AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
by and among
CONGRESS FINANCIAL CORPORATION (SOUTHWEST)
BANKAMERICA BUSINESS CREDIT, INC.
as Lenders
and
CONGRESS FINANCIAL CORPORATION (SOUTHWEST)
as Agent for Lenders
and
PAMIDA, INC.
SEAWAY IMPORTING COMPANY
as Borrowers
Dated: July 2, 1998
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS................................................... 1
SECTION 2. ACKNOWLEDGMENT AND RESTATEMENT................................ 17
2.1 Existing Obligations......................................... 17
2.2 Acknowledgment of Security Interests......................... 17
2.3 Existing Agreement........................................... 17
2.4 Restatement.................................................. 18
2.5 Release...................................................... 18
SECTION 3. CREDIT FACILITIES............................................. 19
3.1 Revolving Credit Facility.................................... 19
3.3 Letter of Credit Accommodations.............................. 19
3.4 Loan Limits; Revolving Credit Facility Limit
3.5 Supplemental Credit Facility Limit........................... 21
3.6 Mandatory Prepayments........................................ 22
3.7 Reserves..................................................... 22
3.8 Fees......................................................... 23
3.9 Interest..................................................... 24
3.10 Conduct of Accounts; Cross-Collateralization................ 26
3.11 Use of Proceeds............................................. 28
3.12 Compensation Adjustment..................................... 28
3.13 Changes in Laws and Increased Costs of Loans................ 29
SECTION 4. CONDITIONS PRECEDENT TO LOANS
AND OTHER FINANCIAL ACCOMMODATIONS.............................30
SECTION 5. COLLATERAL.....................................................31
SECTION 6. REPRESENTATIONS AND WARRANTIES.................................32
6.1 Organization and Qualification............................... 33
6.2 Corporate Power and Authority................................ 33
6.3 Capitalization and Senior Subordinated Notes................. 33
6.4 Compliance with Other Agreements and Applicable Law.......... 34
6.5 Governmental Approval........................................ 35
6.6 Chief Executive Offices; Collateral Locations................ 35
6.7 Priority of Liens/Title to Properties........................ 35
6.8 Tax Returns.................................................. 36
6.9 Litigation................................................... 36
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6.10 Intellectual Property....................................... 36
6.11 Accounts.................................................... 37
6.12 Employee Benefits........................................... 37
6.13 Environmental Compliance.................................... 38
6.14 Investment Company.......................................... 39
6.15 Regulation U; Securities Exchange Act of 1934............... 39
6.16 No Material Adverse Change.................................. 39
6.17 Financial Statements........................................ 40
6.18 Disclosure.................................................. 40
6.19 Labor Disputes.............................................. 40
6.20 Corporate Name; Prior Transactions.......................... 40
SECTION 7. ADDITIONAL COVENANTS...........................................41
7.1 Tradenames................................................... 41
7.2 Subsidiaries................................................. 41
7.3 Indebtedness................................................. 42
7.4 Limitation on Liens.......................................... 45
7.5 Loans, Investments, Guarantees, Etc.......................... 47
7.6 Transactions with Affiliates................................. 50
7.7 Dividends.................................................... 51
7.8 Maintenance of Existence..................................... 51
7.9 Sale of Assets, Consolidation, Merger, Dissolution, Etc...... 51
7.10 Compliance with Laws, Regulations, Etc...................... 53
7.11 Payment of Taxes and Claims................................. 54
7.12 Properties in Good Condition................................ 55
7.13 Insurance................................................... 55
7.14 Appraisals and Inventory Reports............................ 56
7.15 Compliance with ERISA....................................... 56
7.16 Notice of Default........................................... 57
7.17 Financial Statements and Other Information.................. 57
7.18 Capital Expenditures........................................ 60
7.19 Consolidated Adjusted Cash Flow............................. 60
7.20 Further Assurances.......................................... 60
SECTION 8. EVENTS OF DEFAULT AND REMEDIES................................ 61
8.1 Events of Default............................................ 61
8.2 Remedies..................................................... 63
SECTION 9. COLLECTION AND ADMINISTRATION................................. 65
9.1 Collections; Management of Collateral........................ 65
9.2 Right of Inspection; Access.................................. 67
9.3 Specific Powers.............................................. 67
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SECTION 10. EFFECTIVE DATE; TERMINATION; COSTS; MISCELLANEOUS............ 68
10.1 Agent....................................................... 68
10.2 Term........................................................ 68
10.3 Expenses and Additional Fees................................ 69
10.4 Survival of Agreement....................................... 70
10.5 No Waiver; Cumulative Remedies.............................. 71
10.6 Notices..................................................... 71
10.7 Entire Agreement............................................ 72
10.8 Amendments and Waivers...................................... 72
10.9 Applicable Law.............................................. 72
10.10 Successors................................................. 72
10.11 Partial Invalidity......................................... 72
10.12 Headings................................................... 73
10.13 Participant's Security Interests........................... 73
10.14 Waiver of Jury Trial....................................... 73
10.15 Waiver of Counterclaims; Jurisdiction; Service of Process.. 73
10.16 Indemnification............................................ 74
10.17 Texas DTPA Waiver and Related Matters...................... 75
10.18 Counterparts............................................... 75
iii
INDEX TO EXHIBITS
EXHIBIT A Jurisdictions of Qualification Section 6.1(a)
EXHIBIT B Subsidiaries Section 6.1(b)
EXHIBIT C Chief Executive Offices Section 6.6(a)
EXHIBIT D Locations of Collateral Section 6.6(a)
EXHIBIT E Existing Liens Section 6.7(a), 7.4
EXHIBIT F Pending Litigation Section 6.9
EXHIBIT G Environmental Violations Section 6.13
EXHIBIT H Collective Bargaining Agreements Section 6.19
EXHIBIT I Corporate Name; Tradenames;
Prior Transactions Sections 6.20, 7.1
EXHIBIT J Existing Indebtedness Section 7.3
EXHIBIT K Existing Loans, Investments and
Guarantees Section 7.5
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
AGREEMENT dated as of July 2, 1998 by and among Pamida, Inc., a Delaware
corporation ("Pamida", as hereinafter further defined), Seaway Importing
Company, a Nebraska corporation ("Seaway", as hereinafter further defined, and
together with Pamida, each individually a "Borrower" and collectively,
"Borrowers", as hereinafter further defined), Congress Financial Corporation
(Southwest), a Texas corporation (in its individual capacity "Congress", as
hereinafter further defined), BankAmerica Business Credit, Inc., a Delaware
corporation, formerly known as BA Business Credit, Inc. ("BABC", as hereinafter
further defined, and together with Congress, each individually a "Lender" and
collectively, "Lenders", as hereinafter further defined) and Congress Financial
Corporation (Southwest), as Agent for Lenders (in such capacity, the "Agent", as
hereinafter further defined).
W I T N E S S E T H:
WHEREAS, Agent and Lenders have heretofore entered into certain financing
arrangements with Borrowers as set forth in the Existing Agreement (as
hereinafter defined) pursuant to which Lenders or Agent on behalf of Lenders
have made loans and advances and provided other financial accommodations to
Borrowers;
WHEREAS, Borrowers have requested that Lenders and Agent extend, modify and
restate the existing financing arrangements with Borrowers;
WHEREAS, Agent and Lenders are willing to extend, modify and restate the
existing financing arrangements, subject to the terms and conditions contained
herein and in the other Financing Agreements (as defined below);
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements herein contained and other good and valuable consideration, Agent,
Lenders and Borrowers hereby mutually covenant, warrant and agree as follows
(the covenants, warranties and agreements of Borrowers, except as otherwise
expressly set forth herein, being joint and several):
SECTION 1. DEFINITIONS
For the purposes of this Agreement and the other Financing Agreements, the
following terms shall have the respective meanings given to them below:
1.1 "Account Debtor" shall mean each debtor or obligor in any way obligated
on or in connection with any Account.
1.2 "Accounts" shall mean all present and future accounts, contract rights,
general intangibles, chattel paper, documents and instruments, as such terms are
defined in the UCC,
1
including, without limitation, all obligations for the payment of money arising
out of the sale, lease or other disposition of goods or other property or
rendition of services and including, without limitation, Credit Card
Receivables.
1.3 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the maximum reserve percentage, expressed as a
decimal (rounded upwards, if necessary, to the nearest six hundred twenty-five
ten thousandths (.0625%) percent), prescribed by any United States or foreign
banking authority for determining the reserve requirement which is or would be
applicable to deposits of United States dollars in a non-United States or an
international banking office of Reference Bank (or, if greater, in a non-United
States or an international banking office of any Lender, provided, that, Agent
shall have received from such Lender prior written notice of such greater
reserve percentage) used to fund a Eurodollar Rate Loan or any Eurodollar Rate
Loan made with the proceeds of such deposit, whether or not the Reference Bank
(or such other Lender) actually holds or has made any such deposits or loans.
The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of
any change in the Reserve Percentage (or, if later, upon the receipt by Agent of
written notice from any Lender of such greater reserve percentage).
1.4 "Affiliate" shall mean, with respect to a specified Person, a
partnership, corporation or any other person which directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with such Person, and without limiting the generality of the
foregoing, includes (a) any Person which beneficially owns or holds ten (10%)
percent or more of any class of voting securities of such Person or other equity
interests in such Person; (b) any Person of which such Person beneficially owns
or holds ten (10%) percent or more of any class of voting securities or in which
such Person beneficially owns or holds ten (10%) percent or more of the equity
interests; and (c) any director or officer of such Person. For the purposes of
this definition, the term "control" (including with correlative meanings, the
terms "controlled by" and "under common control with"), as used with respect to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
1.5 "Agent" shall mean Congress Financial Corporation (Southwest), a Texas
corporation, acting in its capacity as agent for itself and BankAmerica Business
Credit Inc., formerly known as BA Business Credit Inc., and any successor or
replacement agent, and not as a Lender, as defined below.
1.6 "Asset Sale" shall mean any direct or indirect sale, conveyance,
transfer, lease (including by means of a sale-leaseback) or other disposition to
any Person other than Pamida or a Subsidiary of Pamida, in one transaction or a
series of related transactions, of (a) any capital stock of any Subsidiary of
Pamida or (b) any other property or asset of Pamida or any
2
Subsidiary of Pamida, in each case other than Inventory in the ordinary course
of business and obsolete equipment and other than isolated transactions which do
not exceed $500,000 individually. For the purposes of this definition, the term
"Asset Sale" shall not include (i) sales of Cash Equivalents which are
reinvested in Cash Equivalents within thirty (30) days of such sale, (ii) sales
of receivables not a part of a sale of the business from which they arose or any
disposition of properties and assets of Pamida or any Subsidiary that is
governed under and complies with Section 7.9(a) hereof or (iii) exchanges of
properties and assets of Pamida or any Subsidiary for similar properties and
assets of any Person other than Pamida or a Subsidiary of Pamida.
1.7 "BABC" shall mean BankAmerica Business Credit, Inc., formerly known as
BA Business Credit, Inc., a Delaware corporation, and its successors and
assigns.
1.8 "Bankruptcy Code" shall mean the United States Bankruptcy Code, being
Title 11 of the United States Code, as the same now exists or may from time to
time hereafter be amended, modified, recodified or supplemented, together with
all rules, regulations and interpretations thereunder or related thereto.
1.9 "Blocked Account" shall have the meaning set forth in Section 9.1
hereof.
1.10 "Board" shall mean the Board of Governors of the Federal Reserve
System or any successor thereto.
1.11 "Borrowers" shall mean, individually and collectively, jointly and
severally, Pamida and Seaway and their respective successors and assigns.
1.12 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the Commonwealth of Pennsylvania, and a day
on which the Reference Bank, Agent and Lenders are open for the transaction of
business, except that if a determination of a Business Day shall relate to any
Eurodollar Rate Loans, the term Business Day shall also exclude any day on which
banks are closed for dealings in dollar deposits in the London interbank market
or other applicable Eurodollar Rate market.
1.13 "Capital Expenditures" shall mean all expenditures for any fixed or
capital assets or improvements, or for replacements, substitutions or additions
thereto, which have a useful life of more than one (1) year, including, but not
limited to, the direct or indirect acquisition of such assets by way of
increased product service charges, offset items or otherwise (but shall not
include for purposes of Section 7.18: (a) any such expenditures which have been
previously specifically identified in reports thereof furnished by Borrowers to
Agent and, subject to the terms and conditions contained herein, are allocated
to Supplemental Loans under the Supplemental Credit Facility at the request of
Borrowers and (b) capitalized lease payments).
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1.14 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity of one hundred eighty (180) days or less issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided, that, the full faith and credit of
the United States of America is pledged in support thereof); (b) certificates of
deposit or acceptances with a maturity of one hundred eighty (180) days or less
of any financial institution that is a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than
$250,000,000; (c) commercial paper with a maturity of one hundred eighty (180)
days or less issued by a corporation (except an Affiliate of Borrowers)
organized under the laws of any state of the United States or the District of
Columbia and rated at least A-1 by Standard & Poor's Ratings Service, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or at least P-1 by ▇▇▇▇▇'▇ Investors Service,
Inc.; and (d) repurchase agreements and reverse repurchase agreements relating
to marketable direct obligations issued or unconditionally guaranteed by the
United States of America or issued by any agency thereof and backed by the full
faith and credit of the United States of America, in each case maturing within
one (1) year from the date of acquisition; provided, however, that the terms of
such agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency.
1.15 "Change of Control" shall mean (a) the direct or indirect sale, lease,
exchange or other transfer of all or substantially all of the assets of Holdings
to any Person or entity or group of Persons or entities acting in concert as a
partnership or other group (a "Group of Persons") other than an Affiliate of
Holdings; (b) the merger or consolidation of Holdings with or into another
corporation with the effect that the then existing shareholders of Holdings hold
less than fifty (50%) percent of the combined voting power of the then
outstanding securities of the surviving corporation in such merger or the
corporation resulting from such consolidation ordinarily (and apart from rights
arising under special circumstances) having the right to vote in the election of
directors; (c) the replacement of a majority of the Board of Directors of
Holdings, over a one (1) year period, from the directors who constituted the
Board of Directors at the beginning of such period, and such replacement shall
not have been approved or nominated for election by a vote of at least a
majority of the Board of Directors then still in office who either were members
of the Board of Directors at the beginning of such period or whose election as a
member of the Board of Directors was previously so approved; (d) a Person or
Group of Persons shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange
Act) of securities of Holdings representing thirty (30%) percent or more of the
combined voting power of the then outstanding securities of Holdings ordinarily
(and apart from rights arising under special circumstances) having the right to
vote in the election of directors; or (e) Holdings fails to own a majority of
the combined voting power of the outstanding voting stock of Pamida.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred if one or more of the above events occur or circumstances exist and,
after giving effect thereto, the Senior Subordinated Notes are rated BBB- or
better by Standard & Poor's Ratings Service, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or Baa3 or better by ▇▇▇▇▇'▇ Investors Service, Inc.
4
1.16 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.17 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.18 "Commitment Percentage" shall mean, with respect to the making of
Loans and any other Obligations, for Congress, sixty (60%) percent, and for
BABC, forty (40%) percent.
1.19 "Congress" shall mean Congress Financial Corporation (Southwest), a
Texas corporation, in its individual capacity as Lender, and its successors and
assigns.
1.20 "Consolidated Adjusted Cash Flow" shall mean, as to any Person, with
respect to any period, an amount equal to: (a) the consolidated net income or
loss of such Person and its Subsidiaries (excluding to the extent included
therein any non-cash gains from extraordinary items and any losses arising from
the early extinguishment of the Senior Subordinated Notes) after deducting all
charges which should be deducted before arriving at consolidated net income or
loss for such period, all as determined in accordance with GAAP and after
deducting the Provision for Taxes for such period, plus (b) depreciation for
such period, plus (c) amortization for such period, including, without
limitation, amortization of capitalized debt issuance costs, plus (d) any
increases (or minus any decreases) in any LIFO reserve for such period, plus (e)
other non-cash charges for such period (to the extent deducted in the
computation of net income or loss) all in accordance with GAAP, minus (f)
Capital Expenditures made or accrued during such period (to the extent not
otherwise deducted in the computation of net income or loss), minus (g) payments
made or accrued in respect of dividends on or redemptions of any shares of
capital stock of such Person and its Subsidiaries or pursuant to any tax sharing
arrangements or management or consulting fees during such period (to the extent
not otherwise deducted in the computation of net income or loss), minus (h)
payments made or accrued in respect of principal owing on any Indebtedness for
borrowed money (including, without limitation, Indebtedness for borrowed money
pursuant to any intercompany loans between Affiliates, except to the extent such
Indebtedness is eliminated in the consolidation of the financial statements of
such Person and its Subsidiaries in accordance with GAAP) or payments made or
accrued in respect of capitalized leases other than the portion of such payments
attributable to imputed interest with respect to such capitalized leases (other
than as to Borrowers, repayments of the Loans to Agent and/or Lenders made
through the application of customer remittances or other proceeds from sales of
Inventory in the ordinary course).
1.21 "Consolidated Pre-Tax Net Income" shall mean, with respect to any
Person, for any period, the aggregate of the net income or loss of such Person
and its Subsidiaries, on a consolidated basis, for such period (excluding to the
extent included therein any non-cash gains from extraordinary items) after
deducting all charges which should be deducted before arriving at the net income
or loss for such period and before deducting the Provision for Taxes for such
period, all as determined in accordance with GAAP, provided, that, (a) the net
income of any Person that is not a wholly-owned Subsidiary or that is accounted
for by the
5
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid or payable to such Person or a wholly-owned
Subsidiary of such Person; (b) the effect of any change in accounting principles
adopted by such Person or its Subsidiaries after the date hereof shall be
excluded; and (c) the net income (if positive) of any wholly-owned Subsidiary to
the extent that the declaration or payment of dividends or similar distributions
by such wholly-owned Subsidiary to such Person or to any other wholly-owned
Subsidiary of such Person is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule of government regulation applicable to such wholly-owned Subsidiary shall
be excluded. For the purpose of this definition, net income excludes any gain
(but not loss), together with any related Provision for Taxes for such gain (but
not loss), realized upon the sale or other disposition of any assets that are
not sold in the ordinary course of business, or of any capital stock of such
person or a Subsidiary of such person.
1.22 "Credit Card Receivables" shall mean collectively, (a) all present and
future rights of Borrowers to payment from any credit card issuer, credit card
processor or other third party arising from sales of goods or rendition of
services to customers who have purchased such goods or services using a credit
or debit card, (b) all present and future rights of Borrowers to payment from
any credit card issuer, credit card processor or other third party in connection
with the sale or transfer of Accounts arising pursuant to the sale of goods or
rendition of services to customers who have purchased such goods or services
using a credit card or a debit card, including, but not limited to, all amounts
at any time due or to become due from any credit card issuer or credit card
processor.
1.23 "Eligible Inventory" shall mean Inventory consisting of finished goods
held for resale in the ordinary course of the businesses of Borrowers which
Inventory is acceptable to Agent based on the criteria set forth below. Subject
to the terms and conditions contained herein, Eligible Inventory shall not
include (a) Inventory at premises other than those owned and controlled by
Borrowers, except for (i) Inventory at the retail store locations leased and
operated by Pamida, (ii) Inventory at any distribution centers leased and
operated by Pamida, provided, that, Agent shall have received an agreement in
writing from the owner and lessor of such premises in form and substance
satisfactory to Agent acknowledging Agent's first priority security interest in
the Inventory, waiving security interests and claims by such person against the
Inventory and permitting Agent access to, and the right to remain on, the
premises so as to exercise Agent's rights and remedies and otherwise deal with
the Collateral, (iii) Inventory outside the continental United States and in
transit to premises of Borrowers in the continental United States which are
owned and controlled by Borrowers or leased and operated by Borrowers, provided,
that, (A) Agent has a first priority perfected security interest in, and control
and possession of, all originals of documents of title and such other documents
as may be required in connection therewith and (B) such Inventory is not subject
to any Letter of Credit Accommodation, and (iv) Inventory in transit within the
continental United States from and to premises owned and controlled by Borrowers
or leased and operated by Borrowers; (b) slow moving or obsolete Inventory; (c)
damaged Inventory; (d) Inventory to be returned by Borrowers to vendors; (e)
packaging and shipping materials; (f) supplies used or consumed in Borrowers'
businesses; (g) Inventory subject to a security interest or lien in
6
favor of any person other than Agent and Lenders; (h) Inventory at the premises
of third parties; (i) defective goods; (j) Inventory purchased or held on
consignment; (k) samples; (l) ▇▇▇▇ and hold goods; and (m) Inventory which is
not subject to the first priority perfected security interest of Agent and
Lenders. General criteria for Eligible Inventory may be established and revised
from time to time by Agent in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof to
the extent Agent has no written notice thereof from Borrowers, which adversely
affects or could reasonably be expected to adversely affect the Inventory in the
good faith determination of Agent. In determining such acceptability Agent may,
but need not, rely on reports and schedules of Inventory furnished to Agent by
Borrowers, but reliance thereon by Agent from time to time shall not be deemed
to limit Agent's right to revise standards of eligibility at any time in
accordance with the terms hereof. Any Inventory which Agent determines to be
ineligible or unacceptable for lending purposes at any time shall nevertheless
be and remain at all times part of the Collateral.
1.24 "Eligible Real Property" shall mean the Omaha Real Property owned by
Pamida which is and remains at all times subject to the first priority, valid,
enforceable and perfected security interests, and mortgages and liens of, Agent
and Lenders pursuant to the Mortgages and for which Agent has received an
appraisal in form, scope and methodology acceptable to Agent and Lenders and by
an appraiser acceptable to Agent and Lenders addressed to Agent and on which
Agent is expressly permitted to rely as required under Section 7.14 hereof. Any
real property of Borrowers which is ineligible or unacceptable for lending
purposes at any time shall nevertheless be and remain at all times part of the
Collateral.
1.25 "Environmental Laws" shall mean all Federal, State and local laws,
rules, regulations, ordinances, and consent decrees relating to health, safety,
hazardous substances, and environmental matters, as now or at any time hereafter
in effect, applicable to Borrowers' business and facilities (whether or not
owned by it). Such laws and regulations include, but are not limited to, the
Resource Conservation and Recovery Act, as amended; the Comprehensive
Environmental Response, Compensation and Liability Act, as amended; the Toxic
Substances Control Act, as amended; the Clean Water Act, as amended; the Clean
Air Act, as amended; the Hazardous Materials Transportation Act, as amended;
state and federal superlien and environmental cleanup programs; and U.S.
Department of Transportation and Environmental Protection Agency regulations.
1.26 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.27 "ERISA Affiliate" shall mean any (a) corporation which is a member of
the same controlled group of corporations (within the meaning of section 414(b)
of the Code) as Borrowers, (b) partnership or other trade or business (whether
or not incorporated) which is under common control (within the meaning of
Section 414(c) of the Code) with Borrowers,
7
and (c) member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as Borrowers.
1.28 "Eurodollar Rate" shall mean, with respect to the Interest Period for
a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next six hundred twenty-five ten thousandths (.0625%) percent) at which
Reference Bank is offered deposits of United States dollars in the London
interbank market on or about 9:00 a.m. (New York time) two (2) Business Days
prior to the commencement of such Interest Period in amounts substantially equal
to the principal amount of the Eurodollar Rate Loans requested by and available
to Borrowers in accordance with this Agreement, with a maturity of comparable
duration to the Interest Period selected by Borrowers.
1.29 "Eurodollar Rate Loans" shall mean, individually and collectively,
Eurodollar Rate Revolving Loans and Eurodollar Rate Supplemental Loans.
1.30 "Eurodollar Rate Revolving Loans" shall mean any Revolving Loans or
portion thereof on which interest is payable based on the Adjusted Eurodollar
Rate in accordance with the terms hereof.
1.31 "Eurodollar Rate Supplemental Loans" shall mean any Supplemental Loans
or portion thereof on which interest is payable based on the Adjusted Eurodollar
Rate in accordance with the terms hereof.
1.32 "Event of Default" shall have the meaning set forth in Section 8
hereof.
1.33 "Excess Availability" shall mean the amount, as determined by Agent,
as of any date, equal to:
(a) the lesser of: (i) the amount of the Revolving Credit Availability
as determined by Agent and (ii) the Maximum Credit,
MINUS
(b) the sum of: (i) the amount of all then outstanding and unpaid
Obligations (other than the principal amount of the Supplemental Loans), plus
(ii) the aggregate amount of all then outstanding and unpaid trade payables
which are past due.
1.34 "Existing Agreement" shall mean the Loan and Security Agreement, dated
March 30, 1993, by and among Agent, Lenders and Borrowers.
1.35 "Existing Letter of Credit Accommodations" shall mean, collectively,
the Letter of Credit Accommodations arranged for by Agent for the account of
Borrowers prior to the date hereof under the Existing Agreement.
8
1.36 "Financing Agreements" shall mean, collectively, this Agreement,
together with all other agreements, documents and instruments heretofore, now or
at any time hereafter executed and/or delivered by Borrowers or any other person
with, to or in favor of Agent and/or Lenders in connection herewith or related
hereto, as this Agreement and such other agreements, documents or instruments
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.37 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination except that, for purposes of
Sections 7.18 and 7.19, GAAP shall be determined on the basis of such principles
as in effect on the date hereof and consistent with those used in the
preparation of the most recent audited financial statements delivered to Agent
and Lenders prior to the date hereof.
1.38 "Guarantors" shall mean, individually and collectively, jointly and
severally, Holdings and Transportation and their respective successors and
assigns.
1.39 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
waste, substance or material defined as such under any Environmental Laws,
including, without limitation, (a) those substances included within the
definitions of "hazardous substances", "hazardous materials", "toxic
substances", or "solid waste" in the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Hazardous Materials Transportation Act, Section 311 of the Clean Water Act, and
in the regulations promulgated pursuant to such laws; (b) those substances
listed in the U.S. Department of Transportation Table or by the Environmental
Protection Agency (or any successor agency) as hazardous substances; (c) such
other substances, materials and wastes that are or become regulated under
applicable local, state or federal law, or that are classified as hazardous or
toxic under other applicable federal, state, or local laws or regulations; and
(d) any material, waste or substance that is (i) petroleum, (ii) asbestos, (iii)
polychlorinated biphenyls, (iv) flammable explosives, or (v) radioactive
materials. In the event that any of the applicable Environmental Laws are
amended so as to broaden the meaning of any of the above-referenced terms, such
broader meaning shall apply subsequent to the effective date of such amendment.
1.40 "Holdings" shall mean Pamida Holdings Corporation, a Delaware
corporation, and its successors and assigns.
1.41 "Indebtedness" shall mean, as to any Person, all items which, in
accordance with GAAP, consistently applied, would be included in determining
total liabilities of such Person shown on the liability side of its balance
sheet as at the date such Indebtedness is to be calculated and, in any event,
shall include any liabilities secured by any mortgage, pledge, lien or security
interest existing on any of its properties or assets.
9
1.42 "Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2) or three (3) months duration as Borrowers may
elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar Rate market; provided, that, Borrowers may
not elect an Interest Period which will end after the last day of the
then-current term of this Agreement.
1.43 "Interest Rate" shall mean (a) as to Prime Rate Revolving Loans, a
rate equal to the Prime Rate per annum, (b) as to Prime Rate Supplemental Loans,
a rate equal to one quarter of one (1/4%) percent per annum in excess of the
Prime Rate, (c) as to Eurodollar Rate Revolving Loans, a rate equal to two and
one-quarter (2-1/4%) percent per annum in excess of the Adjusted Eurodollar
Rate, and (d) as to Eurodollar Rate Supplemental Loans, a rate equal to two and
one-half (2-1/2%) percent per annum in excess of the Adjusted Eurodollar Rate
(in each case as to Eurodollar Rate Loans to Borrowers based on the Eurodollar
Rate applicable for the Interest Period selected by Borrowers as in effect three
(3) Business Days after the date of receipt by Lender of the request of
Borrowers for such Eurodollar Rate Loans in accordance with the terms hereof,
whether such rate is higher or lower than any rate previously quoted to
Borrowers); provided, that:
(i) subject to the terms and conditions set forth herein, the Interest
Rate shall be reduced as follows:
(A) as to Eurodollar Rate Revolving Loans, to a rate equal to two
(2%) percent per annum in excess of the Adjusted Eurodollar Rate, as to
Eurodollar Rate Supplemental Loans, to a rate equal to two and one-quarter
(2-1/4%) percent per annum in excess of the Adjusted Eurodollar Rate and as to
Prime Rate Supplemental Loans, to a rate equal to the Prime Rate per annum, in
each case effective on the first day of the month, after each of the following
conditions is satisfied as determined by Agent: (1) either: (aa) Pamida shall
have received not less than $15,000,000 in cash or other immediately available
funds either as the net proceeds from the one time issuance and sale by Pamida
to Holdings of shares of common stock of Pamida (which sale shall be on terms
acceptable to Agent) or as a contribution to the capital of Pamida by Holdings,
in either case with proceeds received by Holdings from the sale of equity
securities, which funds shall be available to Borrowers for working capital or
the development of new retail store locations of Borrowers and other related
operating facilities pursuant to the purchase of land for such stores or other
facilities and the construction of the stores or other facilities on such land
or (bb) the Consolidated Pre- Tax Net Income of Pamida and its Subsidiaries for
the fiscal year of Pamida ending on or about January 31, 1999 as set forth in
the audited financial statements of Pamida and its Subsidiaries for such fiscal
year delivered to Agent, together with the unqualified opinion of the
independent certified public accountants of Borrowers, in accordance with
Section 7.17 hereof, shall be not less than $6,624,000 and (2) no Event of
Default, or act, condition or event which with notice or passage of time or both
would constitute an Event of Default, shall exist or have occurred and be
continuing;
(B) as to Eurodollar Rate Revolving Loans, to a rate equal to one
and three- quarters (1-3/4%) percent per annum in excess of the Adjusted
Eurodollar Rate, as to
10
Eurodollar Rate Supplemental Loans, to a rate equal to two (2%) percent per
annum in excess of the Adjusted Eurodollar Rate (in the event that the rates for
such Loans have previously been reduced pursuant to clause (A) of the definition
above and if not, then as to Eurodollar Rate Revolving Loans, to a rate equal to
two (2%) percent per annum in excess of the Adjusted Eurodollar Rate and as to
Eurodollar Rate Supplemental Loans, to a rate equal to two and one-quarter (2
1/4%) percent per annum in excess of the Adjusted Eurodollar Rate) and as to
Prime Rate Supplemental Loans, to a rate equal to the Prime Rate per annum (if
such rate has not already been so reduced pursuant to clause (A) of this
definition above), in each case effective as of the first day of the month after
each of the following conditions is satisfied as determined by Agent: (1) either
(aa) if Pamida shall not have received $15,000,000 or more in cash or other
immediately available funds as described in clause (A)(1)(aa) of this definition
above during the fiscal year of Pamida ending on or about January 31, 1999, then
if Pamida shall have received not less than $15,000,000 in cash or other
immediately available funds either as the net proceeds from the one time
issuance and sale by Pamida to Holdings of shares of common stock of Pamida
(which sale shall be on terms acceptable to Agent) or as a contribution to the
capital of Pamida by Holdings, in either case with proceeds received by Holdings
from the sale of equity securities, which funds shall be available to Borrowers
for working capital or the development of new retail store locations of
Borrowers and other related operating facilities pursuant to the purchase of
land for such stores or other facilities and the construction of the stores or
other facilities on such land or (bb) the Consolidated Pre-Tax Net Income of
Pamida and its Subsidiaries for the fiscal year of Pamida ending on or about
January 31, 2000 as set forth in the audited financial statements of Pamida and
its such Subsidiaries for such fiscal year delivered to Agent, together with the
unqualified opinion of the independent certified public accountants of
Borrowers, in accordance with Section 7.17 hereof, shall be not less than the
greater of $6,624,000 or the amount equal to eighty (80%) percent of the
Consolidated Pre-Tax Net Income of Pamida and its Subsidiaries for the fiscal
year of Pamida ending on or about January 31, 2000 as set forth in the projected
statements of income and balance sheets of Pamida and its Subsidiaries received
by Agent pursuant to Section 7.17(a)(vi) hereof and (2) no Event of Default, or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred and be continuing;
(ii) notwithstanding anything to the contrary contained in this
Agreement or in any of the other Financing Agreements, the Interest Rate, as to
Prime Rate Loans and Eurodollar Rate Loans, shall mean the rate two (2%) percent
per annum more than the otherwise then applicable Interest Rate, at Lender's
option, without notice, (A) for the period from and after the date of the
occurrence of any Event of Default, and for so long as such Event of Default is
continuing, and (B) on Revolving Loans at any time outstanding in excess of the
Revolving Credit Availability and on Supplemental Loans at any time outstanding
in excess of the Supplemental Credit Availability (whether or not such
excess(es) arise or are made with or without Agent's or any Lender's knowledge
or consent and whether made before or after an Event of Default).
11
1.44 "Interest Rate Protection Obligations" shall mean the obligations of
any Person pursuant to any arrangement with any other Person whereby, directly
or indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
1.45 "Inventory" shall mean all of Borrowers' now owned and hereafter
acquired inventory, wherever located, including, without limitation, all raw
materials, work-in-process, finished and semi-finished inventory of any kind,
nature or description, including, without limitation, all wrapping, packaging,
advertising and shipping materials, and any other personal property held for
sale, exchange or lease or furnished or to be furnished or used or consumed in
the business or in connection with the manufacturing, packaging, shipping,
advertising, selling or furnishing of such goods, inventory, merchandise and
other personal property, and all names or marks affixed to or to be affixed
thereto for purposes of selling same by the seller, manufacturer, lessor or
licensor thereof and all right, title and interest therein and thereto, and the
proceeds (including, without limitation, all proceeds of insurance with respect
thereto, including the proceeds of any applicable casualty insurance) and
products of all of the foregoing; and all ledgers, books of account, records,
computer printouts, computer runs, and other computer prepared information
relating to any of the foregoing.
1.46 "Lenders" shall mean, individually and collectively, Congress and BABC
and their respective successors and assigns.
1.47 "Letter of Credit Accommodations" shall mean the letters of credit and
merchandise purchase or other guaranties which are from time to time either (a)
issued or opened by Agent on behalf of Lenders for the account of a Borrower or
any Obligor or (b) with respect to which Agent on behalf of Lenders has agreed
to indemnify the issuer or guaranteed to the issuer the performance by a
Borrower of its obligations to such issuer (including, without limitation, the
Existing Letters of Credit).
1.48 "Loans" shall mean Revolving Loans and Supplemental Loans.
1.49 "Maximum Credit" shall mean $125,000,000.
1.50 "Mortgages" shall mean, individually and collectively, each of the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Deed of Trust,
Security Agreement, Financing Statement and Assignment of Rents, dated March 30,
1993, by Pamida in favor of Agent, with respect to the Omaha Real Property
(other than the real property located at ▇▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇) and
(b) the Leasehold Deed of Trust, Security Agreement, Financing Statement and
Assignment of Rents, dated March 30, 1993, by Pamida in favor of Agent, with
respect to the real property and related assets of Pamida located at ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
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1.51 "Net Recovery Cost Percentage" shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the expected
recovery on the aggregate amount of the Inventory at such time on a "going out
of business sale" basis as set forth in the most recent acceptable appraisal of
Inventory received by Agent in accordance with Section 7.14, net of operating
expenses, liquidation expenses and commissions, and (b) the denominator of which
is the original cost of the aggregate amount of the Inventory subject to
appraisal.
1.52 "Note Indenture" shall mean the Indenture, dated as of March 15, 1993,
by and among Pamida, as issuer, Holdings, as guarantor and State Street Bank and
Trust Company, as trustee in connection with the Senior Subordinated Notes, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.53 "Obligations" shall mean all obligations, liabilities and indebtedness
of every kind, nature and description owing by either or both of Borrowers to
Agent and/or either or both of Lenders and any Participant, including principal,
interest, charges, fees, premiums, indemnities and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, whether arising
hereunder, under the other Financing Agreements or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term hereof or after the commencement of any case with
respect to Borrowers under the U.S. Bankruptcy Code or any similar statute (and
including, without limitation, any principal, interest, fees, costs, expenses
and other amounts, whether or not such amounts are allowable either in whole or
in part, in any such case or similar proceeding), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured, original, renewed or extended
and whether arising directly or howsoever acquired by Agent and/or Lenders,
including from any other person outright, conditionally or as collateral
security, by assignment, merger with any other person, participations or
interests of Agent or Lenders in the obligations of Borrowers to others,
assumption, operation of law, subrogation or otherwise. Without limiting the
generality of the foregoing, "Obligations" shall include: (a) Borrowers'
liability to Agent or Lenders for all balances owing to Lenders in any account
maintained on Agent's or Lenders' books under this Agreement or the other
Financing Agreements, (b) Borrowers' liability to Agent or Lenders as maker or
endorser of any promissory note or other instrument for the payment of money,
Borrowers' liability to Agent or Lenders under any instrument of guarantee or
indemnity, or arising under or with respect to any letter of credit, acceptance,
instrument, guarantee, endorsement or undertaking which Agent or Lenders may
make, endorse or issue to others for the account of Borrowers, (c) Indebtedness
owing by Borrowers to Agent or Lenders or to present or future Affiliates or
Participants of or with Agent or Lenders arising under or in connection with any
of the foregoing types of agreements, instruments or transactions, and (d) all
principal, interest, financing charges, early termination and other fees,
commissions and expenses payable to Agent or Lenders, including, but not limited
to, attorneys' and accountants' fees and disbursements chargeable to Borrowers
and due from Borrowers under this Agreement or the other Financing Agreements.
13
1.54 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrowers.
1.55 "Omaha Real Property" shall mean the real property of Pamida, together
with all buildings, structures, and other improvements located thereon and all
licenses, easements and appurtenances relating thereto, located at ▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ I Street, Omaha,
Nebraska and ▇▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
1.56 "Participant" shall mean any Person which at any time participates
with either of Lenders in respect of the Revolving Loans, the Supplemental
Loans, the Letter of Credit Accommodations or other Obligations or any portion
thereof.
1.57 "Payment Account" shall have the meaning set forth in Section 9.1
hereof.
1.58 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any subchapter "S"
corporation, as defined in the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.59 "Prime Rate" shall mean the rate from time to time publicly announced
by First Union National Bank, or its successors, as its prime rate, whether or
not such announced rate is the best rate available at such bank.
1.60 "Prime Rate Loans" shall mean, individually and collectively, the
Prime Rate Revolving Loans and the Prime Rate Supplemental Loans.
1.61 "Prime Rate Revolving Loans" shall mean any Revolving Loans or portion
thereof on which interest is payable based on the Prime Rate in accordance with
the terms thereof.
1.62 "Prime Rate Supplemental Loans" shall mean any Supplemental Loans or
portion thereof on which interest is payable based on the Prime Rate in
accordance with the terms thereof.
1.63 "Provision for Taxes" shall mean with respect to any fiscal year of
any Person and its Subsidiaries, an amount equal to all taxes imposed on or
measured by net income, whether Federal, State or local, and whether foreign or
domestic, that are paid or payable by any Person and its Subsidiaries in respect
of such fiscal year on a consolidated basis in accordance with GAAP.
1.64 "Reference Bank" shall mean First Union National Bank, or such other
bank as Agent may from time to time designate, provided, that, such other bank
is a member of the
14
Federal Reserve System and has combined capital and surplus and undivided
profits of not less than $250,000,000.
1.65 "Refinancing Indebtedness" shall have the meaning set forth in Section
7.3(k) hereof.
1.66 "Renewal Date" shall have the meaning set forth in Section 10.2(a)
hereof.
1.67 "Revolving Credit Availability" shall mean, at any time, (a) the
lesser of (i) the amount of the Revolving Loans available to Borrowers as of
such time calculated based on the applicable lending percentage multiplied by
the Value of Eligible Inventory, as set forth in Section 3.1 hereof, as
determined in good faith by Agent, or (ii) the Revolving Credit Facility Limit
minus (b) the reserves established pursuant to Section 3.7 hereof allocated by
Agent to the Revolving Credit Facility at such time. The term "Revolving Credit
Availability" is used herein to mean the amount of Revolving Loans available
without any reduction for the amount of Revolving Loans or Letter of Credit
Accommodations then outstanding.
1.68 "Revolving Credit Facility" shall mean the secured revolving line of
credit provided by Lenders to Borrowers consisting of the Revolving Loans and
Letter of Credit Accommodations as provided for hereunder and under the other
Financing Agreements.
1.69 "Revolving Credit Facility Limit" shall mean, at any time, the amount
equal to (a) the Maximum Credit minus (b) the then outstanding Obligations
arising pursuant to the Supplemental Loans.
1.70 "Revolving Loans" shall mean the secured loans and advances at any
time made by Agent for and on behalf of Lenders to Borrowers or for the benefit
of Borrowers pursuant to the Revolving Credit Facility as provided in Section
3.1 hereof, on a revolving basis (involving advances, repayments and
readvances), subject to the terms and conditions of this Agreement and the other
Financing Agreements.
1.71 "Sale-Leaseback Transaction" shall mean any arrangement with any
Person providing for the leasing by Borrowers or any Subsidiary of Borrowers of
any real or tangible personal property, which property has been or is to be sold
or transferred by Borrowers or such Subsidiary to such Person in contemplation
of such leasing.
1.72 "Senior Subordinated Notes" shall mean, individually and collectively,
the 11 3/4% Senior Subordinated Notes due 2003 issued by Pamida pursuant to the
Note Indenture, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated, or replaced.
1.73 "Subsidiary" or "subsidiary" shall mean any corporation, association
or organization, active or inactive, as to which more than fifty (50%) percent
of the outstanding voting stock or shares or interests shall now or hereafter be
owned or controlled, directly or indirectly, by Borrowers, any Subsidiary of
Borrowers, or any Subsidiary of such Subsidiary.
15
1.74 "Supplemental Credit Availability" shall mean, at any time, (a) the
lesser of (i) the amount of the Supplemental Loans available to Borrowers as of
such time calculated based on the applicable percentages multiplied by the value
of the Eligible Real Property and the Value of Eligible Inventory as set forth
in Section 3.2 hereof, as determined in good faith by Agent, or (ii) the
Supplemental Credit Facility Limit minus (b) the reserves established pursuant
to Section 3.7 hereof allocated by Agent to the Supplemental Credit Facility at
such time. The term "Supplemental Credit Availability" is used herein to mean
the amount of Supplemental Loans available without any reduction for the amount
of Supplemental Loans then outstanding.
1.75 "Supplemental Credit Facility" shall mean the secured revolving line
of credit provided by Lenders to Borrowers consisting of the Supplemental Loans
as provided for hereunder and under the other Financing Agreements.
1.76 "Supplemental Credit Facility Limit" shall mean $25,000,000.
1.77 "Supplemental Loans" shall mean the secured loans and advances at any
time made by Agent for and on behalf of Lenders to Borrowers or for the benefit
of Borrowers pursuant to the Supplemental Credit Facility as provided in Section
3.2 hereof, on a revolving basis (involving advances, repayments and
readvances), subject to the terms and conditions of this Agreement and the other
Financing Agreements.
1.78 "Tradename" shall have the meaning set forth in Section 7.1 hereof.
1.79 "Transportation" shall mean Pamida Transportation Company, a Nebraska
corporation, and its successors and assigns.
1.80 "UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
1.81 "Value" or "value" shall mean, as determined by Agent, with respect to
the Eligible Inventory, the lower of (a) cost computed on a first-in-first-out
basis in accordance with GAAP consistently applied or (b) market value, as
determined by Agent in good faith.
1.82 "Weighted Average Life to Maturity" shall mean, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the product obtained
by multiplying (i) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (ii) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment.
1.83 ACCOUNTING TERMS. All accounting terms used in this Agreement which
are not specifically defined herein shall be construed in accordance with GAAP,
consistently applied, except as otherwise stated herein.
16
1.84 OTHER DEFINED TERMS. The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.85 UNIFORM COMMERCIAL CODE DEFINITIONS. All terms used herein which are
not specifically defined herein which are defined or used in the UCC shall have
the meanings given or used in the UCC.
1.86 INTERPRETATION. For purposes of this Agreement, unless the context
otherwise requires, all other terms hereinbefore or hereinafter defined,
including but not limited to those terms defined in the recitals hereto, shall
have the meanings herein assigned to such terms. All references to Borrowers
wherever used herein shall mean both and each of them and their respective
successors and assigns, individually and collectively, jointly and severally.
All references to any other Persons pursuant to the definitions set forth in the
recitals hereto or otherwise shall include their respective successors and
assigns. All references to any term in the plural shall include the singular and
all references to any term in the singular shall include the plural, unless the
context otherwise requires.
SECTION 2. ACKNOWLEDGMENT AND RESTATEMENT
2.1 EXISTING OBLIGATIONS. Each of Borrowers hereby acknowledges, confirms
and agrees that Borrowers are indebted to Agent and Lenders, as of the close of
business on June 30, 1998, for loans and advances to Borrowers under the
Existing Agreement in the aggregate principal amount of $45,924,236.35 and for
Letter of Credit Accommodations in the aggregate amount of $7,215,779.30,
together with all interest accrued and accruing thereon (to the extent
applicable), and all fees, costs, expenses and other charges relating thereto,
all of which are unconditionally owing by Borrowers to Agent and Lenders,
without offset, defense or counterclaim of any kind, nature or description
whatsoever. Without limiting the generality of the foregoing, each of Borrowers
hereby acknowledges, confirms and agrees that its Guarantee of the Obligations
of the other Borrower to Agent and Lenders is in full force and effect as of the
date hereof, and its obligations thereunder are unconditionally owing to Agent
and Lenders, without offset, defense or counterclaim of any kind, nature or
description whatsoever.
2.2 ACKNOWLEDGMENT OF SECURITY INTERESTS.
(a) Each of Borrowers hereby acknowledges, confirms and agrees that
each of Agent and Lenders has and shall continue to have a security interest in
and lien upon the Collateral heretofore granted to each of Agent and Lenders
pursuant to the Existing Agreement to secure the Obligations, as well as any
Collateral granted under this Agreement or under any of the other Financing
Agreements or otherwise granted to or held by Agent or any Lender.
17
(b) The liens and security interests of Agent and Lenders in the
Collateral shall be deemed to be continuously granted and perfected from the
earliest date of the granting and perfection of such liens and security
interests, whether under the Existing Agreement, this Agreement or any of the
other Financing Agreements.
2.3 EXISTING AGREEMENT. Each of Borrowers hereby acknowledges, confirms and
agrees that: (a) the Existing Agreement has been duly executed and delivered by
Borrowers and is in full force and effect as of the date hereof; (b) the
agreements and obligations of Borrowers contained in the Existing Agreement
constitute the legal, valid and binding obligations of each of Borrowers
enforceable against it in accordance with their respective terms and Borrowers
have no valid defense to the enforcement of such obligations; and (c) Agent and
Lenders are entitled to all of the rights and remedies provided for in the
Existing Agreement.
2.4 RESTATEMENT.
(a) Except as otherwise stated in Section 2.2 hereof and this Section
2.4, as of the date hereof, the terms, conditions, agreements, covenants,
representations and warranties set forth in the Existing Agreement are hereby
amended and restated in their entirety, and as so amended and restated, replaced
and superseded, by the terms, conditions, agreements, covenants, representations
and warranties set forth in this Agreement and the other Financing Agreements,
except that nothing herein or in the other Financing Agreements shall impair or
adversely affect the continuation of the liability of Borrowers for the
Obligations evidenced by or arising under the Existing Agreement or the security
interests, liens and other interests in the Collateral heretofore granted,
pledged and/or assigned to Agent or any Lender. The amendment and restatement
contained herein shall not, in any manner, be construed to constitute payment
of, or impair, limit, cancel or extinguish, or constitute a novation in respect
of, the Indebtedness and other obligations and liabilities of Borrowers
evidenced by or arising under the Existing Agreement, and the liens and security
interests securing such Indebtedness and other obligations and liabilities,
which shall not in any manner be impaired, limited, terminated, waived or
released.
(b) The principal amount of the Loans and Letter of Credit
Accommodations outstanding as of the date hereof under the Existing Agreement
shall be allocated to the Loans and Letter of Credit Accommodations hereunder in
the same amounts as are outstanding as of the date hereof, and as between
Revolving Loans and Supplemental Loans in such amounts as Pamida may request,
subject to the terms and conditions hereof, or if Agent does not receive such
request as of the date hereof, then as Agent shall determine.
2.5 RELEASE. Each of Borrowers, for itself and its successors and assigns,
does hereby remise, release, discharge and hold Agent and each Lender, its
officers, directors, agents and employees and their respective predecessors,
successors and assigns harmless from all claims, demands, debts, sums of money,
accounts, damages, judgments, financial obligations, actions, causes of action,
suits at law or in equity, of any kind or nature whatsoever, whether or not now
existing or known, which Borrowers, or their respective successors or assigns
has had or
18
may now or hereafter claim to have against Agent or any Lender or its officers,
directors, agents and employees and their respective predecessors, successors
and assigns in any way arising from or connected with the Existing Agreement or
the arrangements set forth therein or transactions thereunder up to and
including the date hereof (except as to the specific exceptions of Borrowers to
charges for interest, fees, costs and expenses set forth in the most recent
monthly statement of Borrowers' loan account sent by Agent to Borrowers pursuant
to Section 3.10(g) hereof, which statement shall be presumed correct, except to
the extent Agent receives such specific exceptions within forty-five (45) days
after the date of such statement).
SECTION 3. CREDIT FACILITIES
3.1 REVOLVING CREDIT FACILITY.
(a) Subject to, and upon the terms and conditions contained herein and
in the other Financing Agreements, each of Lenders severally, but not jointly,
agrees to lend to Borrowers and authorizes and appoints Agent to make Revolving
Loans to Borrowers, for the account of and as Agent for Lenders, from time to
time in amounts requested by Borrowers up to the amount equal to: (i) the lesser
of (A) sixty-five (65%) percent of the Value of the Eligible Inventory of
Borrowers or (B) the Revolving Credit Facility Limit, minus (ii) any reserves
established pursuant to Section 3.7 hereof allocated by Agent to the Revolving
Credit Facility.
(b) Agent may, from time to time, upon not less than three (3) days
prior notice to Borrowers, reduce the lending formula with respect to Eligible
Inventory set forth above to the extent that Agent determines in good faith that
the nature, quality or mix of the Inventory has deteriorated. In determining
whether to reduce the lending formula, Agent may consider events, conditions,
contingencies or risks which are also considered in determining Eligible
Inventory or in establishing reserves. To the extent Agent shall have
established a reserve which is sufficient to address any event, condition or
matter in a manner satisfactory to Agent in good faith, Agent shall not also
exercise its rights under this Section 3.1(b) to reduce the lending formulas to
address such event, condition or matter. The amount of any reduction in the
lending formula by Agent pursuant to this Section 3.1(b) shall have a reasonable
relationship to the matter which is the basis for such a reduction.
3.2 SUPPLEMENTAL CREDIT FACILITY. Subject to, and upon the terms and
conditions contained herein and in the other Financing Agreements, each of
Lenders severally, but not jointly, agrees to lend to Borrowers and authorizes
and appoints Agent to make Supplemental Loans to Borrowers, for the account of
and as Agent for Lenders, from time to time in amounts requested by Borrowers up
to the amount equal to: (a) the lesser of (i) the amount equal to the sum of:
(A) seventy (70%) percent of the fair market value of the Eligible Real Property
as set forth in the most recent appraisal of the Real Property received by Agent
in form, scope and methodology acceptable to Agent and Lenders by an appraiser
acceptable to Agent and Lenders addressed to Agent and on which Agent is
expressly permitted to rely, plus (B) ten (10%) percent of the Value of the
Eligible Inventory or (ii) the Supplemental
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Credit Facility Limit, MINUS (b) any reserves established pursuant to Section
3.7 hereof allocated by Agent to the Supplemental Credit Facility.
3.3 LETTER OF CREDIT ACCOMMODATIONS.
(a) Subject to, and upon the terms and conditions contained herein, at
the request of Pamida, Agent agrees, for the ratable risk of Lenders, to provide
or arrange for Letter of Credit Accommodations to be issued for the account of
Borrowers containing terms and conditions acceptable to Agent and the issuer
thereof.
(b) The extension of such Letter of Credit Accommodations by Agent
shall be subject to the satisfaction of each of the following additional
conditions precedent: (i) the Excess Availability on the date of the proposed
issuance of the Letter of Credit Accommodations shall be equal to or greater
than: (A) if the proposed Letter of Credit Accommodation is for the purpose of
purchasing Eligible Inventory, the sum of (1) the percentage equal to one
hundred (100%) percent minus the applicable percentage set forth in Section 3.1
multiplied by the landed cost of such Eligible Inventory, plus (2) the freight,
taxes, duty and other amounts which Agent estimates must be paid for or in
connection with such Inventory upon arrival and for delivery to and within the
United States of America and (B) if the proposed Letter of Credit Accommodation
is for any other purpose, one hundred (100%) percent of the face amount thereof
and all other commitments and obligations made or incurred by Agent or Lenders
with respect thereto, (ii) if any of such Letter of Credit Accommodations is for
the purpose of purchasing goods, Agent and Lenders shall have a valid and
perfected first security interest in and lien upon goods being acquired in
connection therewith, (iii) the form and content of all such Letter of Credit
Accommodations shall be reasonably satisfactory to Agent and all documents,
instruments, notices and statements relating thereto, if any, which Agent may
reasonably request, shall be promptly delivered to Agent; and (iv) Borrowers
shall have fully complied to Agent's reasonable satisfaction with all terms and
provisions hereof and of the terms and provisions of any agreements relating to
the Letter of Credit Accommodations in form and substance acceptable to Agent or
Lenders now or hereafter entered into between Borrowers, Agent and Lenders,
including the payment of all fees, commissions and charges set forth herein and
therein.
(c) Borrowers hereby agree to and do indemnify Agent and each of
Lenders with respect to any loss, cost, liability or expense which Agent and
either of Lenders may suffer or incur in connection with the Letter of Credit
Accommodations. Borrowers further agree that any payments made or other
obligations incurred by Agent or Lenders in connection with Letter of Credit
Accommodations are part of the Obligations, and shall be payable in accordance
with the terms hereof and of the other Financing Agreements. Any such payments
made or obligations incurred by Agent on behalf of Lenders, including, without
limitation, any of the same made after termination or non-renewal of this
Agreement or the other Financing Agreements with respect to Letter of Credit
Accommodations provided to Borrowers prior to such termination or non-renewal,
shall automatically be treated for purposes hereof as Revolving Loans and shall
accrue interest at the Interest Rate with respect
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to Revolving Loans then payable by Borrowers commencing on the date such payment
is made by Agent.
(d) Effective on the issuance of each Letter of Credit Accommodation,
the Revolving Credit Availability shall be reduced in an amount equal to the
following: (i) if the Letter of Credit Accommodation is for the purpose of
purchasing Eligible Inventory, then by an amount equal to the sum of (A) the
percentage equal to one hundred (100%) percent minus the then applicable
percentage set forth in Section 3.1 multiplied by the landed cost of such
Eligible Inventory, plus (B) freight, taxes, duty and other amounts which Agent
reasonably estimates must be paid for and in connection with such Inventory upon
arrival and for delivery to and within the United States of America and (ii) if
the Letter of Credit Accommodation is for any other purpose, then by an amount
equal to one hundred (100%) percent of the face amount thereof and all other
commitments and obligations made or incurred by Agent or Lenders with respect
thereto.
(e) In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations (including any
charges, fees or expenses of First Union National Bank as the issuer of any
Letter of Credit Accommodation as set forth in the schedule of charges, fees or
expenses furnished by Agent to Borrowers), Borrowers shall pay to Agent for the
ratable benefit of Lenders a letter of credit fee at a rate equal to one (1%)
percent per annum on the daily outstanding balance of the Letter of Credit
Accommodations for the immediately preceding month (or part thereof), payable in
arrears as of the first day of each succeeding month, except that Agent may
require Borrowers to pay to Agent for the ratable benefit of Lenders, such
letter of credit fee, effective upon the date of written notice from Agent to
Borrowers, at Agent's option, at a rate equal to two (2%) percent per annum for
(i) the period from and after the date of termination or non-renewal hereof
until Agent and Lenders have received full and final payment of all Obligations
(notwithstanding entry of a judgment against Borrowers) and (ii) the period from
and after the date of the occurrence of an Event of Default and for so long as
such Event of Default is continuing. Such letter of credit fee shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed, and the obligation of Borrowers to pay such fee shall survive the
termination or non-renewal of this Agreement.
(f) Notwithstanding anything to the contrary contained herein or in
any of the other Financing Agreements, except in Agent's discretion, the
aggregate amount of all Letter of Credit Accommodations pursuant hereto and all
other commitments and obligations made or incurred by Agent or Lenders pursuant
hereto for the account or benefit of Borrowers in connection therewith
outstanding at any time shall not exceed $30,000,000.
3.4 LOAN LIMITS; REVOLVING CREDIT FACILITY LIMIT; SUPPLEMENTAL CREDIT
FACILITY LIMIT.
(a) Except in Agent's discretion, the aggregate unpaid principal
amount of the Loans outstanding at any time plus all then outstanding Letter of
Credit Accommodations (and all other commitments and obligations made or
incurred by Agent or Lenders with respect to such Letter of Credit
Accommodations) shall not exceed the least of: (i) the
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Maximum Credit or (ii) the amount equal to ninety (90%) percent of the Net
Recovery Cost Percentage multiplied by the Value of the Eligible Inventory or
(iii) so long as any of the Senior Subordinated Notes are outstanding and
unpaid, the amount equal to the aggregate of ninety (90%) percent of the net
book value of the accounts receivable of Pamida and its Subsidiaries and sixty
(60%) percent of the net book value of the Inventory (on a FIFO basis) of Pamida
and its Subsidiaries (or in the event that the Senior Subordinated Notes have
been repaid with proceeds of Refinancing Indebtedness, such other amount as is
permitted under the terms of the Refinancing Indebtedness).
(b) Except in Agent's discretion, the aggregate unpaid principal
amount of the Revolving Loans outstanding at any time plus all then outstanding
Letter of Credit Accommodations (and all other commitments made or incurred by
Agent or Lenders with respect to such Letter of Credit Accommodations) shall not
exceed the Revolving Credit Facility Limit.
(c) Except in Agent's discretion, the aggregate unpaid principal
amount of the Supplemental Loans outstanding at any time shall not exceed the
Supplemental Credit Facility Limit.
3.5 COMMITMENTS. The Commitments of the Lenders shall be the respective
maximum amounts set forth below each Lender's signature on the signature pages
hereto, as the same may from time to time be amended with the written
acknowledgment and consent of Agent. The aggregate unpaid principal amount of
Loans and outstanding Letter of Credit Accommodations (and all other commitments
and obligations made or incurred by Agent or Lenders with respect to such Letter
of Credit Accommodations), made or provided by Agent to Borrowers for the
account of and as agent for each Lender, shall not exceed such Lender's
respective Commitment Percentage with respect to such amount.
3.6 MANDATORY PREPAYMENTS.
(a) In the event that the outstanding aggregate amount of the
Revolving Loans and the Letter of Credit Accommodations exceeds the Revolving
Credit Availability, or the outstanding aggregate amount of the Supplemental
Loans exceeds the Supplemental Credit Availability, or the aggregate amount of
the Loans and the Letter of Credit Accommodations outstanding at any time
exceeds the Maximum Credit (or if less, the amounts calculated under Sections
3.4(b) and 3.4(c) above), such event shall not limit, waive or otherwise affect
any rights of Agent and Lenders in that circumstance or on any future occasions
and Borrowers shall, upon demand by Agent, which may be made at any time or from
time to time, immediately repay to Agent, for the ratable benefit of Lenders,
the entire amount of any such excess(es) for which payment is demanded or in the
case of Letter of Credit Accommodations, provide cash collateral to Agent (for
itself and the ratable benefit of Lenders) in such amount.
(b) Subject to Section 10.2(e) hereof, all such payments in respect of
the Loans pursuant to this Section 3.6 shall be without premium or penalty. All
interest accrued on the
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principal amount of the Loans paid pursuant to this Section 3.6 shall be paid,
or may be charged by Agent to any of the loan account(s) of Borrowers, at
Agent's option, on the date of such payment.
3.7 Reserves. Without limiting any other rights and remedies of Agent and
Lenders hereunder or under the other Financing Agreements, all Loans and Letter
of Credit Accommodations otherwise available to Borrowers shall be subject to
the right of Agent to from time to time establish and revise in good faith
reserves reducing the amount of Loans and Letter of Credit Accommodations that
would otherwise be available to Borrowers: (a) to reflect events, conditions or
contingencies that, as determined by Agent in good faith, adversely affect or
have a reasonable likelihood of adversely affecting either (i) the Collateral or
any other property which is security for the Obligations, its value or the
amount which may be realized by Agent or Lenders from the sale or other
disposition thereof, or (ii) the assets or financial condition of Borrowers or
any Obligor, or (iii) the security interests and other rights of Agent or
Lenders in the Collateral (including the enforceability, perfection and priority
thereof), or (b) to reflect Agent's good faith belief that any collateral report
or financial information furnished by or on behalf of Borrowers or any Obligor
to Agent is or may have been incomplete, inaccurate or misleading, or (c) in
respect of any state of facts which Agent determines in good faith constitutes
an Event of Default or may, with notice or passage of time or both, constitute
an Event of Default, or (d) to reflect inventory shrinkage (which reserve as of
the date hereof is equal to two (2%) percent of the Inventory, provided, that,
prior to an Event of Default such reserve shall not be greater than an amount
equal to twice the amount of reserves which Borrowers are required to maintain
for inventory shrinkage under GAAP, except that in no event shall such reserve
be less than an amount equal to one and one-half (1 1/2%) percent of the
Inventory), or (e) to reflect markdowns with respect to the sales price of
Inventory, or (f) to reflect amounts due or to become due in respect of sales,
use and/or withholding taxes, provided, that, a reserve pursuant to this Section
3.7(f) will only be established if (i) Excess Availability (without giving
effect to any reserve for such amounts) shall be less than $1,000,000, or (ii)
an Event of Default or act, condition or event which with notice or passage of
time or both would constitute an Event of Default, shall exist or have occurred
and be continuing, or (g) to reflect any rental payments, service charges or
other amounts due to lessors of real or personal property to the extent
Inventory or Records are located in or on such property or such Records are
needed to monitor or otherwise deal with the Collateral, or (h) to reflect
amounts owing by Borrowers to credit card issuers or credit card processors. To
the extent Agent may revise the lending formula set forth in Section 3.1 hereof
or establish new criteria or revise existing criteria for Eligible Inventory so
as to address any circumstance, condition, event or contingency in a manner
satisfactory to Agent, Agent shall not also establish a reserve for the same
purpose. The amount of any reserve established by Agent shall have a reasonable
relationship to the event, condition or other matter which is the basis for such
reserve as determined by Agent in good faith.
3.8 FEES.
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(a) Borrowers shall pay to Agent, for the account of Lenders, a
restructuring fee of $50,000, which fee is fully earned and payable as of the
date hereof.
(b) Borrowers shall pay to Agent, for the account of Lenders, an
annual facility fee of $50,000 for each year or part thereof during the term of
this Agreement and for so long thereafter as any of the Obligations are
outstanding, which fee shall be fully earned as of and payable in advance on the
date hereof and on each anniversary of the date hereof.
(c) Borrowers shall pay monthly to Agent, for the account of Lenders,
an unused line fee at a rate equal to one-half of one (1/2 of 1%) percent per
annum calculated upon the amount (if any) by which (i) $75,000,000 exceeds (ii)
the average aggregate daily principal balance of the Loans and Letter of Credit
Accommodations outstanding during the immediately preceding month (or part
thereof) while this Agreement is in effect and for so long thereafter as any of
the Obligations are outstanding, which fee shall be payable on the first day of
each month in arrears.
(d) Borrower shall pay monthly to Agent, for its own account, a
servicing fee in an amount equal to $6,000, for each month or part thereof
during the term of this Agreement and for so long thereafter as any of the
Obligations are outstanding, which fee shall be fully earned as of and payable
in advance on the date hereof and on the first day of each month hereafter.
(e) The fees provided for in this Section 3.8 shall be in addition to
all other amounts payable by Borrowers under this Agreement and the other
Financing Agreements and shall constitute part of the Obligations. Such fees
may, at Agent's option, be charged directly to any account(s) of Borrowers
maintained with Agent.
3.9 INTEREST.
(a) Borrowers shall pay to Agent for the account of Lenders interest
on the outstanding principal amount of Loans and other non-contingent
Obligations at the Interest Rate. All interest accruing hereunder on and after
the date of any Event of Default or termination or non-renewal hereof shall be
payable on demand.
(b) Borrowers may from time to time request that Prime Rate Loans be
converted to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans
continue for an additional Interest Period. Such request from Borrowers shall
specify the amount of the Prime Rate Loans to be converted to Eurodollar Rate
Loans (subject to the limits set forth below) and the Interest Period to be
applicable to such Eurodollar Rate Loans. Subject to the terms and conditions
contained herein, three (3) Business Days after receipt by Agent of such a
request from Borrowers, such Prime Rate Loans shall be converted to Eurodollar
Rate Loans or such Eurodollar Rate Loans shall continue, as the case may be,
provided, that, (i) no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default exists or
has occurred and is continuing, (ii) no party hereto shall have sent any notice
of termination or non-renewal of this Agreement,
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(iii) Borrowers shall have complied with such customary procedures as are
established by Agent and specified by Agent to Borrowers from time to time for
requests by Borrowers for Eurodollar Rate Loans (that are not inconsistent with
the procedures otherwise set forth herein for such requests), (iv) no more than
four (4) Interest Periods may be in effect at any one time, (v) the aggregate
amount of the Eurodollar Rate Loans must be in an amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, (vi) after
giving effect to the requested conversions(s) and/or continuance(s), the maximum
principal amount of the Eurodollar Rate Loans at any time outstanding during the
applicable Interest Period shall not exceed the amount equal to the lesser of
(A) the principal amount of $100,000,000 or (B) eighty (80%) percent of the
daily average of the principal amount of all Loans which it is anticipated will
be outstanding at any time during the applicable Interest Period, in each case
as determined by Agent and (vii) the Interest Period and Adjusted Eurodollar
Rate are available to Agent and Lenders and can be readily determined as of the
Business Day immediately following the date of the request for such Eurodollar
Rate Loan by Borrowers, provided, that, in the event such Interest Period and
Adjusted Eurodollar Rate are not available to any Lender, such Lender shall give
Agent two (2) Business Days prior written notice, and Agent shall so notify
Borrowers, and Agent and Lenders shall not be required to provide such requested
Eurodollar Rate Loan. Any request by Borrowers to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary contained herein Agent,
Lenders and Reference Bank shall not be required to purchase United States
Dollar deposits in the London interbank market or other applicable Eurodollar
Rate market to fund any Eurodollar Rate Loans, but the provisions hereof shall
be deemed to apply as if Agent, Lenders and Reference Bank had purchased such
deposits to fund the Eurodollar Rate Loans.
(c) Any Loans which are Eurodollar Rate Loans shall automatically
convert to Prime Rate Loans upon the last day of the applicable Interest Period,
unless Agent shall have received and approved a request to continue such
Eurodollar Rate Loan at least three (3) Business Days prior to such last day in
accordance with the terms hereof. Any Eurodollar Rate Loans shall, at Agent's
option, upon notice by Agent to Borrowers, convert to Prime Rate Loans in the
event that (i) an Event of Default or act, condition or event which with the
notice or passage of time or both would constitute an Event of Default, shall
exist, (ii) this Agreement shall terminate or not be renewed, or (iii) the
aggregate principal amount of the Prime Rate Loans which have previously been
converted to Eurodollar Rate Loans or existing Eurodollar Rate Loans continued,
as the case may be, at the beginning of an Interest Period shall at any time
during such Interest Period exceed either (A) eighty (80%) percent of the
aggregate principal amount of the Loans then outstanding, or (B) the principal
amount of the Loans then available to Borrowers under Section 3 hereof,
provided, that, Eurodollar Rate Loans shall be converted to Prime Rate Loans
pursuant to this clause (iii) only to the extent such Eurodollar Rate Loans
exceed either of the amounts under clause (A) or clause (B) above except as
otherwise required as a result of the amounts of the prior purchases of United
States Dollar deposits by Agent or any Lender in the London Interbank market or
other applicable Eurodollar Rate market. Borrowers shall pay to Agent, upon
demand by Agent (or Agent may, at its option, charge any loan account of
Borrowers) any amounts required to compensate Agent, Lenders, the Reference Bank
or any Participant for any loss (including
25
loss of anticipated profits), cost or expense incurred by such person, as a
result of the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant
to any of the foregoing.
(d) Interest shall be payable by Borrowers to Agent for the account of
Lenders monthly in arrears not later than the first day of each calendar month
and shall be calculated on the basis of a three hundred sixty (360) day year and
actual days elapsed. The interest rate on non-contingent Obligations (other than
Eurodollar Rate Loans) shall increase or decrease by an amount equal to each
increase or decrease in the Prime Rate effective on the first day of the month
after any change in such Prime Rate is announced based on the Prime Rate in
effect on the last day of the month in which any such change occurs. In no event
shall charges constituting interest payable by Borrowers to Agent and Lenders
exceed the maximum amount or the rate permitted under any applicable law or
regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
(e) In no event shall the Interest Rate and other charges hereunder
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that a court determines that Agent or Lenders have received interest and
other charges hereunder in excess of the highest rate applicable hereto, such
excess shall be deemed received on account of, and shall automatically be
applied to reduce, the Obligations other than interest in the inverse order of
maturity, and the provisions hereof shall be deemed amended to provide for the
highest permissible rate.
3.10 CONDUCT OF ACCOUNTS; CROSS-COLLATERALIZATION.
(a) Agent and Lenders may maintain one or more accounts reflecting the
Loans, the Letter of Credit Accommodations, repayments of the Loans and payments
of the other Obligations and any of the Collateral contemplated under this
Agreement or the other Financing Agreements with respect to Borrowers, as Agent
and Lenders shall, in their discretion, determine. All Loans shall be charged to
a loan account in the name of Borrowers on Agent's books. All Collateral or
other collateral security held by or granted to Agent and Lenders by Borrowers
or any third persons shall be security for the payment and performance of any
and all Obligations of Borrowers to Agent and Lenders (including but not limited
to the Loans and the Letter of Credit Accommodations), notwithstanding the
maintenance of separate accounts for Borrowers or third persons or the existence
of any notes.
(b) All Loans and Letter of Credit Accommodations under this Agreement
shall be made by Agent for the account of Lenders on a pro rata basis pursuant
to each Lender's Commitment Percentage. It is understood that neither of Lenders
nor Agent shall be responsible to Borrowers for any failure by the other Lender
or Agent to fulfill its obligations to make or, in the case of Agent, to advance
for the account of Lenders, the Loans or the Letter of Credit Accommodations
provided to be made by it or on its behalf hereunder.
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(c) All payments (including prepayments) by or on behalf of Borrowers
or any other amounts received by Agent on account of the Loans or the other
Obligations, or charged to Borrowers' account(s) as permitted hereunder, shall
be made by or on behalf of Borrowers, and/or received by Agent for the account
of Lenders on a pro rata basis pursuant to each Lender's Commitment Percentage
or for its own account to the extent provided herein. Borrowers shall make all
payments in respect of the Obligations free and clear of, and without deduction
or withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholdings, restrictions or
conditions of any kind or nature whatsoever. Borrowers and Lenders hereby
acknowledge and agree that Agent shall have the sole responsibility for the
distribution of any such payments or other amounts to each of Lenders.
Notwithstanding that any portion of the Loans may be evidenced by one instrument
by Borrowers in favor of Agent and both Lenders, the Obligations and amounts
payable at any time hereunder to Agent for the account of each of Lenders shall
be several, and not joint, debts of Borrowers owing to each of Lenders. As
between Borrowers and Lenders, together with Agent, at Agent's option either (i)
each Lender may enforce against Borrowers the Obligations to such Lender, based
on the Commitment Percentage of such Lender, or (ii) Agent may enforce against
Borrowers the Obligations on behalf of both Lenders or either Lender.
(d) All Loans and other Obligations shall be payable to Agent for the
account of Lenders at its address specified herein or at such other place as
Agent may hereafter designate in writing from time to time. Agent may apply
payments received or collected from Borrowers or for the account of Borrowers
(including, without limitation, the monetary proceeds of collections or of
realization upon any Collateral) to such of the Obligations, whether or not then
due, in whatever order and manner Agent, in its discretion, determines. Agent
shall have the continuing and exclusive right to apply and reverse and reapply
any and all such proceeds and payments to any portion of the Obligations. Upon
the request of Agent and/or Lenders, Borrowers shall execute and deliver to
Agent and Lenders one or more promissory notes, in form and substance
satisfactory to Agent and Lenders, to evidence further the Loans, the Letter of
Credit Accommodations or any portion thereof.
(e) If after receipt of any payment of, or proceeds applied to the
payment of, all or any part of the Obligations, Agent or Lenders are for any
reason required to surrender such payment or proceeds to any Person, because
such payment or proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, or a diversion of trust
funds, or for any other reason, then the Obligations or any part thereof
intended to be satisfied shall be revived and continue and this Agreement shall
continue in full force as if such payment or proceeds had not been received by
Agent or Lenders and Borrowers shall be liable to pay to Agent for the account
of Lenders, and hereby does indemnify Agent and Lenders and hold them harmless
for the amount of such payment or proceeds surrendered. The provisions of this
Section 3.10(e) shall be and remain effective notwithstanding any contrary
action which may have been taken by Agent or Lenders in reliance upon such
payment or proceeds, and any such contrary action so taken shall be without
prejudice to Agent's or Lenders' rights under this Agreement and shall be deemed
to have been conditioned upon such payment or proceeds having become final and
irrevocable.
27
The provisions of this Section 3.10(e) shall survive the termination of this
Agreement and the other Financing Agreements and the repayment of the
Obligations.
(f) At Agent's option, all principal, interest, fees, commissions,
costs, expenses, or other charges hereunder, under the other Financing
Agreements or in connection herewith or therewith, and any and all Loans, may be
charged directly to any loan account(s) of Borrowers maintained by Agent. Upon
the reasonable request of Borrowers, Agent shall provide to Borrowers the basis
for any such fees, commissions, costs or expenses.
(g) Agent shall render to Borrowers at the address of Borrowers set
forth in Section 10.6 hereof, each month, one or more statements with respect to
the loan account(s) maintained by Agent for Borrowers pursuant to the provisions
hereof, as of the end of each month while this Agreement is in effect. Such
statements of account shall be considered correct, and deemed accepted by and
conclusively binding upon Borrowers, except to the extent Agent and Lenders
shall receive from Borrowers written notice of all exceptions to such statement
of account with specificity, within forty-five (45) days from the date of
sending.
3.11 USE OF PROCEEDS. All Loans and Letter of Credit Accommodations
provided by Agent and Lenders to Borrowers pursuant to this Agreement and the
other Financing Agreements shall be used by Borrowers for general operating and
working capital purposes of Borrowers and other lawful and proper corporate
purposes not otherwise prohibited by the terms hereof (including the development
of new retail store locations of Borrowers and other related operating
facilities pursuant to the purchase of land for such stores or other facilities
and the construction of the stores or other facilities on such land).
3.12 COMPENSATION ADJUSTMENT.
(a) If after the date of this Agreement the introduction of, or any
change in, any law or any governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any interpretation
thereof, or compliance by Agent or Lenders therewith:
(i) subjects either Agent or Lenders to any tax, duty, charge or
withholding on or from payments due from Borrowers (excluding franchise taxes
imposed upon, and taxation of the overall net income of, Agent or Lenders), or
changes the basis of taxation of payments, in either case in respect of amounts
due it hereunder, or
(ii) imposes or increases or deems applicable any reserve
requirement or other reserve, assessment, insurance charge, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by Agent or Lenders, or
(iii) imposes any other condition the result of which is to
increase the cost to Agent or Lenders of making, funding or maintaining the
Loans or Letter of Credit Accommodations or reduces any amount receivable by
Agent or Lenders in connection with the Loans or Letter of Credit
Accommodations, or requires either of them to make payment
28
calculated by reference to the amount of loans held or interest received by it,
by an amount deemed material by Lenders, or
(iv) imposes or increases any capital requirement or affects the
amount of capital required or expected to be maintained by Lenders or any
corporation controlling Lenders, and either of Lenders determines that such
imposition or increase in capital requirements or increase in the amount of
capital expected to be maintained is based upon the existence of this Agreement
or the Loans or Letter of Credit Accommodations hereunder, all of which may be
determined by Lenders' reasonable allocation of the aggregate of its impositions
or increases in capital required or expected to be maintained, and the result of
any of the foregoing is to increase the cost to Agent or Lenders of making,
renewing or maintaining the Loans or Letter of Credit Accommodations, or to
reduce the rate of return to Agent or either of Lenders on the Loans or Letter
of Credit Accommodations, then, within fifteen (15) days of demand by Agent or
either of Lenders, Borrowers shall pay to Agent, and continue to make periodic
payments to Agent, such additional amounts as may be necessary to compensate
Agent and Lenders for any such additional cost incurred or reduced rate of
return realized.
(b) A certificate of Agent or either of Lenders claiming entitlement
to compensation as set forth above will be conclusive in the absence of manifest
error. Such certificate will set forth the nature of the occurrence giving rise
to such compensation, the additional amount or amounts to be paid and the method
by which such amounts were determined. In determining any additional amounts due
from Borrowers under this Section 3.12, Agent and Lenders shall act reasonably
and in good faith and will, to the extent that the increased costs, reductions,
or amounts received or receivable relate to the Agent's or such Lender's loans
or commitments generally and are not specifically attributable to the Loans and
commitments hereunder, use averaging and attribution methods which are
reasonable and equitable and which cover all loans and commitments similar to
the Loans and commitments under this Agreement by Agent or such Lender, as the
case may be, whether or not the loan documentation for such other loans and
commitments permits Agent or such Lender to receive compensation costs of the
type described in this Section 3.12.
3.13 CHANGES IN LAWS AND INCREASED COSTS OF LOANS.
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Agent to Borrowers, convert to Prime
Rate Loans in the event that (i) any change in applicable law or regulation (or
the interpretation or administration thereof) (A) shall make it unlawful for
Agent, any of Lenders, Reference Bank or any Participant to make or maintain
Eurodollar Rate Loans or to comply with the terms hereof in connection with the
Eurodollar Rate Loans or (B) shall result in the increase in the costs to Agent,
any of Lenders, Reference Bank or any Participant of making or maintaining any
Eurodollar Rate Loans or (C) shall reduce the amounts received or receivable by
Agent, any of Lenders, Reference Bank or any Participants in respect thereof, by
an amount deemed by Agent or such Lender to be material, provided, that, in the
event of any such change of law, regulation, interpretation or administration
applicable to any Lender, such Lender shall have
29
notified Agent and Borrower, or (ii) the cost to Agent, any of Lenders,
Reference Bank or any Participant of making or maintaining any Eurodollar Rate
Loans shall otherwise increase by an amount deemed by Agent or any Lender to be
material to it, other than, with respect to any Eurodollar Rate Loan, an
increase of cost arising solely as the result of an increase in the rate at
which Reference Bank (or any other bank used by any Lender) is offered deposits
of United States dollars in the London interbank market after the date that is
two (2) Business Days prior to the commencement of the Interest Period
applicable to such Eurodollar Rate Loan, provided, that, in the event of any
such increase in cost applicable to any Lender, such Lender shall have notified
Agent and Borrower. Borrowers shall pay to Agent upon demand by Agent (or Agent
may, at its option, charge any loan account of Borrowers) any amounts required
to compensate Agent, any of Lenders, the Reference Bank or any Participant with
Lenders for any loss (including loss of anticipated profits), cost or expense
incurred by such person as a result of the foregoing, including, without
limitation, any such loss, cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such person to make or
maintain the Eurodollar Rate Loans or any portion thereof. A certificate of
Agent setting forth the basis for the determination of such amount necessary to
compensate Agent, any of Lenders, Reference Bank or any Participant with Lenders
as aforesaid shall be delivered to Borrowers and shall be conclusive, absent
manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Agent other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under Section
9 or any other payments made with the proceeds of Collateral, Borrowers shall
pay to Agent upon demand by Agent (or Agent may, at its option, charge any loan
account of Borrowers) any amounts required to compensate Agent, any of Lenders,
the Reference Bank or any Participant with any of Lenders for any additional
loss (including loss of anticipated profits), cost or expense incurred by such
person as a result of such prepayment or payment, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT TO LOANS AND OTHER FINANCIAL ACCOMMODATIONS
Each of the following is a condition precedent to Agent on behalf of
Lenders making the Loans and providing the Letter of Credit Accommodations
pursuant to this Agreement and the other Financing Agreements, including the
making of the initial and any future Loans and Letter of Credit Accommodations
contemplated hereunder (any of which may be waived, in whole or in part, only by
both Lenders in writing):
4.1 Agent shall have received, in form and substance satisfactory to Agent,
all consents, waivers, acknowledgments, releases, terminations and other
agreements and documents from third persons which Agent may deem necessary or
desirable in order to
30
permit, protect and perfect its security interests in and liens upon the
Collateral or to effectuate the provisions or purposes of this Agreement and the
other Financing Agreements;
4.2 Agent shall have received, in form and substance satisfactory to Agent,
such endorsements with respect to the existing title insurance policy issued to
Agent with respect to the Mortgages to reflect the amendment and restatement
provided for herein as Agent may reasonably request;
4.3 Agent shall have received evidence of insurance and loss payee
endorsements required under this Agreement and under the other Financing
Agreements, in form and substance reasonably satisfactory to Agent, and
certificates of insurance policies and/or endorsements naming Agent as loss
payee for Lenders with respect to the Collateral, all at Borrowers' cost and
expense;
4.4 Agent shall have received evidence, in form and substance satisfactory
to Agent, that Agent and Lenders have a valid perfected first security interest
in all of the Collateral except as otherwise permitted herein;
4.5 Agent shall have received and reviewed UCC search results for all
jurisdictions in which assets of Borrowers are located, which search results
shall be in form and substance satisfactory to Agent;
4.6 Agent shall have received, in form and substance satisfactory to Agent,
an opinion letter of counsel to Borrowers with respect to the Financing
Agreements and such other matters as Agent or Lenders or their counsel may
reasonably request;
4.7 this Agreement, the other Financing Agreements and all instruments and
documents thereunder shall have been duly authorized, executed and delivered to
Agent and Lenders, in form and substance satisfactory to Agent;
4.8 Agent shall have received, in form and substance satisfactory to Agent,
all necessary approvals and consents from BABC;
4.9 all representations and warranties contained herein and in the other
Financing Agreements shall be true and correct in all respects; and
4.10 no Event of Default shall have occurred and no event shall have
occurred or condition be existing which, with notice or passage of time or both,
would constitute an Event of Default.
SECTION 5. COLLATERAL
As collateral security for the prompt performance, observance and payment
in full of all of the Obligations, Borrowers hereby jointly and severally grant,
pledge and assign to each
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of Lenders and Agent, and also confirm, reaffirm and restate their prior grant,
pledge and assignment to each of Lenders and Agent of, a continuing security
interest in and liens upon, and rights of setoff against, all of the following
now owned and hereafter acquired or existing assets and properties of Borrowers
(which assets and properties, together with all other collateral security for
the Obligations of any time now or hereafter granted to or otherwise held or
acquired by Agent and/or Lenders are referred to herein as the "Collateral"):
5.1 (a) all Accounts; (b) all monies, securities, credit balances, deposit
accounts and other property and the proceeds thereof, now or hereafter held or
received by, or in transit to, Agent, Lenders or any Participant or their
affiliates, or at any other depository or other institution from or for the
account of Borrowers, whether for safekeeping, pledge, custody, transmission,
collection or otherwise and all of Borrowers' deposits (general or special),
balances, sums and credits with Agent, Lenders or any Participant at any time
existing; (c) all right, title and interest, and all enforcement and other
rights, remedies, and security and liens, in, to and in respect of the Accounts
and other Collateral, including, without limitation, rights of stoppage in
transit, replevin, repossession, sequestration and reclamation and other rights
and remedies of an unpaid vendor, lienor or secured party, guaranties or other
contracts of suretyship with respect to the Accounts, letters of credit,
deposits or other security for the obligation of any Account Debtor, credit and
other insurance; (d) all right, title and interest in, to and in respect of all
goods relating to Accounts, including, without limitation, all goods described
in invoices, documents, and other forms of store receipts, credit card sales
drafts, credit card sales slips or charge slips or receipts, contracts or
instruments with respect to, or otherwise representing or evidencing, any
Account or other Collateral, including, without limitation, all returned,
reclaimed or repossessed goods; and (e) all deposit accounts;
5.2 all present and future contract rights (other than contract rights
relating specifically and exclusively to equipment and real property other than
the Omaha Real Property), general intangibles (including, but not limited to,
tax and duty refunds, registered and unregistered patents, trademarks, service
marks, copyrights, trade names, applications for the foregoing, trade secrets,
goodwill, processes, drawings, blueprints, customer lists, licenses, whether as
licensor or licensee, choses in action and other claims and existing and future
leasehold interests in equipment, real estate and fixtures), chattel paper,
documents, instruments, securities and other investment property, credit card
sales drafts, credit card sales slips or charge slips or receipts and other
forms of store receipts, letters of credit, bankers' acceptances and guaranties;
5.3 all Inventory;
5.4 all Omaha Real Property;
5.5 all present and future books and records relating to any of the above,
including, without limitation, all ledgers, books of account, records, tapes,
cards, computer programs, computer disks or tape files, computer printouts,
computer runs, computer data and other computer prepared information in the
possession or control of Borrowers, any computer service bureau or other third
person; and
32
5.6 all products and proceeds of the foregoing, in any form, including,
without limitation, any insurance proceeds and any claims against third persons
for loss or damage to or destruction of any or all of the foregoing.
SECTION 6. REPRESENTATIONS AND WARRANTIES
Borrowers hereby jointly and severally represent and warrant to Agent and
Lenders as follows, which representations and warranties are continuing and
shall survive the execution and delivery hereof, and the truth and accuracy of
each, together with the representations and warranties in the other Financing
Agreements, being a continuing condition of each Loan and each Letter of Credit
Accommodation:
6.1 ORGANIZATION AND QUALIFICATION.
(a) Each of Borrowers is a duly organized and validly existing
corporation in good standing under the laws of its State or jurisdiction of
incorporation, with perpetual corporate existence, and has the corporate power
and authority to own its properties and to transact the business in which it is
engaged or presently proposes to engage. Each of Borrowers has qualified to do
business as a foreign corporation in the States listed on Exhibit A hereto,
which constitute all States where the nature of its business or the ownership or
use of property requires such qualification.
(b) Neither of the Borrowers has any Subsidiaries as of the date
hereof, except as set forth on Exhibit B hereto.
6.2 CORPORATE POWER AND AUTHORITY. Each of Borrowers has the corporate
power and authority to borrow and to execute, deliver and carry out the terms
and provisions of this Agreement and the other Financing Agreements and all
other agreements, instruments and documents delivered by Borrowers pursuant
hereto and thereto applicable to it, and each of Borrowers has taken or caused
to be taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement, the other Financing Agreements and the other
agreements relating hereto or thereto to which it is a party, the present and
future borrowings and other financial accommodations which may be obtained by
Borrowers hereunder and thereunder and the execution, delivery and performance
of the instruments and documents delivered and to be delivered by it pursuant
hereto and thereto. This Agreement and the other Financing Agreements to which
it is a party constitute and will constitute legal, valid and binding
obligations of Borrowers, enforceable in accordance with their respective terms.
6.3 CAPITALIZATION AND SENIOR SUBORDINATED NOTES.
(a) All of the issued and outstanding shares of capital stock of
Seaway are directly and beneficially owned and held by Pamida and all of the
issued and outstanding shares of capital stock of Pamida are directly and
beneficially owned and held by Holdings
33
and each have been duly authorized and are fully paid and non-assessable, free
and clear of all claims, liens, pledges and encumbrances of any kind, except for
the pledge by Holdings of the capital stock of Pamida to State Street Bank and
Trust Company as collateral agent or trustee on behalf of the holders of the
Senior Subordinated Notes, which pledge is, in all respects, subject and
subordinate to the pledge thereof in favor of Agent and Lenders.
(b) The Senior Subordinated Notes have been duly authorized, issued
and delivered by Pamida and all agreements, documents and instruments related
thereto, including, but not limited to, the Note Indenture, have been duly
authorized, executed and delivered and the transactions contemplated thereunder
have been performed in accordance with their terms by the respective parties
thereto in all respects, including the fulfillment (not merely the waiver) of
all conditions precedent set forth therein. All actions and proceedings required
by the Senior Subordinated Notes and the agreements, documents and instruments
related thereto, applicable law or regulation have been taken and the
transactions required thereunder have been duly and validly taken and
consummated. Neither the execution and delivery of Senior Subordinated Notes or
any of the instruments and documents to be delivered pursuant thereto, nor the
consummation of the transactions therein contemplated, nor compliance with the
provisions thereof, has violated any law or regulation or any order or decree of
any court or governmental instrumentality in any respect or conflicts with or
results in the breach of, or constitutes a default in any respect under, any
indenture, mortgage, deed of trust, agreement or instrument to which Pamida or
any of its Affiliates is a party or may be bound, or results in the creation or
imposition of any lien, charge or encumbrance upon any of the property of Pamida
(except as specifically contemplated or permitted hereunder or under the other
Financing Agreements) or violate any provision of the Certificate of
Incorporation or By- Laws of Pamida or any of its Affiliates. Borrowers have
delivered, or caused to be delivered, to Agent and each of Lenders, true,
correct and complete copies of the Senior Subordinated Notes and all other
agreements, documents and instruments existing as of the date hereof relating
thereto.
(c) Each of Borrowers has sufficient capital to carry on all
businesses and transactions in which it now engages or proposes to engage in, is
solvent and will, in the reasonable, good faith determination of each Borrower
as of the date hereof, continue to be solvent after the creation of the
Obligations and the security interests in favor of Agent and Lenders, and is
able to pay its debts as they mature.
6.4 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAW.
(a) Each of Borrowers is not in material default under, in violation
of or in contravention of, in any respect, any material indenture, mortgage,
deed of trust, deed to secure debt, agreement or instrument to which it is a
party or by which it or any of its assets or properties may be or are bound.
(b) Neither the execution and delivery of this Agreement, the other
Financing Agreements, or any of the instruments and documents to be delivered
pursuant hereto or thereto, nor the consummation of the transactions herein or
therein contemplated, nor
34
compliance with the provisions hereof or thereof, has violated any law or
regulation or any order or decree of any court or governmental instrumentality
in any respect or does or will conflict with or result in the breach of, or
constitute a material default in any respect under, any material indenture
(including, without limitation, the Note Indenture), mortgage, deed of trust,
agreement or instrument to or by which each Borrower is a party or may be bound,
or result in the creation or imposition of any lien, charge or encumbrance upon
any of the property of each of Borrowers (except as specifically contemplated or
permitted hereunder or under the other Financing Agreements) or violate any
provision of the Certificate of Incorporation or By-Laws of either Borrower.
(c) Each of Borrowers has obtained all material permits, licenses,
certificates, approvals, consents, orders or authorizations of any governmental
regulatory authority or other governmental body or authority required for the
lawful conduct of its business and is in compliance in all material respects
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority relating to its business, including, without
limitation, those set forth in or promulgated pursuant to ERISA, the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, the Code, and the rules and regulations thereunder, all
federal, state and local statutes, regulations, rules and orders relating to
consumer credit (including, without limitation, as each has been amended, the
Truth-in-Lending Act, the Fair Credit Billing Act, the Equal Credit Opportunity
Act and the Fair Credit Reporting Act, and regulations, rules and orders
promulgated thereunder), all federal, state and local statutes, regulations,
rules and orders pertaining to sales of consumer goods (including, without
limitation, the Consumer Products Safety Act of 1972, as amended, and the
Federal Trade Commission Act of 1914, as amended, and all regulations, rules and
orders promulgated thereunder and the Environmental Laws).
6.5 GOVERNMENTAL APPROVAL. No consent, approval or other action of, or
filing with, or notice to any governmental or public body, authority or
instrumentality is required in connection with the execution, delivery and
performance of this Agreement, the other Financing Agreements or any of the
instruments or documents to be delivered pursuant hereto or thereto, except for
those consents or approvals already obtained by Borrowers.
6.6 CHIEF EXECUTIVE OFFICES; COLLATERAL LOCATIONS.
(a) The addresses of the principal place of business and chief
executive office of each of Borrowers is as set forth on Exhibit C hereto, which
addresses are the mailing addresses for said principal places of business and
chief executive offices. The books and records of each of Borrowers relating to
the Accounts of each of Borrowers are located at said addresses. The Collateral
is located only at the addresses set forth on Exhibit D, except for Inventory in
transit within the continental United States to a location set forth on Exhibit
D, or from a location set forth on Exhibit D to any of the other locations set
forth on Exhibit D, in either case directly and without any intermediary stops
of more than two (2) Business Days, or Inventory in transit from outside the
continental United States to a location set forth on Exhibit D.
35
(b) Each of Borrowers may open any new location within the continental
United States provided such Borrower (i) gives Agent ten (10) Business Days
prior written notice of the intended opening of any such new location and (ii)
executes and delivers, or causes to be executed and delivered, to Agent such
agreements, documents, and instruments as Agent and Lenders may deem reasonably
necessary or desirable to protect their interests in the Collateral to be
located in such location, including, without limitation, UCC financing
statements.
6.7 PRIORITY OF LIENS/TITLE TO PROPERTIES.
(a) The security interests and liens granted to Agent and Lenders
under this Agreement and the other Financing Agreements constitute valid and
perfected liens and security interests in and upon the Collateral subject only
to the liens indicated on Exhibit E hereto and the liens permitted under Section
7.4 hereof.
(b) Each of Borrowers has good and marketable title to all of the
properties and assets which it owns subject to no liens, mortgages, pledges,
security interests, encumbrances or charges of any kind, except those directly
in favor of or assigned to Agent and/or Lenders and such others as are
specifically permitted under the provisions of this Agreement as listed on
Exhibit E hereto or under Section 7.4 hereof and the other Financing Agreements.
Each of Borrowers has, as the case may be, peaceful and undisturbed possession
of all Inventory, Omaha Real Property and other real property owned or leased by
it and such other assets as may be necessary for its business as presently
conducted or proposed to be conducted and under all leases, licenses and
easements necessary for the operation of its properties and business. None of
such leases, licenses and easements contain any unusual or burdensome provisions
which might materially affect or impair the operations of such properties and
the business in general and all such leases, licenses and easements are valid
and subsisting and in full force and effect.
6.8 TAX RETURNS. Each of Borrowers has filed, or caused to be filed all
Federal, State, county, local, foreign and other tax returns, reports and
declarations which are required to be filed by it and as to which an extension
has not been granted and has paid or caused to be paid all taxes shown to be due
and payable on said returns and reports or in any assessment received by it, to
the extent that such taxes have become due and payable, and has collected,
deposited and remitted all sales and/or use taxes applicable to the conduct of
its business, except, in each case, taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrowers and with respect to which adequate reserves have been set
aside on its books. Adequate provision has been made for the payment of all
accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.
6.9 LITIGATION. Except as set forth on Exhibit F hereto, there is no
present investigation by any governmental agency pending or to the best of
Borrowers' knowledge threatened, against or affecting either Borrower or its
properties or business and there is no action, suit, proceeding or claim by any
Person pending or, to the best of Borrowers' knowledge, threatened against
either Borrower or its assets or goodwill, or against or affecting
36
any transactions contemplated by this Agreement, the other Financing Agreements,
or other instruments, agreements or documents delivered in connection herewith
or therewith, which if adversely determined with respect to such Borrower would
result in any material adverse change in the business, properties, assets,
goodwill or condition, financial or otherwise, of either Borrower.
6.10 INTELLECTUAL PROPERTY. Each of Borrowers owns or licenses all patents,
trademarks, service-marks, logos, tradenames, trade secrets, know-how,
copyrights, or licenses and other rights with respect to any of foregoing, which
are necessary for the operation of its business as presently conducted or
proposed to be conducted. To the best of Borrowers' knowledge, no product,
process, method, substance, part or other material presently contemplated to be
sold by or employed by Borrowers infringes any patent, trademark, service-▇▇▇▇,
tradename, copyright, license or other right owned by any other Person and no
claim or litigation is pending or to the best of Borrowers' knowledge,
threatened against or affecting either Borrower contesting its right to sell or
use any such product, process, method, substance, part or other material, except
as set forth on Exhibit F hereto.
6.11 ACCOUNTS. Each Account representing an obligation for the payment of
money represents a valid and legally enforceable indebtedness based upon an
actual and bona fide sale and delivery of goods or rendition of services in the
ordinary course of the businesses of Borrowers which has been finally accepted
by the Account Debtor and for which the Account Debtor is unconditionally liable
to make payment of the amount stated in each invoice, credit card transaction
record instrument or other document evidencing the Account representing an
obligation for the payment of money in accordance with the terms thereof,
without offset, defense or counterclaim. All statements made and all unpaid
balances appearing in the invoices, credit card transaction record, instruments
or other documentation evidencing each Account are true and correct and are in
all material respects what they purport to be and all signatures and
endorsements that appear thereon are genuine and all signatories and endorsers
have full capacity to contract and each Account Debtor is, to the best of each
Borrower's knowledge, solvent and financially able to pay in full the Account
when it matures. None of the transactions underlying or giving rise to any
Account violates any state, federal or foreign laws or regulations, and all
documents relating to the Accounts are legally sufficient under such laws or
regulations and shall be legally enforceable in accordance with their terms and
all recording, filing and other requirements of giving public notice under any
applicable law have been duly complied with.
6.12 EMPLOYEE BENEFITS.
(a) Neither of the Borrowers has engaged in any transaction in
connection with which either Borrower, or any of its ERISA Affiliates, could be
subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA
or a tax imposed by Section 4975 of the Code in excess of $500,000 in the
aggregate, including any accumulated funding deficiency described in Section
6.12(c) hereof and any deficiency with respect to vested accrued benefits
described in Section 6.12(d) hereof.
37
(b) No liability to the Pension Benefit Guaranty Corporation has been
or is expected by either Borrower to be incurred with respect to any employee
pension benefit plan of either Borrower or any of its ERISA Affiliates. There
has been no reportable event (within the meaning of Section 4043(b) of ERISA) or
any other event or condition with respect to any employee pension benefit plan
of either Borrower or any of its ERISA Affiliates which presents a risk of
termination of any such plan by the Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which either Borrower or
any of its ERISA Affiliates is required under Section 302 of ERISA and Section
412 of the Code to have paid under the terms of each employee pension benefit
plan as contributions to such plan as of the last day of the most recent fiscal
year of such plan ended prior to the date hereof, and no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any employee pension benefit plan
in excess of $500,000 in the aggregate, including any penalty or tax described
in Section 6.12(a) hereof and any deficiency with respect to vested accrued
benefits described in Section 6.12(d) hereof.
(d) The current value of all vested accrued benefits under all
employee pension benefit plans maintained by either Borrowers that are subject
to Title IV of ERISA does not exceed the current value of the assets of such
plans allocable to such vested accrued benefits in excess of $500,000 in the
aggregate, including any penalty or tax described in Section 6.12(a) hereof and
any accumulated funding deficiency described in Section 6.12(c) hereof. The
terms "current value" and "accrued benefit" have the meanings specified in
Section 4062(b)(1)(A) and Section 3 of ERISA, respectively.
(e) Neither Borrowers nor any of its ERISA Affiliates is or has ever
been obligated to contribute to any "multiemployer plan" (as such term is
defined in Section 4001(a)(3) of ERISA) that is subject to Title IV of ERISA.
6.13 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth on Exhibit G hereto, neither of Borrowers nor
its Affiliates have generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off its premises
(whether or not owned by it) in any manner which at any time violates any
applicable Environmental Law or any license, permit, certificate, approval or
similar authorization thereunder and the operations of each of Borrowers and its
Affiliates comply in all material respects with all Environmental Laws and all
licenses, permits, certificates, approvals and similar authorizations
thereunder.
(b) Except as set forth on Exhibit G hereto, there has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any governmental authority or any other person nor is any pending or
threatened, with respect to any non-compliance with or violation of the
requirements of any Environmental Law by each of Borrowers or any of its
Affiliates or the release, spill or discharge, threatened or actual, of any
Hazardous Material or the generation, use, storage, treatment, transportation,
38
manufacturer, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects either of Borrowers
or its Affiliates or their businesses, operations or assets or any properties at
which either Borrower or its Affiliates transported, stored or disposed of any
Hazardous Materials.
(c) Neither of Borrowers or its Affiliates have material liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.
(d) Each of Borrowers and its Affiliates have all licenses, permits,
certificates, approvals or similar authorizations required to be obtained or
filed in connection with the operations of each of Borrowers and its Affiliates
under any Environmental Law where the failure to do so would have a material
adverse effect on the condition (financial or otherwise), business, performance,
operations or properties of Borrowers or the legality, validity or
enforceability of this Agreement or any of the other Financing Agreements or the
ability of Borrowers to repay the Obligations or to perform their obligations
under this Agreement or any of the other Financing Agreements or the ability of
Agent or any Lender to enforce the Obligations or realize upon the Collateral or
otherwise with respect to the rights and remedies of Agent or any Lender under
this Agreement or any of the other Financing Agreements and all of such
licenses, permits, certificates, approvals or similar authorizations are valid
and in full force and effect.
6.14 INVESTMENT COMPANY. Neither of Borrowers is an "investment company",
or an "affiliated person" or "promoter" or "principal underwriter", as such
terms are defined in the Investment Company Act of 1940, as amended. The making
of the Loans and extension of the Letter of Credit Accommodations by Agent and
Lenders, the application of the proceeds and the repayment thereof by Borrowers
and the performance of the transactions contemplated herein will not violate any
provision of the Investment Company Act of 1940, as amended, or any rule,
regulation or order issued pursuant thereto.
6.15 REGULATION U; SECURITIES EXCHANGE ACT OF 1934. Neither of Borrowers
owns any "margin security" as such term is defined in Regulation U, as amended
(12 C.F.R. Part 207) of the Board. The proceeds of the borrowings made pursuant
to this Agreement and the other Financing Agreements will be used by each of
Borrowers only for the purposes contemplated hereunder. None of the proceeds
will be used, directly or indirectly, for the purpose of purchasing or carrying
any margin security or for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the loans to be considered a "purpose
credit" within the meaning of Regulation U of the Board, as amended. Neither of
Borrowers will take, nor will it permit any agent acting in its behalf to take,
any action which might cause this Agreement or the other Financing Agreements,
or instruments delivered pursuant hereto or thereto, to violate any regulation
of the Board or to violate the Securities Exchange Act of 1934 or any state or
other securities laws, in each case as in effect on the date hereof or as
amended hereafter.
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6.16 NO MATERIAL ADVERSE CHANGE. There has been no material adverse change
in the business, assets, condition (financial or otherwise) or results of
operations or prospects of either of Borrowers since the date of the most recent
financial statements with respect thereto submitted to Agent and Lenders or
field examination with respect thereto conducted by Agent and/or Lenders.
6.17 FINANCIAL STATEMENTS.
(a) None of the financial statements, reports and other information
furnished or to be furnished by either of Borrowers to Agent and Lenders with
respect to each of Borrowers and/or its Subsidiaries contain, as of their
respective dates, any untrue statement of material fact or omit to state any
material fact necessary to make the information therein not misleading. Such
financial statements and reports were and will be prepared in accordance with
GAAP, consistently applied, and shall fairly, completely and accurately present
the consolidated and consolidating financial condition and results of operations
of the applicable Persons, as of the dates and for the periods indicated
thereon.
(b) The balance sheets and future cash flow and other projections and
estimates for each of Borrowers (together with summaries of assumptions and
projected assumptions, based on historical performance with respect thereto)
furnished by each of Borrowers to Agent and Lenders represents the reasonable,
good faith opinion of each Borrower and its management as to the subject matter
thereof and based on assumptions as set forth therein which each Borrower has
determined to be fair and reasonable in view of current and reasonably
foreseeable business conditions.
6.18 DISCLOSURE.
(a) The information contained in the representations and warranties
set forth in this Agreement, the other Financing Agreements, or in any other
instrument, document, list, certificate, statement, schedule or exhibit
heretofore delivered or to be delivered to Agents and Lenders, as contemplated
in this Agreement or in the other Financing Agreements, does not contain and
will not contain any untrue statement of a material fact and does not omit and
will not omit to state a material fact necessary in order to make the
information contained herein or therein not misleading.
(b) After giving effect to the transactions contemplated by this
Agreement, the other Financing Agreements, and the other instruments or
documents delivered in connection herewith and therewith, there does not exist
and there has not occurred any act, condition or event which constitutes an
Event of Default or which, with notice or passage of time or both would
constitute an Event of Default.
6.19 LABOR DISPUTES. Except as set forth on Exhibit H: (a) there is no
collective bargaining agreement or other labor contract covering employees of
either of Borrowers or any of its Subsidiaries; (b) no such collective
bargaining agreement or other labor contract is scheduled to expire during the
term of this Agreement; and (c) there is no pending or
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threatened strike, work stoppage, material unfair labor practice claims, or
other material labor dispute against or affecting either of Borrowers or any of
its Subsidiaries or their respective employees.
6.20 CORPORATE NAME; PRIOR TRANSACTIONS. Neither of Borrowers has, during
the past five years, been known by or used any other corporate or fictitious
name or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
or assets out of the ordinary course of business, except as set forth on Exhibit
I hereto.
SECTION 7. ADDITIONAL COVENANTS
In addition to the covenants set forth in the other Financing Agreements,
Borrowers hereby jointly and severally covenant to and agree with Agent and
Lenders that Borrowers shall comply with the following covenants, or cause the
same to be complied with, unless Agent on behalf of both Lenders shall otherwise
consent in writing:
7.1 TRADENAMES. Borrowers may from time to time use the tradenames listed
on Exhibit I hereto (which, together with any new tradenames used after the date
hereof are referred to collectively as the "Tradenames" and individually, as a
"Tradename"). As to the respective Tradenames used by each of them, each
Borrower hereby agrees that:
(a) Each Tradename is a tradename (and not an independent corporation
or other legal entity) by which Borrowers may identify and sell or lease certain
of its goods or services and conduct a portion of its business.
(b) All proceeds (including any returned merchandise) which arise from
the sale or lease of goods or rendition of services invoiced under the Tradename
shall be owned solely by the respective Borrower and shall be subject to the
security interests of Agent and Lenders and other terms of this Agreement and
the other Financing Agreements.
(c) New Tradenames may be used by Borrowers, but only if (i) Agent and
Lenders are given at least thirty (30) days prior written notice of the intended
use of any new Tradename and (ii) such supplemental financing statements or
similar instruments as Agent or Lenders may request shall be executed and
delivered to Agent by Borrowers for filing or recording by Agent prior to the
use of such new Tradename.
7.2 SUBSIDIARIES. Borrowers shall not form or acquire any Subsidiaries,
except upon the satisfaction of each of the following conditions: (a) promptly
upon such formation or acquisition, Borrowers shall cause any such Subsidiary to
execute and deliver to Agent, in form and substance satisfactory to Agent and
its counsel: (i) an absolute and unconditional guarantee of payment of any and
all present and future Obligations of Borrowers to Agent and Lenders containing
terms substantially similar to those guarantees entered into by the existing
Subsidiaries of Borrowers in favor of Agent and Lenders on or prior to the date
41
hereof, (ii) a security agreement granting to Agent for itself and the ratable
benefit of Lenders a first security interest and lien (except as otherwise
consented to in writing by Agent) upon all of the assets of such Subsidiary of
the same types and categories as the Collateral and containing terms
substantially similar to the security agreements entered into by the existing
Subsidiaries of Borrowers in favor of Agent and Lenders on or prior to the date
hereof, (iii) related Uniform Commercial Code Financing Statements, and (iv)
such other agreements, documents and instruments as Agent may require,
including, but not limited to, supplements and amendments hereto and other loan
agreements or instruments evidencing Indebtedness of such new Subsidiary to
Agent and Lenders; (b) promptly upon Agent's request: (i) the Borrower which is
the owner of the capital stock of such Subsidiary shall execute and deliver to
Agent, in form and substance satisfactory to Agent, a pledge and security
agreement granting to Agent, for itself and the ratable benefit of Lenders, a
first pledge of and lien on all of the issued and outstanding shares of capital
stock of such Subsidiary and (ii) Borrower shall deliver the original stock
certificates evidencing such shares of capital stock together with stock powers
with respect thereto duly executed in blank; and (c) the amount of the
investment by such Borrower in the capital stock of such Subsidiary and any
other amounts paid by such Borrower to such Subsidiary or otherwise in
connection with the formation or acquisition thereof shall not exceed the amount
permitted under Section 7.5 hereof.
7.3 INDEBTEDNESS. Borrowers shall not, and shall not permit any Subsidiary
to, create, incur, assume or permit to exist, contingently or otherwise, any
Indebtedness, except:
(a) Indebtedness of Borrowers to Agent and Lenders;
(b) Indebtedness of Borrowers consisting of unsecured current
liabilities incurred in the ordinary course of its business;
(c) Indebtedness of Borrowers incurred in the ordinary course of its
business secured (if at all) only by liens permitted under Sections 7.4(b), (c),
(d), (e), (f), (g) and (h) hereof;
(d) contingent Indebtedness of Borrowers permitted under Section 7.5
hereof;
(e) Indebtedness of Pamida evidenced by the Senior Subordinated Notes
PROVIDED, THAT: (i) the aggregate principal amount of such Indebtedness shall
not exceed $140,000,000 less any principal payments in respect thereof, plus
interest thereon at the rate provided for in the Senior Subordinated Notes as in
effect on the date hereof, (ii) Pamida shall only make regularly scheduled
payments of principal and interest, or other mandatory payments to the extent
permitted under Section 7.3(e)(iii)(B) below, in respect of such Indebtedness in
accordance with the terms of the Senior Subordinated Notes as in effect on the
date hereof (except in connection with Refinancing Indebtedness with respect
thereto permitted under Section 7.3(k) below), (iii) Borrowers shall not,
directly or indirectly, (A) amend, modify, alter or change any of the material
terms of the Senior Subordinated Notes or any agreements, documents or
instruments executed and/or delivered in connection therewith, including, but
not limited to, any terms thereof relating to payments or amortization,
financial
42
covenants, defaults, or the subordination thereof or any collateral therefor,
EXCEPT to the extent any such amendments, modifications, alterations or changes
shall make any such terms more favorable to Pamida or Holdings in the
determination of Agent and Lenders, and including any amendments thereto to
increase or eliminate the dollar amount limit of the Sale- Leaseback
Transactions which Pamida is permitted thereunder, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, except in connection with
Refinancing Indebtedness with respect thereto permitted under Section 7.3(k)
below and except for purchases of Senior Subordinated Notes required to be made
by Pamida under the terms of the Note Indenture (as in effect on the date
hereof): (1) to the extent of net cash proceeds received by Pamida from an Asset
Sale, provided, that, (aa) any such net cash proceeds are first applied to the
Obligations to the extent such assets sold or otherwise disposed of pursuant to
the Asset Sale constitute Collateral or are first applied to the Obligations to
the extent required by Agent and Lenders at the time of any such sale, or as is
otherwise required to satisfy Obligations which are then due and payable or then
due and payable on demand (whether or not such demand has been made) under the
terms hereof or of the other Financing Agreements (in each case such application
being deemed a mandatory repayment of the Obligations) and (bb) no Event of
Default or act, condition or event which with notice or passage of time or both
would constitute an Event of Default exists or has occurred and (2) as a result
of a Change in Control, and (iv) Borrowers shall furnish to Agent and Lenders
all notices and demands either received from any of the holders of the Senior
Subordinated Notes, or on their behalf, promptly after receipt thereof, or sent
by either of Borrowers, or on its behalf, to any of the holders of the Senior
Subordinated Notes, or any representative of the holders (including, but not
limited to, the trustee) concurrently with the sending thereof, as the case may
be;
(f) Indebtedness of any wholly-owned Subsidiary of either of Borrowers
arising pursuant to loans by Borrowers to such Subsidiary permitted under
Section 7.5 hereof;
(g) Indebtedness of Borrowers to any wholly-owned Subsidiary of either
Borrower arising pursuant to loans by such Subsidiary to either Borrower
permitted under Section 7.5 hereof;
(h) contingent Indebtedness of Borrowers to any issuer of a letter of
credit established, opened or maintained for the account of Borrowers pursuant
to the Letter of Credit Accommodations;
(i) Indebtedness of Borrowers in respect of Interest Rate Protection
Obligations incurred in the ordinary course of business;
(j) unsecured Indebtedness of Borrowers owing to any non-affiliated
person on commercially reasonable rates and terms pursuant to an arm's length
transaction; provided, that, (i) Agent shall receive a monthly report of such
Indebtedness, which report shall set forth in reasonable detail satisfactory to
Agent, the amount of such Indebtedness, the person to whom such Indebtedness is
owed, the interest rate, the schedule of repayments and maturity date with
respect thereto and such other information as Agent may request with
43
respect thereto, (ii) upon Agent's request, Agent shall have received true,
correct and complete copies of all agreements, documents and instruments
evidencing or otherwise related to such Indebtedness, (iii) the total aggregate
amount of such Indebtedness at any time outstanding shall not exceed $3,000,000,
(iv) on and before the date of incurring such Indebtedness and after giving
effect thereto, no Event of Default, or act, condition or event which with the
passage of time or both would constitute an Event of Default, shall exist or
have occurred, (v) such Indebtedness shall not at any time include terms and
conditions which in any manner adversely affect or restrict or limit Agent or
any Lender or any rights of Agent or any Lender or the rights of Borrower and
its Subsidiaries with respect to the financing arrangements provided for herein
as determined in good faith by Agent or which are more restrictive or burdensome
than the terms or conditions of the most restrictive or burdensome of any other
material Indebtedness of Borrowers as in effect on the date hereof, and (vi)
Borrowers shall furnish to Agent and Lenders all notices or demands in
connection with such Indebtedness sent by Borrowers or on its or their behalf,
concurrently with the sending thereof, or received by Borrowers or on its or
their behalf, promptly after the receipt thereof, as the case may be;
(k) Indebtedness issued in exchange for, or the proceeds of which are
used to extend, refinance, replace or substitute for, Indebtedness referred to
in Section 7.3(e) hereof (the "Refinancing Indebtedness"); provided, that: (i)
the aggregate principal amount of such Refinancing Indebtedness shall not exceed
$165,000,000, less any principal payments thereof, plus interest thereon at the
rate permitted herein, (ii) the Refinancing Indebtedness shall have a Weighted
Average Life to Maturity and a final maturity equal to or greater than the
Weighted Average Life to Maturity and the final maturity, respectively, of the
Indebtedness being extended, refinanced, replaced or substituted for, (iii) the
Refinancing Indebtedness shall rank in right of payment no more senior than, and
be at least as subordinated (if subordinated) to, the Obligations as the
Indebtedness being extended, refinanced, replaced or substituted, (iv) the
Refinancing Indebtedness shall not include terms and conditions with respect to
Borrowers which are more burdensome or restrictive in any material respect than
those included in the Indebtedness so extended, refinanced, replaced or
substituted for, (v) Agent shall have received not less than ten (10) Business
Days prior written notice of the intention to incur such Indebtedness, which
notice shall set forth in reasonable detail satisfactory to Agent, the amount of
such Indebtedness, the schedule of repayments and maturity date with respect
thereto and such other information with respect thereto as Agent may reasonably
request, (vi) promptly upon Agent's request, Agent shall have received true,
correct and complete copies of all agreements, documents and instruments
evidencing or otherwise related to such Indebtedness, as duly authorized,
executed and delivered by the parties thereto, (vii) such Indebtedness incurred
by Borrowers shall be at rates and with fees or other charges no higher or
greater than the Indebtedness so extended, refinanced, replaced or substituted
for, (viii) as of the date of incurring such Indebtedness and after giving
effect thereto, no Event of Default shall exist or have occurred, (ix) Borrowers
may only make regularly scheduled payments of principal and interest in respect
of such Indebtedness or other mandatory payments to the extent permitted under
Section 7.3(k)(x)(B) below, (x) Borrowers shall not, directly or indirectly, (A)
amend, modify, alter or change the terms of the agreements with respect to such
Indebtedness, except that Borrowers may, after prior
44
written notice to Agent, amend, modify, alter or change the terms thereof so as
to extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or to make any covenants contained therein less
restrictive or burdensome as to Borrowers or otherwise more favorable to
Borrowers, or (B) redeem, retire, defease, purchase or otherwise acquired such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose except for purchases of any notes evidencing such Refinancing
Indebtedness required to be made by Pamida under the terms thereof: (1) to the
extent of net cash proceeds received by Pamida from an Asset Sale, provided,
that, (aa) any such net cash proceeds are first applied to the Obligations to
the extent such assets sold or otherwise disposed of pursuant to the Asset Sale
constitute Collateral or are first applied to the Obligations to the extent
required by Agent and Lenders at the time of any such sale, or as is otherwise
required to satisfy Obligations which are then due and payable or then due and
payable on demand (whether or not such demand has been made) under the terms
hereof or of the other Financing Agreements (in each case such application being
deemed a mandatory repayment of the Obligations) and (bb) no Event of Default or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default exists or has occurred and (2) as a result of a
Change in Control, and (xi) Borrowers shall furnish to Agent all notices or
demands in connection with such Indebtedness either received by Borrowers or on
their behalf promptly after the receipt thereof, or sent by Borrowers or on its
behalf, concurrently with the sending thereof, as the case may be;
(l) Indebtedness of Borrowers existing on the date hereof which is
described on Exhibit J hereto; provided, that: (i) Borrowers may only make
regularly scheduled payments of principal and interest or capital lease payments
as set forth on Exhibit J, (ii) Borrowers shall not, directly or indirectly, (A)
make any prepayments or other non-mandatory payments in respect of such
Indebtedness, without the prior written consent of Agent and Lenders, or (B)
amend, modify, alter or change the terms of the agreements with respect to such
Indebtedness or otherwise, except that Borrowers may, after prior written notice
to Agent, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness (other than pursuant to
payments thereof), or to reduce the interest rate or any fees in connection
therewith or to make any covenants contained therein less restrictive or
burdensome as to Borrowers or (C) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose (except to redeem, retire, defease, purchase or otherwise
acquire such Indebtedness arising pursuant to capital leases of specific fixed
assets located at retail store locations or distribution centers of Borrowers in
connection with the closing or relocation of such retail store locations or
distribution centers to the extent permitted hereunder), and (iii) Borrowers
shall furnish to Agent and Lenders all notices or demands in connection with
such Indebtedness sent by Borrowers or on its or their behalf, concurrently with
the sending thereof, or received by Borrowers or on its or their behalf,
promptly after the receipt thereof, as the case may be.
45
7.4 LIMITATION ON LIENS. Borrowers shall not, and shall not permit any
Subsidiary to, create or suffer to exist any mortgage, pledge, security
interest, lien, encumbrance, defect in title or restriction upon the use of
their real or personal properties, whether now owned or hereafter acquired,
except:
(a) the liens or security interests in favor of Agent and each of
Lenders;
(b) liens arising by operation of law in favor of carriers,
warehousemen, landlords, mechanics, materialmen, laborers, employees or
suppliers in the ordinary course of the businesses of Borrowers and their
Subsidiaries to the extent (i) such liens secure Indebtedness which is not
overdue or (ii) such liens secure Indebtedness being contested in good faith by
appropriate proceedings diligently pursued and available to Borrowers or their
Subsidiaries prior to the commencement of foreclosure or other similar
proceedings, execution on such liens is at all times effectively stayed and an
adequate escrow, in Agent's judgment for such Indebtedness has been established
or, at Agent's option, an adequate reserve reducing amounts otherwise available
to Borrowers pursuant to the terms hereof as Revolving Loans for such
Indebtedness has been established;
(c) purchase money mortgages or other purchase money liens or security
interests upon any specific fixed assets hereafter acquired or liens or security
interests existing on any such future fixed assets at the time of acquisition
thereof and including in any event any capital or finance leases; provided,
that: (i) no such purchase money lien or security interest (or capital or
finance lease, as the case may be) with respect to specific future fixed assets
or as refinanced shall extend to or cover any other property other than the
specific fixed assets so acquired, or acquired subject to such lien or security
interest (or lease) and the proceeds thereof; (ii) such lien or security
interest only secures the obligation to pay the purchase price of such specific
fixed assets (or the obligations under the capital or finance lease); (iii) the
principal amount secured thereby shall not exceed one hundred six (106%) percent
of the cost of the fixed assets so acquired; and (iv) no Event of Default, or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred;
(d) liens or security interests upon any specific fixed assets of
Borrowers consisting of real property and related improvements to be used for a
retail store location of Borrowers in the ordinary course of their businesses or
a distribution center to be used by Borrowers in the ordinary course of their
businesses (and any related equipment located or to be located on and used in
connection with such retail store location or distribution center) arising
pursuant to capital leases of such specific fixed assets to a Borrower in
connection with a Sale-Leaseback Transaction for such fixed assets, provided,
that, (i) no such capital lease shall extend to or cover any other property
other than the specific fixed assets sold and leased back by such Borrower
pursuant to such Sale-Leaseback Transaction, (ii) such lien or security interest
only secures the obligations of such Borrower under such capital lease, (iii)
the principal portion of the amounts payable under such capital lease shall not
exceed one hundred six (106%) percent of the amount of the sale price of such
fixed assets paid to such Borrower pursuant to such Sale-Leaseback Transaction
and (iv) no Event of Default or act,
46
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred;
(e) liens arising by operation of law for taxes, assessments or other
governmental charges to the extent (i) such liens secure Indebtedness which is
not overdue or (ii) such liens secure Indebtedness being contested in good faith
by appropriate proceedings diligently pursued and available to Borrowers or
their Subsidiaries prior to the commencement of foreclosure or other similar
proceedings, execution on such liens thereon is at all times effectively stayed
and an adequate escrow in Agent's judgment for such Indebtedness has been
established or at Agent's option, an adequate reserve reducing amounts otherwise
available to Borrowers pursuant to the terms hereof as Revolving Loans for such
Indebtedness has been established;
(f) liens arising pursuant to the statutory or common law right of
set-off or liens of banks on property of Borrowers or their Subsidiaries in the
possession of such banks;
(g) judgment and other similar liens arising in connection with court
proceedings in an amount not to exceed $500,000; provided, that, (i) the
judgment or other court order giving rise to such lien is being contested in
good faith by appropriate proceedings diligently pursued and available to
Borrowers or their Subsidiaries prior to the commencement of foreclosure or
other similar proceedings, (ii) execution thereon is at all times effectively
stayed and (iii) an adequate escrow in Agent's judgment for such Indebtedness
has been established or, at Agent's option, an adequate reserve reducing amounts
otherwise available to Borrowers pursuant to the terms hereof as Revolving Loans
for such Indebtedness has been established;
(h) liens (other than environmental liens and any lien imposed under
ERISA) arising, or deposits made, in the ordinary course of business (including,
without limitation, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social security benefits
or to secure the performance of tenders, bids, leases, contracts (other than for
the repayment of Indebtedness), statutory obligations and other similar
obligations; provided, that, in connection with any performance bonds issued by
a surety or other person, the issuer of such bond shall have waived in writing
any rights in or to, or other interest in, any of the Collateral in an
agreement, in form and substance satisfactory to Agent;
(i) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other similar restrictions, charges
or encumbrances with respect to the real property of Borrowers or their
Subsidiaries (whether or not recorded) incurred in the ordinary course of
business, which do not secure Indebtedness or the deferred purchase price of any
assets and which do not interfere in any material respect with the use of such
real property or the ordinary conduct of the businesses of Borrowers and their
Subsidiaries as presently conducted thereon and do not materially impair the
value of the real property which may be subject thereto;
47
(j) the existing liens, security interests or encumbrances set forth
on Exhibit E hereto.
7.5 LOANS, INVESTMENTS, GUARANTEES, ETC. Borrowers shall not, and shall not
permit any Subsidiary to, directly or indirectly, make any loans or advance
money or property to any Person, or invest in (by capital contribution, dividend
or otherwise) or purchase or repurchase the stock or Indebtedness or all or a
substantial part of the assets or property of any Person, or guarantee, assume,
endorse, or otherwise become responsible for (directly or indirectly) the
Indebtedness, performance, obligations or dividends of any Person or agree to do
any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in instruments constituting Cash Equivalents, which
shall be delivered to Agent, upon Agent's or Lenders' request, at any time on or
after an Event of Default, and prior to an Event of Default only if such
investment has a maturity of more than seven (7) Business Days;
(c) purchases of Indebtedness evidenced by the Senior Subordinated
Notes to the extent permitted under Section 7.3(e)(iii)(B) hereof or in
connection with the Refinancing Indebtedness;
(d) equity investments of either Borrower in its existing Subsidiaries
and any Subsidiaries formed or acquired after the date hereof to the extent
permitted under and in accordance with Section 7.2 hereof, provided, that, (i)
as of the date of such investment and after giving effect thereto, no Event of
Default, or act, condition or event which with notice or passage of time or both
would constitute an Event of Default, shall exist or have occurred and (ii) in
no event shall the total amount of any capital contributions or other amounts
paid by Borrowers to or for the acquisition of any such Subsidiaries formed or
acquired after the date hereof, plus the amount of any loans to such
Subsidiaries permitted under Section 7.5(g) below, exceed $500,000 in the
aggregate and (iii) such Subsidiary shall have executed and delivered a
guarantee of the Obligations in favor of Agent and Lenders and such other
agreements as are required under Section 7.2 hereof;
(e) guarantees by any wholly-owned Subsidiary of either Borrower in
favor of Agent and Lenders of the Obligations of either Borrower to Agent and
guarantees by either Borrower in favor of Agent and Lenders of Indebtedness, if
any, of such Subsidiary to Agent and Lenders;
(f) guarantees by Borrowers in favor of the person to whom any
Indebtedness is owed which is permitted pursuant to Section 7.3(j) hereof;
(g) loans by Borrowers to any wholly-owned Subsidiary of such
Borrower; provided, that, (i) no Event of Default, or act, condition or event
which with notice or passage
48
of time or both would constitute an Event of Default exists or has occurred,
(ii) in no event shall the total amount of such loans to Subsidiaries formed or
acquired after the date hereof, plus the amount of any capital contributions or
other amounts paid by Borrowers to or for the acquisition of any such
Subsidiaries permitted under Section 7.5(d) above, exceed $500,000 in the
aggregate at any time outstanding and (iii) the Indebtedness arising pursuant to
such loans shall not be evidenced by any promissory note or other instrument,
unless the original of such note or other instrument is pledged and delivered to
Agent (with such endorsement thereof as Agent may require);
(h) loans by any wholly-owned Subsidiary of either Borrower to such
Borrower; provided, that, (i) prior to the making of any such loans Agent shall
have received, in form and substance satisfactory to Agent, a subordination
agreement by and between Agent, Lenders and such wholly-owned Subsidiary, as
acknowledged and agreed to by such Borrower, providing for, inter alia, the
subordination in right of payment of any and all present and future Indebtedness
and other obligations and liabilities of such Borrower to its wholly-owned
Subsidiary to the indefeasible payment and satisfaction in full of the
Obligations and related matters, duly authorized, executed and delivered by such
wholly- owned Subsidiary and such Borrower and (ii) no Event of Default, or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default, exists or has occurred;
(i) obligations owing to Borrowers from purchasers of specific fixed
assets of Borrowers pursuant to a Sale-Leaseback Transaction evidenced by a
promissory note payable by such purchaser to the order of Borrowers; provided,
that, (i) the total aggregate amount of such obligations at any one time
outstanding shall not exceed $5,000,000, (ii) Agent shall have received not less
than ten (10) Business Days prior written notice of any such proposed
transaction which notice shall set forth in reasonable detail the terms of such
Sale-Leaseback Transaction and such obligations, (iii) Agent and Lenders shall
have received such information with respect thereto as Agent or Lenders may
request, (iv) Agent shall have received true, correct and complete copies of all
agreements, documents and instruments relating to such Sale-Leaseback
Transaction, (v) upon Agent's or Lenders' request, Borrowers shall deliver or
cause to be delivered to Agent, any promissory note or other instrument
evidencing such obligations, with an appropriate endorsement or assignment and
with full recourse to the Borrower who is the payee thereof, and (vi) no Event
of Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, shall exist or have occurred;
(j) stock or obligations issued to Borrowers by any Person (or the
representative of such Person) in respect of Indebtedness of such Person owing
to Borrowers in connection with the insolvency, bankruptcy, receivership or
reorganization of such Person or a composition or readjustment of the debts of
such Person; provided, that, the original of any such stock or instrument
evidencing such obligations shall be promptly delivered to Agent, upon Agent's
or Lenders' request (together with such stock power, assignment or endorsement
by Borrowers as Agent or Lenders may request) at any time on or after an Event
49
of Default and prior to an Event of Default if such stock or instrument has a
fair market value greater than $500,000;
(k) obligations of Account Debtors to Borrowers arising from Accounts
which are past due evidenced by a promissory note made by such Account Debtor
payable to any of Borrowers; provided, that, promptly upon the receipt of the
original of any such promissory note by any of Borrowers, such promissory note
shall be endorsed to the order of Agent by the Borrower who is the payee and
promptly delivered to Agent as so endorsed at any time on or after an Event of
Default and prior to an Event of Default if the aggregate amount of all such
notes exceeds $250,000;
(l) loans of money or property to any Person, or investment by capital
contribution in any Person or guarantee of the Indebtedness of any Person (other
than as otherwise permitted above); provided, that, (i) the total aggregate
amount of any such loans, investments or guarantees shall not exceed $1,500,000
at any time outstanding, (ii) no Event of Default, or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred, (iii) in the case of an investment by
capital contribution, at Agent's or Lenders' option, the original of any stock
or other instrument evidencing such capital contribution shall be promptly
delivered to Agent, together with such stock power, assignment or endorsement as
Agent may request, (iv) in the case of loans of money or property, the original
of any promissory note or other instrument evidencing the Indebtedness arising
pursuant to such loans shall be delivered, or caused to be delivered, to Agent,
at Agent's or Lenders' option, together with an appropriate endorsement and with
full recourse to the Borrower or other payee thereof, (v) in the event any such
loan, investment or guarantee exceeds $300,000 or all such loans, investments
and guarantees then outstanding exceed $300,000 in the aggregate, Agent shall
have received (A) not less than one (1) Business Day prior written notice
thereof setting forth in reasonable detail the nature and terms thereof, (B)
true, correct and complete copies of all agreements, documents and instruments
relating thereto and (C) such other information with respect thereto as Agent or
Lenders may request;
(m) the existing loans, investments and guarantees set forth on
Exhibit K hereto.
7.6 TRANSACTIONS WITH AFFILIATES. Borrowers shall not, and shall not permit
any Subsidiary to, directly or indirectly:
(a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any shareholder, officer, director, agent, employee or
Affiliate, except: (i) in the ordinary course of and pursuant to the reasonable
requirements of a Borrower's business and upon fair and reasonable terms no less
favorable to such Borrower than such Borrower would obtain in a comparable arm's
length transactions with a person who is not an Affiliate, and (ii) purchases of
Inventory by Pamida from Seaway on terms and conditions consistent with the
current practices of Pamida and Seaway as of the date hereof; or
50
(b) make any payment of management fees or of the principal amount of
or interest or any Indebtedness owing to any shareholder, officer, director or
Affiliate of Borrowers, except: (i) amounts required to be paid for income and
other taxes payable by Borrowers or their Subsidiaries and/or under any tax
sharing arrangements or similar amounts payable to Holdings in lieu of the
payment of taxes; (ii) to the extent permitted under Section 7.6(a) above, (iii)
any Subsidiaries of Borrowers may repay Indebtedness at any time owing to
Borrowers and either of Borrowers may repay Indebtedness at any time owing to
any of its Subsidiaries subject to the terms of the subordination required under
Section 7.5 above and so long as no Event of Default, or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, exists or has occurred, and (iv) Borrowers and its Subsidiaries may
accrue and pay dividends as permitted under Section 7.7 below.
7.7 DIVIDENDS. Borrowers shall not, and shall not permit any Subsidiary to,
directly or indirectly, during any fiscal year, commencing with each of its
current fiscal year, declare or pay any cash dividends or dividends payable in
property other than stock on account of any shares of any class of capital stock
of Borrowers or such Subsidiary now or hereafter outstanding, or set apart any
sums for such purpose, or redeem, retire, defease, purchase or otherwise acquire
any shares of any class of capital stock of Borrowers or such Subsidiary (or set
aside or otherwise deposit or invest any sums for such purpose) for any
consideration other than stock or apply or set apart any sums, or make any other
distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing, except:
(a) dividends may be accrued and paid by any Subsidiary of either of
Borrowers to Borrowers; and
(b) Pamida may declare and pay dividends to Holdings (including
dividends in respect of common and preferred stock) not to exceed, in any fiscal
year, in the aggregate, an amount equal to $2,000,000; provided, that, each of
the following conditions is satisfied as of the date of the payment of each such
dividend, as determined by Agent: (i) no Event of Default, or act, event or
condition, which with notice, passage of time or both would constitute an Event
of Default, exists or has occurred or would exist or occur after giving effect
to the declaration and payment of such dividend, (ii) there are sufficient
legally available funds therefor, and (iii) as of the date of such payment, the
Excess Availability for each of the immediately preceding ten (10) days shall
have been not less than $5,000,000 and as of the date of such payment and after
giving effect thereto, Excess Availability shall be not less than $5,000,000.
7.8 MAINTENANCE OF EXISTENCE. Each of Borrowers shall at all times
preserve, renew and keep in full, force and effect its corporate existence and
rights and franchises with respect thereto and maintain in full force and effect
all permits, licenses, trademarks, tradenames, approvals, authorizations, leases
and contracts necessary to carry on the business as presently or proposed to be
conducted.
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7.9 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Neither of
Borrowers shall, directly or indirectly, without the prior written consent of
Agent,
(a) merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with it, except that each
of Borrowers or its Subsidiaries may merge into or with the other Borrower or
its Subsidiaries, provided, that, (i) Agent shall have received not less than
thirty (30) Business Days prior written notice of the intention of Borrowers or
their Subsidiaries to so merge and such other information in connection
therewith as Agent or Lenders may request, (ii) as of the effective date of the
merger and after giving effect thereto, no Event of Default, or act, condition
or event which with notice or passage of time or both would constitute an Event
of Default, shall exist or have occurred, (iii) Agent shall have received true,
correct and complete copies of all agreements, documents and instruments
relating to such merger, including, but not limited to, the certificate of
merger as filed with the appropriate Secretary of State, (iv) the surviving
entity shall immediately upon the effectiveness of the merger expressly assume
in writing pursuant to an agreement, in form and substance satisfactory to Agent
and Lenders, all of the Obligations and the Financing Agreements and execute and
deliver such other agreements, documents and instruments as Agent or Lenders may
request in connection therewith; (v) the surviving entity shall, immediately
before and immediately after giving effect to such transaction or series of
transactions, have a consolidated net worth (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions) equal to or greater than
the consolidated net worth of Pamida immediately prior to such transaction or
series of transactions; (vi) each of Guarantors shall ratify and confirm that
their respective guarantees of the Obligations and, as to Holdings, its
obligations under the Pledge and Security Agreement by Holdings in favor of
Agent and Lenders, shall apply to the Obligations as assumed by such surviving
entity; (vii) all of the capital stock of Pamida or such surviving entity shall
be pledged to the same extent as provided herein and in the Pledge and Security
Agreement by Holdings in favor of Agent and Lenders; and (viii) neither Pamida
nor any Subsidiary would thereupon become obligated with respect to any
Indebtedness, nor any of its property become subject to any lien, unless Pamida
or such Subsidiary could incur such Indebtedness or create such lien hereunder;
or
(b) sell, assign, lease, transfer, abandon or otherwise dispose of any
stock or Indebtedness to any other Person or any of their respective properties
or assets to any other Person, except for:
(i) sales of Inventory in the ordinary course of business,
(ii) sales of worn-out or obsolete equipment,
(iii) sales of specific fixed assets pursuant to a Sale-Leaseback
Transaction permitted under Section 7.5(i) hereof and sales of specific fixed
assets (other than the Collateral) pursuant to any other Sale-Leaseback
Transaction, provided, that, the Indebtedness
52
of a Borrower arising pursuant to such other Sale-Leaseback Transaction is
otherwise permitted hereunder,
(iv) sales of equipment in a manner and amounts consistent with
Borrowers' current practices as of the date hereof (other than as permitted
under clause (v) below), provided, that, (A) the total aggregate amount of the
net book value of any equipment sold in any fiscal year shall not exceed
$1,500,000, (B) no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred and (C) at the option of Agent or Lenders, any net cash
proceeds received by Borrowers pursuant thereto shall be paid to Agent for
application to the Obligations, or
(v) sales or other dispositions by a Borrower of assets in
connection with the closing or sale of a retail store location of such Borrower
in the ordinary course of such Borrower's business which consist of leasehold
interests in the premises of such store, the equipment and fixtures located at
such premises and the books and records relating exclusively and directly to the
operations of such store; provided, that, as to each and all such sales, (A) on
the date of, and after giving effect to, any such sale, in any calendar year,
such Borrower shall not have closed or sold retail store locations accounting
for more than ten (10%) percent of all sales of such Borrower in the immediately
preceding twelve (12) month period, (B) Agent shall have received not less than
ten (10) Business Days prior written notice of such sale, which notice shall set
forth in reasonable detail satisfactory to Agent, the parties to such sale or
other disposition, the assets to be sold or otherwise disposed of, the purchase
price and the manner of payment thereof and such other information with respect
thereto as Agent may request, (C) as of the date of such sale or other
disposition and after giving effect thereto, no Event of Default, or act,
condition or event which with notice or passage of time would constitute an
Event of Default, shall exist or have occurred, (D) such sale shall be on
commercially reasonable prices and terms in a bona fide arm's length
transaction, and (E) any and all net proceeds payable or delivered to such
Borrower in respect of such sale or other disposition shall be paid or
delivered, or caused to be paid or delivered, to Agent, for the ratable benefit
of Lenders, in accordance with the terms of this Agreement either, at Agent's
option, for application to the Obligations in accordance with the terms hereof
(except to the extent such proceeds reflect payment in respect of indebtedness
secured by a properly perfected first priority security interest in the assets
sold, in which case, such proceeds shall be applied to such indebtedness secured
thereby) or to be held by Agent as cash collateral for the Obligations on terms
and conditions acceptable to Agent; or
(c) wind up, liquidate or dissolve; or
(d) agree to do any of the foregoing.
7.10 COMPLIANCE WITH LAWS, REGULATIONS, ETC.
(a) Each of Borrowers shall, and shall cause each Subsidiary to,
at all times comply in all material respects with all applicable provisions of
laws, rules, regulations,
53
licenses, permits, approvals and orders and duly observe all material
requirements, of any foreign, federal, state or local governmental authority,
including, without limitation, ERISA, the Occupational Safety and Health Act of
1970, as amended, the Fair Labor Standards Act of 1938, as amended, and the
rules and regulations thereunder, all federal, state and local statutes,
regulations, rules and orders relating to consumer credit (including, without
limitation, as each has been amended, the Truth-in-Lending Act, the Fair Credit
Billing Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act,
and regulations, rules and orders promulgated thereunder), all federal, state
and local statutes, regulations, rules and orders pertaining to sales of
consumer good (including, without limitation, the Consumer Products Safety Act
of 1972, as amended, and the Federal Trade Commission Act of 1914, as amended,
and all regulations, rules and orders promulgated thereunder) and all statutes,
rules, regulations, orders, permits and stipulations relating to environmental
pollution and employee health and safety, including, without limitation, all of
the Environmental Laws.
(b) Each of Borrowers shall, and shall cause each Subsidiary to,
take prompt and appropriate action to respond to any non-compliance with any of
the Environmental Laws and shall regularly report to Agent with regard to such
response. If either of Borrowers receives any notice of (i) the happening of any
event involving the use, spill, discharge or clean-up of any Hazardous Material
which does or may result in any material liability or (ii) any complaint, order,
citation or notice with regard to air emissions, water discharges, noise
emissions or any other environmental, health or safety matter affecting
Borrowers from any Person which does or may result in any material liability,
including, but not limited to, the United States Environmental Protection Agency
or any state or local environmental agency or authority, then Borrowers shall
give within five (5) Business Days both oral and written notice of same to
Agent. Without limiting the generality of the foregoing, whenever there is
non-compliance, or any condition which requires any action by or on behalf of
Borrowers in order to avoid any non-compliance, with any Environmental Law,
Borrowers shall, at Agent's request and Borrowers' expense: (A) cause an
independent environmental engineer acceptable to Agent and Lenders to conduct
such tests of the site where Borrowers' noncompliance or alleged non-compliance
with Environmental Laws has occurred as to such non-compliance and prepare and
deliver to Agent and Lenders a report as to such non-compliance setting forth
the results of such tests, a proposed plan for responding to any environmental
problems described therein, and an estimate of the costs thereof and (B) provide
to Agent and Lenders a supplemental report of such engineer whenever the scope
of such non-compliance, or Borrowers' response thereto or the estimated costs
thereof, shall change in any material respect.
7.11 PAYMENT OF TAXES AND CLAIMS. Each of Borrowers shall, and shall cause
each Subsidiary to, duly pay and discharge all taxes, assessments, contributions
and governmental charges upon or against it or them or its or their properties
or assets, except for taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrowers
prior to the date on which penalties attach thereto and with respect to which
adequate reserves have been set aside. Borrowers shall be liable for any tax or
penalty imposed upon any transaction under this Agreement or any of the other
Financing Agreements or giving rise to any Collateral or which Agent and/or
Lenders may be
54
required to withhold or pay for any reason and Borrowers shall indemnify and
hold Agent and Lenders harmless with respect thereto, and repay to Agent and
Lenders on demand the amount thereof, and, until paid by Borrowers, such amount
shall be added and deemed part of the Obligations, provided, that, nothing
contained herein shall be construed to require Borrowers to pay any income tax
attributable to the income of Agent or Lenders from any amounts charged or paid
hereunder to Agent or Lenders.
7.12 PROPERTIES IN GOOD CONDITION.
(a) Each of Borrowers shall keep its properties used in the
conduct of its business, and shall cause each of its Subsidiaries to keep their
properties used in the conduct of their businesses, in good repair, working
order and condition (reasonable wear and tear excepted) and, from time to time,
make and cause its Subsidiaries to make all needful and proper repairs,
renewals, replacements, additions and improvements thereto, so that the business
carried on may be properly and advantageously conducted at all times in
accordance with prudent business management. The Inventory and the machinery and
equipment of each of Borrowers shall only be used in its business and not for
personal, family, household or farming use.
(b) All of the Inventory of each of Borrowers is and shall be
held for sale, or to be furnished in connection with the rendition of services,
in the ordinary course of Borrowers' businesses, and is and will be fit for such
purposes. Each of Borrowers shall keep the Inventory in good and marketable
condition, at its own expense. Each of Borrowers shall not acquire or accept any
Inventory on consignment or approval or sell any Inventory on a ▇▇▇▇-and-hold,
guaranteed sale or sale on approval basis, except to the extent such Inventory
is specifically reported to Agent in such manner and at such time or times as
Agent may require. Each of Borrowers agrees that all Inventory produced by them
shall be produced in accordance with the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations, and orders thereunder.
7.13 INSURANCE. Each of Borrowers shall at all times maintain with
financially sound and reputable insurers, insurance with respect to the
Collateral and its other properties and assets against loss or damage of the
kind and in the amounts customarily insured against by corporations of
established reputation engaged in the same or similar businesses and similarly
situated and Borrowers shall maintain public liability insurance against claims
for personal injury, death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by them
and occurring in connection with the use (or otherwise) of any products
manufactured or sold by them, and worker's compensation insurance (except as to
worker's compensation insurance to the extent Borrowers are self-insured with
respect thereto). Said policies of insurance shall be reasonably satisfactory to
Lenders as to form, amount and insurer. Borrowers shall furnish certificates,
policies or endorsements to Agent and Lenders as proof of such insurance, and,
if they fail to do so, Agent and Lenders are authorized, but not required, to
obtain such insurance at the expense of Borrowers. All policies shall provide
for at least thirty (30) days prior written notice to Agent and Lenders of any
cancellation or reduction of coverage and that Agent may act as
55
attorney for Borrowers in obtaining (if Borrowers fail to do so), and at any
time on or after the occurrence of an Event of Default, adjusting and settling
in a commercially reasonable manner, and at such time as Agent or any Lender may
have commenced the exercise of its rights or remedies, with respect to the
Collateral, amending and canceling such insurance. Borrowers shall obtain
non-contributory lender's loss payable endorsements to all applicable insurance
policies with respect to the Collateral in form and substance reasonably
satisfactory to Lenders specifying that the proceeds of such insurance shall be
payable to Agent and Lenders as their interests may appear and further
specifying that Lenders shall be paid regardless of any act or omission by
Borrowers. At their option, Agent and Lenders may apply any insurance proceeds
received by Agent or Lenders at any time to the cost of repairs or replacement
of Collateral and/or to payment of the Obligations, whether or not then due, in
any order and in such manner as Agent, in its discretion, may determine.
7.14 APPRAISALS AND INVENTORY REPORTS.
(a) Upon the request of Agent or Lenders, Borrowers shall, at
Borrowers' expense, no more than once every six (6) months, but at any time or
times as Agent may request on or after an Event of Default (which has not been
waived), deliver, or cause to be delivered, to Agent written reports or
appraisals of any or all of the Collateral in form, scope and methodology, and
by an appraiser acceptable to Agent and Lenders which shall be addressed to
Agent and upon which Agent is expressly permitted to rely. Such reports or
appraisals as to the Inventory shall list all items and categories thereof,
describing the condition of same and setting forth the lower of cost (calculated
on a first-in-first-out basis) or fair market value, in such form as is
satisfactory to Agent.
(b) Without limiting the generality of the foregoing, Borrowers
shall, at Borrowers' expense, conduct through RGIS Inventory Specialists, Inc.,
an inventory counting service, or another inventory counting service reasonably
acceptable to Agent and Lenders, each of the following which shall be in form,
scope and methodology substantially consistent with the current practices of
Borrowers: (i) a physical count of the Inventory located at several different
locations of Borrowers at least six (6) times per calendar year and (ii) a
physical count of all of the Inventory at such other times as Agent or Lenders
reasonably request. Borrowers shall promptly deliver, or cause to be delivered,
to Agent and Lenders a copy of such Inventory counts by RGIS Inventory
Specialists, Inc., or other acceptable inventory counting service, and Borrowers
shall deliver confirmation in a form satisfactory to Agent and Lenders that
appropriate adjustments have been made to the inventory records of Borrowers to
reconcile the inventory count to Borrowers' inventory records. (c) Without
limiting the generality of the foregoing, Borrowers shall, at Borrowers'
expense, if requested by Agent, deliver or cause to be delivered, to Agent,
written reports or appraisals as to the Eligible Real Property, in form, scope
and methodology acceptable to Agent and Lenders, and by an appraiser acceptable
to Agent and Lenders, addressed to Agent and upon which Agent is expressly
permitted to rely, not less than once every twelve (12) months or more
frequently as Agent may reasonably request.
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7.15 COMPLIANCE WITH ERISA.
(a) Except as permitted in Section 7.15(c) below, neither of the
Borrowers shall with respect to all "employee pension benefit plans" maintained
by Borrowers or any of its ERISA Affiliates: (i) terminate any of such employee
pension benefit plans so as to incur any liability to the Pension Benefit
Guaranty Corporation established pursuant to ERISA, (ii) allow or suffer to
exist any prohibited transaction involving any of such employee pension benefit
plans or any trust created thereunder which would subject Borrowers or such
ERISA Affiliate to a tax or penalty or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA, (iii) fail to pay
to any such employee pension benefit plan any contribution which it is obligated
to pay under Section 302 of ERISA, Section 412 of the Code or the terms of such
plan, (iv) allow or suffer to exist any accumulated funding deficiency, whether
or not waived, with respect to any such employee pension benefit plan, (v) allow
or suffer to exist any occurrence of a reportable event or any other event or
condition which presents a material risk of termination by the Pension Benefit
Guaranty Corporation of any such employee pension benefit plan that is a Single
Employer Plan, which termination could result in any liability to the Pension
Benefit Guaranty Corporation or (vi) incur any withdrawal liability with respect
to any multiemployer pension plan, except as set forth on Exhibit G.
(b) As used in this Section 7.15, the term "employee pension
benefit plans," "employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in ERISA,
and the term "prohibited transaction" shall have the meaning assigned to it in
Section 4975 of the Code and ERISA.
(c) Notwithstanding anything to the contrary contained in this
Section 7.15, Borrowers shall not permit any liability to exist as a result of
any violation of any covenants contained in Sections 7.15(a)(ii) through (v)
hereof in excess of $500,000 in the aggregate at any one time.
7.16 NOTICE OF DEFAULT. Promptly upon becoming aware of the existence of
any condition or event which constitutes an Event of Default or any condition or
event which, with the passage of time or notice or both would constitute such an
Event of Default, pursuant to the provisions of this Agreement or the other
Financing Agreements, Borrowers shall give Agent written notice thereof
specifying the nature of such condition or event.
7.17 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Borrowers shall promptly furnish to Agent all such financial
and other information as Agent shall reasonably request relating to the
Collateral and the assets, businesses and operations of Borrowers. Without
limiting the foregoing, Borrowers shall furnish to Agent, in such detail as it
shall request, the following:
(i) As soon as available, but in any event not later than
ninety (90) days after the close of each fiscal year, audited consolidated
balance sheets, statements of earnings
57
and retained earnings and cash flows for Borrowers and their Subsidiaries for
such fiscal year, and the accompanying notes thereto, and, if requested by
Agent, unaudited consolidating balance sheets, statements of earnings and
retained earnings and cash flows for Borrowers for such fiscal year, and the
accompanying notes thereto, setting forth in each case in comparative form
figures for the previous fiscal year, all in reasonable detail, fairly
presenting the financial position and the results of operations of Borrowers and
their Subsidiaries as at the date thereof and for the fiscal year then ended,
and prepared in accordance with GAAP consistently applied. Such audited
consolidated statements of Borrowers and their Subsidiaries shall be examined in
accordance with generally accepted auditing standards by and accompanied by a
report thereon unqualified as to scope of a nationally recognized firm of
independent certified public accountants selected by Borrowers.
(ii) As soon as available, but in any event not later than
forty-five (45) days after the close of each fiscal quarter other than the
fourth quarter of a fiscal year, consolidated and consolidating unaudited
balance sheets of Borrowers and their Subsidiaries as at the end of such
quarter, and consolidated and consolidating unaudited statements of income and
expense and statements of cash flow for Borrowers and their Subsidiaries for
such quarter and for the period from the beginning of the fiscal year to the end
of such quarter, together with the accompanying notes thereto, all in reasonable
detail, fairly presenting the financial position and results of operation of
Borrowers and their Subsidiaries as at the date thereof and for such periods,
prepared in accordance with GAAP consistently applied. Such statements shall be
certified to be correct by the chief financial officer of Borrowers, to the best
of his knowledge, subject to normal year-end adjustments.
(iii) As soon as available, but in any event not later than
thirty (30) days after the end of each month, consolidated unaudited balance
sheets of Borrowers and their Subsidiaries as at the end of such month, and
consolidated unaudited statements of income and expenses for Borrowers and their
Subsidiaries for such month and for the period from the beginning of the fiscal
year to the end of such month, all in reasonable detail, fairly presenting the
financial position and results of operation of Borrowers and their Subsidiaries
as at the date thereof and for such periods, and prepared substantially in
accordance with the current practices of Borrowers. Such statements shall be
certified to be correct by the chief financial officer of Borrowers, to the best
of his knowledge, subject to normal year-end adjustments.
(iv) With each of the audited financial statements delivered
pursuant to Section 7.17(a)(i) above, a certificate of the independent certified
public accountants that examined such statements to the effect that they have
reviewed and are familiar with the Financing Agreements and that, in examining
such financial statements, they did not become aware of any fact or condition of
a financial or accounting nature which then constituted an Event of Default,
except for those, if any, described in reasonable detail in such certificate.
(v) Simultaneously with the delivery of each of the annual
audited and quarterly unaudited financial statements as set forth herein, Agent
and Lenders shall receive a certificate of the chief financial officer of
Borrowers (A) setting forth in reasonable detail the
58
calculations required to establish that Borrowers were in compliance with the
covenants set forth in Sections 7.18 and 7.19 hereof during the period covered
in such financial statements and (B) stating that, except as explained in
reasonable detail in such certificate, and to the best of his knowledge, (1) all
of the representations, warranties and covenants of Borrowers contained in this
Agreement and the other Financing Agreements are correct and complete as at the
date of such certificate and (2) no Event of Default then exists or existed
during the period covered by such financial statements. If such certificate
discloses that a representation or warranty is not correct or complete, or that
a covenant has not been complied with, or that an Event of Default existed or
exists, such certificate shall set forth what action Borrowers have taken or
propose to take with respect thereto.
(vi) No sooner than ninety (90) days prior to, and no less
than, thirty (30) days after the beginning of each fiscal year of Borrowers,
projected balance sheets, statements of income and expense, and statements of
cash flow for Borrowers and their Subsidiaries as at the end of and for each
month of such fiscal year.
(vii) Promptly after delivery thereof, any management
letters and reports by such independent certified public accountants to
Borrowers or their Subsidiaries.
(viii) As reasonably requested by Agent, monthly accounts
receivable agings and inventory reports (by product and location), weekly
reports of all Inventory purchases (including all costs related thereto, such as
freight, duty and taxes), weekly reports of sales of Inventory and downward
adjustments of Inventory values, and such schedules of Accounts and Inventory,
together with any further financial and other information regarding the
Collateral, as Agent and Lenders may request from time to time.
(b) Borrowers shall promptly notify Agent and Lenders in writing of
any material loss, damage, investigation, action, suit, proceeding or claim
relating to the Collateral or which might result in any material adverse change
in its business, properties, assets, goodwill or condition, financial or
otherwise.
(c) Borrowers shall promptly provide Agent and Lenders such budgets,
forecasts, projections and other information respecting the business operations
and financial or other condition of Borrowers and their Subsidiaries, as Agent
and Lenders may, from time to time, reasonably request.
(d) Agent and Lenders are hereby authorized to deliver a copy of any
financial statement or any other information relating to the business,
operations or financial condition of Borrowers or their Affiliates and
Subsidiaries, which may be furnished to it hereunder or otherwise, to any court,
regulatory body or agency having jurisdiction over Agent and Lenders or to any
other Person which shall, or shall have any right or obligation to, succeed to
all or any part of Agent's and Lenders' interests in any of the Revolving Loans,
this Agreement, the other Financing Agreements or the Collateral, including,
without limitation, any Participant or prospective Participant.
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(e) Borrowers hereby irrevocably authorize and direct all accountants
or auditors to deliver to Agent, at Borrowers' expense, copies of the financial
statements of Borrowers and any reports or management letters addressed to the
Board of Directors or audit committee, in either case, of a Borrower or Holdings
prepared by such accountants or auditors on behalf of Borrowers or Holdings and
to disclose to Agent such information as they may have regarding the business of
Borrowers, provided, that, (i) Agent shall only request such financial
statements, reports, management letters or other information from the
accountants or auditors pursuant to such authorization and direction in the
event that Borrowers shall not provide any of the same to Agent in accordance
with the terms hereof, within five (5) Business Days after any of the same are
required to be delivered hereunder and (ii) Agent shall notify Borrowers of any
such request concurrently with the making of such request.
7.18 CAPITAL EXPENDITURES. Pamida and its Subsidiaries shall not, directly
or indirectly, make any Capital Expenditures in excess of the following amounts
for the fiscal year ending on or about the date indicated:
FISCAL YEAR ENDING AMOUNT
--------------------------------- -----------
(a) On or about January 31, 1999 $15,000,000
(b) On or about January 31, 2000 $20,000,000
(c) On or about January 31, 2001 $23,000,000
and for each fiscal year
thereafter
7.19 CONSOLIDATED ADJUSTED CASH FLOW. Pamida and its Subsidiaries shall not
permit Consolidated Adjusted Cash Flow to be less than the amount indicated for
the following periods:
DATE AMOUNT
----------------------------------- -------------
(a) The fiscal quarter ending
on or about April 30 ($10,500,000)
(b) The two (2) fiscal quarters,
cumulatively, ending on or
about July 31 ($ 9,500,000)
(c) The three (3) fiscal quarters,
cumulatively, ending on or
about October 31 ($ 6,500,000)
(d) The four (4) fiscal quarters,
cumulatively, ending on or
about January 31 $ 2,000,000
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7.20 FURTHER ASSURANCES. Each of Borrowers has executed or will
contemporaneously herewith execute and deliver to Agent and Lenders such of the
other Financing Agreements to which it is a party and financing statements
pursuant to the UCC, in form and substance satisfactory to Agent and Lenders.
Each of Borrowers shall, at its expense, at any time or times duly execute and
deliver, or shall cause to be duly executed and delivered, such further
agreements, instruments and documents, including, without limitation, additional
security agreements, collateral assignments, UCC financing statements or
amendments or continuations thereof, and do or cause to be done such further
acts as may be necessary or proper in Agent's and Lenders' opinion to evidence,
perfect, maintain and enforce the security interest and the priority thereof in
the Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Where permitted by law,
Borrowers hereby authorize Agent to execute and file one or more UCC financing
statements signed only by Agent. Upon the request of Agent or Lenders, at any
time and from time to time, Borrowers shall, at their cost and expense, do,
make, execute, deliver and record, register or file, financing statements,
mortgages, deeds of trust, deeds to secure debt, and other instruments, acts,
pledges, assignments and transfers relating to the Collateral (or cause the same
to be done) and will deliver to Agent and Lenders such instruments evidencing
items of Collateral as may be requested by any of them.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(a) Borrowers shall be in default in the payment of any of the
Obligations when due; or
(b) (i) Borrowers or any Obligor fails to perform any of the covenants
contained in Sections 7.1, 7.8, 7.10, 7.11, 7.12, 7.15, 7.18, and 7.19 of this
Agreement and such failure shall continue for ten (10) days; provided, that,
such ten (10) day period shall not apply in the case of: (A) any failure to
observe any such covenant which is not capable of being cured at all or within
such ten (10) day period or which has been the subject of a prior failure within
a six (6) month period or (B) an intentional breach of a Borrower or any Obligor
of any such covenant or (ii) a Borrower fails to perform any of the terms,
covenants, conditions or provisions contained in this Agreement or any of the
other Financing Agreements other than those described in Sections 8.1(a) and
8.1(b)(i) above; or
(c) any present or future representation, warranty or statement of
fact when made by or on behalf of Borrowers to Agent or Lenders is false or
misleading in any material respect; or
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(d) a judgment is rendered against either of Borrowers or any other
Obligor in excess of $500,000 in any one case or in excess of $1,000,000 in the
aggregate and the same shall remain undischarged for a period in excess of sixty
(60) days or execution shall at any time not be effectively stayed; or
(e) Borrowers or any Obligor shall be generally unable to pay its
debts as they mature, suspend or discontinue doing business for any reason,
become insolvent, call a meeting of creditors or have a creditors' committee
appointed, make a general assignment for the benefit of creditors, shall admit
in writing its inability to pay its debts as they become due or shall commence
any action or proceeding for the appointment of any trustee, receiver, custodian
or liquidator of Borrowers or such Obligor or all or any part of their
respective properties or assets; or
(f) Borrowers or any Obligor shall commence any action or proceeding
for relief under the Bankruptcy Code or any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
Bankruptcy Code or any other present or future statute, law or regulation or
shall take any corporate action to authorize any of such actions or proceedings;
or
(g) Borrowers or any Obligor shall have commenced against it any
action or proceeding for relief under the Bankruptcy Code or any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the Bankruptcy Code or any other present or future statute, law or
regulation, or any action or proceeding for the appointment of any trustee,
receiver, custodian or liquidator of any of Borrowers or such other Person or
all or any part of their respective properties or assets, which is not dismissed
within thirty (30) days of its commencement, or Borrowers or such Obligor shall
file any answer admitting or not contesting the allegations of a petition filed
against it in any such proceeding or by any act or omission indicates its
consent to, acquiescence in or approval of, any such action or proceeding or if
the relief requested is granted sooner; or
(h) any guarantee of the Obligations shall at any time cease to be in
full force and effect, or shall be declared void or invalid or the validity or
enforceability thereof shall be contested or any party thereto shall deny it has
any further liability or obligation, or shall fail to perform its obligations,
under the any such guarantee; or
(i) Borrowers or any Obligor shall default in the payment of any
amounts at any time due on any Indebtedness for borrowed money, capitalized
lease obligations or any contingent Indebtedness in connection with any
guarantee, letter of credit, indemnity or similar type of instrument at any time
owing to any Person other than Agent or Lenders (including, but not limited to,
the Indebtedness evidenced by the Senior Subordinated Notes) in excess of
$1,000,000 or in the performance of any other terms or covenants or any evidence
of same or other material agreement relating thereto or securing same or with
respect to any material contract, lease, license or other obligation owed to any
Person other than Agent or Lenders, if such default might result in liability in
excess of $1,000,000, which
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default continues for more than the applicable grace or cure period, if any,
with respect thereto;
(j) a Change of Control shall occur; or
(k) after the date hereof, any act, condition or event shall exist or
have occurred which has a material adverse effect upon the assets of a Borrower,
or the Collateral or the value thereof, or the legality, validity or
enforceability of this Agreement or any of the other Financing Agreements, or
the legality, validity or enforceability, perfection or priority of the security
interest or liens of Agent or Lenders on the Collateral or any other property
which is security for the Obligations or the ability of Borrowers to repay the
Obligations or of a Borrower or any Obligor to perform its obligations under
this Agreement or any of the other Financing Agreements; or
(l) the occurrence of any default or event of default under any of the
other Financing Agreements, after giving effect to any grace or cure period
provided for therein.
8.2 REMEDIES.
(a) Without limiting Agent's and Lenders' rights to demand payment
sooner as provided in this Agreement, upon or at any time after the occurrence
or existence of any one or more of such Events of Default, upon termination of
this Agreement or the other Financing Agreements, or if this Agreement and the
other Financing Agreements are not renewed, in addition to any other rights
Agent and Lenders may have under the Financing Agreements or otherwise:
(i) Agent or Lenders may, at any time thereafter, at their
option, without presentment for payment, demand, notice of dishonor or notice of
protest or any other or further notice, all of which are hereby expressly waived
by Borrowers, declare any or all of the Obligations to be immediately due and
payable, together with interest at the highest rate of interest hereunder until
fully and indefeasibly paid; and
(ii) each Participant, to the fullest extent permitted by
applicable law, shall have the right to (A) set off against the Obligations any
and all deposits (whether general or special, time or demand, provisional or
final), credits, balances, accounts, monies or other assets which are the
property of Borrowers and held by such Participant or owed by such Participant
to Borrowers and (B) remit the same to Agent for application to the Obligations;
(iii) without further notice to Borrowers appropriate, set off
and apply to the payment of any or all of the Obligations, any or all
Collateral, in such manner as Agent and Lenders shall determine, enforce payment
of any Collateral, settle, compromise or release in whole or in part, any
amounts owing on the Collateral, make allowances and adjustments with respect
thereto, issue credits in Agent's or Borrowers' name, sell, assign and deliver
the Collateral (or any part thereof), at public or private sale, for cash, upon
credit or otherwise, at Agent's and Lenders' option and discretion, and Agent
and Lenders may bid or become
63
purchaser at any such sale, if public, free from any right of redemption which
is hereby expressly waived;
(iv) without limiting the generality of the foregoing, Agent and
Lenders are hereby authorized at any time and from time to time, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other Indebtedness at any time owing by Agent or
Lenders to or for the credit or the account of Borrowers against any and all of
the Obligations, whether or not then due and payable;
(v) Agent and Lenders shall have the right, without notice to
Borrowers (except as otherwise expressly provided herein), at any time and from
time to time in its discretion, with or without judicial process or the aid or
assistance of others and without cost to Agent or Lenders (A) to enter upon any
premises on or in which any of the Inventory may be located and, without
resistance or interference by Borrowers, take possession of the Inventory; (B)
to complete processing, manufacturing and repair of all or any portion of the
Inventory; (C) to sell, foreclose or otherwise dispose of any part or all of the
Inventory on or in any premises of Borrowers or premises of any other party; (D)
to require Borrowers, at their expense, to assemble and make available to Agent
and Lenders any part or all of the Inventory at any reasonable place and time
designated by Agent or Lenders; and (E) to remove any or all of the Inventory
from any premises on or in which the same may be located, for the purpose of
effecting the sale, foreclosure or other disposition thereof or for any other
purpose.
(b) Agent and Lenders shall have all of the rights and remedies of a
secured party under the UCC or applicable law of any other State in which any
Collateral may be situated, in addition to all of the rights and remedies set
forth in this Agreement and the other Financing Agreements, and in any
instrument or document referred to herein or therein, and/or under any other
applicable law relating to this Agreement, the other Financing Agreements, the
Obligations or the Collateral.
(c) Borrowers agree that the giving of ten (10) days notice to
Borrowers by Agent or Lenders at Borrowers' address set forth below, designating
the place and time of any public sale or of the time after which any private
sale or other intended disposition of the Collateral is to be made, shall be
deemed to be reasonable notice thereof and Borrowers waives any other notice
with respect thereto.
(d) The net cash proceeds resulting from the exercise of any of the
foregoing rights or remedies shall be applied by Agent to the payment of the
Obligations in such order as Agent may elect, and Borrowers shall remain liable
to Agent and Lenders for any deficiency. Without limiting the generality of the
foregoing, if Agent enters into any credit transaction, directly or indirectly,
in connection with the disposition of any Collateral, Agent shall have the
option, at any time, in its discretion, to reduce the Obligations by the
principal amount of such credit transaction or to defer the reduction thereof
until actual receipt by Agent of cash or other immediately available funds in
connection therewith.
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(e) In the event Agent or Lenders institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment remedy or
otherwise, Borrowers hereby irrevocably waive (i) the posting of any bond,
surety or security with respect thereto which might otherwise be required, (ii)
any demand for possession prior to the commencement of any suit or action to
recover the Collateral, and (iii) any requirement that Agent and Lenders retain
possession and not dispose of any Collateral until after trial or final
judgment.
(f) Agent and Lenders may, at their option, cure any default by
Borrowers under any agreement with any Person, which constitutes, or with notice
or passage of time or both would constitute, an Event of Default hereunder or
under any of the other Financing Agreements, or pay or bond on appeal any
judgment entered against Borrowers (irrespective of the amount of said judgment
or the time elapsed since entry thereof), and charge each Borrower's account(s)
therefor, such amounts to be repayable by Borrowers on demand, together with
interest thereon at the highest rate of interest payable hereunder; provided,
however, Agent and Lenders shall be under no obligation to effect such cure,
payment or bonding and shall not, by making any payment for Borrowers'
account(s), be deemed to have assumed any obligation or liability of Borrowers.
(g) The enumeration of the foregoing rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies Agent and Lenders may
have under the UCC or other applicable law. Agent and Lenders shall have the
right to determine which rights and remedies, and in which order any of the
same, are to be exercised, and to determine which Collateral is to be proceeded
against and in which order, and the exercise of any right or remedy shall not
preclude the exercise of any others, all of which shall be cumulative.
(h) No act, failure or delay by Agent and/or Lenders shall constitute
a waiver of any of the rights and remedies of Agent and Lenders. No single or
partial waiver by Agent or Lenders of any provision of this Agreement or any of
the other Financing Agreements, or breach or default thereunder, or of any right
or remedy which Agent or Lenders may have shall operate as a waiver of any other
provision, breach, default, right or remedy or of the same provision, breach,
default, right or remedy on a future occasion.
(i) Each of Borrowers waives presentment, notice of dishonor, protest
and notice of protest of all instruments included in or evidencing any of the
Obligations or the Collateral and any and all notices or demands whatsoever
(except as expressly provided herein). Agent and Lenders may, at all times,
proceed directly against either or both Borrowers to enforce payment of the
Obligations and shall not be required to take any action of any kind to
preserve, collect or protect any rights in the Collateral.
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SECTION 9. COLLECTION AND ADMINISTRATION
9.1 COLLECTIONS; MANAGEMENT OF COLLATERAL.
(a) Borrowers shall establish and maintain, at their expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Agent may specify, with such banks as are acceptable to Agent
into which Borrowers shall promptly deposit and direct its account debtors to
directly remit all payments on Accounts and all payments constituting proceeds
of Inventory or other Collateral in the identical form in which such payments
are made, whether by cash, check or other manner. The banks at which the Blocked
Accounts are established shall enter into an agreement, in form and substance
satisfactory to Lender, providing that all items received or deposited in the
Blocked Accounts are the property of Agent and Lenders, that the depository bank
has no lien upon, or right to setoff against, the Blocked Accounts, the items
received for deposit therein, or the funds from time to time on deposit therein
and that the depository bank will wire, or otherwise transfer, in immediately
available funds, on a daily basis, at such time as Lender shall direct, all
funds received or deposited into the Blocked Accounts to such bank account of
Agent as Agent may from time to time designate for such purpose ("Payment
Account"). Agent shall instruct the depository banks at which the Blocked
Accounts are maintained to transfer the funds on deposit in the Blocked Accounts
to such operating bank account of Borrowers as Borrowers may specify in writing
to Agent until such time as Agent shall notify the depository bank otherwise.
Agent may instruct the depository banks at which the Blocked Accounts are
maintained to transfer all funds received or deposited into the Blocked Accounts
to the Payment Account at any time that either: (i) an Event of Default, or an
act, condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred, or (ii) Excess
Availability shall be less than $10,000,000 for fifteen (15) consecutive
Business Days. Borrowers agree that all payments made to such Blocked Accounts
or other funds received and collected by Lender, whether on the Accounts or as
proceeds of Inventory or other Collateral or otherwise, shall be the property of
Lender.
(b) For purposes of calculating interest on the Obligations, such
payments or other funds received will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Agent of
immediately available funds by Agent in the Payment Account provided such
payments and notice thereof are received in accordance with Agent's usual and
customary practice as in effect from time to time by 12 noon, New York City
time, on such day, and if not, then on the next Business Day. For purposes of
calculating the amount of the Loans available to Borrowers, such payments or
other funds received will be applied (conditional upon final collection) to the
Obligations on the Business Day of receipt by Agent in the Payment Account
provided such payments and notice thereof are received in accordance with
Agent's usual and customary practices as in effect from time to time by 12 noon,
New York City time, on such day, and if not, then on the next Business Day.
(c) Borrowers and all of their Subsidiaries, shareholders, directors,
employees, agents and other Affiliates shall, acting as trustee for Agent,
receive, as the property of Agent,
66
any monies, checks, notes, drafts or any other payment relating to and/or
proceeds of Accounts or other Collateral which come into their possession or
under their control and immediately upon receipt thereof, shall deposit or cause
the same to be deposited in the Blocked Accounts, or remit the same or cause the
same to be remitted, in kind, to Agent. In no event shall the same be commingled
with any Borrower's own funds. Borrowers agree to reimburse Agent and Lenders on
demand for any amounts owed or paid to any bank at which a Blocked Account is
established or any other bank or person involved in the transfer of funds to or
from the Blocked Accounts arising out of any payments by Agent or Lenders to or
indemnification of such bank or person. The obligation of Borrowers to reimburse
Agent and Lenders for such amounts pursuant to this Section 9.1 shall survive
the termination or non-renewal of this Agreement.
(d) Borrowers shall immediately upon obtaining knowledge thereof
report to Agent all reclaimed, repossessed or returned goods (other than returns
in the ordinary course of business of Borrowers which shall only be reported to
Agent with such frequency and in such manner as Agent may reasonably require),
material claims of Account Debtors and any other matter affecting the value,
enforceability or collectibility of any Account. At Agent's request, any goods
reclaimed or repossessed by or returned to Borrowers will be set aside, marked
with Agent's name and held by Borrowers for the account of Agent and Lenders and
subject to the security interests of Agent and Lenders. All claims and disputes
relating to Accounts are to be promptly adjusted within a reasonable time, at
Borrowers' own cost and expense. Agent may, at its option, settle, adjust or
compromise claims and disputes relating to Accounts which are not adjusted by
Borrowers within a reasonable time.
9.2 RIGHT OF INSPECTION; ACCESS. Agent and Lenders and their respective
representatives shall, at all times during normal business hours, have free
access to and right of inspection of the Collateral and have full access to and
the right to examine and make copies of the books and records of Borrowers to
confirm and verify all Accounts, to perform general audits and to do whatever
else Agent and/or Lenders deem necessary to protect the interests of Lenders. At
any time on or after an Event of Default, Agent and Lenders may at any time
during normal business hours examine on the premises of Borrowers or require
Borrowers or any accountants and auditors employed by Borrowers to deliver
copies of any books and records and Agent and Lenders may, without cost or
expense to them, use such of Borrowers' personnel, supplies, computer equipment
and space at its places of business as may be reasonably necessary for the
handling of collections.
9.3 SPECIFIC POWERS. Each of Borrowers hereby constitutes Agent and its
designees, as its attorney-in-fact, with power of substitution, at the cost and
expense of Borrowers, to exercise at any time all or any of the following powers
which appointment, being coupled with an interest, shall be irrevocable until
all Obligations have been indefeasibly paid in full: (a) to receive, take,
endorse, assign, deliver, accept and deposit, in the name of Agent or Borrowers,
any and all checks, notes, drafts, remittances and other instruments and
documents or chattel paper relating to the Collateral; (b) to transmit to
Account Debtors notice of the interest of Agent and Lenders therein and to
request from such Account Debtors at any time, in the name of Agent or Lenders
or that of Agent's designee, information concerning the
67
Collateral and the amounts owing thereon; (c) on or after the occurrence of an
Event of Default, or an act, condition or event which with notice, passage of
time or both would constitute an Event of Default, to notify Account Debtors to
make payment directly to Agent; (d) on or after the occurrence of an Event of
Default, or an act, condition or event which with notice, passage of time or
both would constitute an Event of Default, to take or bring, in the name of
Agent or Borrowers, all steps, actions, suits or proceedings deemed by Agent
necessary or desirable to effect collection of the Collateral; and (e) to
execute in Borrowers' name and on its behalf any UCC financing statements or
amendments thereto. Each of Borrowers hereby releases Agent and each of Lenders
and their respective officers, employees and designees, from any liability
arising from any act or acts under this Agreement or in furtherance thereof,
whether of omission or commission, and whether based upon any error of judgment
or mistake of law or fact, except for Agent's or Lenders' gross negligence or
wilful misconduct as determined pursuant to a final non-appealable order of a
court of competent jurisdiction.
SECTION 10. EFFECTIVE DATE; TERMINATION; COSTS; MISCELLANEOUS
10.1 AGENT. Each of Lenders hereby appoints the Agent and the Agent hereby
agrees to act as agent under this Agreement and the other Financing Agreements.
The Agent shall have and may exercise such powers as are delegated to the Agent
by the terms hereof and of the Co-Lending and Agency Agreement, dated March 23,
1993, by and among Agent and Lenders, as amended. Each of Lenders hereby
authorizes, consents and directs Borrowers to deal with the Agent as the true
and lawful agent of such Lender to the extent set forth herein and at any time
directed by such Lender.
10.2 TERM.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date hereof and shall continue in full force and effect for
a term ending on the date three (3) years from the date hereof (the "Renewal
Date") and from year to year thereafter, unless sooner terminated pursuant to
the terms hereof; provided, that, Lenders or both Borrowers (but not either
Borrower alone) may terminate this Agreement and the other Financing Agreements
effective on the Renewal Date or on the anniversary of the Renewal Date in any
year by giving to the other party at least ninety (90) days prior written
notice. This Agreement and all other Financing Agreements must be terminated
simultaneously.
(b) In addition, without limiting the foregoing, upon the occurrence
of an Event of Default or an act, condition or event which with notice or
passage of time or both would constitute an Event of Default, Agent and Lenders
may, at their option, without notice, cease or suspend the making of Loans or
arranging for Letter of Credit Accommodations or reduce the lending formulas or
amounts of Loans and Letter of Credit Accommodations available to Borrowers.
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(c) Upon the effective date of termination or non-renewal of the
Financing Agreements, Borrowers shall pay to Agent for the account of Lenders in
full, all outstanding and unpaid Obligations (including, but not limited to, the
Loans and all interest, fees (including the early termination fees provided
herein, if applicable), charges, expenses and other amounts provided for
hereunder, under the other Financing Agreements or otherwise) and shall furnish
cash collateral to Agent in such amounts as Agent determines are reasonably
necessary to secure Agent from loss, cost, damage or expense, including
attorneys' fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Agent has not yet received final and indefeasible payment. Such
payments and cash collateral shall be remitted by wire transfer in federal funds
to such bank account of Agent, as Agent may, in its discretion, designate in
writing to Borrowers for such purpose. Interest at the Interest Rate shall be
due until and including the next Business Day, if the amounts so paid by
Borrowers to the bank account designated by Agent are received in such bank
account later than 12:00 noon, New York, New York time.
(d) No termination of the Financing Agreements shall relieve or
discharge Borrowers of their duties, obligations and covenants under the
Financing Agreements until all Obligations have been fully indefeasibly
discharged and paid, and Agent's and Lenders' continuing security interests in
the Collateral shall remain in effect until all such Obligations have been fully
and indefeasibly discharged and paid.
(e) If Lenders terminate this Agreement or the other Financing
Agreements upon the occurrence of an Event of Default or, subject to Section
3.10(e) hereof, at the request of Borrowers prior to the Renewal Date, or prior
to any subsequent anniversary of the Renewal Date, in view of the impracticality
and extreme difficulty of ascertaining actual damages and by mutual agreement of
the parties as to a reasonable calculation of Lenders' lost profits as a result
thereof, Borrowers hereby agree to pay to Agent for the account of Lenders, upon
the effective date of such termination, an early termination fee in an amount
equal to:
(i) two (2%) percent of the Maximum Credit, if such termination
is effective on or prior to the first anniversary of this Agreement; or
(ii) one (1%) percent of the Maximum Credit, if such termination
is effective after the first anniversary of this Agreement but on or prior to
the second anniversary of this Agreement; or
(iii) one-half of one (1/2%) percent of the Maximum Credit, if
such termination is effective after the second anniversary of this Agreement but
on or prior to the date which is one hundred eighty (180) days prior to the
third (3rd) anniversary of this Agreement; or
(iv) zero (0%) percent, if such termination is effective after
the date which is one hundred eighty (180) days prior to the third (3rd)
anniversary of this
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Agreement and on or prior to the third (3rd) anniversary of this Agreement; or
(v) one-half of one (1/2%) percent of the Maximum Credit, if such
termination is effective after the third (3rd) anniversary of this Agreement and
during any renewal period.
Such early termination fee shall be presumed to be the amount of damages
sustained by said early termination and Borrowers agrees that it is reasonable
under the circumstances currently existing. The early termination fee provided
for in this Section 10.2 shall be deemed included in the Obligations.
10.3 EXPENSES AND ADDITIONAL FEES.
(a) Each of Borrowers shall pay to Agent on demand all reasonable
costs and expenses that Agent and Lenders pay or incur in connection with the
negotiation, preparation, consummation, administration, enforcement, and
termination of this Agreement and the other Financing Agreements, including,
without limitation: (i) reasonable attorneys' and paralegals' fees and
disbursements of counsel to Agent and Lenders and any Participant (including
allocated costs of in-house counsel); (ii) reasonable costs and expenses
(including reasonable attorneys' and paralegals' fees and disbursements, and
allocated costs of in-house counsel) for any amendment, supplement, waiver,
consent, or subsequent closing in connection with the Financing Agreements and
the transactions contemplated thereby; (iii) costs and expenses of lien and
title searches and title insurance; (iv) taxes, fees and other charges for
recording any agreements or documents with the Office of Patents and Trademarks,
the Copyright Office or any other governmental authority, and the filing of UCC
financing statements and continuations, and other actions to perfect, protect,
and continue the security interests and liens of Agent and Lenders in the
Collateral; (v) sums paid or incurred to pay any amount or take any action
required of Borrowers under the Financing Agreements that Borrowers fail to pay
or take; (vi) costs of appraisals and environmental audits (including allocated
costs for in- house appraisals or environmental reviews), inspections, and
verifications of the Collateral (except not for any audit or field examination
charges and expenses); (vii) reasonable costs and expenses of forwarding loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining payment accounts and lock boxes; (viii) costs and expenses of
preserving and protecting the Collateral; and (ix) reasonable costs and expenses
(including reasonable attorneys' and paralegals' fees and disbursements and
allocated costs of in-house counsel) paid or incurred to obtain payment of the
Obligations, enforce the security interests and liens of Agent and Lenders, sell
or otherwise realize upon the Collateral, and otherwise enforce the provisions
of this Agreement and the other Financing Agreements, or to defend any claims
made or threatened against Agent and Lenders arising out of the transactions
contemplated hereby (including, without limitation, preparations for and
consultations concerning any such matters). The foregoing shall not be construed
to limit any other provisions of the Financing Agreements regarding costs and
expenses to be paid by Borrowers.
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(b) Each of Borrowers shall pay to Agent and Lenders all of their
customary charges and fees in connection with (i) any payment, claim or refund
relating to the dishonor of any checks or other items of any of Borrowers or
Account Debtors, and (ii) wire transfers to Borrowers.
(c) All sums provided for in this Section 10.3 shall be part of the
Obligations, shall be payable on demand, and shall accrue interest after demand
for payment thereof at the applicable rate of interest then payable hereunder.
Agent is hereby irrevocably authorized to charge any amounts payable hereunder
directly to any of the account(s) maintained by Agent with respect to Borrowers.
10.4 SURVIVAL OF AGREEMENT. All agreements, representations and warranties
contained herein or made in writing by the parties hereto in connection with the
transactions contemplated hereby shall survive the execution and delivery of
this Agreement, the other Financing Agreements and the consummation of the
transactions contemplated herein or therein regardless of any investigation made
by or on behalf of Lenders.
10.5 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise, and no delay
in exercising on the part of Agent or Lenders any right, power or privilege
under this Agreement or under any of the other Financing Agreements or other
documents referred to herein or therein shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power and privilege. No notice to or demand on Borrowers not
required hereunder or any of the other Financing Agreements shall entitle
Borrowers to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of Agent and Lenders to any
other or further action in any circumstances without notice or demand. The
rights and remedies of Agent and Lenders under this Agreement, the other
Financing Agreements and any other present and future agreements between Agent,
Lenders and Borrowers are cumulative and not exclusive of any rights or remedies
provided by law or under any of the Financing Agreements or such other
agreements and all such rights and remedies may be exercised successively or
concurrently.
10.6 NOTICES. All notices, requests and demands hereunder shall be in
writing and (a) made to Agent and Lenders at their address set forth below and
to Borrowers at their chief executive offices set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provisions, and (b) deemed to have been given or made if
delivered in person, immediately upon delivery; if by facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests and
demands upon the parties are to be given to the following addresses (or to such
other address as any party may designate by notice in accordance with this
Section):
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If to Borrowers: Pamida, Inc.
▇▇▇▇ ▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
If to Agent
or Congress: Congress Financial Corporation (Southwest)
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to BABC: BankAmerica Business Credit Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President
and Divisional Manager
10.7 ENTIRE AGREEMENT. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represent the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior and contemporaneous agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, offers and contracts concerning the subject matter hereof and
thereof, whether oral or written.
10.8 AMENDMENTS AND WAIVERS. Neither this Agreement, nor any of the other
Financing Agreements or any other instrument or document referred to herein or
therein may be changed, waived, discharged or terminated orally, except by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
10.9 APPLICABLE LAW. The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (other than the Mortgages to the
extent otherwise specifically provided therein) and any dispute arising out of
the relationship between the parties hereto, whether in contract, tort, equity
or otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
10.10 SUCCESSORS. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Agent, Lenders, Borrowers and their
respective successors and assigns, except that Borrowers may not assign their
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any Lender may, after notice to Borrowers, assign its rights
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and delegate its obligations under this Agreement and the other Financing
Agreements. In addition, any Lender may, after notice to Borrowers, sell
participations in, all or any part of the Loans, or any other interest herein to
another financial institution or other person. Agent and Lenders may furnish any
information concerning Borrowers in the possession of Agent and Lenders from
time to time to assignees and Participants or prospective assignees and
Participants.
10.11 PARTIAL INVALIDITY. If any provision of this Agreement or the other
Financing Agreements is held to be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate this Agreement or the other Financing
Agreements as a whole but this Agreement or the particular Financing Agreement,
as the case may be, shall be construed as though it did not contain the
particular provision or provisions held to be invalid or unenforceable and the
rights and obligations of the parties shall be construed and enforced only to
such extent as shall be permitted by law.
10.12 HEADINGS. The headings used herein are for convenience only and do
not constitute matters to be considered in interpreting this Agreement.
10.13 PARTICIPANT'S SECURITY INTERESTS. If a Participant shall at any time
participate with Lenders in the Loans and Letter of Credit Accommodations,
Borrowers hereby grant to such Participant and such Participant shall have and
is hereby given, a continuing lien on and security interest in any money,
securities and other property of Borrowers in the custody or possession of the
Participant, including the right of setoff, to the extent of the Participant's
participation in the Obligations, and such Participant shall be deemed to have
the same right of setoff to the extent of its participation in the Obligations,
as it would have if it were a direct Lender.
10.14 WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
IN ANY ACTION OR PROCEEDING OF ANY KIND WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF THIS AGREEMENT, THE OTHER FINANCING AGREEMENTS, THE OBLIGATIONS,
THE COLLATERAL OR ANY INSTRUMENT, DOCUMENT OR GUARANTY DELIVERED PURSUANT HERETO
OR TO ANY OF THE FOREGOING, OR THE VALIDITY, PROTECTION, INTERPRETATION,
ADMINISTRATION, COLLECTION OR ENFORCEMENT HEREOF OR THEREOF OR PURSUANT TO THE
OTHER FINANCING AGREEMENTS, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING
BETWEEN BORROWERS AND AGENT AND/OR LENDERS.
10.15 WAIVER OF COUNTERCLAIMS; JURISDICTION; SERVICE OF PROCESS. EACH OF
BORROWERS HEREBY WAIVES ALL RIGHTS OF SETOFF AND RIGHTS TO IMPOSE COUNTERCLAIMS
(OTHER THAN COMPULSORY COUNTERCLAIMS) IN THE EVENT OF ANY LITIGATION WITH
RESPECT TO ANY MATTER CONNECTED WITH THIS AGREEMENT, THE OTHER FINANCING
AGREEMENTS, THE OBLIGATIONS, THE COLLATERAL, OR ANY TRANSACTION BETWEEN THE
PARTIES HERETO, AND IRREVOCABLY CONSENTS AND SUBMITS
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TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK
IN NEW YORK CITY AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK AND THE DISTRICT COURT OF THE STATE OF TEXAS AND THE UNITED STATES
DISTRICT FOR THE NORTHERN DISTRICT OF TEXAS AND THE COURTS OF ANY STATE IN WHICH
ANY OF THE COLLATERAL IS LOCATED AND OF ANY FEDERAL COURT LOCATED IN SUCH STATES
IN CONNECTION WITH ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE OTHER FINANCING AGREEMENTS, THE OBLIGATIONS, THE COLLATERAL
OR ANY DOCUMENT, INSTRUMENT OR GUARANTY DELIVERED PURSUANT HERETO OR TO ANY OF
THE FOREGOING. IN ANY SUCH LITIGATION, EACH OF BORROWERS WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT THE SERVICE THEREOF
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED AND BY
TELECOPIER, DIRECTED TO IT AT ITS CHIEF EXECUTIVE OFFICE SET FORTH HEREIN, OR
DESIGNATED IN WRITING PURSUANT TO THIS AGREEMENT, OR IN ANY OTHER MANNER
PERMITTED BY THE RULES OF SAID COURTS. WITHIN THIRTY (30) DAYS AFTER SERVICE,
THE BORROWERS NAMED IN SUCH SUMMONS, COMPLAINT OR OTHER PROCESS SHALL APPEAR TO
ANSWER SUCH SUMMONS, COMPLAINT OR OTHER PROCESS, FAILING WHICH BORROWERS SHALL
BE DEEMED IN DEFAULT AND JUDGMENT MAY BE ENTERED BY LENDERS AGAINST SUCH
BORROWERS FOR THE AMOUNT OF THE CLAIM AND OTHER RELIEF REQUESTED THEREIN.
10.16 INDEMNIFICATION. Each of Borrowers hereby indemnifies, defends and
holds each of Agent and Lenders, and its directors, officers, agents, employees
and counsel, harmless from and against any and all losses, claims, damages,
liabilities, deficiencies, judgments, penalties or expenses imposed on, incurred
by or asserted against any of them, except as a result of Agent's or Lenders'
gross negligence or wilful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction, whether direct,
indirect or consequential arising out of or by reason of any litigation,
investigations, claims, or proceedings (whether based on any federal, state or
local laws or other statutes or regulations, including, without limitation,
securities, environmental, or commercial laws and regulations, under common law
or at equitable cause, or on contract or otherwise) commenced or threatened,
which arise out of or are in any way based upon the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this
Agreement, any of the other Financing Agreements, or any undertaking or
proceeding related to any of the transactions contemplated hereby or any act,
omission to act, event or transaction related or attendant thereto, including,
without limitation, amounts paid in settlement, court costs, and the fees and
expenses of counsel reasonably incurred in connection with any such litigation,
investigation, claim or proceeding. Agent shall provide notice to Borrowers of
any litigation for which Agent may seek indemnification under this Section
10.16. Without limiting the foregoing, if, by reason of any suit or proceeding
of any kind, nature, or description against Borrowers, or by Borrowers or any
other party against Agent and/or Lenders, which in Agent's or such Lender's
discretion makes it advisable for Agent or such Lender to seek
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counsel for protection and preservation of its liens and security interests, or
to defend its own interest, such expenses and counsel fees shall be allowed to
Agent or such Lender. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in this Section may be unenforceable because it is
violative of any law or public policy, each of Borrowers shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all indemnified matters incurred by Agent
and/or Lenders. The provisions of this Section 10.16 shall survive the
termination of this Agreement and the other Financing Agreements and the
repayment of the Obligations. All of the foregoing costs and expenses shall be
part of the Obligations and secured by the Collateral.
10.17 TEXAS DTPA WAIVER AND RELATED MATTERS.
(a) Each of Borrowers hereby waives all provisions of the Deceptive
Trade Practices Act-Consumer Protection Act ("DTPA"), other than Section 17.555,
pertaining to contribution and each of Borrowers (i) has assets of $5,000,000 or
more, (ii) has knowledge and experience in financial and business matters that
enable each of Borrowers to evaluate the merits and risks of this transaction,
and (iii) is not in a significantly disparate bargaining position relative to
Agent or Lenders.
(b) THE NOTICE IN THIS SECTION 10.17(B) RELATES TO ALL OF THE
FINANCING AGREEMENTS. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
(c) The provisions of Chapter 15 of the Texas Credit Code (Vernon's
Texas Civil Statutes), Article 5069-15, as amended, are specifically declared by
all parties hereto not to be applicable to this Agreement or to any of the other
agreements executed in connection herewith or to the transactions contemplated
hereby or thereby.
10.18 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by Agent, Lenders and Borrowers in separate counterparts, each
of which shall be an original, but all of which shall together constitute one
and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Agent, Lenders and Borrowers have caused these presents
to be duly executed as of the day and year first above written.
AGENT BORROWERS
CONGRESS FINANCIAL CORPORATION PAMIDA, INC.
(SOUTHWEST), Agent
By:____________________
By:____________________ Title:_________________
Title:_________________
SEAWAY IMPORTING COMPANY
By:____________________
Title:_________________
LENDERS
CONGRESS FINANCIAL CORPORATION BANKAMERICA BUSINESS CREDIT, INC.
(SOUTHWEST)
By:____________________ By:____________________
Title:_________________ Title:_________________
COMMITMENT: COMMITMENT:
----------- -----------
$75,000,000 $50,000,000
COMMITMENT PERCENTAGE: COMMITMENT PERCENTAGE:
---------------------- ----------------------
60% 40%
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