right to, the Lien in such Collateral Agent
for the benefit of the Secured Parties). Provided no Default or Event of Default
has occurred and is continuing, the Administrative Agent shall give the
Borrowers ten (10) days prior notice of the imposition of any Availability
Reserve not described in clauses (i) through (v) above.
"Average Daily Facility Usage" means for any period the average daily usage
of the credit facilities hereunder by the Borrowers. Facility usage on each date
shall be determined by dividing (a) the Exposure on such date by (b) the total
Commitments on such date.
"Blocked Account Agreement" means with respect to an account established by
a Loan Party, an agreement, in form and substance satisfactory to the Collateral
Agent, establishing Control (as defined in the Security Agreement) of such
account by the Collateral Agent and whereby the bank maintaining such account
agrees, upon the occurrence and during the continuance of a Triggering Event, to
comply only with the instructions originated by the Collateral Agent without the
further consent of any Loan Party.
"Blocked Accounts" has the meaning set forth in Section 5.15(d).
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America.
"Borrowers" means the Company, Compass Foods, Inc., Borman's, Inc.,
Shopwell, Inc., Waldbaum, Inc., Super Fresh Food Markets, Inc., Super Market
Service Corp., Super Fresh/Sav-A-Center, Inc., Hopelawn Property I, Inc., Lo-Lo
Discount Stores, Inc. and Food Basics, Inc.
"Borrowing" means (i) a group of Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect or (ii) a Swingline Loan.
3
"Borrowing Base" means, on any date (subject to adjustment as provided in
Section 1.05), the aggregate value of the assets of the Loan Parties, in an
amount (calculated based on the most recent Borrowing Base Certificate delivered
to the Administrative Agent in accordance with Section 5.01(f), absent any error
in such Borrowing Base Certificate) that is equal to:
(a) the product of (x) 85% (or such other rate as determined from time
to time by the Administrative Agent in its commercially reasonable
discretion in accordance with Section 1.05) and (y) Appraised Value of
Eligible Inventory (subject to the provisions of clause (j) of the
definition of Eligible Inventory) and; plus
(b) the product of (x) 85% (or such other rate as determined from time
to time by the Administrative Agent in its commercially reasonable
discretion in accordance with Section 1.05) and (y) the face amount of all
Eligible Credit Card Account Receivables; plus
(c) the product of (x) 85% (or such other rate as determined from time
to time by the Administrative Agent in its commercially reasonable
discretion in accordance with Section 1.05) and (y) the face amount of
Eligible Coinstar Receivables; plus
(d) the product of (x) 85% (or such other rate as determined from time
to time by the Administrative Agent in its commercially reasonable
discretion in accordance with Section 1.05) and (y) the face amount of all
Eligible Third Party Insurance Provider Accounts Receivables; plus
(e) the product of (x) 85% (or such other rate as determined from time
to time by the Administrative Agent in its commercially reasonable
discretion in accordance with Section 1.05) and (y) the Appraised Value of
Scripts; plus
(f) 100% of all Eligible Cash and Cash Equivalents, plus;
(g) the product of the Applicable Advance Rate times the outstanding
balance of Eligible Additional Investments; provided that, Eligible Cash
and Cash Equivalents and Eligible Additional Investments included in the
Borrowing Base may not be withdrawn from the related account at the
Administrative Agent or Affiliate of the Administrative Agent, thereby
reducing the Borrowing Base, unless and until the Borrowers furnish the
Administration Agent with (i) notice of such intended withdrawal and (ii)
in the event there are any outstanding Loans, a Borrowing Base Certificate
as of the date of such proposed withdrawal reflecting that, after giving
effect to such withdrawal, Borrowing Base Availability exists; minus
(h) the then amount of all Availability Reserves.
The Borrowing Base shall be computed for each fiscal month as required by and
subject to the proviso after Section 5.01(g), and established based upon the
most recent Borrowing Base Certificate delivered to the Administrative Agent and
shall remain in effect until the delivery to the Administrative Agent of a
subsequent Borrowing Base Certificate.
4
"Borrowing Base Availability" means the amount by which the lesser of the
aggregate outstanding Commitment or the Borrowing Base, within all applicable
sublimits, exceeds the Exposure.
"Borrowing Base Certificate" means a certificate substantially in the form
of Exhibit B hereto (with such changes therein as may be required by the
Administrative Agent to reflect the components of and reserves against the
Borrowing Base as provided for hereunder from time to time), executed and
certified as accurate and complete by a Financial Officer of the Company which
shall include appropriate exhibits, schedules, supporting documentation, and
additional reports (i) as outlined in Schedule 1 to Exhibit B and (ii) as
reasonably requested by the Administrative Agent.
"Borrowing Request" means a request by a Borrower for a Borrowing in
accordance with Section 2.04.
"bps" means basis points.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in Boston, Massachusetts or New York, New York are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"Calculation Date" means the last Business Day of each calendar week.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as liabilities
on a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
"Cash and Cash Equivalents" means:
(1) United States Dollars;
(2) securities issued or directly and fully guaranteed or insured by
the United States or any agency or instrumentality of the United States
(provided that the full faith and credit of the United States is pledged in
support of those securities) having maturities of not more than one year
from the date of acquisition;
(3) obligations issued or fully guaranteed by any state of the United
States of America or any political subdivision of any such state or
province or any instrumentality thereof maturing within one year from the
date of acquisition and having a rating of either "A" or better from
Standard & Poor's, A2 or better from Moody's;
(4) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, banker's
acceptances with maturities not
5
exceeding one year and overnight bank deposits, in each case, with any
Lender or with any United States commercial bank having capital and surplus
in excess of $300,000,000;
(5) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2), (3), and (4)
above entered into with any financial institution meeting the
qualifications specified in clause (4) above;
(6) commercial paper rated at least "P-2" by Moody's, at least "A-2"
by Standard and Poor's and in each case maturing within one year after the
date of acquisition; and
(7) money market funds that are SEC.270.2a-7 compliant or enhanced
cash funds having a weighted average maturity of not greater than 120 days.
"Cash Receipts" has the meaning set forth in Section 5.15(f).
"Change in Control" means, at any time, (a) the board of directors of the
Company shall cease to consist of a majority of the Continuing Directors, (b)
any person or group (within the meaning of Sections 13(d) and 14(d) of the
Securities and Exchange Act of 1934, as amended) other than a Permitted Holder
shall acquire a majority of the voting power represented by the Company's
outstanding capital stock entitled to vote in the election of directors of the
Company.
"Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender or the Issuing Bank
(or, for purposes of Section 2.15(b), by any lending office of such Lender or by
such Lender's or such Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Coinstar Installation Agreements" means that certain Coinstar Installation
Agreement, dated April 29, 2002 (as the same may be amended, supplemented and
otherwise modified from time to time with the prior written consent of the
Administrative Agent), between the Company and Coinstar, Inc., together with
each other installation agreement between the Company (or any of its
Subsidiaries) and Cointstar, Inc. in form and substance satisfactory to the
Administrative Agent.
"Coinstar Notification" has the meaning set forth in Section 5.15(d).
"Coinstar Receivable" means each "Account" (as defined in the UCC )
together with all income, payments and proceeds thereof due and owing to the
Company (or any of its Subsidiaries) by Coinstar, Inc., pursuant to any contract
between the Company (or any of its Subsidiaries) and Coinstar, Inc., including
but not limited to the Coinstar Installation Agreements.
6
"Collateral" means any and all "Collateral", as defined in any applicable
Security Document.
"Collateral Agent" means Bank of America, N.A., in its capacity as
collateral agent for the Secured Parties under the Security Documents.
"Commitment" means, with respect to each Lender, the commitment, if any, of
such Lender to make Loans and to acquire participations in Letters of Credit,
expressed as an amount representing the maximum aggregate amount of such
Lender's Exposure hereunder, as such commitment may be (a) reduced from time to
time pursuant to paragraph (b)of Section 2.09 and (b) increased from time to
time pursuant to Section 2.02 or pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender's Commitment is set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender shall have assumed its Commitment, as applicable. The initial
aggregate amount of the Lenders' Commitments is One Hundred Fifty Million
Dollars ($150,000,000).
"Commitment Increase" has the meaning set forth in Section 2.02(a).
"Commitment Increase Date" has the meaning set forth in Section 2.02(c).
"Company" means The Great Atlantic & Pacific Tea Company, Inc., a Maryland
corporation.
"Consolidated EBITDA" means, for any period, Income or Loss from Operations
for such period plus (a) without duplication and to the extent deducted in
determining such Income or Loss from Operations, the sum of (i) all amounts
attributable to depreciation and amortization for such period, (ii) any
extraordinary or nonrecurring non-cash charges for such period, (iii)
consolidated rental expense for such period attributable to stores that were
permanently closed during such period plus any rent, common area maintenance,
real estate taxes and other real estate related expenses related to such
closure, (iv) charges for pension withdrawal liabilities related to the
permanent closing of retail and/or distribution facilities, and (v) the loss for
the early extinguishment of debt, minus (b) without duplication to the extent
included in determining such Income or Loss from Operations, (i) any
extraordinary or nonrecurring gains for such period, including, in the case of
the closure described in clause (a)(iii) of this definition, gains for such
period in accordance with GAAP, (ii) cash charges for such period (excluding
cash charges for pension withdrawal liabilities incurred in the first fiscal
quarter of 2005 in an amount not to exceed $30,000,000) and (iii) payments made
during such period related to stores previously closed.
"Continuing Directors" means directors of the Company who are in office on
the Effective Date and each other director, who's nomination for election to the
Board of Directors of the Company is recommended by a majority of the then
Continuing Directors or a Permitted Holder.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
7
"Credit Card Notification" has the meaning set forth in Section 5.15(d).
"Credit Card Receivables" means each "Account" (as defined in the UCC)
together with all income, payments and proceeds thereof, owed by an issuer of
credit cards to a Loan Party resulting from charges by a customer of a Loan
Party on credit cards issued by such issuer in connection with the sale of goods
by a Loan Party, or services performed by a Loan Party, in each case in the
ordinary course of its business.
"Currency and Commodity Hedging Agreement" means any foreign currency
exchange agreement, commodity price protection agreement or other currency
exchange rate or commodity price hedging arrangement.
"DDAs" means any checking, savings or other demand deposit account
maintained by a Loan Party.
"DDA Notification" has the meaning set forth in Section 5.15(d).
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disbursement Accounts" has the meaning set forth in Section 5.15(i).
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"Distribution Center Shrink Percentage" shall be applicable to Inventory
located at the Distribution Centers and shall mean, at the end of each fiscal
quarter, average shrink expressed in terms of cost value resulting from the
physical Distribution Center inventories performed during the two (2) fiscal
quarters ending on such date, expressed as a percentage of the cost value of
Inventory.
"Distribution Center Shrink Reserve" shall be equal to the product of (a)
the excess of the Distribution Center Shrink Percentage over 1%, multiplied by
(b) Inventory as of the date of the most recent Borrowing Base Certificate.
"Distribution Centers" means (i) the warehouse facilities operated by the
Loan Parties on the date hereof as set forth in Schedule B and (ii) any
warehouse facility located in the United States and operated by Loan Parties
that is designated as a Distribution Center by (a) giving 30 days prior written
notice to the Administrative Agent and (b) effecting the execution, filing and
recordation of such financing statements, the delivery of such Priority of
Claims Waivers as required hereby and taking any and all such further actions as
may be reasonably requested by the Administrative Agent.
"Dollars" and the symbol "$" mean the lawful currency of the United States.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
8
"Eligible Additional Investments" means Additional Investments of a
Borrower from time to time on deposit in an account in the name of a Borrower at
the Administrative Agent or an Affiliate of the Administrative Agent, which
account is subject to a first perfected security interest in favor of the
Collateral Agent for the benefit of itself and the Secured Parties and is
subject to a Blocked Account Agreement.
"Eligible Cash and Cash Equivalents" means Cash and Cash Equivalents of a
Borrower from time to time deposited in an account in the name of a Borrower at
the Administrative Agent or an Affiliate of the Administrative Agent (excluding
any amounts on deposit with the Administrative Agent pursuant to Section 2.06(j)
hereof or in any other escrow, or special purpose or restricted account, such as
an account specifically designated for payroll or sales taxes), which account is
subject to a first perfected security interest in favor of the Collateral Agent
for the benefit of itself and the Secured Parties and is subject to a Blocked
Account Agreement.
"Eligible Coinstar Receivables" means, at the time of any determination
thereof, each Coinstar Receivable that satisfies the following criteria at the
time of creation and continues to meet the same at the time of such
determination: such Coinstar Receivable (i) has been earned and represents the
bona fide amounts due to the Company or another Loan Party from Coinstar, Inc.
and in each case originated in the ordinary course of business of the Company or
another Loan Party and (ii) is not ineligible for inclusion in the calculation
of the Borrowing Base pursuant to any of clauses (a) through (i) below. Without
limiting the foregoing, to qualify as Eligible Coinstar Receivable, an Account
shall indicate no person other than the Company or another Loan Party as payee
or remittance party. In determining the amount to be so included, the face
amount of an Account shall be reduced by, without duplication, to the extent not
reflected in such face amount, (i) the amount of all accrued and actual
discounts, claims, credits or credits pending, promotional program allowances,
price adjustments, finance charges or other allowances (including any amount
that the Company or another Loan Party, as applicable, may be obligated to
rebate to a customer and (ii) the aggregate amount of all cash received in
respect of such Account but not yet applied by the Company or another Loan Party
to reduce the amount of such Coinstar Receivable. Unless otherwise approved from
time to time in writing by the Administrative Agent, no Coinstar Receivable
shall constitute an Eligible Coinstar Receivable if, without duplication:
(a) such Coinstar Receivable is not owned by the Company (or another
Loan Party) and the Company (or another Loan Party) does not have good or
marketable title to such receivable free and clear of any Lien of any
Person other than the Collateral Agent;
(b) such Coinstar Receivable does not constitute an "Account" (as
defined in the UCC) or such receivables have been outstanding for more than
ten (10) Business Days;
(c) either the Company (or the applicable Loan Party) or Coinstar,
Inc. is the subject of any bankruptcy or insolvency proceedings;
9
(d) such Coinstar Receivable is not a valid, legally enforceable
obligation of Coinstar, Inc.;
(e) such Coinstar Receivable is not subject to a properly perfected
security interest in favor of the Collateral Agent, or is not in form and
substance reasonably satisfactory to the Administrative Agent, or is
subject to any Lien (other than the Lien of the Collateral Agent)
whatsoever;
(f) such Coinstar Receivable otherwise does not conform to all
representations, warranties, covenants and agreements in the Loan Documents
relating to receivables;
(g) Coinstar, Inc. has not received the Coinstar Notification within
the timeframe set forth in Section 5.15(d) hereof;
(h) such Coinstar Receivable does not meet such other usual and
customary eligibility criteria for receivables as the Administrative Agent
may determine from time to time in its commercially reasonable discretion;
or
(i) such Coinstar Receivable is evidenced by "chattel paper" or an
"instrument" of any kind unless such "chattel paper" or "instrument" is in
the possession of the Collateral Agent, and to the extent necessary or
appropriate, endorsed to the Collateral Agent.
"Eligible Credit Card Accounts Receivable" means at the time of any
determination thereof, each Credit Card Receivable that satisfies the following
criteria at the time of creation and continues to meet the same at the time of
such determination: such Credit Card Receivable (i) has been earned and
represents the bona fide amounts due to the Company or another Loan Party from a
credit card payment processor and/or credit card issuer, and in each case
originated in the ordinary course of business of the Company and the related
Loan Party and (ii) is not ineligible for inclusion in the calculation of the
Borrowing Base pursuant to any of clauses (a) through (j) below. Without
limiting the foregoing, to qualify as an Eligible Credit Card Account
Receivable, an Account shall indicate no person other than the Company or the
related Loan Party (other than an Excluded Subsidiary) as payee or remittance
party. In determining the amount to be so included, the face amount of an
Account shall be reduced by, without duplication, to the extent not reflected in
such face amount, (i) the amount of all accrued and actual discounts, claims,
credits or credits pending, promotional program allowances, price adjustments,
finance charges or other allowances (including any amount that the Company or
the related Loan Party, as applicable, may be obligated to rebate to a customer,
a credit card payment processor, or credit card issuer pursuant to the terms of
any agreement or understanding (written or oral)) and (ii) the aggregate amount
of all cash received in respect of such Account but not yet applied by the
Company or the related Loan Party to reduce the amount of such Credit Card
Receivable. Unless otherwise approved from time to time in writing by the
Administrative Agent, no Credit Card Receivable shall constitute an Eligible
Credit Card Accounts Receivable if, without duplication:
10
(a) such Credit Card Receivable is not owned by a Loan Party and such
Loan Party does not have good or marketable title to such Credit Card
Receivable free and clear of any Lien of any Person other than the
Collateral Agent;
(b) such Credit Card Receivable does not constitute an "Account" (as
defined in the UCC) or such Credit Card Receivable has been outstanding for
more than seven (7) business days;
(c) the issuer or payment processor of the applicable credit card with
respect to such Credit Card Receivable is the subject of any bankruptcy or
insolvency proceedings;
(d) such Credit Card Receivable is not a valid, legally enforceable
obligation of the applicable issuer with respect thereto;
(e) such Credit Card Receivable is not subject to a properly perfected
security interest in favor of the Collateral Agent, or is not in form and
substance reasonably satisfactory to the Administrative Agent, or is
subject to any Lien whatsoever other than Permitted Encumbrances
contemplated by the processor agreements and for which appropriate reserves
(as determined by the Administrative Agent) have not been established or
maintained by the Borrowers;
(f) the Credit Card Receivable does not conform to all
representations, warranties or other provisions in the Loan Documents
relating to Credit Card Receivables;
(g) such Credit Card Receivable is owed by a Person that has not
received a Credit Card Notification within the timeframe set forth in
Section 5.15(d) hereof;
(h) such Credit Card Receivable is subject to risk of set-off,
non-collection or not being processed due to unpaid and/or accrued credit
card processor fee balances, limited to the lesser of the balance of Credit
Card Receivable or unpaid credit card processor fees;
(i) such Credit Card Receivable is evidenced by "chattel paper" or an
"instrument" of any kind unless such "chattel paper" or "instrument" is in
the possession of the Collateral Agent, and to the extent necessary or
appropriate, endorsed to the Collateral Agent; or
(j) such Credit Card Receivable does not meet such other usual and
customary eligibility criteria for Credit Card Receivables as the
Administrative Agent may determine from time to time in its commercially
reasonable discretion.
"Eligible Inventory" means, at the time of any determination thereof the
Inventory of the Company or a Loan Party at the time of such determination that
is not ineligible for inclusion in the Borrowing Base pursuant to any of the
clauses (a) through (o) below. Without limiting the foregoing, to qualify as
Eligible Inventory no person other than the Company or a Loan Party (other than
an Excluded Subsidiary) shall have any direct or indirect ownership, interest or
title
11
to such Inventory and no person other than the Company or a Loan Party, shall be
indicated on any purchase order or invoice with respect to such Inventory as
having or purporting to have an interest therein. Unless otherwise from time to
time approved in writing by the Administrative Agent, no Inventory shall be
deemed Eligible Inventory if, without duplication:
(a) it is located at a reclamation center of any Distribution Center
or is otherwise held at any Distribution Center for return to vendor;
(b) it is supplies, packaging, selling or display materials;
(c) it is produce, floral, seafood, meat, bakery, dairy, deli, or fuel
(provided that fuel in an aggregate amount not to exceed $1,000,000 may be
deemed eligible inventory for purposes of calculating the Borrowing Base);
(d) it is not owned solely by the Company or any other Loan Party or
is owned by an Excluded Subsidiary;
(e) it is on consignment to the Company or any other Loan Party;
(f) it is not located at property that is owned or leased by the
Company or any other Loan Party or is in transit from vendors to such a
property; provided that (I) frozen seafood and meat and HBA in third party
storage facilities located in jurisdictions other than Priming
Jurisdictions shall, if not otherwise excluded, be included as Eligible
Inventory, minus any claims or Liens, other than Permitted Encumbrances,
that vendors, landlords, public warehouse operators or any third party
bailee may have against such property, from time to time, and (II) frozen
seafood and meat and HBA located in Priming Jurisdictions shall not be
included in Eligible Inventory pursuant to this paragraph (f) unless either
(A) the applicable vendor, landlord, public warehouse or any third party
bailee has provided to the related Loan Party a Priority of Claims Waiver
in form and substance reasonably satisfactory to the Administrative Agent,
or (B) the Borrowers have deposited with the Collateral Agent collateral
consisting of Cash and Cash Equivalents an amount equal to the Reserve for
Leasehold Obligations for Leasehold Obligations (as applicable) with
respect to such property, or (C) Borrowers' obligations to such vendor,
landlord, public warehouse or third party bailee are supported by a standby
letter of credit issued by a Lender pursuant to this Agreement in an amount
at least equal to the Reserve for Leasehold Obligations;
(g) it is not located in the United States of America;
(h) it is not subject to a perfected first priority Lien, other than
Permitted Encumbrances, securing the Obligations, regardless of its
location;
(i) it is not in good condition, does not meet all standards imposed
by any Governmental Authority having regulatory authority over it, or is
not currently saleable in the normal course of business of the Company and
the Subsidiaries;
12
(j) it is inventory located at any Distribution Center on such date
that represents over 13 weeks old inventory based on date of receipt
determined at an individual product level (provided that such inventory
shall be eligible for purposes of calculating the Borrowing Base to the
extent of fifty percent (50%) of the book value thereof);
(k) it is Inventory that is accounted for in both the Company's
Distribution Center and Store Inventory;
(l) it includes any profits or transfer price additions charged or
accrued in connection with transfers of Inventory between the Company and
its Subsidiaries or Affiliates;
(m) it is accounted for in the Store Shrink Reserve;
(n) it is accounted for in the Distribution Center Shrink Reserve; or
(o) it is accounted for in the Company's reserve which adjusts
Inventory valued under the Company's historical retail method of accounting
to actual cost value (product mix) or adjusts Inventory for unallocated
earned allowances (net costing).
"Eligible Third Party Insurance Provider Accounts Receivable" means, at the
time of any determination thereof, each third party insurance provider "Account"
(as defined in the UCC) together with all income, payments and proceeds thereof,
that satisfies the following criteria at the time of creation and continues to
meet the same at the time of such determination: such Account (i) has been
earned and submitted for reimbursement to, and represents the bona fide amounts
due to the Company or other Loan Party (other than an Excluded Subsidiary) from,
a third party insurance provider, in each case originated in the ordinary course
of business of the Company or the related Loan Party and (ii) is not ineligible
for inclusion in the calculation of the Borrowing Base pursuant to any of
clauses (a) through (m) below. Without limiting the foregoing, to qualify as an
Eligible Third Party Insurance Provider Accounts Receivable, a third party
insurance provider account receivable shall indicate no person other than the
Company or the related Loan Party (other than an Excluded Subsidiary) as payee
or remittance party. In determining the amount to be so included, the face
amount of such an account shall be reduced by, without duplication, to the
extent not reflected in such face amount, (i) the amount of all accrued and
actual discounts, claims, credits or credits pending, promotional program
allowances, price adjustments, finance charges or other allowances (including
any amount that the Company or the related Loan Party, as applicable, may be
obligated to rebate to a third party insurance provider pursuant to the terms of
any agreement or understanding (written or oral)) and (ii) the aggregate amount
of all cash received in respect of such Account but not yet applied by the
Company or the related Loan Party to reduce the amount of such Account. Unless
otherwise approved from time to time in writing by the Administrative Agent, no
third party insurance provider account receivable shall constitute an Eligible
Third Party Insurance Provider Accounts Receivable if, without duplication:
13
(a) an invoice (in form and substance satisfactory to the
Administrative Agent) with respect to such third party insurance provider
accounts receivable has not been sent to the applicable account debtor;
(b) such third party insurance provider accounts receivable are not
due and payable in full, are subject to any bill and hold arrangement, or
more than 90 days have elapsed since the date of the sale of goods giving
rise to such third party insurance provider accounts receivable;
(c) the aggregate amount of accounts due from third party insurance
providers exceeds Fifteen Million U.S. Dollars ($15,000,000) for which more
than 60 days but not more than 90 days have elapsed since the date of the
sale of goods or rendering of services giving rise to such third party
insurance provider accounts receivable;
(d) such third party insurance provider accounts receivable did not
arise from the provision of goods authorized by a physician's prescription,
and such goods have been performed or provided; (e) such third party
insurance provider accounts receivable arose from the provision of durable
medical equipment;
(f) such third party insurance provider accounts receivable are
subject to any assignment, claim, lien, or security interest, except in
favor of the Administrative Agent and the Lenders;
(g) such third party insurance provider accounts receivable are not
valid and legally enforceable obligations of the account debtor, are with
recourse, or are subject to any claim for credit, defense, offset,
chargeback, counterclaim or adjustment by the account debtor (other than
any discount allowed for prompt payment and reconciliations in the ordinary
course of business), and the assignment or pledging thereof violates any
agreement to which the account debtor is subject;
(h) such third party insurance provider accounts receivable did not
arise in the ordinary course of business of the Company and its
Subsidiaries, or a notice of the bankruptcy, insolvency, failure, or
suspension or termination of business of the account debtor has been
received by the Company or the related Loan Party, or the payor thereunder
shall have provided written notice to anyone of a challenge or dispute of
its obligations thereunder;
(i) such third party insurance provider accounts receivable do not
conform to all representations, warranties or other provisions of the Loan
Documents relating to such third party insurance provider accounts
receivable;
(j) such third party insurance provider accounts receivable are
obligations payable under Medicare, Medicaid or any other governmental
program or the related account debtor is any unit of government;
14
(k) such third party insurance provider accounts receivable is owed by
a Person that has not received an Insurance Provider Notification within
the timeframe set forth in Section 5.15(d) hereof;
(l) such third party insurance provider accounts receivable do not
meet other usual and customary eligibility criteria for third party
insurance provider accounts receivable, including the payors thereunder, as
determined by the Administrative Agent in its commercially reasonable
discretion; or
(m) such third party insurance provider account receivable is
evidenced by "chattel paper" or an "instrument" of any kind unless such
"chattel paper" or "instrument" is in the possession of the Collateral
Agent, and to the extent necessary or appropriate, endorsed to the
Collateral Agent.
"Environmental Laws" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the pollution or protection of the environment or the preservation or
reclamation of natural resources, including those relating to the management,
release or threatened release of any Hazardous Material, or to employee health
and safety matters.
"Environmental Liability" means any liability, obligation, damage, loss,
claim, action, suit, judgment, order, fine, penalty, fee, expense or cost,
contingent or otherwise (including any liability for costs of environmental
remediation, or natural resource damages, administrative oversight costs, and
indemnities), of the Company or any Subsidiary directly or indirectly resulting
from or based upon (a) compliance or noncompliance with any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal or presence of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract or agreement pursuant to which liability is
assumed or imposed with respect to any of the foregoing.
"Equity Interests" means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Company, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA
15
of an application for a waiver of the minimum funding standard with respect to
any Plan; (d) the incurrence by the Company or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by the Company or any ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to an intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by
the Company or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Company or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Company or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar" means, when used in reference to any Loan or Borrowing,
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning set forth in Article VII.
"Exchange Act Filings" means all filings made by the Company pursuant to
the Securities and Exchange Act of 1934, and the rules promulgated thereunder,
since and including the annual report of the Company on Form 10-K for the fiscal
year ended immediately prior to the date as of which representation and warranty
is made or deemed to be made hereunder.
"Excluded Subsidiary" has the meaning set forth in Article VII.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, any Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of any Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (a) above, (c) United States
Federal withholding tax imposed with respect to amounts payable to a Non-U.S.
Lender to the extent that the obligation to withhold such amounts existed on the
date such Non-U.S. Lender became a party to this Agreement (or became an
assignee through any assignment or a Participant through the purchase of any
participation hereunder) or, with respect to payments to a new lending office,
the date such Non-U.S. Lender designated such new lending office with respect to
a Loan, and (d) any withholding tax that is attributable to a Lender's failure
to comply with Section 2.17(e) or (h), except that clause (c) above shall not
include amounts that arise (1) with respect to an assignment or the designation
of a new lending office made at the request of the Company; or (2) to the extent
the indemnity payment or additional amounts that any assignee or Lender through
a new lending office would be entitled to receive do not exceed the indemnity
payment or additional amounts that such assignee or person making the
designation of such new lending office would have been entitled to receive in
the absence of such assignment or designation.
16
"Exposure" means, at any time, the aggregate principal amount of
outstanding Loans and L/C Exposure at such time. The Exposure of any Lender at
any time shall be the sum of its L/C Exposure plus the aggregate principal
amount of its outstanding Loans at such time.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fee Letter" means the Fee Letter dated October 11, 2005 by and among the
Company, Bank of America, N.A. and Banc of America Securities LLC, as amended,
supplemented, replaced and in effect from time to time.
"Financial Officer" of any corporation means the chief financial officer,
principal accounting officer, treasurer, controller or any vice
president-finance, -financial services or -treasury services of such
corporation.
"Foreign Subsidiary" means any Subsidiary that is organized under the laws
of a jurisdiction other than the United States of America or any State thereof
or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United States
of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of
17
any Guarantee by a person shall be deemed to be an amount equal to the stated
amount or determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such person is required to
perform thereunder) as determined by such person in good faith.
"Guarantee Agreement" means the Guarantee Agreement among the Loan Parties
and the Administrative Agent, substantially in the form of Exhibit C.
"Hazardous Materials" means all explosive, radioactive, hazardous or toxic
substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes, and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.
"HBA" means health and beauty aids.
"Hedging Agreement" means any Currency and Commodity Hedging Agreement or
Interest Rate Hedging Agreement.
"Income or Loss from Operations" means, for any period, the income or loss
from operations of the Company and the Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP; provided that there shall be
excluded the income or loss of any Person (other than the Company) in which any
other Person (other than the Company or any Subsidiary or any director holding
qualifying shares in compliance with applicable law) owns an Equity Interest.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid
(excluding current accounts payable in the ordinary course of business), (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person
of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
18
"Indemnity, Subrogation and Contribution Agreement" means the Indemnity,
Subrogation and Contribution Agreement among the Loan Parties party thereto and
the Collateral Agent, substantially in the form of Exhibit D.
"Insurance Provider Notification" has the meaning set forth in Section
5.15(d).
"Interest Election Request" means a request by a Borrower to convert or
continue a Borrowing in accordance with Section 2.08.
"Interest Payment Date" means (a) with respect to any ABR Loan (including
any Swingline Loan) , the last Business Day of each calendar month and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six (or to
the extent available to all of the Lenders nine or twelve) months thereafter, as
the Borrowers may elect, provided that (a) if any Interest Period would end on a
day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (b) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.
"Interest Rate Hedging Agreement" means any interest rate protection
agreement or other interest rate hedging arrangement.
"Inventory" means all products available for sale by the Company and the
other Loan Parties in the following categories as defined and classified by the
Company and the other Loan Parties on a basis consistent with the Company's
current and historical accounting practices: HBA, perishable, grocery, pharmacy,
meat, seafood, produce, floral, bakery, deli, dairy, liquor, and fuel, each
valued at cost on a basis consistent with the current and historical accounting
practices (without giving effect to LIFO reserves).
"Issuing Bank" means Bank of America, N.A., in its capacity as the issuer
of Letters of Credit hereunder, and its successors in such capacity as provided
in Section 2.06(i); provided, that (i) the Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term "Issuing Bank" shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate; and (ii)
with the consent of the Borrowers and the Administrative Agent, the Issuing Bank
may arrange for one or more Letters of Credit to be issued by a Lender other
than the Issuing Bank (or an Affiliate of such
19
other Lender), in which case the term "Issuing Bank" shall include such Lender
(or Affiliate of such Lender) with respect to Letters of Credit issued by such
Lender (or Affiliate of such Lender). In the event that there is more than one
Issuing Bank at any time, references herein and in the other Loan Documents to
the Issuing Bank shall be deemed to refer to the Issuing Bank in respect of the
applicable Letter of Credit or to all Issuing Banks, as the context requires.
"L/C Disbursement" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"L/C Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
principal amount of all L/C Disbursements made pursuant to Letters of Credit
that have not yet been reimbursed by or on behalf of a Borrower at such time.
The L/C Exposure of any Lender at any time shall mean its Applicable Percentage
of the aggregate L/C Exposure at such time.
"Leasehold Obligations" means, with respect to each Loan Party, all
payments made, if any, by such Loan Party with respect to rent (including fixed
rent and variable rent), common area maintenance charges and other monetary
obligations under any lease of real property (including any Distribution Center
or Store) where any Inventory is stored or otherwise located.
"Lender" means each Person listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any Person that ceases to be a Party hereto pursuant to an Assignment
and Acceptance.
"Letter of Credit" means any Letter of Credit issued by the Issuing Bank
for the account of a Borrower.
"Letter of Credit Fee " has the meaning set forth in Section 2.12(c).
"LIBO Rate" means, for any Interest Period, the rate appearing on Page 3750
of the Telerate Service (or on any successor or substitute page of such Telerate
Service, or any successor to or substitute for such Telerate Service, providing
rate quotations comparable to those currently provided on such page of such
Telerate Service, as determined by the applicable Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the "LIBO Rate" for such Interest Period shall be the rate at
which dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the Administrative
Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the
20
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan" means all ABR Loans, Eurodollar Loans, Swingline Loans and all other
advances to or for the account of the Borrowers pursuant to this Agreement.
"Loan Documents" means this Agreement, the Guarantee Agreement, the
Indemnity, Subrogation and Contribution Agreement and the Security Documents.
"Loan Parties" means each of the Company, the other Borrowers and each
other Subsidiary identified as a "Loan Party" on Schedule 3.12 and each
Subsidiary made a party hereto pursuant to Section 5.12.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations or condition, financial or otherwise, of the
Company and the Subsidiaries taken as a whole, (b) the ability of any Loan Party
to perform any of its obligations under any Loan Document, (c) the rights of or
benefits available to the Lenders under any Loan Document or (d) the Collateral
as a whole.
"Material Contract" means any agreement to which any Loan Party is a party,
the termination of which would have a Material Adverse Effect, including,
without limitation, as of the Effective Date, the Supply Agreement, dated as of
June 27, 2005 by and between the Company and C&S Wholesale Grocers, Inc., as the
same may be amended from time to time.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Company and its Subsidiaries in an aggregate principal
amount exceeding $10,000,000 (or its equivalent). For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the Company
or any Subsidiary in respect of any Hedging Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that the
Company or such Subsidiary would be required to pay if such Hedging Agreement
were terminated at such time.
"Maturity Date" means November 15, 2010.
"Maximum Rate" has the meaning set forth in Section 9.13.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Multiemployer Plan" or "Multiemployer Plan" means a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by the Company and the
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale,
21
transfer or other disposition of an asset (including pursuant to a sale and
leaseback transaction or a casualty or a condemnation or similar proceeding),
the amount of all payments required to be made by the Company and the
Subsidiaries as a result of such event to repay Indebtedness (other than Loans)
secured by such asset or otherwise subject to mandatory prepayment as a result
of such event, (iii) the amount of all taxes paid (or reasonably estimated to be
payable) by the Company and the Subsidiaries, and the amount of any reserves
established by the Company and the Subsidiaries to fund contingent liabilities
reasonably estimated to be payable, in each case during the year that such event
occurred or the next succeeding year and that are directly attributable to such
event (as determined reasonably and in good faith by the chief financial officer
of the Company) and (iv) all amounts deposited in trust or escrow for the
benefit of any third party or to which any third party may be entitled in
connection with such event, provided that any such amounts returned to the
Company or any Subsidiary shall constitute Net Proceeds when received.
"Noncompliance Notice " has the meaning set forth in Section 2.05(b).
"Non-U.S. Lender" means a Lender or a Participant that is organized under
the laws of a jurisdiction other than the United States, any state thereof or
the District of Columbia.
"Obligations" has the meaning set forth in the Security Agreement.
"Other Taxes" means any and all present or future recording, stamp,
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PACA" means the Perishable Agricultural Commodities Act of 1930, as
amended.
"PACA Liability Reserve" means an amount calculated on a monthly basis by
the Collateral Agent to provide for vendor liabilities pursuant to PACA.
"Participant" has the meaning set forth in Section 9.04(e).
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate substantially in the form of
Exhibit E or any other form reasonably approved by the Administrative Agent.
"Permitted Encumbrances" means:
(a) liens imposed by law for Taxes, assessments and governmental
charges or claims that are not yet delinquent or are being contested in
compliance with Section 5.05;
(b) carriers', landlord's, warehousemen's, mechanics', materialmen's
and repairmen's liens, statutory liens of banks and rights of set-off and
other Liens imposed by law, arising in the ordinary course of business and
securing obligations
22
that are not overdue by more than 30 days or are being contested in
compliance with Section 5.05;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations and deposits securing liability to
insurance carriers under insurance arrangements;
(d) deposits to secure the performance of bids, tenders, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in
the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Company or any Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Holder" means Tengelmann Warenhandelsgesellschaft or (ii) any
Affiliate of Tengelmann Warenhandelsgesellschaft.
"Permitted Investments" means:
(a) Cash and Cash Equivalents; and
(b) Additional Investments.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Company or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" means the Pledge Agreement among the Loan Parties party
thereto and the Collateral Agent, substantially in the form of Exhibit F.
"Prepayment Event" means:
23
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of the Company or
any Subsidiary, other than (i) dispositions described in clauses (a) and
(b) of Section 6.05 and (ii) other dispositions resulting in aggregate Net
Proceeds not exceeding $20,000,000 during any fiscal year of the Company;
or
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property
or asset of the Company or any Subsidiary, but (i) only to the extent that
the Net Proceeds therefrom have not been applied to repair, restore or
replace such property or asset within 180 days after such event and (ii)
only to the extent the value of such loss is in excess of $1,000,000 (or
its equivalent); or
(c) the issuance by the Company or any Subsidiary of any Equity
Interests, or the receipt by the Company or any Subsidiary of any capital
contribution, other than any such issuance of Equity Interests to, or
receipt of any such capital contribution from, the Company or a Subsidiary;
or
(d) the incurrence by the Company or any Subsidiary (i) of any
Indebtedness, other than Indebtedness permitted by Section 6.01.
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by Bank of America, N.A. as its prime rate in effect at its
principal office in Charlotte, North Carolina; each change in the Prime Rate
shall be effective on the date such change is publicly announced as being
effective.
"Priming Jurisdiction" means any jurisdiction listed on Schedule A hereto,
which schedule may be revised by the Administrative Agent to reflect changes in
applicable law. The Administrative Agent shall provide the Company with ten (10)
days' prior written notice of any revisions to the jurisdictions listed on
Schedule A hereto.
"Priority of Claims Waiver" means a waiver of a Person's right, title and
interest in, to or under the Inventory.
"Qualified Preferred Stock" means, with respect to any Person, any
preferred capital stock or preferred equity interest that by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable or exercisable) or upon the happening of any event does not (a)
mature or becomes mandatorily redeemable prior to the Maturity Date, pursuant to
a sinking fund obligation or otherwise; (b) become convertible or exchangeable
at the option of the holder thereof for Indebtedness or preferred stock that is
not Qualified Preferred Stock, prior to the Maturity Date; or (c) become
redeemable at the option of the holder thereof, in whole or in part, prior to
the Maturity Date.
"Register" has the meaning set forth in Section 9.04(c).
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
24
"Reserve for Leasehold Obligations" means, on any date, the aggregate
amount of Leasehold Obligations of the Loan Parties due and owing with respect
to properties of a vendor, landlord, public warehouse operator or other third
party bailee located in a Priming Jurisdiction that has not provided a Priority
of Claims Waiver in form and substance satisfactory to the Administrative Agent;
for each such property the amount of Leasehold Obligations shall be the next two
months' Leasehold Obligations (net of any Letter of Credit amount benefiting
such landlord in respect of such Leasehold Obligations). For the avoidance of
doubt, the amount of Leasehold Obligations for any property for which a
satisfactory Priority of Claims Waiver is delivered by a vendor, landlord,
public warehouse operator or other third party bailee, shall be zero.
"Required Lenders" means, at any time, Lenders having Exposure and unused
Commitments representing greater than 50% (except as set forth in Sections
9.02(b)(vi) and 9.02(b)(vii) of the sum of all Exposure and unused Commitments
at such time.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any Equity Interests in the
Company or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any Equity Interests in the Company or any option, warrant or other right to
acquire any such Equity Interests in the Company.
"S&P" means Standard & Poor's Ratings Service, a Division of The
McGraw-Hill Companies, and its successors.
"Scripts" means the pharmaceutical customer list owned and controlled by
each Loan Party relating to certain items and services, including, without
limitation, any drug price data, drug eligibility data, clinical drug
information and health information of a pharmaceutical customer that is not
protected under Sections 1171 through 1179 of the Social Security Act or other
applicable law.
"Secured Parties" has the meaning set forth in the Security Agreement.
"Security Agreement" means the Security Agreement among the Loan Parties
party thereto and the Collateral Agent, substantially in the form of Exhibit G.
"Security Documents" means the Security Agreement, the Pledge Agreement and
each other security agreement or other instrument or document executed and
delivered by any Loan Party to secure any of the Obligations.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair saleable value of the properties and assets
of such Person is not less than the amount that would be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
25
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in a business or a transaction, and is not about to engage in a business or
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. The amount of all
Guarantees and contingent obligations at any time shall be computed as the
amount that, in light of all the facts and circumstances existing at the time,
can reasonably be expected to become an actual or matured liability.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D of the Board. Eurodollar Loans shall be deemed to
constitute Eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D of the Board
or any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Store Shrink Percentage" shall be applicable to Inventory located at
Stores and shall mean, as of any date, the amount of loss recorded in accordance
with GAAP of the grocery and HBA inventories expressed as a percentage of the
grocery and HBA sales for the most recently ended two (2) fiscal quarters.
"Store Shrink Reserve" shall be equal to the product of (a) the excess of
the Store Shrink Percentage over 1%, multiplied by (b) the Inventory of the
Company and the other Loan Parties as of the date of the most recent Borrowing
Base calculation.
"Stores" means all supermarket retail locations of the Company and other
Loan Parties selling Inventory owned by the Loan Parties.
"Subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Swingline Lender" means Bank of America, N.A., in its capacity as Lender
of Swingline Loans hereunder.
26
"Swingline Loan" means a Loan made by the Swingline Lender to the Borrowers
pursuant to Section 2.05.
"Swingline Loan Ceiling" means $15,000,000.
"Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Transactions" means the execution, delivery and performance by each Loan
Party of the Loan Documents to which it is to be a party, the borrowing of
Loans, the use of the proceeds thereof, and the issuance of Letters of Credit
hereunder.
"Triggering Event" means either (a) the occurrence of any Event of Default
specified in Sections 7.01(a), 7.01(b), 7.01(h) or 7.01(i), or (b) at any time
(i) Uncapped Availability shall be less than $25,000,000 and (ii) the aggregate
amount of the Borrowers' Cash and Cash Equivalents on deposit in a Blocked
Account(s) constituting Collateral for the Obligations shall be less than
$50,000,000. Upon the occurrence of a Triggering Event, such Triggering Event
shall be deemed "continuing" until such time as Uncapped Availability shall
exceed $25,000,000 for thirty (30) consecutive days; provided, however, that the
foregoing cure provision may only be exercised once in any six (6) month period.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
"Uncapped Availability" means as of any date the difference between (a) the
Borrowing Base and (b) the outstanding Exposure.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code as in
effect on the date of determination in the applicable jurisdiction.
"Unused Commitment" means as of any date (a) the total Commitments on such
date, minus (b) the Exposure on such date."
"Unused Fee" has the meaning set forth in Section 2.12(b).
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., an "ABR Loan"
or a "Eurodollar Loan"). Borrowings also may be classified and referred to by
Type (e.g., an "ABR Borrowing" or a "Eurodollar Borrowing").
SECTION 1.03 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter
27
forms. The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation". The word "will" shall be construed
to have the same meaning and effect as the word "shall". Unless the context
requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement, (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights, and (f) unless
otherwise stated herein, all provisions herein within the discretion or to the
satisfaction of a party shall be deemed to include a standard of reasonableness,
good faith and fair dealing.
SECTION 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Company notifies the Administrative Agent that the Company requests an amendment
to any provision hereof to eliminate the effect of any change occurring after
the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Administrative Agent notifies the Company that the Required
Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been affirmatively withdrawn
by the Company (or, in the case of a request for an amendment under this Section
by the Required Lenders, the Administrative Agent) or such provision amended in
accordance herewith.
SECTION 1.05 Borrowing Base Adjustments. The Administrative Agent or the
Required Lenders may, in their commercially reasonable discretion (x) in
reviewing the collateral components of the Borrowing Base, (y) after completion
of any evaluation or any appraisal contemplated by Section 5.09(a) or Section
5.09(b) or (z) upon the occurrence and during the continuation of a Default,
from time to time (a) decrease the advance rates for the Borrowing Base (or
both), (b) establish and revise reserves reducing the amount of Eligible
Coinstar Receivables, Eligible Credit Card Accounts Receivable, Eligible Third
Party Insurance Provider Accounts Receivable, Eligible Inventory or Scripts and
(c) impose additional eligibility criteria to be applicable to Eligible Coinstar
Receivables, Eligible Credit Card Accounts Receivable, Eligible Third Party
Insurance Provider Accounts Receivable, Eligible Inventory or Scripts; provided
that any such adjustment described in clause (a), (b) or (c) above shall be made
only in the event that the Administrative Agent or the Required Lenders
reasonably determine (based upon an
28
evaluation or appraisal referred to in Section 5.09(a) or Section 5.09(b) or
other objectively determinable facts or circumstances) that the Borrowing Base,
or component thereof, or its value as Collateral, is adversely affected by one
or more events, conditions, contingencies or risks that are not already
adequately reflected in the calculation of the Borrowing Base (as applicable);
and provided further that no change will be made to the borrowing base standards
pursuant to this Section 1.05 if such change would increase the Borrowing Base
in effect at any time above the Borrowing Base that would be in effect at such
time if the Borrowing Base were calculated using the standards in effect on the
date hereof or, if such standards have been amended pursuant to Section
9.02(b)(vi), using the standards as in effect on the date of such amendment. The
Administrative Agent will provide written notice to the Company of any
adjustments made pursuant to this Section 1.05 on the date of such adjustments.
ARTICLE II
The Credits
SECTION 2.01 Commitments.
(a) Subject to the terms and conditions set forth herein, each Lender
agrees to make Loans to the Borrowers from time to time during the Availability
Period with respect to such Lender in an aggregate principal amount that will
not result in (i) such Lender's Exposure exceeding such Lender's Commitment,
(ii) the total Exposure exceeding the total Commitments, or (iii) the total
Exposure exceeding the Borrowing Base then in effect.
(b) Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrowers may borrow, prepay and reborrow Loans from each
Lender during the Availability Period with respect to such Lender.
SECTION 2.02 Increase in Total Commitments
(a) So long as no Default or Event of Default exists or would arise
therefrom, (i) the Borrowers shall have the right, at any time from time to
time after the Effective Date, to request an increase of the aggregate of
the then outstanding Commitments by an amount not to exceed in the
aggregate $100,000,000. Any such requested increase shall be first made to
all existing Lenders on a pro rata basis based on their respective
Applicable Percentages. To the extent that the existing Lenders decline to
increase their Commitments, or decline to increase their Commitments to the
amount requested by the Borrowers, the Administrative Agent, in
consultation with the Borrowers, will use its reasonable efforts to arrange
for other Persons to become a Lender hereunder and to issue commitments in
an amount equal to the amount of the increase in the Commitments requested
by the Borrowers and not accepted by the existing Lenders (each such
increase by either means, a "Commitment Increase," and each Person issuing,
or Lender increasing, its Commitment, an "Additional Commitment Lender"),
provided, however, that (i) no Lender shall be obligated to provide a
Commitment Increase as a result of any such request by the Borrowers, and
(ii) any Additional Commitment Lender which is not an existing Lender shall
be subject to the approval of the Administrative Agent, the
29
Issuing Bank and the Company (which approval shall not be unreasonably
withheld). Each Commitment Increase shall be in a minimum aggregate amount
of at least $10,000,000 and in integral multiples of $5,000,000 in excess
thereof.
(b) No Commitment Increase shall become effective unless and until
each of the following conditions have been satisfied:
(i) The Borrowers, the Administrative Agent, and any Additional
Commitment Lender shall have executed and delivered a joinder to the
Loan Documents in substantially the form of Exhibit H hereto;
(ii) The Borrowers shall have paid such fees and other
compensation to the Additional Commitment Lenders and to the
Administrative Agent as the Borrowers and such Additional Commitment
Lenders shall agree;
(iii) The Borrowers shall deliver to the Administrative Agent and
the Lenders an opinion or opinions, in form and substance reasonably
satisfactory to the Administrative Agent, from counsel to the
Borrowers reasonably satisfactory to the Administrative Agent and
dated such date; and
(iv) The Borrowers and the Additional Commitment Lender shall
have delivered such other instruments, documents and agreements as the
Administrative Agent, may reasonably have requested in order to
effectuate the documentation of the foregoing.
(c) The Administrative Agent shall promptly notify each Lender as to
the effectiveness of each Commitment Increase (with each date of such
effectiveness being referred to herein as a "Commitment Increase Date"),
and at such time (i) the Commitments, under, and for all purposes of, this
Agreement shall be increased by the aggregate amount of such Commitment
Increases, (ii) Schedule 2.01 shall be deemed modified, without further
action, to reflect the revised Commitments of the Lenders and (iii) this
Agreement shall be deemed amended, without further action, to the extent
necessary to reflect such increased Commitments.
SECTION 2.03 Loans and Borrowings(a) Each Loan shall be made as part of a
Borrowing consisting of Loans of the same Type made by the Lenders ratably in
accordance with their respective Applicable Percentages of Commitments. The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender's failure to make Loans as required.
(b) Each Borrowing shall be denominated in Dollars and comprised entirely
of ABR Loans or Eurodollar Loans as the Borrowers may request in accordance
herewith; provided that all Swingline Loans shall be ABR Loans. Each Lender at
its option may make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan; provided that any exercise
of such option shall not affect the obligation of the Borrowers to repay such
Loan in accordance with the terms of this Agreement and provided
30
further, that the exercise of such option shall not result in an increase in
additional amounts payable by the Borrowers pursuant to Section 2.17.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate principal amount that is an
integral multiple of $1,000,000 and not less than $3,000,000. At the time that
each ABR Borrowing is made, such Borrowing shall be in an aggregate principal
amount that is an integral multiple of $1,000,000 and not less than $3,000,000;
provided that an ABR Borrowing may be in an aggregate principal amount that is
equal to the entire unused balance of Commitments or that is required to finance
the reimbursement of a L/C Disbursement as contemplated by Section 2.06(e).
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of ten (10) Eurodollar
Borrowings outstanding. For purposes of the foregoing, Loans having different
Interest Periods, regardless of whether they commence on the same date, shall be
deemed as made under separate Borrowings.
(d) Notwithstanding any other provision of this Agreement, the Borrowers
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
SECTION 2.04 Requests for Borrowings. To request a Borrowing, the Company
shall notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 12:00 noon, Boston, Massachusetts
time, three Business Days before the date of the proposed Borrowing, or (b) in
the case of an ABR Borrowing, not later than 2:00 p.m., Boston, Massachusetts
time, on the day of the proposed Borrowing; provided that any such notice of an
ABR Borrowing to finance the reimbursement of an L/C Disbursement as
contemplated by Section 2.06(e) may be given not later than 10:00 a.m., Boston,
Massachusetts time on the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Company. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.03:
(i) the Borrower(s) on whose behalf the Company is requesting such
Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and
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(vi) the location and number of the Borrowers' account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.07.
If no election as to the Type of Borrowing is specified with respect to a
Borrowing in Dollars, then the requested Borrowing shall be an ABR Borrowing. If
no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrowers shall be deemed to have selected an Interest
Period of one month's duration. Promptly following receipt of a Borrowing
Request in accordance with this Section, the Administrative Agent shall advise
each of the Lenders of the details thereof and of the amount of such Lender's
Loan to be made as part of the requested Borrowing.
SECTION 2.05 Swingline Loans.
(a) The Swingline Lender is authorized by the Lenders, and shall make
Swingline Loans at any time (subject to Section 2.05(b)) to the Borrowers
up to the amount of the sum of the Swingline Loan Ceiling upon a notice of
Borrowing from the Borrowers received by the Administrative Agent and the
Swingline Lender (which notice, at the Swingline Lender's discretion, may
be submitted prior to 3:00 p.m., Boston, Massachusetts time on the Business
Day on which such Swingline Loan is requested). Swingline Loans shall be
ABR Loans and shall be subject to weekly settlement with the Lenders.
(b) The Company's request for a Swingline Loan shall be deemed a
representation that the applicable conditions for borrowing under Article
IV are satisfied. If the conditions for borrowing under Article IV cannot
in fact be fulfilled, (x) the Borrowers shall give immediate notice (a
"Noncompliance Notice") thereof to the Administrative Agent and the
Swingline Lender, and the Administrative Agent shall promptly provide each
Lender with a copy of the Noncompliance Notice, and (y) the Required
Lenders may direct the Swingline Lender to, and the Swingline Lender
thereupon shall, cease making Swingline Loans until such conditions can be
satisfied or are waived in accordance with Section 9.02. Unless the
Required Lenders so direct the Swingline Lender, the Swingline Lender may,
but is not obligated to, continue to make Swingline Loans commencing one
(1) Business Day after the Noncompliance Notice is furnished to the
Lenders. Notwithstanding the foregoing, no Swingline Loans shall be made
pursuant to this Section 2.05(b) if the aggregate outstanding amount of the
Exposure would exceed the limitations set forth in Section 2.01.
SECTION 2.06 Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein, at any
time and from time to time during the Availability Period, the Company may
request the issuance of a Letter of Credit for the account of a Borrower, in a
form appropriately completed and reasonably acceptable to the Administrative
Agent and the Issuing Bank. In the event of any inconsistency between the terms
and conditions of this Agreement and the terms and conditions of any form of
letter of credit application or other agreement submitted by the Company or any
Borrower to, or entered into by the Company or any Borrower with, the Issuing
Bank relating to
32
any Letter of Credit, the terms and conditions of this Agreement shall control.
Each Letter of Credit shall be denominated in Dollars.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Company shall hand deliver or
telecopy (or transmit by electronic communication, if arrangements for doing so
have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day, the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Bank, the Company or the applicable
Borrower also shall submit a letter of credit application on the Issuing Bank's
standard form in connection with any request for a Letter of Credit. Following
receipt of such notice and prior to the issuance of the requested Letter of
Credit or the applicable amendment, renewal or extension, the Administrative
Agent shall notify the Company and the Issuing Bank of the results of the tests
described below after giving effect to (i) the issuance, amendment, renewal or
extension of such Letter of Credit, (ii) the issuance or expiration of any other
Letter of Credit that is to be issued or will expire prior to the requested date
of issuance of such Letter of Credit and (iii) the borrowing or repayment of any
Loans that (based upon notices delivered to the Administrative Agent by the
Company or a Borrower) are to be borrowed or repaid prior to the requested date
of issuance of such Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit, the Borrowers shall be deemed to represent
and warrant that) such issuance, amendment, renewal or extension the total L/C
Exposure shall not exceed $150,000,000, (2) the total Exposure shall not exceed
the total Commitments and (3) the total Exposure shall not exceed the Borrowing
Base then in effect.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one (1) year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) unless
cash collateralized or otherwise credit supported to the reasonable satisfaction
of the Issuing Bank, the date that is five (5) Business Days prior to the
Maturity Date. Each Letter of Credit may, upon the request of the Company
include a provision whereby such Letter of Credit shall be renewed automatically
for additional consecutive periods of twelve (12) months or less unless the
Issuing Bank notifies the beneficiary thereof at least thirty (30) days prior to
the then-applicable expiration date that such Letter of Credit will not be
renewed; provided, however, that no Letter of Credit shall be renewed or
extended on or after the occurrence of a Default or an Event of Default.
(d) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby
grants to each Lender, and each such Lender hereby acquires from such Issuing
Bank, a participation in such Letter of Credit equal to
33
such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each such Lender hereby absolutely and unconditionally agrees to pay
to the Administrative Agent, for the account of such Issuing Bank, such Lender's
Applicable Percentage of each L/C Disbursement made by such Issuing Bank and not
reimbursed by the Borrowers on the date due as provided in paragraph (e) of this
Section, or of any reimbursement payment required to be refunded to the
Borrowers for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank in respect of a Letter of Credit
shall make any L/C Disbursement in respect of such Letter of Credit, the
Borrowers shall reimburse such L/C Disbursement by paying to the Administrative
Agent an amount equal to such L/C Disbursement (i) prior to the close of
business, Boston, Massachusetts time, on the Business Day immediately following
the day that such L/C Disbursement is made, if the Borrowers shall have received
notice of such L/C Disbursement prior to 11:00 a.m., Boston, Massachusetts time,
or (ii) if such notice has not been received by the Borrowers prior to 11:00
a.m., Boston, Massachusetts time, then prior to the close of business, Boston,
Massachusetts time, on the second Business Day immediately following the day the
Borrowers receive such notice; provided that, if such L/C Disbursement is not
less than $1,000,000, the Borrowers may, subject to the conditions to borrowing
set forth herein, request in accordance with Section 2.04 that such payment be
financed with an ABR Borrowing in an equivalent amount and, to the extent so
financed, the Borrowers' obligation to make such payment shall be discharged and
replaced by the resulting ABR Loan. If the Borrowers fail to make such payment
when due, the Administrative Agent shall notify each Lender of the applicable
L/C Disbursement, the payment then due from the Borrowers in respect thereof and
such Lender's Applicable Percentage thereof. Promptly following receipt of such
notice, each such Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrowers, in the same manner as
provided in Section 2.07 with respect to Loans made by such Lender (and Section
2.07 shall apply, mutatis mutandis, to the payment obligations of such Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from such Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrowers pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing
Bank as their interests may appear. Any payment made by a Lender pursuant to
this paragraph to reimburse the Issuing Bank for any L/C Disbursement (other
than the funding of ABR Loans as contemplated above) shall not constitute a Loan
and shall not relieve the Borrowers of their obligation to reimburse such L/C
Disbursement.
(f) Obligations Absolute. Each Borrower's obligation to reimburse L/C
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or
34
enforceability of any Letter of Credit or any Loan Document, or any term or
provision therein, (ii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii) payment by
the Issuing Bank under a Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit, or
(iv) any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section, constitute
a legal or equitable discharge of, or provide a right of setoff against, the
Borrowers' obligations hereunder. Neither the Administrative Agent, the Lenders
nor the Issuing Bank, nor any of their Related Parties, shall have any liability
or responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank; provided that the foregoing shall
not be construed to excuse the Issuing Bank from liability to a Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by each of the Borrowers to the extent
permitted by applicable law) suffered by a Borrower that are caused by the
Issuing Bank's failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that, in the absence of gross
negligence or willful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrowers by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an
L/C Disbursement thereunder; provided that any failure to give or delay in
giving such notice shall not relieve the Borrowers of their obligation to
reimburse the Issuing Bank and Lenders with respect to any such L/C
Disbursement.
(h) Interim Interest. If the Issuing Bank in respect of a Letter of Credit
shall make any L/C Disbursement under such Letter of Credit, then, unless the
Borrowers shall reimburse such L/C Disbursement in full on the date such L/C
Disbursement is due pursuant to paragraph (e) of this Section, the unpaid amount
thereof shall bear interest, for each day from and including the date such L/C
Disbursement is made to but excluding the date that the Borrowers reimburse such
L/C Disbursement, at the rate per annum then applicable to ABR Loans; provided
that, if the Borrowers fail to reimburse such L/C Disbursement when due
35
pursuant to paragraph (e) of this Section, then Section 2.12(d) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing
Bank shall be for the account of such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at
any time by written agreement among the Company, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrowers shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(c). From and after the effective date of any such replacement, (i)
such successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" and the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the replacement of an Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of the Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Company receives notice from the
Administrative Agent or the Required Lenders demanding the deposit of cash
collateral pursuant to this paragraph, the Borrowers shall deposit in an account
with the Administrative Agent an amount in cash for the benefit of the Lenders,
equal to the total L/C Exposure as of such date plus any accrued and unpaid
interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to any Borrower described in clause (h) or
(i) of Article VII. The Borrowers also shall deposit cash collateral pursuant to
this paragraph as and to the extent required by Section 2.11(b). Any such cash
collateral so deposited pursuant to Section 2.11(b) and held by the
Administrative Agent hereunder shall not constitute part of the Borrowing Base
for purposes of determining compliance with Section 2.11(b). Each such deposit
shall be held by the Administrative Agent as collateral for the payment and
performance of the obligations of the Borrowers under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such accounts. Other than any interest
earned on the investment of such deposits, which investments shall be made at
the option and sole discretion of the Administrative Agent and at the Borrowers'
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such accounts. Moneys in such
accounts shall be (i) applied by the Administrative Agent to reimburse the
Issuing Bank for L/C Disbursements for which it has not been reimbursed and
(ii), to the extent not so applied, held for the satisfaction of the
reimbursement obligations of the Borrowers for their L/C Exposure at such time,
or (iii) be applied to satisfy other obligations of the Borrowers under this
Agreement. If the Borrowers are required to provide an amount of cash collateral
hereunder as a result of the occurrence of an
36
Event of Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrowers within three Business Days after all Events of Default
have been cured or waived. If the Borrowers are required to provide cash
collateral other than as a result of an occurrence of an Event of Default
hereunder, such amount (to the extent not applied as aforesaid) shall be
promptly returned to the extent that, and following such time as, after giving
effect to such return: (i) the total Exposure does not exceed the total
Commitments, and (ii) the total Exposure does not exceed the Borrowing Base then
in effect.
SECTION 2.07 Funding of Borrowings.
(a) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by 2:00
p.m., Boston, Massachusetts time, to the account of the Administrative Agent
most recently designated by it for such purpose by notice to the Lenders. The
Administrative Agent will make each such Loan available to the Borrowers by
promptly crediting the amounts so received, in like funds, to an account of the
Borrowers maintained with the Administrative Agent in Boston, Massachusetts and
designated by the Company in the applicable Borrowing Request; provided that any
ABR Loans made to finance the reimbursement of an L/C Disbursement as provided
in Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing
Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Loan to be made by such Lender on the
occasion of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then such Lender and the Borrowers
jointly and severally agree to pay to the Administrative Agent forthwith on
demand such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to the Borrowers to but
excluding the date of payment to the Administrative Agent, at (i) in the case of
any Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrowers, the interest
rate applicable to ABR Loans. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.08 Interest Elections.
(a) Each Borrowing initially shall be of the Type specified in the
applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall
have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Borrowers may elect to convert such Borrowing to a different
Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing,
may elect Interest Periods therefor, all as provided in this Section. The
Borrowers may elect different options with respect to different portions of the
affected Borrowing, in which case each such portion shall be allocated ratably
among the Lenders
37
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Company shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.04 if the Company were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Company.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.03:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to clauses (iii)
and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrowers shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each affected Lender of the details thereof
and of such Lender's portion of each resulting Borrowing.
(e) If the Company fails to deliver a timely Interest Election Request with
respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Company, then, so long as an Event of
Default is continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
38
SECTION 2.09 Termination or Reduction of Commitments.
(a) Unless previously terminated, the Commitment of each Lender shall
terminate on the Maturity Date with respect to such Commitment.
(b) The Company may at any time terminate, or from time to time reduce, the
Commitments; provided that (i) the Company shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of Loans in
accordance with Section 2.11, the total Exposure would exceed the total
Commitments and (ii) each partial reduction of the Commitments shall be in an
integral multiple of $1,000,000 and in a minimum principal amount of $5,000,000.
(c) The Company shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Company pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the
Company (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments shall be permanent. Each reduction of the Commitments shall
be made ratably among the applicable Lenders in accordance with their respective
Applicable Percentages of the Commitments.
SECTION 2.10 Repayment of Loans; Evidence of Debt.
(a) Each Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Loan made to the Borrowers and held by such Lender on the
Maturity Date applicable to such Loan.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of each Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time under this
Agreement.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from each Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the respective Lenders and each respective Lender's
share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to
39
maintain such accounts or any error therein shall not in any manner affect the
obligation of any Borrower to repay its Loans in accordance with the terms of
this Agreement.
(e) Any Lender may request that Loans made by it to any Borrower or
Borrowers be evidenced by a promissory note. In such event, each of the
Borrowers shall prepare, execute and deliver to such Lender a promissory note
payable to the order of such Lender (or, if requested by such Lender, to such
Lender and its registered assigns) and in a form approved by the Administrative
Agent. Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section 9.04)
be represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).
SECTION 2.11 Prepayment of Loans.
(a) Subject to the requirements of this Section and the payment of any
amounts required under Section 2.16 (i) each Borrower shall promptly prepay any
Borrowing (or deposit such amounts) as may be required by this Agreement,
together with any and all amounts required under Section 2.16 and (ii) each
Borrower shall have the right at any time and from time to time to prepay, in
whole or in part, any Borrowing. Any optional partial prepayment of Borrowings
shall be in an integral multiple of $1,000,000 and in a minimum aggregate
principal amount of $5,000,000.
(b) In the event and on such occasion that the total Exposure exceeds the
lesser of the aggregate Commitments or the Borrowing Base then in effect, each
of the Borrowers shall promptly prepay its Borrowings (or, if no such Borrowings
are outstanding, deposit cash collateral in an account with the Administrative
Agent pursuant to Section 2.06(j)) in an aggregate amount equal to such excess.
(c) At any time that any Loans are outstanding, in the event and on each
occasion that any Net Proceeds are received by or on behalf of any Loan Party in
respect of any Prepayment Event, such Loan Party shall, within five Business
Days after such Net Proceeds are received, prepay Borrowings in an aggregate
amount equal to such Net Proceeds.
(d) Prior to any optional or mandatory prepayment of Borrowings hereunder,
the Borrowers shall select the Borrowing or Borrowings to be prepaid and shall
specify such selection in the notice of such prepayment pursuant to Section
2.11(f). Notwithstanding the foregoing provisions of this Section 2.11, if at
any time the Borrowers are required to make a prepayment under this Section 2.11
and the Borrowers would incur breakage costs under Section 2.16 as a result of
Eurodollar Loans being prepaid other than on the last day of an Interest Period
applicable thereto (the "Affected Eurodollar Loans"), and provided that no
Default has occurred and is continuing at the time, then the Borrowers may in
their sole discretion initially deposit a portion (up to 100%) of the amounts
that otherwise would have been paid in respect of the Affected Eurodollar Loans
with the Administrative Agent (which deposit must be equal in amount to the
amount of the Affected Eurodollar Loans not immediately prepaid) to be held as
security for such obligations of the Borrowers hereunder pursuant to a cash
collateral agreement to be entered into in form and substance reasonably
40
satisfactory to the Administrative Agent and shall provide for investments in
Permitted Investments satisfactory to the Administrative Agent and the Company,
with such cash collateral to be directly applied upon the first occurrence (or
occurrences) thereafter of the last day of an Interest Period applicable to the
relevant Loans that are Eurodollar Loans (or such earlier date or dates as shall
be requested by the Company), to repay an aggregate principal amount of such
Loans equal to the Affected Eurodollar Loans not initially prepaid pursuant to
this sentence. Notwithstanding anything to the contrary contained in the
immediately preceding sentence, all amounts deposited as cash collateral
pursuant to the immediately preceding sentence shall be held for the sole
benefit of the Lenders and may be applied to the prepayment of such Loans
immediately if an Event of Default has occurred and is continuing.
(e) The Company shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment (other than mandatory prepayments
which shall be payable immediately when due without notice) hereunder (i) in the
case of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, Boston,
Massachusetts time, three Business Days before the date of prepayment or (ii) in
the case of prepayment of an ABR Borrowing, not later than 12:00 noon, Boston,
Massachusetts time, on the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing or portion thereof to be prepaid and, in the case of a mandatory
prepayment, a reasonably detailed calculation of the amount of such prepayment;
provided that, if a notice of optional prepayment is given in connection with a
conditional notice of termination of the Commitments as contemplated by Section
2.11(f), then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.11(f). Promptly following
receipt of any such notice, the Administrative Agent shall advise the relevant
Lenders of the contents thereof. Each partial prepayment of any Borrowing shall
be in an amount that would be permitted in the case of an advance of a Borrowing
of the same Type as provided in Section 2.02, except as necessary to apply fully
the required amount of a mandatory prepayment. Each prepayment of a Borrowing
shall be applied ratably to the Loans included in the prepaid borrowing.
Prepayments shall be accompanied by accrued interest to the extent required by
Section 2.12.
(f) In the event that, on any date, the total Exposure exceeds the total
Commitments (after giving effect to the reduction in total Commitments on such
date), each of the Borrowers shall promptly (but in no event later than one (1)
Business Day following the date of determination), prepay its Borrowings (or, if
no such Borrowings are outstanding, deposit cash collateral in an account with
the Administrative Agent pursuant to Section 2.06(j)) in an aggregate amount
equal to such excess.
(g) The Loans shall be repaid daily in accordance with (and to the extent
required under) the provisions of Section 5.15.
SECTION 2.12 Fees.(a) The Borrowers shall pay to the Administrative Agent
the fees set forth in the Fee Letter as and when payment of such fees is due as
therein set forth.
(b) The Borrowers shall pay the Administrative Agent, for the account of
the Lenders, an aggregate fee (the "Unused Fee") equal to 0.20% per annum (on
the
41
basis of actual days elapsed in a year of 360 days) of the average daily balance
of the Unused Commitment, during the calendar quarter just ended (or relevant
period with respect to the payment being made for the first calendar quarter
ending after the Effective Date or on the Termination Date). The Unused Fee
shall be paid in arrears, on the tenth day of each January, April, July and
October after the execution of this Agreement and on the Termination Date. The
Administrative Agent shall pay the Unused Fee to the Lenders upon the
Administrative Agent's receipt of the Unused Fee based upon their respective
Applicable Percentages an amount equal to the aggregate Unused Fee to all
Lenders.
(c) The Borrowers shall pay the Administrative Agent for the account of the
Lenders, on the first day of each October, January, April and October, in
arrears, a fee calculated on the basis of a 360 day year and actual days elapsed
(each, a "Letter of Credit Fee"), equal to the following per annum percentages
of the average face amount of the following categories of Letters of Credit
outstanding during the three month period then ended:
(i) Standby Letters of Credit for the Borrowers: At a per annum rate
equal to the then Applicable Margin for Eurodollar Loans; and
(ii) Commercial Letters of Credit for the Borrowers: At a per annum
rate equal to the then Applicable Margin for Eurodollar Loans minus fifty
bps (0.50%).
(d) The Borrowers shall pay to the Issuing Bank, in addition to all Letter
of Credit Fees otherwise provided for hereunder, the reasonable and customary
fees and charges of the Issuing Bank in connection with the issuance,
negotiation, settlement, amendment and processing of each Letter of Credit
issued by the Issuing Bank in such amounts as shall be mutually agreed by the
Company and the Issuing Bank.
(e) The Borrowers shall pay to the Administrative Agent the fees set forth
in the Fee Letter for the respective accounts of the parties specified therein,
as and when payment of such fees is due as set forth in the Fee Letter.
(f) All fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for the respective accounts of the
Administrative and other Lenders as provided herein. Once due, all fees shall be
fully earned and shall not be refundable under any circumstances.
SECTION 2.13 Interest.
(a) The Loans comprising each ABR Borrowing shall bear interest at the
Alternate Base Rate plus the Applicable Margin.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at
the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus
the Applicable Margin.
42
(c) Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by any Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, two hundred
bps (2.0%) plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section and (ii) in the case of any other amounts,
two hundred bps (2.0%) plus the rate applicable to ABR Loans as provided in
paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and upon termination of the Commitments;
provided that (i) interest accrued pursuant to paragraph (c) of this Section
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan of any Lender (other than a prepayment of an ABR Loan prior to the end
of the Availability Period with respect to such Lender), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360
days, and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.
SECTION 2.14 Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by a majority in interest of
the Lenders that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest
Period;
then the Administrative Agent shall give notice thereof to the Company and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent thereafter notify the Company and the Lenders
that the circumstances giving rise to such notice no longer exist, (i) any
Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.15 Increased Costs.
(a) If any Change in Law shall:
43
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or any Issuing Bank; or
(ii) impose on any Lender or any Issuing Bank or the London interbank
market any other condition affecting this Agreement, any Loans made by such
Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Loan (or of maintaining its obligation to
make any such Loan) or to increase the cost to such Lender or Issuing Bank of
participating in, issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by such Lender or Issuing Bank
hereunder (whether of principal, interest or otherwise), then the Company will
pay to such Lender or Issuing Bank, as the case may be, such additional amount
or amounts as will compensate such Lender or Issuing Bank, as the case may be,
for such additional costs incurred or reduction suffered.
(b) If any Lender or any Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or Issuing Bank's capital or on the capital of such
Lender's or Issuing Bank's holding company, if any, as a consequence of this
Agreement or the Loans made by, or participations in Letters of Credit held by,
such Lender, or the Letters of Credit issued by such Issuing Bank, to a level
below that which such Lender or such Issuing Bank or such Lender's or Issuing
Bank's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's or Issuing Bank's policies and the policies of
such Lender's or Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Company will pay to such Lender or Issuing
Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or Issuing Bank or such Lender's or the Issuing Bank's holding
company for any such reduction suffered.
(c) A certificate of a Lender or any Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the Company and shall be conclusive absent
manifest error. The Company shall pay such Lender or Issuing Bank, as the case
may be, the amount shown as due on any such certificate within 10 days after
receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
that the Company shall not be required to compensate a Lender or Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 180 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Company of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased
44
costs or reductions is retroactive, then the 180-day period referred to above
shall be extended to include the period of retroactive effect thereof.
SECTION 2.16 Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of the acceleration of the
Obligations upon the occurrence of an Event of Default), (b) the conversion of
any Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the
date specified in any notice delivered pursuant hereto (regardless of whether
such notice may be revoked under Section 2.11(e) and is revoked in accordance
therewith), or (d) the assignment of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by a
Borrower pursuant to Section 2.19, then, in any such event, such Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBO
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement of
such period, for dollar deposits of a comparable amount and period from other
banks in the eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrowers and shall be conclusive absent
manifest error. The Borrowers shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
SECTION 2.17 Taxes.
(a) Any and all payments by or on account of any obligation of any Borrower
hereunder or under any other Loan Document shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if
such Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all such required deductions (including deductions applicable
to additional sums payable under this Section), the Administrative Agent, Lender
or Issuing Bank (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) such Borrower shall
make such deductions and (iii) such Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.
(b) In addition, each of the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Each of the Borrowers shall indemnify the Administrative Agent, each
Lender and each Issuing Bank, within 10 days after written demand therefor, for
the full
45
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
Lender or Issuing Bank, as the case may be, on or with respect to any payment by
or on account of any obligation of such Borrower hereunder or under any other
Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to a Borrower by a Lender or
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a
Lender or Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by any Borrower to a Governmental Authority, such Borrower shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which any Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to such Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by such Borrower as will permit such payments to be made
without withholding or at a reduced rate, provided that such Lender has received
written notice from such Borrower advising it of the availability of such
exemption or reduction and supplying all applicable documentation.
(f) If the Administrative Agent, any Lender or Issuing Bank becomes aware
that it is entitled to claim a refund from a Governmental Authority in respect
of Indemnified Taxes or Other Taxes as to which it has been indemnified by a
Borrower, or with respect to which a Borrower has paid additional amounts
pursuant to this Section 2.17, it shall promptly notify such Borrower of the
availability of such refund claim and shall, within 30 days after receipt of a
request by such Borrower, make a claim to such Governmental Authority for such
refund at such Borrower's expense. If the Administrative Agent, any Lender or
Issuing Bank receives a refund (including pursuant to a claim for a refund made
pursuant to the preceding sentence) in respect of Indemnified Taxes or Other
Taxes as to which it has been indemnified by a Borrower in which such Borrower
has paid additional amounts pursuant to this Section 2.17, it shall within 30
days from the date of such receipt pay over such refund to such Borrower (but
only to the extent of indemnity payments made, or additional amounts paid, by
such Borrower under this Section 2.17 with respect to Indemnified Taxes or Other
Taxes giving rise to such refund), net of all out of pocket expenses of the
Administrative Agent, the Lender or Issuing Bank and without interest (other
than interest paid by the relevant Governmental Authority with respect to such
refund); provided, however, that such Borrower, upon the request of the
Administrative Agent, Lender or Issuing Bank, agrees to repay the amount paid
over to such Borrower (plus penalties, interest and other charges, including the
reasonable fees and expenses of the Administrative Agent and Collateral Agent)
to the Administrative Agent,
46
Lender or Issuing Bank if the Administrative Agent, Lender or Issuing Bank is
required to repay such refund to such Governmental Authority.
(g) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.17 shall
survive the payment in full of the principal of and interest on all Loans and
L/C Disbursements made hereunder.
(h) Each Non-U.S. Lender shall deliver to the Company two copies of either
U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or any subsequent
versions thereof or successors thereto, properly completed and duly executed by
such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Company under this Agreement. Such
forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement and on or before the date, if any, such
Non-U.S. Lender changes its applicable lending office by designating a different
lending office. In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Notwithstanding any other provision of this Section
2.17(h), a Non-U.S. Lender shall not be required to deliver any form pursuant to
this Section 2.17(h) that such Non-U.S. Lender is not legally able to deliver.
(i) Nothing contained in this Section 2.17 shall require the Administrative
Agent, any Lender or Issuing Bank to make available any of its tax returns (or
any other information that it deems, in its sole discretion, to be confidential
or proprietary).
SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Setoffs.
(a) Each Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest,
fees, reimbursement of L/C Disbursements, or of amounts payable under Section
2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required hereunder
or under such other Loan Document for such payment (or, if no such time is
expressly required, prior to 12:00 noon, Boston, Massachusetts time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 40 Broad Street,
Boston, Massachusetts 02109, except payments to be made directly to the Issuing
Bank as expressly provided herein and except that payments pursuant to Sections
2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto
and payments pursuant to other Loan Documents shall be made to the Persons
specified therein. The Administrative Agent and the Collateral Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
under any Loan Document shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable for
the period of such extension. All payments under each Loan Document shall be
made in Dollars.
47
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed L/C
Disbursements, interest and fees then due hereunder in respect of Obligations,
then such funds shall be applied (i) first, towards payment of interest and fees
then due hereunder in respect of Obligations, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal and unreimbursed L/C
Disbursements then due hereunder in respect of Obligations, ratably among the
parties entitled thereto in accordance with the amounts of principal and
unreimbursed L/C Disbursements then due to such parties in respect of
Obligations.
(c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Loans or participations in L/C Disbursements resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
and participations in L/C Disbursements and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in L/C Disbursements of other Lenders to the extent necessary
so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in L/C Disbursements; provided that
(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph shall not be construed to
apply to any payment made by any Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in L/C Disbursements to any assignee or participant,
other than to a Borrower or any Subsidiary or Affiliate thereof (as to which the
provisions of this paragraph shall apply). Each Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against any Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of such Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from a
Borrower prior to the date on which any payment by such Borrower is due to the
Administrative Agent for the account of any of the Lenders or the Issuing Bank
hereunder that such Borrower will not make such payment, the Administrative
Agent may assume that such Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
applicable Lenders or the Issuing Bank, as the case may be, the amount due. In
such event, if such Borrower has not in fact made such payment, then each of
such Lenders or such Issuing Bank, as the case may be, severally agrees to repay
to the Administrative Agent forthwith on demand the amount so distributed to
such Lender or Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
48
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Sections 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.19 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.14, or if a
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be,
in the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. Each of the
Borrowers hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.15, or if a
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Company may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Company
shall have received the prior written consent of the Administrative Agent and
the Issuing Bank, which consents shall not unreasonably be withheld, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in L/C Disbursements, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrowers (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
2.15 or payments required to be made pursuant to Section 2.17, such assignment
will result in a material reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Company to require such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full, and all Letters of Credit
49
shall have expired or terminated and all L/C Disbursements shall have been
reimbursed, each of the Borrowers represents and warrants to the Lenders that:
SECTION 3.01 Organization; Powers. Each of the Company and the Subsidiaries
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
SECTION 3.02 Authorization; Enforceability. The Transactions to be entered
into by each Loan Party are within such Loan Party's corporate powers and have
been duly authorized by all necessary corporate and, if required, equityholder
action. This Agreement has been duly executed and delivered by each of the
Borrowers and constitutes, and each other Loan Document to which any Loan Party
is to be a party, when executed and delivered by such Loan Party, will
constitute, a legal, valid and binding obligation of each such Borrower or Loan
Party (as the case may be), enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and have been disclosed to the Lenders
to their reasonable satisfaction, and except filings necessary to perfect Liens
created under the Loan Documents, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of the
Company or any of the Subsidiaries or any order of any Governmental Authority,
(c) will not violate or result in a default under any indenture, agreement or
other instrument binding upon the Company or any of the Subsidiaries or its
assets, or give rise to a right thereunder to require any payment to be made by
the Company or any of the Subsidiaries, and (d) will not result in the creation
or imposition of any Lien on any asset of the Company or any of the
Subsidiaries, except Liens created under the Loan Documents.
SECTION 3.04 Financial Condition; No Material Adverse Change.
(a) The Company has heretofore furnished to the Lenders its consolidated
balance sheet and statements of consolidated operations and retained earnings,
consolidated shareholders' equity and consolidated cash flows (i) as of and for
the fiscal year ended February 26, 2005, reported on by Pricewaterhouse Coopers
LLP, independent public accountants, and (ii) as of and for the fiscal quarter
and the portion of the fiscal year ended June 30, 2005, certified by its chief
financial officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Company and the Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject to year-
50
end audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.
(b) Since February 26, 2005, there has been no material adverse change in
(a) the business, assets, operations or condition, financial or otherwise, of
the Company and the Subsidiaries, taken as a whole, except as disclosed in the
Exchange Act Filings made prior to the Effective Date or in any Schedules or
Exhibits to this Agreement as of the Effective Date, (b) after the Effective
Date, the ability of any Loan Party to perform any of its obligations under any
Loan Document, (c) after the Effective Date, the rights of or benefits available
to the Lenders under any Loan Document or (d) the Collateral as a whole.
SECTION 3.05 Properties.
(a) Each of the Company and the Subsidiaries has good title to, or valid
leasehold interests in, all its real and personal property material to its
business, except for Liens permitted by Section 6.02.
(b) Each of the Company and the Subsidiaries owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Company and the
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06 Litigation and Environmental Matters.
(a) There are no actions, suits or proceedings by or before any arbitrator
or Governmental Authority pending against or, to the knowledge of any of the
Borrowers, threatened against or affecting the Company or any of the
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, would reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve any of the Loan Documents or
the Transactions.
(b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect, neither the Company nor any of the
Subsidiaries (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability. (c) Since the date of
this Agreement, there has been no change in the status of the Disclosed Matters
that, individually or in the aggregate, has resulted in, or materially increased
the likelihood of, a Material Adverse Effect.
SECTION 3.07 Compliance with Laws and Agreements. Each of the Company and
the Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
51
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default or Event of Default
has occurred and is continuing.
SECTION 3.08 Investment and Holding Company Status. Neither the Company nor
any of the Subsidiaries is an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
SECTION 3.09 Taxes. Each of the Company and the Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) any Taxes that are being contested in good faith by appropriate
proceedings and for which the Company or such Subsidiary, as applicable, has set
aside on its books adequate reserves or (b) to the extent that the failure to do
so could not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10 Employee Benefit Plans. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.11 Disclosure. To the best knowledge of the Borrowers, the
Borrowers have disclosed to the Lenders all agreements, instruments and
corporate or other restrictions to which the Company or any of the Subsidiaries
is subject, and all other matters known to any of them, that, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect. None of the reports, financial statements, certificates or other
information furnished by or on behalf of any Loan Party to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished) contains, as of the date hereof
(or in the case of items furnished after the date hereof, when furnished), any
material misstatement of fact or omits, as of the date hereof (or in the case of
items furnished after the date hereof, when furnished), to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected financial information, the Borrowers represent only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time so furnished.
SECTION 3.12 Subsidiaries. Schedule 3.12 sets forth the name of, and the
ownership interest of the Company in, each Subsidiary of the Company, in each
case as of the Effective Date.
SECTION 3.13 Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of the Company and the Subsidiaries as of
the Effective Date. As of the Effective Date, all premiums in respect of such
insurance have
52
been paid. The insurance maintained by or on behalf of the Company and the
Subsidiaries is in full force and effect and complies with the requirements set
forth in Section 5.07.
SECTION 3.14 Labor Matters. As of the Effective Date, there are no strikes,
lockouts or slowdowns against the Company or any Subsidiary pending or, to the
knowledge of any Borrower, threatened. The Company and the Subsidiaries have not
been in violation of, in any material respect, the Fair Labor Standards Act or
any other applicable Federal, state, local or foreign law dealing with hours
worked by or payments made to employees or any similar matters. All payments due
from the Company or any Subsidiary, or for which any claim may be made against
the Company or any Subsidiary, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a liability
on the books of the Company or such Subsidiary. The consummation of the
Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Company or any Subsidiary is bound.
SECTION 3.15 Security Documents.
(a) The Pledge Agreement creates in favor of the Collateral Agent, for the
benefit of the Secured Parties referred to therein, a legal, valid, continuing
and enforceable security interest in the Collateral (as defined in the Pledge
Agreement), the enforceability of which is subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law, and the Pledged Securities (as
defined in the Pledge Agreement) have been delivered to the Collateral Agent
(together with stock powers or other appropriate instruments of transfer
executed in blank form). The Collateral Agent has a fully perfected first
priority Lien on, and security interest in, to and under all right, title and
interest of each pledgor thereunder in such Collateral, and such security
interest is in each case prior and superior in right and interest to any other
Person.
(b) The Security Agreement creates in favor of the Collateral Agent, for
the benefit of the Secured Parties referred to therein, a legal, valid,
continuing and enforceable security interest in the Collateral (as defined in
the Security Agreement), the enforceability of which is subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law. The
financing statements, releases and other filings set forth on Schedule 3.15(b)
are in appropriate form and have been or will be filed in the offices specified
in the Perfection Certificate. Upon such filings and/or the obtaining of
"control," the Collateral Agent will have a perfected Lien on, and security
interest in, to and under all right, title and interest of the grantors
thereunder in all Collateral that may be perfected by filing, recording or
registering a financing statement or analogous document (including without
limitation the proceeds of such Collateral subject to the limitations relating
to such proceeds in the UCC) or by obtaining control, under the UCC (in effect
on the date this representation is made) in each case prior and superior in
right to any other Person other than with respect to Liens expressly permitted
by Section 6.02 hereof.
53
(c) When the Security Agreement is filed in the United States Patent and
Trademark Office and the United States Copyright Office and when financing
statements, releases and other filings set forth on Schedule 3.15(c) in
appropriate form are filed in the offices specified on the Perfection
Certificate, the Security Agreement shall constitute a fully perfected Lien on,
and security interest in, all right, title and interest of the applicable Loan
Parties in the Intellectual Property (as defined in the Security Agreement) in
which a security interest may be perfected by filing, recording or registering a
security agreement, financing statement or analogous document in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, in each case prior and superior in right to any other Person other
than with respect to Liens expressly permitted by Section 6.02 hereof (it being
understood that subsequent recordings in the United States Patent and Trademark
Office and the United States Copyright Office may be necessary to perfect a Lien
on registered trademarks, trademark applications and copyrights acquired by the
Loan Parties after the date hereof).
SECTION 3.16 Federal Reserve Regulations.
(a) No Loan Party is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying
or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will
be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to buy or carry Margin Stock or to extend
credit to others for the purpose of buying or carrying Margin Stock or to
refund indebtedness originally incurred for such purpose in violation of
Regulation U or X or (ii) for any purpose that entails a violation of, or
that is inconsistent with, the provisions of the Regulations of the Board,
including Regulation U or Regulation X.
ARTICLE IV
Conditions
SECTION 4.01 Effective Date. The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):
(a) The Administrative Agent shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Agents, the Issuing Bank and the Lenders and
dated the Effective Date) of each of (i) Mary Ellen Offer, Esq., Vice
President and Chief Legal Officer of the Company, and (ii) Cahill Gordon &
Reindel LLP, counsel for the Loan
54
Parties, substantially in the form of Exhibits I and J, respectively, and,
in the case of each such opinion required by this paragraph, covering such
other matters relating to the Loan Parties, the Loan Documents or the
Transactions as the Required Lenders shall reasonably request. Each of the
Borrowers hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received a true and complete
copy of each Borrower's organizational documents, an incumbency certificate
for each person authorized to execute Loan Documents on behalf of a
Borrower, resolutions authorizing the due execution, delivery and
performance of the Loan Documents and the Transactions and a good standing
certificate from each jurisdiction where a Borrower is organized and each
jurisdiction necessary for it to carry on its business and such other
documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good
standing of each Borrower, the authorization of the Transactions and any
other legal matters relating to the Borrower, the Loan Documents or the
Transactions, all in form and substance satisfactory to the Administrative
Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the president, a vice president or a
Financial Officer of the Company, confirming compliance with the conditions
set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
(including reasonable fees, charges and disbursements of counsel) required
to be reimbursed or paid by any Loan Party hereunder or under any other
Loan Document.
(f) The Collateral Agent shall have received counterparts of the
Pledge Agreement signed on behalf of the Loan Parties party thereto, and
the Collateral Agent shall have received certificates or other instruments
representing all the outstanding Equity Interests of each Subsidiary owned
by any Loan Party (excluding the stock certificates representing shares of
common stock of a Foreign Subsidiary), together with stock powers or other
instruments of transfer with respect thereto endorsed in blank form.
(g) The Collateral Agent shall have received counterparts of the
Security Agreement signed on behalf of the Loan Parties party thereto,
together with the following:
(i) all documents and instruments, including Uniform Commercial
Code financing statements, required by law or reasonably requested by
the Collateral Agent to be filed, registered or recorded to create or
perfect the Liens intended to be created under the Security Agreement;
and
55
(ii) a completed Perfection Certificate from the Company dated
the Effective Date and signed by an executive officer or Financial
Officer of the Company, together with all relevant attachments
contemplated thereby, including the then completed results of a search
of the Uniform Commercial Code filings made with respect to the
applicable Loan Parties in the jurisdictions contemplated by the
applicable Perfection Certificate and copies of the financing
statements disclosed by such search and evidence reasonably
satisfactory to the Collateral Agent that the Liens indicated by such
financing statements are permitted by Section 6.02 or have been
released.
(h) The Collateral Agent shall have received counterparts of the
Guarantee Agreement signed on behalf of the Loan Parties party thereto.
(i) The Administrative Agent shall have received counterparts of the
Indemnity, Subrogation and Contribution Agreement signed on behalf of the
Loan Parties party thereto.
(j) The Administrative Agent shall have received evidence satisfactory
to them that the insurance required by Section 5.07 and the Security
Documents is in effect.
(k) The Administrative Agent shall have received a completed Borrowing
Base Certificate dated the Effective Date and signed by a Financial Officer
of the Company, calculating the Borrowing Base as of the end of the month
ended immediately prior to the Effective Date.
(l) The Administrative Agent, the Issuing Bank and the Lenders shall
have received, for the remainder of the 2005 fiscal year and for the 2006
through 2007 fiscal years, the items required by clause (g) of Section
5.01.
(m) The Administrative Agent shall have received the results of
satisfactory lien searches (including, without limitation, the results of
satisfactory tax lien and judgment lien searches) showing the absence of
any Liens (except for the Liens in favor of the Collateral Agent) on any of
any of the Collateral other than Liens expressly permitted by Section 6.02
hereof.
(n) After giving effect to the calculation of the Borrowing Base, the
Borrowing Base Availability shall not be less than Fifty Million Dollars
($50,000,000).
(o) The Administrative Agent shall have received reports in form and
substance satisfactory to the Administrative Agent relating to inspections,
audits and field searches (which may include conversations with responsible
officers and employees) of each Loan Parties' assets (including, without
limitation, accounts receivable and inventory), liabilities, books and
records, management information systems, cash management, vendor agreements
and other agreements related to the Transactions contemplated hereby.
56
(p) [Reserved]
(q) The Administrative Agent shall have received an appraisal, in form
and substance satisfactory to the Agents, performed by an appraiser
acceptable to the Agents of the Inventory and the Scripts to be pledged or
granted as Collateral.
The Administrative Agent shall notify the Company and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at
or prior to 3:00 p.m., Boston, Massachusetts time on December 15, 2005 (and, in
the event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).
SECTION 4.02 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of each Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to receipt of the request
therefor in accordance herewith and to the satisfaction of the following
conditions:
(a) The representations and warranties of each Loan Party set forth in
the Loan Documents shall be true and correct in all material respects on
and as of the date of such Borrowing or the date of issuance, amendment,
renewal or extension of such Letter of Credit, as applicable (unless a
representation or warranty is made as of a specific date, in which case
such representation or warranty shall remain true and correct as of such
specified date).
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default or Event of Default shall have
occurred and be continuing.
(c) No indictment of, or institution of any legal process or
proceeding against, the Company or any Loan Party, under any federal,
state, municipal, and other civil or criminal statute, rule, regulation,
order, or other requirement having the force of law, which is reasonably
likely to have a Material Adverse Effect shall occurred.
Each of the Borrowers, in connection with each Borrowing, and each issuance,
amendment, renewal or extension of a Letter of Credit shall be deemed to have
represented and warranted on the date thereof that the conditions specified in
paragraphs (a) and (b) of this Section 4.02 have been satisfied at that time and
that after giving effect to such extension of credit the Borrowers shall
continue to be in compliance with the Borrowing Base. The conditions set forth
in this Section 4.02 are for the sole benefit of the Administrative Agent, the
Issuing Bank and the Lenders and may be waived by the Administrative Agent, in
whole or in part, without prejudice to the rights of the Administrative Agent,
the Issuing Bank or any Lender.
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ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full, and all Letters of Credit shall have expired or terminated and all L/C
Disbursements shall have been reimbursed, each of the Borrowers covenants and
agrees with the Lenders that:
SECTION 5.01 Financial Statements and Other Information. The Company will
furnish to the Administrative Agent and each Lender each of the following
together with all supporting documentation as the Administrative Agent may
reasonably require:
(a) within 90 days after the end of each fiscal year of the Company,
its audited consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for
such year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by Pricewaterhouse Coopers LLP or
other independent public accountants of recognized national standing
(without a "going concern" or like qualification or exception and without
any qualification or exception as to the scope of such audit) to the effect
that such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the Company
and its consolidated subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, the Company's consolidated
balance sheet and related statements of operations, stockholders' equity
and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of
(or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and results of
operations of the Company and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) within 45 days after the end of each of the first two (or three,
in the event of a fiscal quarter having four fiscal four week periods)
fiscal four-week periods of each fiscal quarter of the Company (other than
the first fiscal four-week period of each fiscal year), its consolidated
balance sheet and related statements of operations, stockholders' equity
and cash flows as of the end of and for such fiscal four-week periods and
the then elapsed portion of the fiscal year, all certified by one of its
Financial Officers as presenting in all material respects the financial
condition and results of operations of the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes; provided that, the information required by this Section shall
not be required with respect to any month during which the average daily
Exposure during such month is less than $50,000,000;
58
(d) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer (i)
certifying as to whether a Default or an Event of Default has occurred and,
if a Default or Event of Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto,
(ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 6.12, if applicable and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of
the Company's audited financial statements referred to in Section 3.04 and,
if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any Default
or an Event of Default(which certificate may be limited to the extent
required by accounting rules or guidelines);
(f) within ten (10) Business Days after the end of each fiscal month,
a completed Borrowing Base Certificate calculating and certifying the
Borrowing Base as of the last day of such fiscal month, signed on behalf of
the Company by one of its Financial Officers, provided, however, that upon
the occurrence of a Triggering Event, the Borrowing Base Certificate
required by this paragraph will be delivered by the Borrowers weekly within
eight (8) Business Days after the end of each calendar week and shall
calculate and certify the Borrowing Base as of the last day of such
calendar week;
(g) prior to the end of the first fiscal quarter of each fiscal year
of the Company (and, with respect to the last quarter of the fiscal year
ending on or about February 28, 2006, on or before the Effective Date), a
reasonably detailed consolidated budget for such fiscal year (including a
projected consolidated balance sheet and related statements of projected
operations and cash flow as of the end of and for each fiscal quarter
during such fiscal year and setting forth the assumptions used for purposes
of preparing such budget) and, promptly when available and from time to
time, any significant revisions of such budget (including, without
limitation, any amounts to be paid to any pension plan (including any Plan,
or, the best of the Company's knowledge, a Multi-Employer Plan) or to any
third party on account of any such pension plan);
(h) within ten (10) Business Days after any sale, transfer or other
disposition of assets permitted by clause (c) of Section 6.05, a complete
description of such sale, transfer or other disposition, and, with respect
to sales, transfers or other dispositions resulting in Net Proceeds greater
than $20,000,000, (i) the most recently delivered Borrowing Base
Certificate delivered pursuant to Section 5.01 (f) revised to give pro
forma effect to such sale, transfer or other disposition and (iii) any
significant revisions to the budget previously delivered pursuant to clause
(g) of this Section;
59
(i) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Company or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or distributed
by the Company to its stockholders generally, as the case may be; and
(j) the financial and collateral reports described on Schedule C
hereto, at the times set forth in such Schedule; provided that, the
information required by this Section shall not be required with respect to
any month during which the average daily Exposure during such month is less
than $50,000,000.
(k) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Company or any Subsidiary, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may reasonably request.
SECTION 5.02 Notices of Material Events. The Company will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Company or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other related ERISA Events that have occurred, could reasonably be expected
to result in liability of the Company and its Subsidiaries in an aggregate
amount exceeding $5,000,000; and
(d) any other development (other than those specified above as to
which the Lenders have received due notice) that results in, or could
reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Company setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03 Information Regarding Collateral.
(a) The Company will furnish to the Administrative Agent prompt written
notice of any change (i) in any Loan Party's corporate name or in any trade name
used to identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of any Loan Party's chief executive office, its
principal place of business, its "location" (as determined under Section 9-307
of Revised Article 9 of the UCC), any office in which it
60
maintains books or records relating to Collateral owned by it or any office or
facility at which Collateral owned by it is located (including the establishment
of any such new office or facility), (iii) in any Loan Party's identity or
corporate structure or (iv) in any Loan Party's Federal Taxpayer Identification
Number or state organizational number. Without limitation of the foregoing, the
Company will furnish to the Administrative Agent at least fifteen (15) days (or
such shorter period of time as may be agreed to by the Administrative Agent)
prior written notice of any change in any Loan Party's state of organization or
incorporation. The Company agrees not to effect or permit any change referred to
in the preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Collateral Agent
to continue at all times following such change to have a valid, legal and
perfected security interest in all of the Collateral to the extent it is
intended to be so perfected on the date hereof.
(b) Each year, at the time required for delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause (a) of
Section 5.01, the Company shall deliver to the Administrative Agent a
certificate of a Financial Officer and the chief legal officer of the Company
(i) setting forth the information required pursuant to the Perfection
Certificate or confirming that there has been no change in such information
since the date of the Perfection Certificate delivered on the Effective Date or
the date of the most recent certificate delivered pursuant to this Section and
(ii) certifying that all Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect and
perfect the security interests under the Security Agreement for a period of not
less than eighteen (18) months after the date of such certificate (except as
noted therein with respect to any continuation statements to be filed within
such period).
SECTION 5.04 Existence; Conduct of Business. The Company will, and will
cause each of the Subsidiaries to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its business; provided
that the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03.
SECTION 5.05 Payment of Obligations. The Company will, and will cause each
of its Subsidiaries to, pay its Indebtedness and other obligations, including
Tax liabilities, before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Company or such Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP, (c) such
contest effectively suspends collection of the contested obligation and the
enforcement of any Lien securing such obligation and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect.
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SECTION 5.06 Maintenance of Properties. The Company will, and will cause
each of the Subsidiaries to, keep and maintain all property material to the
conduct of its business in good working order and condition, ordinary wear and
tear excepted.
SECTION 5.07 Insurance.
(a) The Company will, and will cause each of its Subsidiaries to, (i)
maintain insurance with financially sound and reputable insurers reasonably
acceptable to the Administrative Agent on such of its property and in at least
such amounts and against at least such risks as is customary with companies in
the same or similar businesses operating in the same or similar locations,
including public liability insurance against claims for personal injury or death
occurring upon, in or about or in connection with the use of any properties
owned, occupied or controlled by it including the insurance required pursuant to
the Security Documents; (ii) maintain such other insurance as may be required by
law; and (iii) upon request by the Administrative Agent, which request need not
be made in writing, furnish the Administrative Agent with certificates
evidencing the insurance required by this paragraph. In the event of the
Company's or Loan Parties' failure to obtain or maintain the insurance required
by this paragraph, the Administrative Agent shall have the right to obtain the
required coverage and bill the Company for the premium payments therefor. To the
extent consistent with prudent business practice, the Company may maintain a
program of self-insurance in place of any of the insurance required by this
paragraph.
(b) Fire and extended coverage policies with respect to any Collateral
shall not include (i) a provision to the effect that any of the Borrowers, the
Administrative Agent, the Collateral Agent, or any other party shall be a
coinsurer and (ii) shall be endorsed, which endorsement shall be satisfactory in
form and substance to the Collateral Agent, to name the Collateral Agent for the
benefit of the Lenders, as additional insured or loss payee, as appropriate, and
shall include such other provisions as the Collateral Agent may reasonably
require from time to time to protect the interests of the Lenders, provided that
the requested provisions are available at reasonable cost. Each such policy
referred to in this paragraph also shall provide that it shall not be cancelled,
modified or not renewed (i) by reason of nonpayment of premium except upon not
less than 30 days' prior written notice thereof by the insurer to the Collateral
Agent (giving the Collateral Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason except upon not less than 30 days' prior
written notice thereof by the insurer to the Collateral Agent. The Borrowers
shall deliver to the Collateral Agent, prior to the cancellation of any such
policy of insurance, a Certificate of Insurance for the replacement policy.
(c) The Company and the Loan Parties acknowledge and agree that all income,
payments and proceeds of a physical damage property insurance claim payable to
them and relating to the Collateral will be received by the Company and the Loan
Parties as agent hereunder for the benefit of the Lenders and deposited in an
account subject to a Blocked Account Agreement. Unless a Triggering Event or an
Event of Default has occurred and is continuing, the Collateral Agent shall use
commercially reasonable efforts to cause any insurance proceeds for which it is
loss payee for the benefit of the Secured Parties to be made available to the
Borrowers as promptly as practicable after receipt thereof by the Collateral
Agent. The Company and the Loan Parties disclaim any right, title or interest in
or to such
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income, payments or proceeds and hereby confirm that the Company and the Loan
Parties have granted a first priority security interest to the Collateral Agent
(for the benefit of the Lenders) in all such income, payments and proceeds.
(d) The Company shall continue to maintain, for itself and its
subsidiaries, a Directors and Officers insurance policy, and a "Blanket Crime"
policy including employee dishonesty, forgery or alteration, theft,
disappearance and destruction, robbery and safe burglary, property, and computer
fraud coverage with responsible companies in such amounts as are customarily
carried by business entities engaged in similar businesses similarly situated,
and will upon request by the Administrative Agent, which request need not be
made in writing, furnish the Administrative Agent certificates evidencing
renewal of each such policy.
SECTION 5.08 Casualty and Condemnation. The Borrowers (a) will furnish to
the Administrative Agent and the Lenders prompt written notice of any casualty
or other insured damage to any material portion of any Collateral or the
commencement of any action or proceeding for the taking of any Collateral or any
part thereof or interest therein under power of eminent domain or by
condemnation or similar proceeding and (b) will ensure that the Net Proceeds of
any such event (whether in the form of insurance proceeds or otherwise) are
collected and applied in accordance with the applicable provisions of the
Security Documents.
SECTION 5.09 Books and Records; Inspection and Audit Rights.
(a) The Company will, and will cause each of its Subsidiaries to, keep
proper financial records in accordance with GAAP. The Company will, and will
cause each of the Subsidiaries to, permit any representatives designated by the
Administrative Agent in consultation with the Borrowers, upon reasonable prior
notice, no less frequently than semi-annually in any period of twelve (12)
consecutive months commencing on or after the Effective Date, to visit and
inspect its properties, to examine and make extracts from such records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at reasonable times.
(b) The Company will, and will cause each of the Subsidiaries to, permit
any representatives designated by the Administrative Agent (including any
consultants, accountants, lawyers and appraisers retained by the Administrative
Agent) in consultation with the Borrowers to conduct commercial finance
examinations and appraisals of the computation of the Borrowing Base and the
assets included therein, including supporting systems, processes and controls,
all at the expense of the Borrowers (i) one (1) time during any twelve month
period in which the average daily Exposure is greater than or equal to
$50,000,000 but less than $125,000,000, (ii) up to three (3) times during any
twelve month period in which the average daily Exposure is greater than
$125,000,000, and (c) at any time at the request of the Administrative Agent
after the occurrence and the continuation of an Event of Default. In addition to
the foregoing the Administrative Agent will have the right to conduct such
commercial finance examinations and appraisals at the expense of the
Administrative Agent, but no more frequently than once in any calendar year. The
expenses reimbursable by the Borrowers pursuant to his Section shall include the
reasonable fees and expenses of any representatives retained by the
Administrative Agent.
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SECTION 5.10 Compliance with Laws. The Company will, and will cause each of
the Subsidiaries to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.11 Use of Proceeds and Letters of Credit. The proceeds of the
Loans will be used for general corporate purposes, including working capital and
capital expenditures. No part of the proceeds of any Loan will be used, directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations T, U and X. Letters of Credit
will be issued only for general corporate purposes.
SECTION 5.12 Additional Subsidiaries. If any additional Subsidiary is
formed or acquired after the Effective Date, the Company will notify the
Administrative Agent, the Collateral Agent and the Lenders thereof and (a) the
Company will cause such Subsidiary (i) to become a party to (A) the Guarantee
Agreement (or this Agreement if such Subsidiary shall be a Borrower hereunder),
(B) the Indemnity, Subrogation and Contribution Agreement, (C) the Security
Agreement and (D) the Pledge Agreement, in each case in the manner provided
therein and within ten (10) Business Days after such Subsidiary is formed or
acquired and (ii) promptly to take such actions to perfect the Liens on such
Subsidiary's assets granted under the Security Documents as the Administrative
Agent or the Required Lenders shall reasonably request and (b) if any Equity
Interests of such Subsidiary are owned by or on behalf of any Loan Party, the
Company will cause such Equity Interests to be pledged pursuant to the Pledge
Agreement within ten (10) Business Days after such Subsidiary is formed or
acquired (excluding, if such Subsidiary is a Foreign Subsidiary, shares of
voting stock of such Subsidiary).
SECTION 5.13 [Reserved]
SECTION 5.14 Further Assurances. The Borrowers will, and will cause each
other Loan Party to, execute any and all further documents, financing
statements, agreements and instruments, and take all such further actions
(including the filing and recording of financing statements, termination
statements, fixture filings and other documents), which may be required under
any applicable law, or which the Administrative Agent or the Required Lenders
may reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens created or
intended to be created by the Security Documents or the validity or priority of
any such Lien, all at the expense of the Loan Parties. The Borrowers also agree
to provide to the Administrative Agent, from time to time upon request, evidence
reasonably satisfactory to the Administrative Agent as to the perfection and
priority of the Liens created or intended to be created by the Security
Documents.
SECTION 5.15 Cash Management.
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(a) Annexed hereto as Schedule 5.15(a) is a schedule of all DDAs that
are maintained by the Loan Parties, which schedule shall include, with
respect to each depository (i) the name and address of such depository;
(ii) the account number(s) maintained with such depository; and (iii) a
contact person at such depository.
(b) Annexed hereto as Schedule 5.15(b) is a list describing all
arrangements to which any Loan Party is a party with respect to the payment
to such Loan Party of the proceeds of all credit card charges for sales by
such Loan Party.
(c) Annexed hereto as Schedule 5.15(c) is a list describing all payors
of the third party insurance provider accounts from which a Loan Party
receives payments of Eligible Third Party Insurance Provider Account
Receivables.
(d) Within forty-five (45) days after the Effective Date, each Loan
Party shall:
(i) deliver to the Administrative Agent notifications (each, a
"Credit Card Notification") substantially in the form attached hereto
as Exhibit K which have been executed on behalf of such Loan Party and
addressed to such Loan Party's credit card clearinghouses and
processors;
(ii) deliver to the Administrative Agent notifications, (each, an
"Insurance Provider Notification") substantially in the form attached
as Exhibit L which have been executed on behalf of such Loan Party and
addressed to such Loan Party's payors of third party insurance
providers accounts;
(iii) enter into a Blocked Account Agreement substantially in the
form attached as Exhibit M (or in such other form reasonably
acceptable to the Administrative Agent) with the banks with which such
Borrower maintains accounts into which the DDAs are concentrated
(collectively, the "Blocked Accounts") listed on Schedule 5.15(d)(iv)
attached hereto; and
(iv) deliver to the Administrative Agent a notification, (the
"Coinstar Notification") substantially in the form attached as Exhibit
N which has been executed on behalf of the Loan Parties and addressed
to Coinstar, Inc.
(e) At the request of the Administrative Agent (which request shall
not be made prior to the date that is forty-five (45) days after the
Effective Date), each Loan Party shall deliver to the Administrative Agent
notifications (each, a "DDA Notification") substantially in the form
attached as Exhibit O which have been executed on behalf of each Loan Party
to each depository institution with which any DDA is maintained.
(f) Each DDA Notification, Credit Card Notification, Insurance
Provider Notification and Blocked Account Agreement and the Coinstar
Notification shall require, after the occurrence and during the continuance
of a Triggering Event, the ACH or wire transfer on each Business Day (and
whether or not there is then an outstanding balance in the Loan Account) of
all available cash receipts (the "Cash
65
Receipts") to the concentration account maintained by the Administrative
Agent at Bank of America (the "Agent's Account") from:
(i) the sale of Inventory and other Collateral;
(ii) all proceeds of collections of Accounts;
(iii) all Net Proceeds, and all other cash payments received by a
Loan Party from any Person or from any source or on account of any
Prepayment Event or other transaction or event;
(iv) the then contents of each DDA;
(v) the then entire ledger balance of each Blocked Account; and
(vi) the proceeds of all credit card charges.
(g) Upon the occurrence of a Triggering Event, the Borrowers shall
accurately report to the Administrative Agent all amounts deposited in the
Blocked Accounts to ensure the proper transfer of funds as set forth above.
If, at any time after the occurrence of a Triggering Event, any cash or
cash equivalents owned by any Loan Party that constitutes Collateral are
deposited to any account, or held or invested in any manner, otherwise than
in a Blocked Account that is subject to a Blocked Account Agreement (or a
DDA which is swept daily to a Blocked Account), the Administrative Agent
may require the applicable Loan Party to close such account and have all
funds therein transferred to a Blocked Account, and all future deposits
made to a Blocked Account which is subject to a Blocked Account Agreement.
(h) The Loan Parties may close DDAs or Blocked Accounts and/or open
new DDAs or Blocked Accounts, subject to the execution and delivery to the
Administrative Agent of appropriate Blocked Account Agreements consistent
with the provisions of this Section 5.15 and otherwise satisfactory to the
Administrative Agent. Unless consented to in writing by the Administrative
Agent, the Loan Parties shall not enter into any agreements with credit
card processors other than the ones expressly contemplated herein unless
contemporaneously therewith, a Credit Card Notification, is executed and
delivered to the Administrative Agent.
(i) The Borrowers may also maintain one or more disbursement accounts
(the "Disbursement Accounts") to be used by the Borrowers for disbursements
and payments (including payroll) in the ordinary course of business or as
otherwise permitted hereunder. The only Disbursement Accounts as of the
Closing Date are those described in Schedule 5.15(i).
(j) The Agent's Account shall at all times be under the sole dominion
and control of the Administrative Agent. Each Loan Party hereby
acknowledges and agrees that (i) such Loan Party has no right of withdrawal
from the Agent's Account, (ii) the funds on deposit in the Agent's Account
shall at all times continue to be collateral security for all of the
Obligations, and (iii) the funds on deposit in the
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Agent's Account shall be applied as provided in this Agreement. In the
event that, notwithstanding the provisions of this Section 5.15, any Loan
Party receives or otherwise has dominion and control of any such proceeds
or collections, such proceeds and collections shall be held in trust by
such Loan Party for the Administrative Agent, shall not be commingled with
any of such Loan Party's other funds or deposited in any account of such
Loan Party and shall, not later than the Business Day after receipt
thereof, be deposited into the Agent's Account or dealt with in such other
fashion as such Loan Party may be instructed by the Administrative Agent.
(k) Any amounts received in the Agent's Account at any time when all
of the Obligations have been and remain fully repaid shall be remitted to
the Borrowers, if and as the Company may request.
(l) The following shall apply to deposits and payments under and
pursuant to this Agreement:
(i) Funds shall be deemed to have been deposited to the Agent's
Account on the Business Day on which deposited, provided that notice
of such deposit is available to the Administrative Agent by 12:00
noon, Boston, Massachusetts time, on that Business Day;
(ii) Funds paid to the Administrative Agent other than by deposit
to the Agent's Account, shall be deemed to have been received on the
Business Day when they are good and collected funds, provided that
notice of such payment is available to the Administrative Agent by
12:00 noon, Boston, Massachusetts time, on that Business Day;
(iii) If notice of a deposit to a Agent's Account or payment is
not available to the Administrative Agent until after 12:00 noon,
Boston, Massachusetts time, on a Business Day, such deposit or payment
shall be deemed to have been made at 9:00 a.m., Boston, Massachusetts
time, on the then next Business Day;
(iv) If any item deposited to the Agent's Account and credited to
the Loan Account is dishonored or returned unpaid for any reason,
whether or not such return is rightful or timely, the Administrative
Agent shall have the right to reverse such credit and charge the
amount of such item to the Loan Account and the Borrowers shall
indemnify the Administrative Agent and the Lenders against all claims
and losses resulting from such dishonor or return.
SECTION 5.16 Priority of Claims Waivers. Unless reserved for in accordance
with the provisions hereof, the Borrowers from time to time shall promptly
deliver, or cause to be promptly delivered, a Priority of Claims Waiver from
each vendor, landlord, public warehouse operator or other third party bailee
that has not provided a Priority of Claims Waiver in form and substance
satisfactory to the Administrative Agent for each third party storage facility
located in any Priming Jurisdiction.
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SECTION 5.17 Benefit Plans Payments. The Loan Parties, Subsidiaries and all
ERISA Affiliates shall make all required contributions under any Plans or
Multi-Employer Plans which, if not made, could result in a Material Adverse
Effect unless such payment is being contested pursuant to Section 5.05.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all L/C Disbursements shall
have been reimbursed, each of the Borrowers covenants and agrees with the
Lenders that:
SECTION 6.01 Indebtedness; Certain Equity Securities.
(a) The Company will not, and will not permit any Subsidiary to, create,
incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof
(except to the extent of any reasonable premiums, fees and expenses
incurred in connection with any such extensions, renewals and replacements)
or result in an earlier maturity date or decreased weighted average life
thereof;
(iii) Indebtedness of the Company to any Subsidiary and of any
Subsidiary to the Company or any other Subsidiary; provided that
Indebtedness of any Subsidiary that is not a Loan Party owing to any Loan
Party shall be subject to Section 6.04;
(iv) Guarantees by the Company of Indebtedness of any Subsidiary and
by any Subsidiary of Indebtedness of the Company or any other Subsidiary;
provided that Guarantees by any Loan Party of Indebtedness of any
Subsidiary that is not a Loan Party shall be subject to Section 6.04;
(v) Indebtedness of the Company or any Subsidiary incurred to finance
the acquisition, construction or improvement of any fixed or capital
assets, including Capital Lease Obligations (other than in respect of
leased real property) and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements
of any such Indebtedness that do not increase the outstanding principal
amount thereof (except to the extent of any reasonable premiums, fees and
expenses incurred in connection with any such extensions, renewals and
replacements) or result in an earlier maturity date or decreased weighted
average life thereof; provided that (A) before and after giving effect to
the incurrence of such Indebtedness, no Default or Event of Default shall
have occurred and be continuing, (B) such Indebtedness is incurred
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prior to or within 180 days after such acquisition or the completion of
such construction or improvement and (C) the aggregate principal amount of
Indebtedness incurred on or after the Effective Date and permitted by this
clause (v) and clause (vii) below, plus the aggregate book value of all
assets sold after the Effective Date pursuant to sale and leaseback
transactions permitted by clause (b) of Section 6.06 shall not exceed
$200,000,000;
(vi) Indebtedness of the Company or any Subsidiary incurred to finance
the acquisition by the Company or any Subsidiary after the Effective Date
of real property and improvements thereto (but not inventory or other
personal property located therein), and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof (except to the extent of any reasonable premiums,
fees and expenses incurred in connection with any such extensions, renewals
and replacements) or result in an earlier maturity date or decreased
weighted average life thereof; provided that (A) before and after giving
effect to the incurrence of such Indebtedness, no Default or Event of
Default shall have occurred and be continuing,(B) the terms of such
Indebtedness are commercially reasonable and (C) the secured recourse to
the Company or any Subsidiary of such Indebtedness shall be limited to the
value of the real property and improvements financed by such Indebtedness;
(vii) Indebtedness of the Company or any Subsidiary relating to
purchase money security interests (as defined in the New York Uniform
Commercial Code, as amended); provided that, (A) before and after giving
effect to the incurrence of such Indebtedness, no Default or Event of
Default shall have occurred and be continuing, and (B) the aggregate
principal amount of Indebtedness permitted by this clause (vii) shall be
subject to the limitation set forth in the proviso to clause (v) above.
(viii) Guarantees by the Company or any of its Subsidiaries of
Indebtedness of third parties given in connection with the acquisition or
improvement of real property for use in the business of the Company and its
Subsidiaries not exceeding $10,000,000 at any one time outstanding;
(ix) software licenses required to be reflected as indebtedness on the
Company's consolidated balance sheet in an aggregate amount not exceeding
$10,000,000;
(x) liabilities for leases of real property characterized as
Indebtedness for purposes of GAAP; and
(xi) other unsecured Indebtedness in an aggregate principal amount not
exceeding $50,000,000 at any time outstanding.
(b) The Company will not, nor will the Company permit any Subsidiary to,
issue any preferred stock or other preferred Equity Interests, other than
Qualified Preferred Stock.
SECTION 6.02 Liens. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset
69
now owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Liens created under the Loan Documents and the Blocked Account
Agreements;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of the Company or any Subsidiary
set forth in Schedule 6.02; provided that (i) such Lien shall not apply to
any asset contained in the Borrowing Base, (ii) such Lien shall not apply
to any other property or asset of the Company or any Subsidiary and (iii)
such Lien shall secure only those obligations which it secures on the date
hereof and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof, the obligations
thereunder or the property or assets securing such obligations;
(d) any Lien existing on any property or asset prior to the
acquisition thereof by the Company or any Subsidiary; provided that (i)
such Lien is not created in contemplation of or in connection with such
acquisition, (ii) such Lien shall not apply to any other property or assets
of the Company or any Subsidiary and (iii) such Lien shall secure only
those obligations which it secures on the date of such acquisition and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof (except to the extent of any
reasonable premiums, fees and expenses incurred in connection with any such
extensions, renewals and replacements);
(e) Liens on fixed or capital assets acquired, constructed or improved
by the Company or any Subsidiary; provided that (i) such security interests
secure Indebtedness permitted by clause (v) of Section 6.01(a), (ii) such
security interests and the Indebtedness secured thereby are incurred prior
to or within 180 days after such acquisition or the completion of such
construction or improvement, (iii) the Indebtedness secured thereby does
not exceed the cost of acquiring, constructing or improving such fixed or
capital assets and (iv) such security interests shall not apply to any
other property or assets of the Company or any Subsidiary;
(f) Liens on real properties and improvements thereto (but not
inventory or other personal property located therein) owned or leased by
the Company or any Subsidiary; provided that such Liens secure Indebtedness
permitted by clause (vi) of Section 6.01(a);
(g) Liens of sellers of goods to any Loan Party arising under the
provisions of applicable law similar to Article 2 of the UCC in the
ordinary course of business, covering only goods (other than Inventory and
Equipment (as defined in the Security Agreement) included in the Borrowing
Base), and Liens that secure Indebtedness permitted by clause (vii) of
Section 6.01 ;
(h) Liens constituting leasehold interests made by a Loan Party as
lessor entered into in the ordinary course of business; and
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(i) Any right, title and interest of the landlord under any lease
pursuant to which a Loan Party has a leasehold interest in any property or
assets and any liens that by operation of law have been placed by such
landlord on property over which any Loan Party has any real property
interest (excluding any liens on any Collateral).
SECTION 6.03 Fundamental Changes.
(a) The Company will not, nor will it permit any Subsidiary to, merge into
or consolidate or amalgamate with any other Person, or permit any other Person
to merge into or consolidate with it, or liquidate or dissolve, except that, if
at the time thereof and immediately after giving effect thereto no Default or
Event of Default shall have occurred and be continuing (i) any Subsidiary may
merge into or with the Company in a transaction in which the Company is the
surviving corporation, (ii) any Subsidiary may merge into any Subsidiary in a
transaction in which the surviving entity is a Subsidiary and (if any party to
such merger is a Loan Party) is a Loan Party and (iii) any Subsidiary (other
than a Borrower) may liquidate or dissolve if the Company determines in good
faith that such liquidation or dissolution is in the best interests of the
Company and the Subsidiaries, taken as a whole, and is not materially
disadvantageous to the Lenders; provided that any such merger involving a Person
that is not a wholly owned Subsidiary immediately prior to such merger shall not
be permitted unless also permitted by Section 6.04.
(b) The Company will not, and will not permit any of its Subsidiaries to,
engage to any material extent in any business other than businesses of the type
conducted by the Company and its Subsidiaries on the date of execution of this
Agreement and businesses reasonably related thereto.
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. The
Company will not, and will not permit any of its Subsidiaries to, purchase, hold
or acquire (including pursuant to any merger with any Person that was not a
wholly owned Subsidiary prior to such merger) any Equity Interests in or
evidence of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments existing on the date hereof and set forth on Schedule
6.04 and any other investments from time to time not to exceed at any time
outstanding an aggregate principal amount in excess of the Net Proceeds
received from the disposition of investments permitted by this Section
6.04(b);
(c) investments by the Company and its Subsidiaries in Equity
Interests in their respective Subsidiaries; provided that (i) any such
Equity Interests held by a Loan Party shall be pledged pursuant to the
Pledge Agreement (excluding the common stock of any Foreign Subsidiary),
(ii) the aggregate amount of investments
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by Loan Parties in, and loans and advances by Loan Parties to, and
Guarantees by Loan Parties of Indebtedness of, Subsidiaries that are not
Loan Parties (including all such investments, loans, advances and
Guarantees existing on the Effective Date) shall not exceed $20,000,000 at
any time outstanding and (iii) neither the Company nor any of the
Subsidiaries will create or acquire any Subsidiary after the Effective Date
that is not a Loan Party;
(d) loans or advances made by the Company to any Subsidiary and made
by any Subsidiary to the Company or any other Subsidiary; provided that the
amount of such loans and advances made by Loan Parties to Subsidiaries that
are not Loan Parties shall be subject to the limitation set forth in clause
(c) above;
(e) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that the aggregate principal amount of Indebtedness of
Subsidiaries that are not Loan Parties that is Guaranteed by any Loan Party
shall be subject to the limitation set forth in clause (c) above;
(f) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(g) non-cash consideration received in connection with the sale,
transfer, lease or disposition of any asset in compliance with Sections
6.05 and 6.06; and
(h) other Investments made after the Effective Date; provided that at
any time there is any outstanding Exposure hereunder, (i) the aggregate
amount such investments plus the aggregate amount of Restricted Payments
made pursuant to Section 6.08(a)(i) shall not exceed $150,000,000 in the
aggregate and (ii) immediately before and after giving effect to the making
of any such Investments, (A) Borrowing Base Availability shall be in an
amount greater than twenty percent (20%) of the Borrowing Base, and (B) no
Default or Event of Default has occurred and is continuing.
SECTION 6.05 Asset Sales. The Company will not, and will not permit any of
its Subsidiaries to, sell, transfer, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will the Company permit any of
its Subsidiaries to issue any additional Equity Interest in such Subsidiary,
except:
(a) sales, transfers or other dispositions of inventory, used or
surplus equipment, or Permitted Investments made pursuant to Section
6.04(a) or (h), in each case in the ordinary course of business;
(b) sales, transfers and dispositions to the Company or a Subsidiary;
provided that any such sales, transfers or dispositions involving a
Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.09;
(c) sales, transfers and other dispositions of assets that are not
permitted by any other clause of this Section; provided that immediately
before and after giving
72
effect to such sale, transfer or disposition (i) each of the Loan Parties
is Solvent, and (ii) no Default or Event of Default has occurred or is
continuing; and provided further that the assets sold, transferred or
otherwise disposed of (including assets sold, transferred or disposed of by
means of the sale, transfer or disposition of any Equity Interests other
than the Equity Interests of Metro Inc. and its subsidiaries) in reliance
upon this clause (c) during any fiscal year of the Company shall not exceed
fifteen percent (15%) of the operating assets of the Loan Parties as of the
Effective Date (excluding the operating assets relating to stores operating
under the Farmer Jack brand and the Company's stores located in Louisiana,
which stores may be sold, transferred or disposed of without restriction);
(d) sales of assets pursuant to sale and leaseback transactions
permitted by Section 6.06;
(e) leases or subleases of property (excluding sale and leaseback
transactions) by any Loan Party in the ordinary course of business.
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clauses (a) and (b) above) shall be
made for fair value and at least 70% cash consideration.
SECTION 6.06 Sale and Leaseback Transactions. The Company will not, and
will not permit any of its Subsidiaries to, enter into any arrangement, directly
or indirectly, whereby it shall sell or transfer any property, real or personal,
used or useful in its business, whether now owned or hereinafter acquired, and
thereafter rent or lease such property or other property that it intends to use
for substantially the same purpose or purposes as the property sold or
transferred, except (a) any such sale of any fixed or capital assets that is
made for consideration having a cash component in an amount not less than the
cost of such fixed or capital asset and is consummated within 180 days after the
Company or such Subsidiary acquires or completes the construction of such fixed
or capital asset and (b) any other such sale of fixed or capital assets,
provided that the aggregate book value of all assets sold after the Effective
Date pursuant to this clause (b) shall be subject to the limitation set forth in
the proviso to clause (v) of Section 6.01(a).
SECTION 6.07 Hedging Agreements. The Company will not, and will not permit
any of its Subsidiaries to, enter into any Hedging Agreement, other than Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
interest rate, currency or energy exposure to which the Company or any
Subsidiary is exposed in the conduct of its business.
SECTION 6.08 Restricted Payments; Certain Payments of Indebtedness.
(a) The Company will not, nor will it permit any Subsidiary to, declare or
make, or agree to pay or make, directly or indirectly, any Restricted Payment,
or incur any obligation (contingent or otherwise) to do so, except (i) the
Company may make any Restricted Payment provided that (A) the aggregate amount
such Restricted Payment(s) plus the aggregate amount of Investments made
pursuant to Section 6.04(h) shall not exceed
73
$150,000,000 in the aggregate and (B) immediately before and after giving effect
to any such Restricted Payment (1) each of the Loan Parties is Solvent, (2)
Borrowing Base Availability on the date of any such dividend and projected on a
pro forma basis for the following twelve months shall be in an amount greater
than twenty percent (20%) of the Borrowing Base and (3) no Default or Event of
Default has occurred and is continuing; (ii) the Company may declare and pay
dividends with respect to its capital stock payable solely in additional shares
of its common stock and (iii) Subsidiaries may declare and pay dividends ratably
with respect to their capital stock.
(b) The Company will not, nor will it permit any Subsidiary to, make or
agree to pay or make, directly or indirectly, any payment or other distribution
(whether in cash, securities or other property), other than regularly scheduled
payments as and when due, in respect of principal of, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of, (i) any Indebtedness of
the Company or any Subsidiary that is scheduled to mature after the Maturity
Date, (ii) any other Indebtedness of the Company or any Subsidiary provided that
(x) the Company may make payments and distributions in respect of the Company's
9.125% Senior Notes due December 15, 2011, provided that immediately before and
after giving effect to any such distribution or payment (A) each of the Loan
Parties is Solvent, (B) Borrowing Base Availability on the date of such
distribution or payment shall be in an amount greater than twenty percent (20%)
of the Borrowing Base, and (C) no Default or Event of Default has occurred and
is continuing and (y) the Company or any Subsidiary may make payments and
distributions in respect of any other Indebtedness of the Company or any
Subsidiary not described in the foregoing clauses (i) and (ii)(x) provided that
immediately before and after giving effect to any such distribution or payment
(A) each of the Loan Parties is Solvent, (B) Borrowing Base Availability on the
date of such distribution or payment and projected on a pro forma basis for the
following twelve months shall be in an amount greater than twenty percent (20%)
of the Borrowing Base, and (C) no Default or Event of Default has occurred and
is continuing.
SECTION 6.09 Transactions with Affiliates. The Company will not, nor will
it permit any Subsidiary to, sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates,
except (a) transactions in the ordinary course of business at prices and on
terms and conditions not less favorable to the Company or such Subsidiary than
could be obtained on an arm's-length basis from unrelated third parties, or (b)
transactions between or among the Loan Parties not involving any other
Affiliate.
SECTION 6.10 Restrictive Agreements. The Company will not, nor will it
permit any Subsidiary to, directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of the Company or any Subsidiary to create,
incur or permit to exist any Lien securing Obligations or any refinancing
thereof upon any property or assets actually owned by it, or (b) the ability of
any Subsidiary to pay dividends or other distributions with respect to any
shares of its capital stock or to make or repay loans or advances to the Company
or any other Subsidiary or to Guarantee Indebtedness of the Company or any
74
other Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by any Loan Document, (ii) the
foregoing shall not apply to customary provisions included in licenses,
contracts, leases, agreements and other instruments restricting assignment
and/or encumbrance, (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (v) clause (a) of the foregoing shall not
apply to customary provisions in leases restricting the assignment thereof.
SECTION 6.11 Amendment of Material Documents. The Company will not, nor
will it permit any Subsidiary to, amend, modify or waive any of (a) the
provisions of its certificate of incorporation, by-laws or other organizational
documents or (b) its rights under other material documents, in the case of all
of the foregoing, in a manner materially adverse to the Lenders.
SECTION 6.12 Minimum EBITDA Covenant. Upon the occurrence and during the
continuance of a Triggering Event, the Company and its Subsidiaries shall
achieve Consolidated EBITDA measured at the end of each of the following fiscal
quarters on a trailing twelve month basis of at least the following amounts:
--------------------------------------- --------------------------
Consolidated EBITDA Fiscal Quarter(s)
--------------------------------------- --------------------------
$50,000,000 Third Quarter FY 2005
Fourth Quarter FY 2005
First Quarter FY 2006
--------------------------------------- --------------------------
$55,000,000 Second Quarter FY 2006
--------------------------------------- --------------------------
$70,000,000 Third Quarter FY 2006
--------------------------------------- --------------------------
$80,000,000 Fourth Quarter FY 2006
--------------------------------------- --------------------------
$100,000,000 First Quarter FY 2007
Second Quarter FY 2007
--------------------------------------- --------------------------
$120,00,000 Third Quarter FY 2007
and each Fiscal Quarter
thereafter
--------------------------------------- --------------------------
SECTION 6.13 Limitation on Change in Fiscal Year. The Company will not
permit its fiscal year to end on a date other than the last Saturday in the
month of February in each calendar year.
75
ARTICLE VII
Events of Default
SECTION 7.01 Events of Default. If any of the following events ("Events of
Default") shall occur:
(a) any Loan Party shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any L/C Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof (including, as required under Section
2.11(b)) or otherwise;
(b) any Loan Party shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or any other Loan Document, when
and as the same shall become due and payable, and such failure shall
continue unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of any Borrower or any other Loan Party in or in connection with any Loan
Document or any amendment or modification thereof or waiver thereunder, or
in any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been
incorrect in any material respect when made or deemed made;
(d) any Borrower shall (i) fail to observe or perform any covenant,
condition or agreement contained in Sections 5.01 (excluding clauses (a),
(b), (c) and (f) thereof), 5.02, 5.04 (with respect to the existence of any
Borrower), or 5.11 or in Article VI or (ii) fail to observe or perform any
covenant, condition or agreement contained in clauses (a), (b) or (c) of
Section 5.01, and such failure shall continue unremedied for a period of
fifteen (15) days (thirty (30) days if approved in writing by the
Administrative Agent in its discretion) or (iii) fail to observe or perform
any covenant, condition or agreement contained in clause (f) of Section
5.01 (subject to a grace period of up to five (5) Business Days if approved
in writing by the Administrative Agent in its discretion) or (iv) fail to
observe or perform any covenant, condition or agreement contained in
Section 5.07, and such failure shall continue unremedied for a period of
fifteen (15) days;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of thirty (30) days after written
notice thereof from the Administrative Agent to the Company (which notice
may be given at the request of any Lender);
(f) the Company or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of
any Material Indebtedness, when and as the same shall become due and
payable;
76
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (after the giving of notice and/or the lapse of any applicable
grace period) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material Indebtedness
to become due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity; provided that this
clause (g) shall not apply to secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets securing
such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Company or any Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Company or any
Subsidiary or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be
entered;
(i) the Company or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Company or any
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors
or (vi) take any action for the purpose of effecting any of the foregoing;
(j) the Company or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become
due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $35,000,000 shall be rendered against the Company, any
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Company or any
Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, when taken together with
all other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;
(m) any Lien purported to be created under any Security Document shall
cease to be, or shall be asserted by any Loan Party not to be, a valid and
perfected
77
Lien on any material portion of the Collateral, with the priority required
by the applicable Security Document, except (i) as a result of the sale or
other disposition of the applicable Collateral in a transaction permitted
under the Loan Documents, (ii) as a result of the Collateral Agent's
failure (x) to maintain possession of any stock certificates, promissory
notes or other instruments delivered to it under the Pledge Agreement or
(y) to file any document delivered by the Loan Parties to it for filing or
(iii) as a result of the Collateral Agent's failure to take any action that
the Company reasonably requests, in writing, the Collateral Agent to take;
(n) a Change in Control shall occur; or
(o) The occurrence of an event of default on the part of the Company
or any Loan Party under any Material Contract or Material Indebtedness to
which the Company or any Loan Party is a party or any indenture or other
agreement relating to any Material Indebtedness of the Company or any Loan
Party;
(p) [Reserved].
(q) [Reserved].
(r) the determination by the Company or any Loan Party, to suspend the
operation of their business in the ordinary course, liquidate all or
substantially all of the Company's or such Loan Party's assets or employ an
agent or other third party to conduct a program of closings, liquidations
or "Going-Out-Of-Business" sales of all or substantially all of the
business; or
(s) any Loan Document shall not be in full force and effect;
then, and in every such event (other than an event with respect to a Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Company, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrowers accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by each of the Borrowers; and in case
of any event with respect to any Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrowers accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each of the Borrowers.
Solely for purposes of determining whether a Default has occurred under
clause (h), (i) or (j) of this Article VII, any reference in any such clause to
any "Subsidiary" shall be deemed not to include any Subsidiary (after any such
event referred to in such clauses, each such Subsidiary
78
shall be deemed an "Excluded Subsidiary") affected by any event or circumstance
referred to in any such clause that meets all the following conditions: (a) the
Company's direct and indirect investments in and advances to the Subsidiary is
less than 1% of the total assets of the Company consolidated as of the end of
the most recently completed fiscal year; (b) the Company's direct and indirect
proportionate share of the total assets (after intercompany eliminations) of the
Subsidiary is less than 1% of the total assets of the Company consolidated as of
the end of the most recently completed fiscal year; and (c) the Company's direct
and indirect equity in the income from continuing operations before income
taxes, extraordinary items and cumulative effect of a change in accounting
principle of the Subsidiary is less than 1% of such income of the Company
consolidated for the most recently completed fiscal year; provided that (i) if
it is necessary to exclude more than one Subsidiary from clause (h) or (j) of
Article VII pursuant to this paragraph in order to avoid a Default thereunder,
all excluded Subsidiaries shall be considered to be a single consolidated
Subsidiary for purposes of determining whether the conditions specified in
clauses (a), (b) and (c) above are satisfied and (ii) a Subsidiary shall not be
excluded from clauses (h) and (j) of Article VII if such Subsidiary holds rights
under any long-term contracts for the purchase of inventory accounting for more
than 5% of the total inventory purchased by the Company and its Subsidiaries
during the most recent Calculation Period.
ARTICLE VIII
The Agents
Each of the Lenders and the Issuing Bank hereby irrevocably appoints each
Agent as its agent and authorizes each Agent to take such actions on its behalf
and to exercise such powers as are delegated to each such Agent, respectively,
by the terms of the Loan Documents, together with such actions and powers as are
reasonably incidental thereto.
Each bank serving as an Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same
as though it were not an Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Company or any Subsidiary or other Affiliate thereof as if it were not an
Agent hereunder.
No Agent shall have any duties or obligations except those expressly set
forth in the Loan Documents. Without limiting the generality of the foregoing,
(a) an Agent shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (b) an Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that such Agent is required to exercise in
writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02), and (c) except as expressly set forth in the Loan Documents, an Agent
shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Company or any Subsidiary that is
communicated to or obtained by the bank serving as an Agent or any of its
Affiliates in any capacity. An Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or
79
willful misconduct. An Agent shall be deemed not to have knowledge of any
Default unless and until written notice thereof is given to such Agent by a
Borrower or a Lender, and an Agent shall not be responsible for or have any duty
to ascertain or inquire into (i) any statement, warranty or representation made
in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document, (iv) the
validity, enforceability, effectiveness or genuineness of any Loan Document or
any other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere in any Loan Document, other than
to confirm receipt of items expressly required to be delivered to such Agent.
Each Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for the
Borrowers), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
Each Agent may perform any and all its duties and exercise its rights and
powers by or through any one or more sub-agents appointed by it. Each Agent and
any such subagent may perform any and all its duties and exercise its rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of (i) each Agent and (ii) any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a successor Agent as provided
in this paragraph, an Agent may resign at any time by notifying the Lenders, the
other Agent, the Issuing Bank and the Company. Upon any such resignation, the
Required Lenders shall have the right, in consultation with the Company, to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation, then such retiring Agent
may, on behalf of the Lenders and the Issuing Bank, appoint a successor Agent
which shall be a bank with an office in New York, New York or Boston,
Massachusetts, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and such retiring Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Company to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Company and such successor. After an Agent's resignation hereunder,
the provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Agent.
Each Lender acknowledges that it has, independently and without reliance
upon any Agent or any other Lender and based on such documents and information
as it has deemed
80
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.
None of the rights or obligations of any Agent under any Loan Document may
be amended, supplemented or otherwise modified without the prior written consent
of such Agent and the Required Lenders.
ARTICLE IX
Miscellaneous
SECTION 9.01 Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to any Borrower, to it in care of the Company at Two Paragon
Drive, Montvale, New Jersey 07645, Attention of the Treasurer (Telecopy No.
(201) 571-8036);
(b) if to the Administrative Agent, the Collateral Agent or the
Swingline Lender to Bank of America, N.A., 40 Broad Street, Boston,
Massachusetts 02109, Attention: Alexis MacElhiney (Telecopy No. (617)
434-2615), (E-Mail to alexis.macelhiney@bankofamerica.com), with a copy to
Riemer & Braunstein, LLP, Three Center Plaza, Boston, Massachusetts 02108,
Attention: David S. Berman, Esquire (Telecopy No. (617) 880-3456), (E-Mail
to dberman@riemerlaw.com;
(c) if to the Issuing Bank, to it at Letters of Credit Department,
Bank of America, N.A. 1 Fleet Way, Scranton, Pennsylvania 18507, Attention
Michael Grizzanti (telecopy No. (800) 755-8743), (E-Mail to
Michael.A.Grizzanti@bankofamerica.com);
(d) if to a Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02 Waivers; Amendments.
(a) No failure or delay by the Administrative Agent, the Collateral Agent,
the Issuing Bank or any Lender in exercising any right or power hereunder or
under any other Loan
81
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any Default
or Event of Default, regardless of whether the Administrative Agent, the
Collateral Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default or Event of Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by the
Borrowers and the Required Lenders or, in the case of any other Loan Document,
pursuant to an agreement or agreements in writing entered into by the Agent that
is a party thereto and the Loan Party or Loan Parties that are parties thereto,
in each case with the consent of the Required Lenders; provided that no such
agreement shall (i) increase the Commitment of any Lender without the written
consent of such Lender, (ii) reduce the principal amount of any Loan or
unreimbursed L/C Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan under Section 2.10 or the required date of reimbursement of any L/C
Disbursement, or any date for the payment of any interest or fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.18(b) or (c) in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the provisions of
this Section or the percentage set forth in the definition of "Required Lenders"
or any other provision of any Loan Document specifying the number or percentage
of Lenders required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender, (vi) directly or indirectly change any of the provisions of the
definitions of "Borrowing Base", "Eligible Inventory", "Eligible Coinstar
Receivables", "Eligible Credit Card Accounts Receivable", "Eligible Third Party
Insurance Provider Accounts Receivable", "Eligible Cash and Cash Equivalents",
Eligible Additional Investments" or "Scripts", in each case in a manner adverse
to the interests of the Lenders or in a manner that would make more credit
available to the Borrowers, without the written consent of the Required Lenders
(calculated for this purpose as though the percentage specified in the
definition of "Required Lenders" were 66-2/3% instead of 50%), (vii) increase
the total Commitments (other than in accordance with Section 2.02), without the
written consent of the Required Lenders (calculated for this purpose as though
the percentage specified in the definition of "Required Lenders" were 66-2/3%
instead of 50%), (viii) release any Loan Party from its Guarantee under the
Guarantee Agreement (except as expressly provided in the Guarantee Agreement),
or limit its liability in respect of such Guarantee, without the written consent
of each Lender or (ix) release all or any substantial part
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of the Collateral from the Liens of the Security Documents (except with respect
to sales or transfers of, and other transactions relating to, Collateral
permitted pursuant to the Loan Documents), without the written consent of each
Lender; provided further that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent or the Issuing Bank or
the Collateral Agent without the prior written consent of the Administrative
Agent or the Issuing Bank or the Collateral Agent, as the case may be.
Notwithstanding the foregoing, any provision of this Agreement may be amended by
an agreement in writing entered into between the Borrowers, the Required Lenders
and the Administrative Agent (and, if their rights or obligations are affected
thereby, the Issuing Bank) if (i) by the terms of such agreement the Commitment,
and L/C Exposure of each Lender not consenting to the amendment provided for
therein shall, for such Lender, terminate upon the effectiveness of such
amendment and (ii) at the time such amendment becomes effective, each Lender not
consenting thereto receives payment in full of the principal of and interest
accrued on each Loan owed to it and all other amounts owing to it or accrued for
its account under this Agreement.
SECTION 9.03 Expenses; Indemnity; Damage Waiver.
(a) The Borrowers agree, jointly and severally, to pay (i) on or before the
Effective Date, to the greatest extent possible, and after the Effective Date,
as necessary, all fees and reasonable out-of-pocket expenses (including, without
limitation, the fees and expenses incurred in connection with any field
examination and any appraisal of any of the Collateral) incurred by the
Administrative Agent, the Collateral Agent and their respective Affiliates,
including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent and the Collateral Agent, in connection with the
syndication of the credit facilities provided for herein, the preparation,
execution, delivery and administration of the Loan Documents or any amendments,
supplements, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses (including the reasonable and documented fees,
charges and disbursements of any counsel for the Administrative Agent, the
Collateral Agent, the Issuing Bank and/or any Lender) incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender, including the reasonable fees, charges
and disbursements of any counsel for the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender, in connection with the enforcement or
protection of their rights in connection with the Loan Documents, including
their rights under this Section, or in connection with the Loans made or Letters
of Credit issued hereunder, including all such out-of-pocket expenses (including
the reasonable fees, charges and disbursements of any counsel for the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender)
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.
(b) The Borrowers agree, jointly and severally, to indemnify the
Administrative Agent, the Collateral Agent, the Issuing Bank and each Lender,
and each Related Party of any of the foregoing Persons (each such Person being
called an "Indemnitee") against, and hold each Indemnitee harmless (on an after
tax basis) from, any and all losses, claims, damages, liabilities, costs and
related expenses, including the reasonable fees, charges
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and disbursements of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as a result of (i)
the execution or delivery of any Loan Document or any other agreement or
instrument contemplated hereby or thereby, the performance by the parties to the
Loan Documents of their respective obligations thereunder or the consummation of
the Transactions or any other transactions contemplated hereby or thereby, (ii)
any Loan or Letter of Credit or the use of the proceeds therefrom (including any
refusal by the Issuing Bank to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit), (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property currently or
formerly owned or operated by the Company or any of its subsidiaries, or any
Environmental Liability related in any way to the Company or any of its
subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities, costs or related
expenses are determined by a court of competent jurisdiction by final judgment
to have resulted from the gross negligence or willful misconduct of such
Indemnitee.
(c) To the extent that the Borrowers fail to pay any amount required to be
paid by them to the Administrative Agent, the Collateral Agent or the Issuing
Bank under paragraph (a) or (b) of this Section, each Lender severally agrees to
pay to the Administrative Agent, the Collateral Agent or the Issuing Bank, as
the case may be, such Lender's pro rata share (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Collateral Agent or the
Issuing Bank in its capacity as such. For purposes hereof, a Lender's "pro rata
share" shall be determined based upon its share of the sum of the aggregate
amount of the total Commitments at the time.
(d) To the extent permitted by applicable law, none of the Borrowers shall
assert, and each of the Borrowers hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 9.04 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that no Borrower may assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
of the Lenders (and any attempted assignment or transfer by a Borrower without
such consent shall be null and void). Nothing in this Agreement, expressed or
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implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement. The Administrative Agent also shall indicate in the Register the
Maturity Date applicable to each Lender and its Commitments and Loans.
(b) Each Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment, the Loans at the time owing to it and its participation in Letters
of Credit); provided that (i) except in the case of an assignment to a Lender or
an Affiliate of a Lender, each of the Company, the Administrative Agent and the
Issuing Bank must give their prior written consent to such assignment (which
consents shall not be unreasonably withheld), (ii) except in the case of an
assignment of the entire remaining amount of the assigning Lender's Commitment,
the amount of the Commitment of the assigning Lender to be assigned to an
assignee other than a Lender or an Affiliate of a Lender pursuant to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $10,000,000 unless each of the Company and the Administrative Agent
otherwise consent to a lesser amount, (iii) each partial assignment shall be
made as an assignment of a proportionate part of all the assigning Lender's
rights and obligations under this Agreement, (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500, in the
case of fees payable to the Administrative Agent (except such fee shall not be
payable in the case of an assignment by any Lender to any of its affiliates or
an assignment pursuant to Sections 2.09 or 2.19) and (v) the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire; and provided further that any consent of the
Company otherwise required under this paragraph shall not be required if a
Default or Event of Default has occurred and is continuing. Subject to
acceptance and recordation in the Register pursuant to paragraph (d) of this
Section, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution and recordation thereof, the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all the assigning Lender's rights and obligations under this Agreement such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of the
Borrowers, shall maintain at one of its offices in Boston, Massachusetts a copy
of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and L/C
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Disbursements owing to, each Lender pursuant to the terms hereof from time to
time (the "Register"). The entries in the Register shall be conclusive, and the
Borrowers, the Administrative Agent, the Issuing Bank and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the
Borrowers, the Issuing Bank and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, the assignee's completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrowers, the
Administrative Agent, the Collateral Agent or the Issuing Bank, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrowers, the
Administrative Agent, the Collateral Agent, the Issuing Bank and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, supplement, modification or waiver of
any provision of the Loan Documents; provided that such agreement or instrument
may provide that such Lender will not, without the consent of the Participant,
agree to any amendment, supplement, modification or waiver described in the
first proviso to Section 9.02(b) that affects such Participant. Subject to
paragraph (f) of this Section, each Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 9.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.18(c) as
though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with a Borrower's
prior written consent. A Participant that would be a Non-U.S. Lender if it were
a Lender shall not be entitled to the benefits of Section 2.17 unless the
Company is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrowers, to comply with Section
2.17(e) as though it were a Lender.
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(g) Any Lender may at any time grant, pledge, hypothecate or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any grant, pledge, hypothecation or
assignment to secure obligations to a Federal Reserve Bank, and none of the
restrictions or conditions set forth in this Section 9.04 related to any such
grant, pledge, hypothecation or assignment shall apply to any such grant,
pledge, hypothecation or assignment of a security interest; provided that no
such grant, pledge, hypothecation or assignment of a security interest shall
release a Lender from any of its obligations hereunder or substitute any such
grantee, pledge, hypothecatee or assignee for such Lender as a party hereto.
SECTION 9.05 Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 9.06 Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.07 Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting
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the validity, legality and enforceability of the remaining provisions hereof;
and the invalidity of a particular provision in a particular jurisdiction shall
not invalidate such provision in any other jurisdiction.
SECTION 9.08 Right of Setoff. If one or more Events of Default shall have
occurred and be continuing, each Lender shall have the right, in addition to and
not in limitation of any right which any such Lender may have under applicable
law or otherwise, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at
any time owing by such Lender or its Affiliates to or for the credit or the
account of any of the Borrowers against any of and all the obligations of any of
the Borrowers now or hereafter existing under this Agreement and the other Loan
Documents held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section 9.08 are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have. No Credit Party will, or will
permit its Participant to, exercise its rights under this SECTION 9.08 without
the consent of the Administrative Agent. ANY AND ALL RIGHTS TO REQUIRE THE
ADMINISTRATIVE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES ANY OF THE OBLIGATIONS PRIOR TO THE EXERCISE THE
RIGHT OF SETOFF UNDER THIS SECTION ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
SECTION 9.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAW OF THE STATE OF NEW YORK (EXCEPT FOR THE CONFLICT OF LAWS RULES THEREOF,
BUT INCLUDING GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402).
(b) Each of the Borrowers hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to any Loan Document, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Loan Document against any of the Borrowers or their respective
properties in the courts of any jurisdiction.
(c) Each of the Borrowers hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or
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hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Loan Document in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 9.11 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12 Confidentiality. Each of the Administrative Agent, the
Collateral Agent, the Issuing Bank and the Lenders agrees to maintain the
confidentiality of the Information (as defined below) except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the consent of
the Company or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
the
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Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Borrowers. For the purposes
of this Section, "Information" means all information received from any of the
Borrowers relating to the Borrowers or their business, other than any such
information that is available to the Administrative Agent, the Collateral Agent,
the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
any of the Borrowers; provided that, in the case of information received from a
Borrower after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
Notwithstanding anything herein to the contrary, to the extent not
inconsistent with applicable securities laws, a Lender or potential Lender (and
each employee, representative, or other agent of such person or entity) may
disclose to any and all persons, without limitation, the tax treatment and tax
structure of the transaction (as defined in United States Treasury Regulation
Section 1.6011-4) contemplated herein and all related materials of any kind,
including opinions or other tax analyses, that are provided to such person or
entity. However, such person or entity may not disclose any other information
relating to this transaction (as defined in United States Treasury Regulation
Section 1.6011-4) unless such information is related to such tax treatment and
tax structure.
SECTION 9.13 Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively, the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.14 Patriot Act.
Each Lender hereby notifies the Borrowers that pursuant to the requirements
of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the "Act"), it is required to obtain, verify and record information that
identifies the Borrowers, which information includes the name and address of
each Borrower and other information that will allow such Lender to identify such
Borrower in accordance with the Act. Each Borrower is in compliance, in all
material respects, with the Patriot Act. No part of the proceeds of the Loans
will be used by the Loan Parties, directly or indirectly, for any payments to
any governmental
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official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.
SECTION 9.15 Foreign Asset Control Regulations.
Neither of the advance of the Loans nor the use of the proceeds of any
thereof will violate the Trading With the Enemy Act (50 U.S.C. ss. 1 et seq., as
amended) (the "Trading With the Enemy Act") or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) (the "Foreign Assets Control Regulations") or any
enabling legislation or executive order relating thereto (which for the
avoidance of doubt shall include, but shall not be limited to (a) Executive
Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)) (the "Executive Order") and (b) the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56)). Furthermore, none of the Borrowers
or their Affiliates (a) is or will become a "blocked person" as described in the
Executive Order, the Trading With the Enemy Act or the Foreign Assets Control
Regulations or (b) knowingly engages or will engage in any dealings or
transactions, or be otherwise associated, with any such "blocked person" or in
any manner violative of any such order.
SECTION 9.16 Additional Waivers.
(a) The Obligations are the joint and several obligation of each Loan
Party. To the fullest extent permitted by applicable law, the obligations
of each Loan Party hereunder shall not be affected by (i) the failure of
the Administrative Agent, the Collateral Agent, the Issuing Bank or any
Lender to assert any claim or demand or to enforce or exercise any right or
remedy against any other Loan Party under the provisions of this Agreement,
any other Loan Document or otherwise, (ii) any rescission, waiver,
amendment or modification of, or any release of any Loan Party from, any of
the terms or provisions of, this Agreement, any other Loan Document, or
(iii) the failure to perfect any security interest in, or the release of,
any of the Collateral or other security held by or on behalf of the
Administrative Agent, the Collateral Agent the Issuing Bank or any Lender.
(b) The obligations of each Loan Party to pay the Obligations in full
hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason (other than the payment in full in cash of the
Obligations), including any claim of waiver, release, surrender, alteration
or compromise of any of the Obligations and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of any of the
Obligations or otherwise. Without limiting the generality of the foregoing,
the obligations of each Loan Party hereunder shall not be discharged or
impaired or otherwise affected by the failure of the Administrative Agent,
the Collateral Agent, the Issuing Bank or any Lender to assert any claim or
91
demand or to enforce any remedy under this Agreement, any other Loan
Document or any other agreement, by any waiver or modification of any
provision of any thereof, any default, failure or delay, willful or
otherwise, in the performance of any of the Obligations, or by any other
act or omission that may or might in any manner or to any extent vary the
risk of any Loan Party or that would otherwise operate as a discharge of
any Loan Party as a matter of law or equity (other than the payment in full
in cash of all the Obligations).
(c) To the fullest extent permitted by applicable law, each Loan Party
waives any defense based on or arising out of any defense of any other Loan
Party or the unenforceability of the Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of any other
Loan Party, other than the payment in full in cash of all the Obligations.
The Administrative Agent, the Collateral Agent, the Issuing Bank and the
Lenders may, at their election, foreclose on any security held by one or
more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or
adjust any part of the Obligations, make any other accommodation with any
other Loan Party, or exercise any other right or remedy available to them
against any other Loan Party, without affecting or impairing in any way the
liability of any Loan Party hereunder except to the extent that all the
Obligations have been indefeasibly paid in full in cash and performed in
full. Pursuant to applicable law, each Loan Party waives any defense
arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Loan Party
against any other Loan Party, as the case may be, or any security.
(d) Each Loan Party hereby agrees to keep each other Loan Party fully
apprised at all times as to the status of its business, affairs, finances,
and financial condition, and its ability to perform its Obligations under
the Loan Documents and in particular as to any adverse developments with
respect thereto. Each Loan Party hereby agrees to undertake to keep itself
apprised at all times as to the status of the business, affairs, finances,
and financial condition of each other Loan Party, and of the ability of
each other Loan Party to perform its Obligations under the Loan Documents,
and in particular as to any adverse developments with respect to any
thereof. Each Loan Party hereby agrees, in light of the foregoing mutual
covenants to inform each other, and to keep themselves and each other
informed as to such matters, that the none of the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender shall have any duty to
inform any Loan Party of any information pertaining to the business,
affairs, finances, or financial condition of any other Loan Party, or
pertaining to the ability of any other Loan Party to perform its
Obligations under the Loan Documents, even if such information is adverse,
and even if such information might influence the decision of one or more of
the Loan Parties to continue to be jointly and severally liable for, or to
provide Collateral for, Obligations of one or more of the other Loan
Parties. To the fullest extent permitted by applicable law, each Loan Party
hereby expressly waives any duty of the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender to inform any Loan Party
of any such information.
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[SIGNATURE PAGES FOLLOW]
93
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BANK OF AMERICA, N.A., as Administrative Agent
and Collateral Agent
By: /s/ Alexis MacElhiney
--------------------------------
Name: Alexis MacElhiney
Title: Director
CIT GROUP BUSINESS CREDIT, INC.
By: /s/ Susanna Profis
--------------------------------
Name: Susanna Profis
Title: AVP
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Christopher S. Hudik
--------------------------------
Name: Christopher S. Hudik
Title: Director
JPMORGAN CHASE BANK, N.A.
By: /s/ James L. Sloan
--------------------------------
Name: James L. Sloan
Title: Vice President
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
By: /s/ William J. Moss
--------------------------------
Name: William J. Moss
Title: Vice President and Treasurer
COMPASS FOODS, INC.
By: /s/ William J. Moss
--------------------------------
Name: William J. Moss
Title: Vice President
BORMAN'S, INC.
By: /s/ William J. Moss
--------------------------------
Name: William J. Moss
Title: Vice President
SHOPWELL, INC.
By: /s/ William J. Moss
--------------------------------
Name: William J. Moss
Title: Vice President
WALDBAUM, INC.
By: /s/ William J. Moss
--------------------------------
Name: William J. Moss
Title: Vice President
SUPER FRESH FOOD MARKETS, INC.
By: /s/ William J. Moss
--------------------------------
Name: William J. Moss
Title: Vice President
SUPER MARKET SERVICE CORP.
By: /s/ William J. Moss
--------------------------------
Name: William J. Moss
Title: Vice President
SUPER FRESH/SAV-A-CENTER, INC.
By: /s/ William J. Moss
--------------------------------
Name: William J. Moss
Title: Vice President
FOOD BASICS, INC.
By: /s/ William J. Moss
--------------------------------
Name: William J. Moss
Title: Vice President
HOPELAWN PROPERTY I, INC.
By: /s/ William J. Moss
--------------------------------
Name: William J. Moss
Title: Vice President
LO-LO DISCOUNT STORES, INC.
By: /s/ William J. Moss
--------------------------------
Name: William J. Moss
Title: Vice President