Exhibit 10.8
CREDIT AGREEMENT
This Agreement, dated as of December 6, 1996, is among PETCO
ANIMAL SUPPLIES, INC., a Delaware corporation (the "Borrower"),
the Lenders and UNION BANK OF CALIFORNIA, N.A. ("UBOC"), as
Agent. The parties hereto agree as follows:
RECITALS
WHEREAS, UBOC (as successor by merger to Union Bank) and the
Borrower are parties to that Loan Agreement dated as of May 10,
1995 (the "Prior Loan Agreement"); and
WHEREAS, the Lenders have agreed, on the terms and
conditions herein set forth, to extend credit to the Borrower for
the purposes of repaying all amounts under the Prior Loan
Agreement and making permitted acquisitions and capital
expenditures and for general working capital purposes;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto hereby
agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of
related transactions, consummated on or after the date of this
Agreement, by which the Borrower or any of its Subsidiaries (i)
acquires any going business in the pet food and supply business
or related fields or all or substantially all of the assets of
any firm, corporation or division thereof in the pet food and
supply business or related fields, whether through purchase of
assets, merger or otherwise or (ii) directly or indirectly
acquires (in one transaction or as the most recent transaction in
a series of transactions) at least a majority (in number of
votes) of the securities of a corporation in the pet food and
supply business or related fields which have ordinary voting
power for the election of directors (other than securities having
such power only by reason of the happening of a contingency) or a
majority (by percentage or voting power) of the outstanding
partnership interests of a partnership in the pet food and supply
business or related fields.
"Acquisition Documents" means the purchase agreement,
together with all schedules and exhibits referenced therein and
the legal opinions delivered in connection therewith in
connection with any Acquisition.
"Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Loans made by the Lenders to the
Borrower of the same Type and, in the case of a LIBOR Loan, for
the same Interest Period.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control
with such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through
ownership of stock, by contract or otherwise.
"Agent" means Union Bank of California, N.A. in its capacity
as administrative agent for the Lenders pursuant to Article 10,
and not in its individual capacity as a Lender, and any successor
Agent appointed pursuant to Article 10.
"Aggregate Available Commitment" means the aggregate of the
Available Commitments of all the Lenders.
"Aggregate Commitment" means the aggregate of the
Commitments of all the Lenders.
"Agreement" means this Credit Agreement, as it may be
amended or modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted
accounting principles as in effect from time to time, applied in
a manner consistent with that used in preparing the financial
statements referred to in Section 5.6 (except for changes
concurred on by the Borrower's independent public accountants and
the Required Lenders).
"Applicable Lending Office" means for any Lender, its
offices for LIBOR Loans and Base Rate Loans, specified in
Schedule 1 or in the Assignment and Acceptance pursuant to which
it became a party hereto, as the case may be, any of which
offices may, upon 10 days' prior written notice to the Agent and
the Borrower, be changed by such Lender.
"Applicable Margin": for each LIBOR Loan and for each Base
Rate Loan as set forth below:
LIBOR Base
Leverage Ratio Level Margin Rate Margin
1 .375% 0%
2 .50% 0%
3 .625% 0%
4 .75% 0%
5 1.00% 0%
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Assignment and Acceptance" means an Assignment and
Acceptance in the form of Exhibit C hereto.
"Authorized Officer" means any of the chief executive
officer, chief financial officer or any senior vice president
(specifically authorized by the Borrower) of the Borrower, acting
singly.
"Available Commitment" means, with respect to each Lender,
the amount by which (i) the Commitment of each Lender on such
date exceeds (ii) the sum of (a) the aggregate principal sum of
such Lender's Loans outstanding, (b) such Lender's Commitment
Percentage of the aggregate Letter of Credit Amount of all
Letters of Credit outstanding and (c) such Lender's Commitment
Percentage of the aggregate amount of unreimbursed drawings under
all Letters of Credit on such date.
"Base Rate" means, for any day, a rate per annum equal to
(i) the Corporate Base Rate for such day plus (ii) the Applicable
Margin, in each case changing when and as the Corporate Base Rate
changes.
"Base Rate Loan" means a Loan when it bears interest at the
Base Rate.
"Borrower" means Petco Animal Supplies, Inc., a Delaware
corporation, and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made
hereunder.
"Business Day" means any day (a) other than a Saturday,
Sunday or other day on which commercial banks are authorized or
required by law to close in Los Angeles, California and (b) if
the applicable Business Day relates to a LIBOR Loan, on which
dealings are carried on in the London interbank market.
"Capital Expenditures" means, for any period, for any person
or entity, the aggregate of all expenditures which are made
during such period (whether paid in cash or accrued as
liabilities), by such person or entity, for property, plant or
equipment and which would be reflected as additions to property,
plant or equipment on a balance sheet of such person or entity
prepared in accordance with Agreement Accounting Principles
(including, without limitation, all such property held under
Capitalized Leases).
"Capitalized Lease" of a Person means any lease of Property
by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"Closing Date" means the date on which all the conditions
precedent set forth in Section 4.1 shall have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such
Lender to make Loans not exceeding the amount set forth opposite
its name on Schedule 1 hereto or as set forth in any Assignment
and Acceptance relating to any assignment that has become
effective pursuant to Section 12.3, as such amount may be
modified from time to time pursuant to the terms hereof.
"Commitment Percentage" means as to any Lender at any time,
the percentage of the Aggregate Commitments then constituted by
such Lender's Commitments.
"Compliance Certificate" has the meaning set forth in
Section 6.1(v).
"Consideration" means, with respect to any Acquisition, the
aggregate consideration, in whatever form (including, without
limitation, cash payments, the principal amount of promissory
notes and Debt assumed, the aggregate amounts payable to acquire,
extend and exercise any option, the aggregate amount payable
under non-compete agreements and management agreements and the
fair market value of other property delivered) paid, delivered or
assumed by the Borrower and its Subsidiaries for such Acquisition
and the expenses associated therewith, including all brokerage
commissions, legal fees and similar expenses. Notwithstanding
anything herein to the contrary, no Acquisition involving the
assumption of Debt by the Borrower or its Subsidiaries shall be
permitted if such assumption would violate the terms of this
Agreement.
"Consolidated Fixed Charges" means, for the Borrower and its
Subsidiaries, on a consolidated basis, for any period of four
consecutive fiscal quarters, the sum (without duplication) of (i)
Interest Expense for such period, (ii) the aggregate principal
amount of all scheduled payments of Debt (including the principal
portion of rentals under Capitalized Leases) required to be made
during such period and (iii) all taxes required to be paid during
such period.
"Consolidated Net Worth" means with respect to the Borrower
and its Subsidiaries, the excess of total assets over total
liabilities, all to be determined on a consolidated basis in
accordance with Agreement Accounting Principles.
"Control" means the power to direct or cause the direction
of the management or policies of a person, whether through rights
of ownership under voting securities, under contract or
otherwise, and "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Controlled Group" means all members of a controlled group
of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower or any of its Subsidiaries, are treated as a single
employer under Section 414 of the Code.
"Conversion/Continuation Notice" is the notice referred to
in Section 2.12.
"Corporate Base Rate" means a rate per annum equal to the
corporate base rate of interest announced by UBOC from time to
time, changing when and as said corporate base rate changes.
"Debt" of any person or entity means (i) all indebtedness of
such person or entity for borrowed money or for the deferred
purchase price of property or services, (ii) all obligations of
such person or entity evidenced by notes, bonds, debentures or
other similar instruments, (iii) all indebtedness created or
arising under any conditional-sale or other title-retention
agreement with respect to property acquired by such person or
entity, (iv) all obligations of such person or entity as lessee
under leases that have been or should be, in accordance with
Agreement Accounting Principles, recorded as Capitalized Leases,
(v) all obligations of such person or entity under direct or
indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to
secure a credit against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (i),
(ii), (iii) or (iv) above and (vi) liabilities in respect of
unfunded vested benefits under plans covered by Title IV of
ERISA.
"Default" means any Event of Default and any default, event
or condition that would, with the giving of any requisite notice
and the passage of any requisite period of time, constitute an
Event of Default.
"Drawing Lender" has the meaning set forth in Section
2.10(iii).
"EBITDA" means for any period, for the fiscal quarter most
recently ended and the immediately preceding three fiscal
quarters, Net Income after eliminating extraordinary gains and
losses, plus (i) provisions for taxes, (ii) depreciation and
amortization, (iii) Interest Expense and (iv) all non-cash
Acquisition-related costs (including charges related to fixed
asset write-downs, lease cancellations and Acquisition-specific
non-cash charges; provided that with regard to lease
cancellations and other types of non-cash Acquisition costs, the
Borrower may include initial non-cash reserves and deduct, in the
following quarters, any cash payments made on the related
reserves).
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any State thereof, and
having total assets in excess of $250,000,000; (ii) a commercial
bank organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and
having total assets in excess of $250,000,000, provided that such
bank is acting through a branch or agency located in the United
States; (iii) an insurance company or other financial institution
or an investment fund that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of
its business and having total assets in excess of $250,000,000;
(iv) any Affiliate of an existing Lender; and (v) any other
Person approved by the Agent and, in the absence of any Default,
the Borrower.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any rule or regulation
issued thereunder.
"Eurocurrency Liabilities" has the meaning set forth in
Regulation D of the Board of Governors of the Federal Reserve
System.
"Event of Default" has the meaning set forth in Section 7.
"Facility Termination Date" means December 6, 1998.
"Federal Funds Effective Rate" means, for any day, an
interest rate per annum equal to the weighted average of the
rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or, if such day is not a Business
Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the
quotations at approximately 10 a.m., Los Angeles time, on such
day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its
sole discretion.
"Funded Debt" means the sum of the outstanding principal
balance of all Debt of the Borrower and its Subsidiaries
described in clauses (i), (ii), (iii) and (iv) of the definition
of "Debt" set forth herein.
"Governmental Person" means, whether domestic or foreign,
any national, federal, state or local government, any political
subdivision thereof or any governmental, quasi-governmental,
judicial, public or regulatory instrumentality, authority, body
or entity, including the Federal Deposit Insurance Corporation,
the Comptroller of the Currency, the Board of Governors of the
Federal Reserve System, any central bank and any comparable
authority.
"Governmental Rule" means any treaty, law, rule, regulation,
ordinance, order, code, judgment, decree, directive,
interpretation, request, guideline, policy or similar form of
decision of any Governmental Person.
"Guarantors" means International Pet Supplies and
Distribution, Inc., a California corporation, and Pet Nosh,
Consolidated Co., Inc., a New York corporation.
"Guaranties" means, collectively, each Guaranty dated as of
even date herewith executed by a Guarantor in favor of the Agent,
for the benefit of the Lenders, and in form and substance
satisfactory to the Agent, as it may be amended from time to
time.
"Interest Expense" means as of any date, for the fiscal
quarter most recently ended and the immediately preceding three
fiscal quarters, the sum of (i) the amount of all interest on
Funded Debt which was paid, payable and/or accrued for such
period (without duplication of previous amounts) and (ii) all
commitment, letter of credit or line of credit fees paid, payable
and/or accrued for such period (without duplication of previous
amounts) to any lender in exchange for such lender's commitment
to lend.
"Interest Period" means, with respect to a LIBOR Loan, a
period of one, two, three or six months, commencing on a Business
Day selected by the Borrower pursuant to this Agreement. Such
Interest Period shall end on (but exclude) the day which
corresponds numerically to such date one, two or three or six
months thereafter, provided, however, that if there is no such
numerically corresponding day in such next, second or third or
sixth succeeding month, such Interest Period shall end on the
last Business Day of such next, second or third or sixth
succeeding month. If an Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall end
on the next succeeding Business Day, provided, however, that if
said next succeeding Business Day falls in a new calendar month,
such Interest Period shall end on the immediately preceding
Business Day. No Interest Period may end after the Facility
Termination Date.
"Lenders" means the lending institutions listed on the
signature pages of this Agreement and their respective successors
and assigns.
"Letter of Credit Amount" means the stated maximum amount
available to be drawn under a particular Letter of Credit, as
such amount may be reduced or reinstated from time to time in
accordance with the terms of such Letter of Credit.
"Letter of Credit Request" means a request by the Borrower
for the issuance of a Letter of Credit, on the Agent's standard
form of standby or commercial letter of credit application and
agreement, the current form of which is attached hereto as
Exhibit E, and containing terms and conditions satisfactory to
the Agent in its sole discretion.
"Letter of Credit" shall have the meaning set forth in
Section 2.1.
"Leverage Ratio Level": if the Total Debt Ratio shall be
less than or equal to 1.49:1.00, the Leverage Ratio Level shall
be 1; if the Total Debt Ratio shall be equal to or greater than
1.50:1.00 and equal to or less than 1.99:1.00, the Leverage Ratio
Level shall be 2; if the Total Debt Ratio shall be equal to or
greater than 2.00:1.00 and equal to or less than 2.49:1.00, the
Leverage Ratio Level shall be 3; if the Total Debt Ratio shall be
equal to or greater than 2.50:1.00 and equal to or less than
2.75:1.00, the Leverage Ratio Level shall be 4; and if the Total
Debt Ratio shall be equal to or greater than 2.76:1.00, the
Leverage Ratio Level shall be 5.
"Leverage Ratio Level Certificate" is defined in Section
2.13.
"LIBOR" means, for any Interest Period for any LIBOR Loan,
the interest rate per annum obtained by dividing (a) the average
of the respective rates per annum at which deposits in United
States dollars are offered to the Agent in London, England in the
London interbank market at 11 a.m., London time, two Business
Days before the first day of such Interest Period in an amount
substantially equal to the amount of such Loan and for a period
equal to such Interest Period by (b) a percentage equal to 100%
minus the LIBOR Reserve Percentage for such Interest Period.
"LIBOR Loan" means a Loan when it bears interest at the
LIBOR Rate.
"LIBOR Rate" means, with respect to a LIBOR Loan for the
relevant Interest Period, the sum of (i) LIBOR applicable to such
Interest Period, plus (ii) the Applicable Margin. The LIBOR Rate
shall be rounded to the next higher multiple of 1/100 of 1% if
the rate is not such a multiple.
"LIBOR Reserve Percentage" means, for any Interest Period
for any LIBOR Loan, the reserve percentage applicable two
Business Days before the first day of such Interest Period under
regulations issued from time to time by the Board of Governors of
the Federal Reserve System for determining the maximum reserve
requirements (including any emergency, supplemental or other
marginal reserve requirement) for the Bank with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities
that includes deposits by reference to which the interest rate on
such LIBOR Loan is determined) having a term equal to such
Interest Period.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential
arrangement, including the lien or retained title of a
conditional vendor and any easement, right of way or other
encumbrance on title to real property.
"Loan" means, with respect to a Lender, a LIBOR Loan or a
Base Rate Loan.
"Loan Documents" means this Agreement, any Letter of Credit
Requests, the Letters of Credit, the Notes and the Guaranties
executed by the Borrower or any Guarantor in connection herewith
and any other agreement executed by the Borrower or any Guarantor
in connection herewith, as such agreements and documents may be
amended, supplemented and otherwise modified from time to time in
accordance with the terms hereof.
"Material Adverse Effect" means a material adverse effect on
(i) the business, Property, condition (financial or otherwise) or
results of operations of the Borrower and its Subsidiaries taken
as a whole, (ii) the ability of the Borrower to perform its
obligations under the Loan Documents or (iii) the validity or
enforceability of any of the Loan Documents or the rights or
remedies of the Agent or the Lenders thereunder.
"Multiemployer Plan" means a Plan that is a "multiemployer
plan" as defined in Section 3(37) or 4001(i)(3) of the Borrower's
ERISA Plan.
"Net Income" means for the Borrower and its Subsidiaries on
a consolidated basis, net income as determined in accordance with
Agreement Accounting Principles.
"Note" means a promissory note, in substantially the form of
Exhibit A hereto, duly executed by the Borrower and payable to
the order of a Lender in the amount of its Commitment, including
any amendment, modification, renewal or replacement of such
promissory note.
"Notice of Assignment" is defined in Section 12.3(ii).
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Notes, the obligation to reimburse
drawings under Letters of Credit (including the contingent
obligation to reimburse any drawings under outstanding Letters of
Credit), all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower
to the Lenders or to any Lender, the Agent or any indemnified
party hereunder arising under the Loan Documents.
"Participants" is defined in Section 12.2(i).
"Payment Date" means the first day of each January, April,
July and October in each calendar year.
"PBGC" means the Pension Benefit Guaranty Corporation, or
any successor thereto.
"Person" means any natural person, corporation, firm,
limited liability company, joint venture, partnership,
association, enterprise, trust or other entity or organization,
or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code maintained by or
contributed to by the Borrower or any member of the Controlled
Group.
"Prior Loan Agreement" is defined in the first Recital.
"Property" of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person,
or other assets owned, leased or operated by such Person.
"Purchasers" is defined in Section 12.3(i).
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and
any successor thereto or other regulation or official
interpretation of said Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve
System.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and
any successor or other regulation or official interpretation of
said Board of Governors relating to the extension of credit by
banks for the purpose of purchasing or carrying margin stocks
applicable to member banks of the Federal Reserve System.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such
section, with respect to a Single Employer Plan, excluding,
however, such events as to which the PBGC by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified
within 30 days of the occurrence of such event, provided,
however, that a failure to meet the minimum funding standard of
Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any such waiver of
the notice requirement in accordance with either Section 4043(a)
of ERISA or Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at
least 76% of the Aggregate Commitment or, if the Aggregate
Commitment has been terminated, Lenders in the aggregate holding
at least 76% of the aggregate unpaid principal amount of the
outstanding Loans.
"SEC" means the United States Securities and Exchange
Commission.
"SEC Report" means a Current Report on Form 8-K pursuant to
the Securities Exchange Act of 1934.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Single Employer Plan" means a Plan other than a
Multiemployer Plan.
"Subsidiary" of a Person means (i) any corporation more than
50% of the outstanding securities having ordinary voting power of
which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries
or by such Person and one or more of its Subsidiaries, or (ii)
any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references
herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.
"Taxes" is defined in Section 3.2.
"Total Debt Ratio" means for the Borrower and its
Subsidiaries on a consolidated basis, determined as of the end of
each fiscal quarter for the period of four fiscal quarters then
ended, the ratio of Funded Debt (including obligations under
Capitalized Leases) outstanding at such time to EBITDA.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to a Loan, its nature as a Base
Rate Loan or a LIBOR Loan.
"UBOC" means Union Bank of California, N.A. in its
individual capacity, and its successors.
"Unfunded Liabilities" means the amount (if any) by which
the present value of all nonforfeitable benefits under all Single
Employer Plans exceeds the fair market value of all such Plan
assets allocable to such benefits, all determined in accordance
with the respective most recent valuations for such Plans.
The foregoing definitions shall be equally applicable to
both the singular and plural forms of the defined terms.
ARTICLE 2
THE CREDIT
2.1 Commitment. Each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Loans on a
revolving credit basis to the Borrower from time to time and to
participate in standby and/or commercial letters of credit issued
for the account of the Borrower pursuant to Section 2.10 from
time to time (each a "Letter of Credit" and, collectively, the
"Letters of Credit"), from and including the Closing Date to but
excluding the Facility Termination Date in an amount not to
exceed the amount of its Commitment. The sum of (i) the
aggregate principal amount of all Loans outstanding, (ii) the
aggregate Letter of Credit Amount of all Letters of Credit
outstanding and (iii) the aggregate amount of unreimbursed
drawings under all Letters of Credit shall not exceed, at any
time, the amount of the Aggregate Commitment. Further, the sum
of (a) the aggregate Letter of Credit Amount of all Letters of
Credit outstanding and (b) the aggregate amount of unreimbursed
drawings under all Letters of Credit shall not exceed $3,500,000
at any time. Within the limit of each Lender's Commitment, the
Borrower may borrow, have Letters of Credit issued and/or renewed
for the Borrower's account, prepay Loans, reborrow and have
additional Letters of Credit issued for the Borrower's account.
2.2 Commitment Percentage. The principal amount of each
Lender's Loan and participation in a Letter of Credit shall be in
an amount equal to the product of (i) such Lender's Commitment
Percentage (expressed as a fraction) and (ii) the total amount of
the Loan or Loans or Letters of Credit requested; provided that
in no event shall any Lender be obligated to make a Loan if after
giving effect to such Loan such Lender's Loans, Commitment
Percentage of the aggregate Letter of Credit Amount of all
Letters of Credit outstanding and Commitment Percentage of the
aggregate amount of unreimbursed drawings under all Letters of
Credit outstanding would exceed its Commitment or if the amount
of such requested Loan is in excess of such Lender's Available
Commitment.
2.3 Types of Loans. The Loans may from time to time be (i)
LIBOR Loans, (ii) Base Rate Loans or (iii) a combination thereof,
as determined by the Borrower and notified to the Agent in
accordance with Section 2.12. Notwithstanding the foregoing, the
initial Loans made on the Closing Date shall be made as Base Rate
Loans and shall be subject to conversion to LIBOR Loans pursuant
to Section 2.12. Each Lender may make or maintain its Loans to
the Borrower by or through any Applicable Lending Office. At no
time shall more than ten Advances be outstanding.
2.4 Notes. The Loans made by each Lender to the Borrower shall
be evidenced by a Note, with appropriate insertions therein as to
payee, date and principal amount, payable to the order of such
Lender and representing the obligation of the Borrower to pay the
aggregate unpaid principal amount of all Loans made by such
Lender to the Borrower, with interest thereon as prescribed in
Sections 2.13 and 2.14. Each Lender is hereby authorized (but
not required) to record the date and amount of each payment or
prepayment of principal of its Loans made to the Borrower, each
continuation thereof, each conversion of all or a portion thereof
to another Type and, in the case of LIBOR Loans, the length of
each Interest Period with respect thereto, in the books and
records of such Lender, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so
recorded. The failure of any Lender to make any such recordation
or notation in the books and records of the Lender (or any error
in such recordation or notation) shall not affect the obligations
of the Borrower hereunder or under the Notes. Each Note shall
(i) be dated the Closing Date, (ii) provide for the payment of
interest in accordance with Sections 2.13 and 2.14 and (iii) be
stated to be payable on the Facility Termination Date.
2.5 Notice of Borrowing. The Borrower shall give the Agent
irrevocable written notice substantially in the form of Exhibit F
attached hereto (which notice must be received by the Agent prior
to 12:00 noon, Los Angeles time, on the proposed Borrowing Date
or, if all or any part of the Loans are requested to be made as
LIBOR Loans, three Business Days prior to each proposed Borrowing
Date) requesting that the Lenders make the Loans on the proposed
Borrowing Date and specifying (i) the aggregate amount of Loans
requested to be made (which must be in an aggregate amount equal
to at least $1,000,000 or an integral multiple of $1,000,000),
(ii) subject to Section 2.3, whether the Loans are to be LIBOR
Loans, Base Rate Loans or a combination thereof and (iii) if the
Loans are to be entirely or partly LIBOR Loans, the respective
amounts of each such Type of Loan and the respective lengths of
the Interest Periods therefor. On receipt of such notice, the
Agent shall promptly notify each Lender thereof not later than
10:30 a.m., Los Angeles time, on the date of receipt of such
notice. On the proposed Borrowing Date, not later than 1:00
p.m., Los Angeles time, each Lender shall make available to the
Agent at its office specified in Section 13.1 such Lender's
Commitment Percentage of the aggregate borrowing amount (as
determined in accordance with Section 2.2) in immediately
available funds. Not later than 1:30 p.m., Los Angeles time, on
the date of such Loans and upon fulfillment of the applicable
conditions set forth in Section 4, the Agent shall make such
Loans available to the Borrower in immediately available funds.
Each notice pursuant to this Section 2.5 shall be irrevocable and
binding on the Borrower. The Agent may, in the absence of
notification from any Lender that such Lender has not made its
pro rata share available to the Agent, on such date, credit the
account of the Borrower on the books of such office of the Agent
with the aggregate amount of Loans.
2.6 Commitment Reduction. At the Borrower's option and upon at
least five Business Days' prior irrevocable written notice to the
Agent, with such notice specifying the amount and the date of
such reduction, the Borrower may permanently reduce the Aggregate
Commitment in whole at any time or in part from time to time;
provided, however, that each partial reduction of the Aggregate
Commitment shall be in an aggregate amount equal to at least
$1,000,000 or an integral multiple of $1,000,000. The Agent
shall promptly notify each Lender (by telecopy or by telephone)
of such requested Commitment reduction.
Reductions of the Aggregate Commitment pursuant to this Section
2.6 shall automatically effect a reduction of the Commitment of
each Lender to an amount equal to the product of (i) the
Aggregate Commitment of all Lenders, as reduced pursuant to this
Section 2.6 and (ii) the Commitment Percentage of such Lender, in
each case determined immediately prior to such reduction of the
Aggregate Commitment on such date.
Upon each reduction of the Aggregate Commitment, the Borrower
shall (i) pay the unused commitment fee, payable pursuant to
Section 2.11(i), accrued on the amount of the Aggregate
Commitment so reduced through the date of such reduction, (ii)
prepay the amount, if any, by which the sum of (a) the aggregate
unpaid principal amount of the Loans, (b) the aggregate Letter of
Credit Amount of all Letters of Credit outstanding and (c) the
aggregate amount of unreimbursed drawings under all Letters of
Credit exceeds the amount of the Aggregate Commitment as so
reduced, together with accrued interest on the amount being
prepaid to the date of such prepayment (or, with respect to
outstanding Letters of Credit, make a cash collateral deposit in
an amount equal to such excess to the extent such excess is not
corrected by the foregoing prepayment) and (d) compensate the
Lenders for their funding costs, if any, in accordance with
Section 3.1.
2.7 Commitment Obligations. Neither the Agent nor any Lender
shall be responsible for the obligation or Available Commitment
of any other Lender hereunder, nor will the failure of any Lender
to comply with the terms of this Agreement relieve any other
Lender or the Borrower of its obligations under this Agreement
and the Notes. Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its Commitments hereunder
or to prejudice any rights which the Borrower may have against
any Lender as a result of any default by such Lender hereunder.
2.8 Commitment Termination. The Commitment of each Lender and
the Aggregate Commitment shall terminate on the Facility
Termination Date.
2.9 Required Payments. The outstanding Loans and all other
unpaid Obligations shall be paid in full by the Borrower on the
Facility Termination Date.
2.10 Issuance of Letters of Credit.
(i) The Borrower shall be entitled to request the issuance of
standby and/or commercial Letters of Credit from time to time
from and including the Closing Date to but excluding the date
which is seven Business Days prior to the Facility Termination
Date by giving the Agent (a) a standby Letter of Credit Request
at least three Business Days before the requested date of
issuance of such standby Letter of Credit and (b) a commercial
Letter of Credit Request no later than the requested date of
issuance of such commercial Letter of Credit (provided that such
Letter of Credit Request is received by the Agent no later than
11:00 a.m., Los Angeles time and any Letter of Credit Request
received after such time shall be deemed to have been received on
the next Business Day) (which date of issuance shall be a
Business Day). All letters of credit outstanding on the Closing
Date which were issued under the Prior Loan Agreement shall be
deemed to have been issued hereunder on and as of the Closing
Date and shall be subject to the terms and conditions hereof. No
Letter of Credit shall have an expiration date more than one year
from its date of issuance. The aggregate Letter of Credit
Amounts under all outstanding Letters of Credit and the aggregate
amount of unreimbursed drawings under Letters of Credit shall
reduce, dollar for dollar, Aggregate Available Commitment. The
sum of (a) the aggregate Letter of Credit Amount of all Letters
of Credit outstanding and (b) the aggregate amount of
unreimbursed drawings under all Letters of Credit shall not at
any time exceed $3,500,000. In addition, the sum of (i) the
aggregate principal amount of all Loans outstanding, (ii) the
aggregate Letter of Credit Amount of all Letters of Credit
outstanding and (iii) the aggregate amount of unreimbursed
drawings under all Letters of Credit shall not exceed, at any
time, the Aggregate Commitment. Any Letter of Credit Request
received by the Agent later than 10:00 a.m., Los Angeles time,
shall be deemed to have been received on the next Business Day.
Each Letter of Credit Request shall be made in writing, shall be
signed by an Authorized Officer, shall be irrevocable and shall
be effective upon receipt by the Agent. Provided that a valid
Letter of Credit Request has been received by the Agent and upon
fulfillment of the other applicable conditions set forth in
Section 4.3, the Agent will issue the requested Letter of Credit
from its office specified in Section 13.1.
Commercial Letters of Credit shall be used only for the purpose
of supporting purchases of inventory by the Borrower and standby
Letters of Credit shall be used solely to provide support for
leasing (including Capitalized Leases) and insurance obligations
of the Borrower.
(ii) Immediately upon the issuance of each Letter of Credit, the
Agent shall be deemed to have sold and transferred to each
Lender, and each Lender shall be deemed to have purchased and
received from the Agent, in each case irrevocably and without any
further action by any party, an undivided interest and
participation in such Letter of Credit, each drawing thereunder
and the obligations of the Borrower under this Agreement in
respect thereof in an amount equal to the product of (i) such
Lender's Commitment Percentage and (ii) the maximum amount
available to be drawn under such Letter of Credit (assuming
compliance with all conditions to drawing). The Agent shall
promptly advise each Lender of the issuance of each Letter of
Credit, the Letter of Credit Amount of such Letter of Credit, any
change in the face amount or expiration date of such Letter of
Credit, the cancellation or other termination of such Letter of
Credit and any drawing under such Letter of Credit.
(iii) The payment by the Agent of a draft drawn under any
Letter of Credit shall first be made from any cash collateral
deposit held by the Agent with respect to such Letter of Credit.
After any such cash collateral deposit has been applied, the
payment by the Agent of a draft drawn under any Letter of Credit
shall constitute for all purposes of this Agreement the making by
the Agent in its individual capacity as a Lender hereunder (in
such capacity, the "Drawing Lender") of a Base Rate Loan in the
amount of such payment (but without any requirement of compliance
with the conditions set forth in Section 4.3). In the event that
any such Loan by the Drawing Lender resulting from a drawing
under any Letter of Credit is not repaid by the Borrower by 12:00
noon, Los Angeles time, on the day of payment of such drawing,
the Agent shall promptly notify each other Lender. Each Lender
shall, on the day of such notification (or if such notification
is not given by 1:00 p.m., Los Angeles time, on such day, then on
the next succeeding Business Day), make a Base Rate Loan, which
shall be used to repay the applicable portion of the Base Rate
Loan of the Drawing Lender with respect to such Letter of Credit
drawing, in an amount equal to the amount of such Lender's
participation in such drawing for application to repay the
Drawing Lender (but without any requirement of compliance with
the applicable conditions set forth in Section 4.3) and shall
deliver to the Agent for the account of the Drawing Lender, on
the day of such notification (or if such notification is not
given by 1:00 p.m., Los Angeles time, on such day, then on the
next succeeding Business Day) and in immediately available funds,
the amount of such Base Rate Loan. In the event that any Lender
fails to make available to the Agent for the account of the
Drawing Lender the amount of such Base Rate Loan, the Drawing
Lender shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the Federal Funds
Effective Rate for each day such amount remains outstanding.
(iv) The obligations of the Borrower with respect to any Letter
of Credit, any Letter of Credit Request and any other agreement
or instrument relating to any Letter of Credit and any Base Rate
Loan made under Section 2.10(iii) shall be absolute,
unconditional and irrevocable and shall be paid strictly in
accordance with the terms of the aforementioned documents under
all circumstances, including the following:
(a) any lack of validity or enforceability of any Letter
of Credit, this Agreement or any other Loan Document;
(b) the existence of any claim, setoff, defense or other
right that the Borrower may have at any time against any
beneficiary or transferee of any Letter of Credit (or any Person
for whom any such beneficiary or transferee may be acting), the
Agent, any Lender (other than the defense of payment to a Lender
in accordance with the terms of this Agreement) or any other
Person, whether in connection with this Agreement, any other Loan
Document, the transactions contemplated hereby or thereby or any
unrelated transaction;
(c) any statement or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect, or any statement therein being
untrue or inaccurate in any respect whatsoever;
(d) payment by the Agent under any Letter of Credit
against presentation of a draft or certificate that does not
comply on its face with the terms of such Letter of Credit;
(e) any exchange, release or nonperfection of any
collateral, or any release, amendment or waiver of or consent to
departure from any Guaranty, other Loan Document or other
guaranty, for any of the Obligations of the Borrower in respect
of the Letters of Credit; and
(f) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
(v) The Borrower shall pay to the Agent with respect to each
Letter of Credit issued hereunder, the following fees:
(a) for each commercial Letter of Credit for the period
from and including the day such commercial Letter of Credit is
issued to but excluding the day such commercial Letter of Credit
expires, a letter of credit fee to the Agent for the benefit of
the Lenders equal to the amount set forth on the Agent's
published Schedule of International Fees (such fee to be payable
on the date of issuance) except for payment fees, which shall be
equal to the greater of (x) the product of (i) .125% and (ii) the
Letter of Credit Amount of such Letter of Credit paid or (y) $100
(such payment fee to be payable on the date such Letter of Credit
is paid);
(b) for each commercial Letter of Credit, a fronting
fee to the Agent for its benefit alone equal to (x) $100, if the
commercial Letter of Credit Amount is less than $500,000 or (y)
.125% of the Letter of Credit Amount, if the commercial Letter of
Credit Amount is equal to or more than $500,000 (such fee to be
payable on the date of issuance);
(c) for each standby Letter of Credit, for the period
from and including the day such standby Letter of Credit is
issued to but excluding the day such standby Letter of Credit
expires, a letter of credit fee to the Agent for the benefit of
the Lenders equal to 1% per annum of the Letter of Credit Amount
(such fee to be payable on the date of issuance);
(d) for each standby Letter of Credit, a fronting fee
to the Agent for its benefit alone equal to .25% of the Letter of
Credit Amount (such fee to be payable on date of issuance); and
(e) from time to time, such additional fees and charges
(including cable charges) as are generally associated with
letters of credit, in accordance with the Agent's standard
internal charge guidelines and the related Letter of Credit
Request.
(vi) The Borrower agrees to the provisions in the Letter of
Credit Request form; provided, however, that the terms of the
Loan Documents shall take precedence if there is any
inconsistency between the terms of the Loan Documents and the
terms of said form.
(vii) The Borrower assumes all risks of the acts or
omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither
the Agent nor any Lender nor any of their respective officers or
directors shall be liable or responsible for (i) the use that may
be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (ii) the
validity, sufficiency or genuineness of documents, or of any
endorsement thereof, even if such documents should prove to be in
any or all respects invalid, insufficient, fraudulent or forged;
(iii) in the absence of any gross negligence or wilful misconduct
by the Agent, payment by the Agent against presentation of
documents that do not comply with the terms of any Letter of
Credit, including failure of any documents to bear any reference
or adequate reference to any Letter of Credit; or (iv) any other
circumstance whatsoever in making or failing to make payment
under any Letter of Credit. In furtherance and not in limitation
of the foregoing, the Agent may accept any document that appears
on its face to be in order, without responsibility for further
investigation, regardless of any notice or information to the
contrary.
2.11 Fees. The Borrower agrees to pay to the Lenders an unused
commitment fee to be shared among Lenders on the basis of their
respective Commitment Percentages with respect to the Commitments
for the period from and including the Closing Date to but
excluding the Facility Termination Date, computed at the
applicable percentage set forth below of the average daily
aggregate amount of the Aggregate Available Commitment from time
to time in effect, to be payable quarterly in arrears on each
Payment Date and on the Facility Termination Date, commencing on
the first such date to occur after the Closing Date.
Commitment
Leverage Ratio Level Fee
1 .125%
2 .175%
3 .250%
4 .375%
5 .500%
2.12 Voluntary Conversion of Advances. The Borrower may on any
Business Day, upon written notice given to the Agent not later
than 12:00 noon, Los Angeles time, on the third Business Day
before the date of the proposed conversion and subject to the
provisions of Section 3.1(c), convert any Advance into an Advance
of another Type; provided, however, that, with respect to a
conversion from a LIBOR Loan into a Base Rate Loan, any such
conversion shall be made on, and only on, the last day of the
Interest Period for such Loan. Each such notice of a conversion
shall, within the restrictions specified above, specify (a) the
Loan to be converted, (b) the type of Loan into which such Loan
is to be converted and (c) the requested date for such
conversion. Upon receipt of any such notice the Agent shall
promptly notify each Lender thereof. Any part of outstanding
LIBOR Loans and Base Rate Loans may be converted as provided
herein, provided (i) no Loan may be converted into a LIBOR Loan
after the date that is one month prior to the Facility
Termination Date and (ii) the Borrower shall not have the right
to continue or convert to a LIBOR Loan if a Default shall have
occurred and be continuing. However, if the Borrower shall fail
to give any required notices described above in this Section or
if such continuation is not permitted pursuant to the preceding
sentence, such Loans shall be automatically converted to Base
Rate Loans on the last day of such then-expiring Interest Period.
2.13 Interest. A Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from and
including the date such Loan is made or is converted from a LIBOR
Loan into a Base Rate Loan pursuant to Section 2.12 to (but not
including) the date it becomes due or is converted into a LIBOR
Loan pursuant to Section 2.12 hereof, at a rate per annum equal
to the Base Rate for such day. Changes in the rate of interest
on any Loan maintained as a Base Rate Loan will take effect
simultaneously with each change in the Corporate Base Rate. Each
LIBOR Loan shall bear interest from and including the first day
of the Interest Period applicable thereto to (but not including)
the last day of such Interest Period at the LIBOR Rate determined
as applicable to such LIBOR Loan.
For purposes of determining the Applicable Margin for all Loans,
interest rates on the Loans shall be calculated on the basis of
the Total Debt Ratio set forth in the most recent certificate of
an Authorized Officer of the Borrower delivered pursuant to
Section 6.1(v) (a "Leverage Ratio Level Certificate"). For
accrued and unpaid interest only (no changes being made for
interest payments previously made), changes in interest rates on
the Loans attributable to changes in the Applicable Margin caused
by changes in the applicable Leverage Ratio Level shall be
calculated upon the delivery of a Leverage Ratio Level
Certificate and such change shall be effective (y) in the case of
a Base Rate Loan, on the day subsequent to the delivery of the
Leverage Ratio Level Certificate and (z) in the case of a LIBOR
Loan, from the first day of the Interest Period applicable to
such LIBOR Loans subsequent to the delivery of the Leverage Ratio
Level Certificate. If, for any reason, the Borrower shall fail
to deliver a Leverage Ratio Level Certificate when due in
accordance with Section 6.1(v), and such failure shall continue
for a period of twenty days, the Leverage Ratio Level shall be
deemed to be ▇▇▇▇▇ ▇, retroactive to the date on which the
Borrower should have delivered such Leverage Ratio Level
Certificate and shall continue until a Leverage Ratio Level
Certificate indicating a different Leverage Ratio Level is
delivered to the Agent.
2.14 Rates Applicable After Default. Notwithstanding anything
to the contrary contained in Section 2.3 or 2.12, during the
continuance of an Event of Default no Loan may be made as,
converted into or continued as a LIBOR Loan. During the
continuance of an Event of Default each Loan shall bear interest
at a rate per annum equal to the Base Rate otherwise applicable
to the Base Rate Loan plus 3% per annum. All such interest shall
be payable on demand of the Agent.
2.15 Method of Payment. All payments of the Obligations
hereunder shall be made, without setoff, deduction, or
counterclaim, in immediately available funds to the Agent at the
Agent's address specified pursuant to Article 13, or at any other
Applicable Lending Office of the Agent specified in writing by
the Agent to the Borrower, by 2:00 p.m., Los Angeles time, on the
date when due and shall be applied ratably by the Agent among the
Lenders. Each payment delivered to the Agent for the account of
any Lender shall be delivered promptly by the Agent to such
Lender in the same type of funds that the Agent received at its
address specified pursuant to Article 13 or at any Applicable
Lending Office specified in a notice received by the Agent from
such Lender. The Agent is hereby authorized (but not obligated)
to charge the account of the Borrower maintained with UBOC for
each payment of principal, interest and fees as it becomes due
hereunder.
2.16 Telephonic Notices. The Borrower hereby authorizes the
Lenders and the Agent to convert or continue Loans and effect
selections of Types of Loans based on telephonic notices made by
any person or persons the Agent or any Lender in good faith
believes to be acting on behalf of the Borrower. The Borrower
agrees to deliver promptly to the Agent a written confirmation,
if such confirmation is requested by the Agent or any Lender, of
each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the
action taken by the Agent and the Lenders, the records of the
Agent and the Lenders shall govern absent manifest error.
2.17 Interest Payment Dates; Interest and Fee Basis. Interest
accrued on each Base Rate Loan shall be payable on each Payment
Date, commencing with the first such date to occur after the date
hereof, on any date on which a Base Rate Loan is prepaid, whether
due to acceleration or otherwise, and at maturity. Interest
accrued on that portion of the outstanding principal amount of
any Base Rate Loan converted into a LIBOR Loan on a day other
than a Payment Date shall be payable on the date of conversion.
Interest accrued on each LIBOR Loan shall be payable on the last
day of its applicable Interest Period, on any date on which the
LIBOR Loan is prepaid, whether by acceleration or otherwise, and
at maturity. Interest accrued on each LIBOR Loan having an
Interest Period longer than three months shall also be payable on
the last day of each three-month interval during such Interest
Period.
Interest on Loans and commitment fees shall be calculated for
actual days elapsed on the basis of a 360-day year. Interest
shall be payable for the day a Loan is made but not for the day
of any payment on the amount paid if payment is received prior to
2:00 p.m., Los Angeles time, at the place of payment. Whenever
any payment to be made hereunder shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest;
provided, however, that, if such extension would cause any
payment of interest on or principal of any LIBOR Loan to be made
in the next following calendar month, then such payment shall
instead be made on the next preceding Business Day, and such
shortened time shall in such case be used in the computation of
payment of interest. Each determination by the Bank of an
interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
2.18 Notification of Loan, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Agent
will notify each Lender of the contents of a borrowing notice,
Conversion/Continuation Notice and repayment notice received by
it hereunder. The Agent will notify each Lender of the interest
rate applicable to each LIBOR Loan promptly upon determination of
such interest rate and will give each Lender prompt notice of
each change in the Corporate Base Rate.
Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding
on the Borrower and the Lenders in the absence of manifest error.
2.19 Applicable Lending Offices. Each Lender may book its Loans
at any Applicable Lending Office selected by such Lender and may
change its Applicable Lending Office from time to time. All
terms of this Agreement shall apply to any such Applicable
Lending Office and the Note shall be deemed held by each Lender
for the benefit of such Applicable Lending Office. Each Lender
may, by written or telex notice to the Agent and the Borrower,
designate an Applicable Lending Office through which the Loans
will be made by it and for whose account Loan payments are to be
made.
2.20 Non-Receipt of Funds by the Agent. Unless the Borrower or
a Lender, as the case may be, notifies the Agent prior to the
date on which it is scheduled to make payment to the Agent of (i)
in the case of a Lender, the proceeds of a Loan or (ii) in the
case of the Borrower, a payment of principal, interest or fees to
the Agent for the account of the Lenders, that it does not intend
to make such payment, the Agent may assume that such payment has
been made. The Agent may, but shall not be obligated to, make
the amount of such payment available to the intended recipient in
reliance upon such assumption. If such Lender or the Borrower,
as the case may be, has not in fact made such payment to the
Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period
commencing on the date such amount was so made available by the
Agent until the date the Agent recovers such amount at a rate per
annum equal to (a) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day or (b) in the case of
payment by the Borrower, the interest rate applicable to the
relevant Loan.
2.21 Withholding Tax Exemption. At least five Business Days
prior to the first date on which interest or fees are payable
hereunder for the account of any Lender, each Lender that is not
incorporated under the laws of the United States of America, or a
state thereof, agrees that it will deliver to each of the
Borrower and the Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Lender is entitled to receive payments under this
Agreement and the Note without deduction or withholding of any
United States federal income taxes. Each Lender which so
delivers a Form 1001 or 4224 further undertakes to deliver to
each of the Borrower and the Agent two additional copies of such
form (or a successor form) on or before the date that such form
expires (currently, three successive calendar years for Form 1001
and one calendar year for Form 4224) or becomes obsolete or after
the occurrence of any event requiring a change in the most recent
forms so delivered by it, and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by
the Borrower or the Agent, in each case certifying that such
Lender is entitled to receive payments under this Agreement and
the Note without deduction or withholding of any United States
federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred
prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender advises the Borrower and
the Agent that it is not capable of receiving payments without
any deduction or withholding of United States federal income tax.
2.22 Optional Prepayments. The Borrower may on the last day of
any Interest Period with respect thereto, in the case of LIBOR
Loans, or at any time and from time to time, in the case of Base
Rate Loans, prepay the Loans, in whole or in part, without
premium or penalty, upon at least three Business Days'
irrevocable written notice, in the case of LIBOR Loans, and upon
at least one Business Day's irrevocable written notice, in the
case of Base Rate Loans, from the Borrower to the Agent,
specifying the date and amount of prepayment and whether the
prepayment is of LIBOR Loans, Base Loans or a combination
thereof, and, if a combination thereof, the amount allocable to
each. Upon receipt of any such notice from the Borrower, the
Agent shall promptly notify each Lender thereof. If any such
notice is given, the amount specified in such notice shall be due
and payable by the Borrower on the date specified therein,
together with accrued interest to such date on the amount
prepaid. Partial prepayments of Loans shall be in an aggregate
principal amount of $1,000,000 or an integral multiple thereof.
ARTICLE 3
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection.
(i) If any repayment of principal of, or conversion of,
any LIBOR Loan is made other than on the last day of an Interest
Period therefor, as a result of a prepayment, payment or
conversion, or an acceleration of the maturity of the Loan
pursuant to Section 8, or for any other reason, or if the
Borrower shall fail to borrow a LIBOR Loan after requesting one,
then the Borrower shall, upon demand by the Agent pay to the
Lenders any amounts required to compensate them for any
additional losses, costs or expenses that they may reasonably
incur as a result of such repayment, conversion or failure to
borrow, including any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by a Lender
to fund or maintain such LIBOR Loan.
(ii) If, due to either (a) the introduction of or any
change in or in the interpretation of any Governmental Rule or
(b) the compliance by the Lenders with any Governmental Rule
(whether or not having the force of law), there is any increase
in the cost to the Lenders of agreeing to make, making, funding
or maintaining any LIBOR Loan, then the Borrower shall from time
to time, upon written demand by the Agent, pay to the Agent
additional amounts sufficient to compensate the Lenders for such
increased cost. A certificate as to the amount of such increased
cost, submitted to the Borrower by the Agent, shall be conclusive
and binding for all purposes, absent manifest error.
(iii) Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the
interpretation of any Governmental Rule makes it unlawful, or any
Governmental Person asserts that it is unlawful, for any Lender
to perform its obligations hereunder to make LIBOR Loans or to
continue to fund or maintain LIBOR Loans hereunder, then, on
notice thereof and demand therefor by the Agent to the Borrower,
(a) the obligation of such Lender to make LIBOR Loans and to
convert Base Rate Loans into LIBOR Loans shall terminate and (b)
the Borrower shall forthwith prepay in full all LIBOR Loans then
outstanding, together with interest accrued thereon, unless the
Borrower, within five Business Days of such notice and demand,
converts all LIBOR Loans then outstanding into Base Rate Loans in
accordance with Section 2.12.
(iv) If, with respect to any LIBOR Loan, the Agent
notifies the Borrower that LIBOR for such Loan will not
adequately reflect the cost to one or more Lenders (as determined
by such Lender(s) in good faith on the basis of market conditions
then in effect) of making, funding or maintaining such Loan, then
(a) such Loan will automatically, on the last day of the then
existing Interest Period therefor, convert into a Base Rate Loan
and (b) the obligation of the affected Lender to make, or to
convert Base Rate Loans into LIBOR Loans shall be suspended until
the Agent notifies the Borrower that the circumstances causing
such suspension no longer exist.
3.2 Taxes. All payments by or on behalf of the Borrower
hereunder shall be made without set-off or counterclaim and in
such amounts as may be necessary in order that all such payments
(after deduction or withholding for or on account of any present
or future taxes, levies, imposts, duties or other charges of
whatsoever nature imposed by any Governmental Person, other than
any tax on or measured by the overall net income of the Agent or
a Lender pursuant to the income tax laws of the United States,
the jurisdiction where the Agent's or such Lender's principal
office is located or any political subdivision thereof
(collectively, the "Taxes")) shall not be less than the amounts
otherwise specified to be paid hereunder. A certificate as to
any additional amounts payable to the Agent or a Lender hereunder
submitted to the Borrower by the Agent shall show in reasonable
detail the amount payable to the Agent or a Lender and the
calculations used to determine in good faith such amount and
shall be conclusive absent manifest error. Any amounts payable
by the Borrower hereunder with respect to past payments shall be
due within ten days following receipt by the Borrower of such
certificate from the Agent; and such amounts payable with respect
to future payments shall be due concurrently with such future
payments. With respect to each deduction or withholding for or
on account of any Taxes, the Borrower shall promptly furnish to
the Agent such certificates, receipts and other documents as may
be required (in the reasonable judgment of the Agent) to
establish any tax credit to which a Lender may be entitled. The
agreements and obligations of the Borrower under this paragraph
shall survive the payment in full of the Loans.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 Initial Loan or Letter of Credit. The Lenders shall not be
required to make their initial Loans or participate in the
initial Letter of Credit hereunder unless the Borrower has
furnished to the Agent:
(i) this Agreement and the Notes, duly executed by the
Borrower;
(ii) the Guaranties, duly executed by each Guarantor;
(iii) Articles of Incorporation and Bylaws of the Borrower
and each Guarantor certified by the Secretary of State of the
relevant state of incorporation;
(iv) Resolutions of the Board of Directors of the Borrower
and of the executive officers of each Guarantor approving the
execution, delivery and performance by the Borrower and each
Guarantor, of the Loan Documents to which the Borrower and each
Guarantor is a party, certified by the Secretary of the Borrower
and each Guarantor to be true and correct and in full force and
effect;
(v) an Incumbency Certificate of the Borrower and each
Guarantor;
(vi) a favorable legal opinion (in form and substance
satisfactory to the Agent) of counsel to the Borrower and each
Guarantor;
(vii) evidence that all amounts outstanding under the Prior
Loan Agreement have been paid in full and that such agreement has
been terminated;
(viii) a duly completed Leverage Ratio Level Certificate in
substantially the form of Exhibit D hereto;
(ix) all fees and expenses to be paid on the Closing Date
(including, but not limited to, amounts due to UBOC in
reimbursement of costs and expenses under the Prior Loan
Agreement);
(x) no statute, rule, regulation, order, decree or
preliminary or permanent injunction of any court or
administrative agency or, to the best knowledge of the Borrower,
any such action threatened by any Person, shall be in effect that
prohibits the Lenders from consummating the transactions
contemplated by this Agreement and the other Loan Documents;
(xi) copies of the Borrower's consolidated audited
financial statements for the period ending February 3, 1996,
together with any management letter prepared by the accountants,
and unaudited financial statements for the period ending August
3, 1996;
(xii) evidence satisfactory to the Agent that there shall
have been no material adverse change to the syndication markets
for credit facilities similar to this Agreement and there shall
not have occurred and be continuing a material disruption of or
material adverse change in financial, banking or capital markets
which would have an adverse effect on such syndication market, as
determined by the Agent in its sole discretion; and
(xiii) such other documents, instruments and opinions as
the Agent or its counsel may have reasonably requested.
4.2 All Loans. The Lenders shall not be required to make any
Loan (including the initial Loan) hereunder unless the Borrower
has furnished to the Agent with sufficient copies for the
Lenders:
(i) a duly completed certificate executed by an
Authorized Officer of the Borrower certifying that:
(a) there exists no Default or Event of
Default;
(b) the representations and warranties
contained in Article 5 hereof are true and correct as of
the Borrowing Date except to the extent any such
representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty
shall be true and correct on and as of such earlier date;
and
(c) no event has occurred, or condition
exists, which could have a Material Adverse Effect.
(ii) in the case where Loan proceeds are to be used for
an Acquisition and such Acquisition will result in the Borrower
being required to file an SEC Report, executed copies of each of
the Acquisition Documents, certified by an Authorized Officer,
together with the other documents required by Section 6.14;
(iii) in the case where Loan proceeds are to be used for
an Acquisition, evidence satisfactory to the Agent that the
Acquisition contemplated by the relevant Acquisition Documents
will immediately be consummated upon the funding of the Loan; and
(iv) such other documents as the Agent or its counsel
may have reasonably requested.
4.3 All Letters of Credit. The Agent shall not be required to
issue any Letter of Credit and the Lenders shall not be required
to participate in any Letter of Credit (including the initial
Letter of Credit) hereunder unless the Borrower has furnished to
the Agent with sufficient copies for the Lenders:
(i) a completed Letter of Credit Request with regard to
each such Letter of Credit;
(ii) all fees to be paid to the Agent in connection with
each Letter of Credit shall have been paid; and
(iii) such other documents as the Agent, any Lender or
its respective counsel may have reasonably requested.
Any Letter of Credit Request delivered to the Agent shall be
deemed a representation and warranty to the Agent and the Lenders
that:
(i) there exists no Default or Event of Default;
(ii) the representations and warranties contained in
Article 5 hereof are true and correct as of the issuance date of
each Letter of Credit except to the extent any such
representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall
be true and correct on and as of such earlier date; and
(iii) no event has occurred, or condition exists, which
could have a Material Adverse Effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1 Authorization. The execution, delivery and performance by
the Borrower of the Loan Documents to which the Borrower is a
party are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action and do not
contravene any applicable law, rule, regulation or order or any
contractual restriction binding on or affecting the Borrower or
its Subsidiaries.
5.2 Governmental Action. No authorization, approval or other
action by, or notice to or filing with, any Governmental Person
is required for the due execution, delivery and performance by
the Borrower of the Loan Documents to which the Borrower is a
party.
5.3 Enforceability. Each Loan Document to which the Borrower
is a party is the legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally.
5.4 Use of Proceeds. The Borrower will use the proceeds of the
Loans solely for the (a) repayment of amounts outstanding under
the Prior Loan Agreement, (b) to make permitted Acquisitions, (c)
to make permitted Capital Expenditures and (d) for other general
working capital purposes. No action has been taken or is
currently planned by the Borrower, or any agent acting on its
behalf, which would cause this Agreement or the Notes to violate
Regulation U or any other regulation of the Board of Governors of
the Federal Reserve System or to violate the Securities and
Exchange Act of 1934, in each case as in effect now or as the
same may hereafter be in effect. The Borrower is not engaged in
the business of extending credit for the purpose of purchasing or
carrying margin stock as one of its important activities and none
of the proceeds of the Loans or Letters of Credit will be used
directly or indirectly for such purpose.
5.5 Litigation. There is no litigation, tax claim, proceeding,
arbitration or dispute pending, or, to the best knowledge of the
Borrower, threatened against or affecting the Borrower or its
Property, an adverse determination in which could have a Material
Adverse Effect.
5.6 Financial Statements. The consolidated financial
statements of the Borrower dated February 3, 1996 and August 3,
1996, copies of which have been delivered to the Lenders, fairly
and accurately reflect the financial condition of the Borrower
and its Subsidiaries as of such date, and since such date there
has been no Material Adverse Effect.
5.7 Taxes. The Borrower and each Subsidiary has filed all tax
returns and reports required to be filed and has paid all
applicable federal, state and local franchise and income taxes
which are due and payable.
5.8 Subsidiaries. Schedule 2 hereto contains an accurate list
of all of the presently existing Subsidiaries of the Borrower,
setting forth their respective jurisdictions of incorporation or
organization and the percentage of their respective capital stock
or ownership interests owned by the Borrower or other
Subsidiaries. All of the issued and outstanding shares of
capital stock of such Subsidiaries have been duly authorized and
issued and are fully paid and non-assessable.
5.9 ERISA. The Unfunded Liabilities do not in the aggregate
exceed $1,000,000. Each Single Employer Plan complies in all
material respects with all applicable requirements of law and
regulations, except to the extent that the failure to comply
therewith does not have a Material Adverse Effect. No Reportable
Event has occurred with respect to any Single Employer Plan,
except to the extent that such Reportable Event has no Material
Adverse Effect. Neither the Borrower nor any Subsidiary (a) is a
party to any Multiemployer Plan or (b) has withdrawn from any
Multiemployer Plan, except to the extent such actions do not have
a Material Adverse Effect.
5.10 Accuracy of Information. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent
or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents contained any material
misstatement of fact or omitted to state a material fact or any
fact necessary to make the statements contained therein not
misleading in any material respect.
5.11 Organization and Existence. The Borrower is duly
organized, validly existing and in good standing under the laws
of the State of Delaware and it has the corporate power and
authority, and the legal right, to own and operate its Properties
and to conduct the business in which it is currently engaged and
in which it proposes to be engaged after the Closing Date and is
duly qualified as a foreign entity and in good standing under the
laws of each jurisdiction where its ownership, lease or operation
of Property or the conduct of its business requires such
qualification except to the extent that the failure to comply
thereunder could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect and is in compliance with all
Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.12 Consents. No consent or authorization of, or filing with
or other act by or in respect of, any Governmental Authority, or
any other Person is required in connection with the Loans
hereunder or with the execution, delivery, performance, validity
or enforceability of this Agreement, the Notes or the other Loan
Documents. The execution, delivery and performance of this
Agreement, the Notes and the other Loan Documents, the Loans, the
Letters of Credit and the use of the proceeds thereof will not
violate any Requirement of Law or contractual obligations of the
Borrower or any of its Subsidiaries which could be reasonably
expected to have a Material Adverse Effect and will not result
in, or require, the creation or imposition of any Lien on any of
its or their respective Properties or revenues pursuant to any
such Requirement of Law or contractual obligation, except
pursuant to the Loan Documents or otherwise as permitted
hereunder, which Lien could reasonably be expected to have a
Material Adverse Effect.
5.13 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, patents, copyrights, material permits, licenses or
other intangibles necessary for the conduct of its business as
currently conducted, except to the extent that the failure to own
or license such property could not reasonably be expected to have
a Material Adverse Effect.
5.14 Default. There exists no Default or Event of Default.
5.15 Nature of Business. Neither the Borrower nor any of its
Subsidiaries is engaged in any material business other than the
ownership and operation of pet food and supply retail stores and
the manufacture or procurement of pet food and supplies.
5.16 Ranking of Loans. This Agreement and the other Loan
Documents to which the Borrower is a party, when executed, and
the Loans, when borrowed are and will be the direct and general
obligations of the Borrower. The Borrower's obligations
hereunder and thereunder will rank at least pari passu in
priority of payment with all other senior Debt, except to the
extent otherwise permitted hereunder.
5.17 Compliance with Laws. The Borrower and each of its
Subsidiaries is in compliance with all Governmental Rules except
to the extent that the failure to comply therewith could not, in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
5.18 Investment Company Acts; Other Regulations. Neither the
Borrower nor any of its Subsidiaries is an "investment company,"
or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
5.19 Environmental Matters. The Borrower and its Subsidiaries
are in compliance in all material respects with all applicable
environmental laws, and there is no contamination at, under or
about any of their respective Properties, or violation of any
environmental law with respect to any of their respective
Properties or the business conducted at any of their respective
Properties which involves a matter or matters which has caused or
reasonably likely to cause a Material Adverse Effect.
5.20 Title. Except for assets which may have been disposed of
in the ordinary course of business, the Borrower has good and
marketable title to all of the property reflected in its
financial statements delivered to the Lenders and to all property
acquired by the Borrower since the date of said financial
statements, free and clear of all Liens, encumbrances, security
interests and adverse claims except (a) those specifically
referred to in said financial statements, (b) those permitted by
Section 6.22 hereof and (c) those that could not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
ARTICLE 6
COVENANTS
During the term of this Agreement, unless the Required Lenders
shall otherwise consent in writing:
6.1 Financial Reporting. The Borrower will maintain, for
itself and each Subsidiary, a system of accounting established
and administered in accordance with Agreement Accounting
Principles, and furnish to the Lenders:
(i) As soon as available and in any event within 45
days after the end of each quarterly fiscal period
of each fiscal year of the Borrower (except the
last fiscal quarter), consolidated statements of
income, retained earnings and cash flow of the
Borrower and its consolidated Subsidiaries for such
period and for the period from the beginning of the
respective fiscal year to the end of such period,
and the related consolidated balance sheets of the
Borrower and its consolidated Subsidiaries as at
the end of such period, setting forth in each case
in comparative form the corresponding consolidated
figures for the corresponding period in the
preceding fiscal year, accompanied by a certificate
of an Authorized Officer of the Borrower, which
certificate shall state that those consolidated
financial statements fairly present the
consolidated financial condition and results of
operations of the Borrower and its consolidated
Subsidiaries, in each case in accordance with
Agreement Accounting Principles, consistently
applied, as at the end of, and for, such period
(subject to normally recurring audit adjustments).
(ii) As soon as available and in any event within 90
days after the end of each fiscal year of the
Borrower consolidated statements of income,
retained earnings and cash flow of the Borrower and
its consolidated Subsidiaries for such fiscal year
and the related consolidated balance sheets of the
Borrower and its consolidated Subsidiaries as at
the end of such fiscal year, setting forth in each
case in comparative form the corresponding
consolidated figures for the preceding fiscal year,
and accompanied, in the case of those consolidated
statements and balance sheet of the Borrower, by a
unqualified opinion of independent certified public
accountants of recognized national standing, which
opinion shall state that those consolidated
financial statements fairly present the
consolidated financial condition and results of
operations of the Borrower and its consolidated
Subsidiaries as at the end of, and for, such fiscal
year in accordance with Agreement Accounting
Principles, consistently applied.
(iii) At any time that 50% or more of the Aggregate
Commitment has been utilized, as soon as available
and in any event within 30 days after the end of
each fiscal month (except the last fiscal month in
a fiscal year), consolidated statements of income
and cash flow of the Borrower and its Consolidated
Subsidiaries for such period and the related
consolidated balance sheets of the Borrower and its
Consolidated Subsidiaries as at the end of such
period, accompanied by a certificate of an
Authorized Officer of the Borrower, which
certificate shall state that those consolidated
financial statements fairly present the
consolidated financial condition and results of
operations of the Borrower and its Consolidated
Subsidiaries, in each case in accordance with
Agreement Accounting Principles, consistently
applied, as at the end of, and for, such period
(subject to normally recurring audit adjustments).
(iv) As soon as available, but in any event no later
than 45 days subsequent to the beginning of each
fiscal year of the Borrower, based on the best
information then currently available, a copy of the
plan and forecast (including a projected
consolidated balance sheet, income statement and
funds flow statement), prepared on a quarterly
format basis, of the Borrower and its Subsidiaries
for such fiscal year.
(v) Together with the financial statements required in
Section 6.1(i) and (ii), a compliance certificate
in substantially the form of Exhibit B hereto (a
"Compliance Certificate") signed by an Authorized
Officer showing the calculations necessary to
determine compliance with this Agreement and
stating that no Default or Event of Default exists,
or if any Default or Event of Default exists,
stating the nature and status thereof.
(vi) As soon as possible, but in any event within 45
days after the end of each quarter (except the last
fiscal quarter, in which case within 90 days after
the end of such quarter), a Leverage Ratio Level
Certificate in substantially the form of Exhibit D
hereto signed by an Authorized Officer.
(vii) As soon as possible and in any event within 10 days
after the Borrower knows that any Reportable Event
has occurred with respect to any Single Employer
Plan, a statement, signed by an Authorized Officer,
describing said Reportable Event and the action
which the Borrower proposes to take with respect
thereto.
(viii) As soon as possible and in any event within 10 days
after receipt by the Borrower, a copy of (a) any
notice or claim to the effect that the Borrower or
any of its Subsidiaries is or may be liable to any
Person as a result of the release by the Borrower,
any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or substance into the
environment, and (b) any notice alleging any
violation of any federal, state or local
environmental, health or safety law or regulation
by the Borrower or any of its Subsidiaries, which,
in either case, could have a Material Adverse
Effect.
(ix) Promptly upon the furnishing thereof to the
shareholders of the Borrower, copies of all
financial statements, reports and proxy statements
so furnished.
(x) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly,
monthly or other regular reports or statutory
statements which the Borrower or any of its
Subsidiaries files with the SEC or any insurance or
regulatory agency.
(xi) Such other information (including non-financial
information) as the Agent may from time to time
reasonably request.
6.2 Use of Proceeds. The Borrower will use the proceeds of the
Loans (a) for the repayment of amounts outstanding under the
Prior Loan Agreement, (b) to make permitted Acquisitions, (c) to
make permitted Capital Expenditures and (d) for other general
working capital purposes. The Borrower will not, nor will it
permit any Subsidiary to, use any of the proceeds of the Loans to
purchase or carry any "margin stock" (as defined in Regulation
U).
6.3 Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt (but in any case, within 5 Business
Days) notice in writing to the Lenders of the occurrence of any
Default or Event of Default and of any other development,
financial or otherwise, which could have a Material Adverse
Effect.
6.4 Conduct of Business. The Borrower will, and will cause
each Subsidiary to, carry on and conduct its business in the pet
food and supply business and related fields and to do all things
necessary to remain in good standing in its jurisdiction of
organization and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted.
The Borrower shall not, and shall not permit any of its
Subsidiaries to, make any material change in the nature of its
business as presently conducted; provided that the foregoing
shall not be construed as a limitation on Acquisitions permitted
hereunder.
6.5 Records. The Borrower will, and will cause each Subsidiary
to, keep adequate records and books of account, in which full and
correct entries shall be made in accordance with Agreement
Accounting Principles of all financial transactions of the
Borrower, its Subsidiaries, their respective assets and their
respective business.
6.6 Insurance. The Borrower will, and will cause each
Subsidiary to, maintain insurance on all their Property in such
amounts and covering such risks as is consistent with sound
business practice, and the Borrower will furnish to any Lender
upon request full information as to the insurance carried.
6.7 Compliance with Laws. The Borrower will, and will cause
each Subsidiary to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance
to include, without limitation, paying before the same become
delinquent, all taxes, assessments and governmental charges
imposed upon it or upon its property, except such taxes,
assessments and governmental charges as are being contested in
good faith by appropriate proceedings and as to which appropriate
reserves are maintained.
6.8 Maintenance of Properties. The Borrower will, and will
cause each Subsidiary to, do all things necessary to maintain,
preserve, protect and keep its Property in good repair, working
order and condition, and make all necessary and proper repairs,
renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
6.9 Inspection. At any reasonable time and from time to time
upon reasonable notice, the Borrower will, and will cause each
Subsidiary to, permit the Agent, by its respective
representatives and agents, to inspect any of the Property,
corporate books and financial records of the Borrower and each
Subsidiary, to examine and make copies of the books of accounts
and other financial records of the Borrower and each Subsidiary,
and to discuss the affairs, finances and accounts of the Borrower
and each Subsidiary with, and to be advised as to the same by,
their respective officers at such reasonable times and intervals
as the Lenders may designate.
6.10 Debt. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Debt, except:
(i) Debt of the Borrower under the Loan Documents;
(ii) Debt in existence on the date hereof, as set forth on
Schedule 3;
(iii) trade Debt incurred to acquire goods, supplies, and
services and incurred in the ordinary course of business;
(iv) Debt incurred to refinance all or a portion of the Loans
and/or Letters of Credit as long as all proceeds are used to
repay the Loans (or apply as cash collateral for outstanding
Letters of Credit), the Debt is not senior or pari passu in any
way to the Loans or the Letters of Credit remaining outstanding
and such Debt does not mature prior to the maturity of Loans
and/or Letters of Credit remaining outstanding; and
(v) Debt secured by Liens permitted pursuant to Section 6.22.
6.11 Merger. The Borrower will not, nor will it permit any
Subsidiary to, enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its
property, business or assets; provided that the Borrower may
merge or consolidate with another Person if (i) the Borrower is
the surviving corporation, (ii) the Borrower will be in pro forma
compliance with all provisions of this Agreement subsequent to
such merger or consolidation and (iii) the Borrower has filed the
SEC Report (if required to do so by law).
6.12 Sale of Assets. The Borrower will not, nor will it permit
any Subsidiary to, lease, sell or otherwise dispose of its
Property, to any other Person except for (i) sales of inventory
in the ordinary course of business and (ii) leases, sales or
other dispositions of its Property that, together with all other
Property of the Borrower and its Subsidiaries previously leased,
sold or disposed of (other than inventory in the ordinary course
of business) as permitted by this Section during the term of this
Agreement do not require the Borrower to file an SEC Report;
provided that the foregoing shall not be construed as prohibiting
a transfer of assets from a Subsidiary to the Borrower or the
merger of a Subsidiary into the Borrower.
6.13 Sale of Accounts. The Borrower will not, nor will it
permit any Subsidiary to, sell or otherwise dispose of any notes
receivable or accounts receivable, with or without recourse,
except the Borrower or any Subsidiary may assign accounts
receivable (previously expensed by the Borrower as bad debts) for
collection, with or without recourse.
6.14 Acquisitions. The Borrower will not, nor will it permit
any Subsidiary to, enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or
take any action to solicit the tender of securities or proxies in
respect thereof in order to effect any Acquisition, unless:
(i) the Person to be (or whose assets are to be) acquired does
not oppose such Acquisition and the line or lines of business of
the Person to be acquired are substantially the same as one or
more line or lines of business conducted by the Borrower and its
Subsidiaries,
(ii) no Default or Event of Default shall have occurred
and be continuing either immediately prior to or immediately
after giving effect to such Acquisition,
(iii) if any Acquisition would require the Borrower to
file an SEC Report, the Borrower shall have furnished to the
Agent (A) pro forma historical financial statements as of the end
of the most recently completed fiscal year of the Borrower and
most recent interim fiscal quarter, if applicable, giving effect
to such Acquisition and (B) a Compliance Certificate prepared on
a historical pro forma basis giving effect to such Acquisition,
which certificate shall demonstrate that no Default or Event of
Default would exist immediately after giving effect thereto
(provided, however, that in each case if such information is not
then available for such periods with respect to Borrower, any
Subsidiary or the Person being acquired (or from whom assets are
being acquired), then such statements may be based instead upon
reasonable estimates made by Borrower as to the financial
performance of such Persons for such periods) and
(iv) the Person acquired shall be a Subsidiary, or be
merged into the Borrower or a Subsidiary, immediately upon
consummation of the Acquisition (or if assets are being acquired,
the acquiror shall be the Borrower or a Subsidiary).
6.15 Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service)
with, or make any payment or transfer to, any Affiliate except in
the ordinary course of business and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Borrower
or such Subsidiary than the Borrower or such Subsidiary would
obtain in a comparable arms-length transaction; provided that the
foregoing shall not be construed as prohibiting a transfer of
assets from a Subsidiary to the Borrower or the merger of a
Subsidiary into the Borrower.
6.16 ERISA. The Borrower will not, and will not permit any
Subsidiary to, become a party to any Multiemployer Plan.
6.17 Capital Expenditures. The Borrower will not, and will not
permit any Subsidiary to, make or commit to make (by way of the
acquisition of securities of a person or entity or otherwise) any
Capital Expenditure, except for Capital Expenditures not
exceeding (i) in fiscal year 1996, $40,000,000 in the aggregate
and (ii) in fiscal year 1997, the sum of $50,000,000 in the
aggregate, plus an aggregate amount equal to the amount (if any)
by which the actual Capital Expenditures in 1996 were less than
those permitted under (i) hereof. Notwithstanding the foregoing,
any Capital Expenditure made by a Person which is the subject of
an Acquisition by the Borrower, prior to such Acquisition, shall
not be included in determining compliance by the Borrower and its
Subsidiaries with this Section.
6.18 Total Debt Ratio. The Borrower and its Subsidiaries on a
consolidated basis shall not permit, as of the end of each fiscal
quarter for the four consecutive fiscal quarters then ended, the
Total Debt Ratio to be greater than 3.0:1.0.
6.19 Payment of Obligations. The Borrower and each Subsidiary
will pay and discharge promptly all taxes, assessments and other
governmental charges and claims levied or imposed upon it or its
Property, or any part thereof, provided, however, that the
Borrower and its Subsidiaries shall have the right in good faith
to contest any such taxes, assessments, charges or claims and,
pending the outcome of such contest, to delay or refuse payment
thereof provided that adequately funded reserves are established
by it to pay and discharge any such taxes assessments, charges
and claims.
6.20 Consolidated Net Worth. The Borrower and its Subsidiaries
shall at all times maintain Consolidated Net Worth, determined as
of the end of each fiscal quarter, of not less than $150,000,000
plus 50% of cumulative Net Income for the period commencing on
August 3, 1996 through the end of such fiscal quarter plus 75% of
any net proceeds obtained from any public equity offering. (In
the event that the Borrower and its Subsidiaries have a
consolidated net loss for any fiscal quarter, Net Income for
purposes of this Section shall be deemed zero for such fiscal
quarter).
6.21 Minimum Interest Coverage Ratio. The Borrower shall
maintain a ratio, determined as of the end of each fiscal
quarter, for the four consecutive fiscal quarters then ended, of
EBITDA to Interest Expense of not less than 4.0:1.0.
6.22 Encumbrances and Liens. The Borrower will not create,
assume or suffer to exist any Lien (other than for taxes not
delinquent and for taxes and other items being contested in good
faith) on Property of any kind, whether real, personal or mixed,
now owned or hereafter acquired, or upon the income or profits
thereof, except for (i) minor encumbrances and easements on real
property which do not materially affect its market value, (ii)
existing Liens on the Borrower's personal property; (iii) future
purchase money security interests encumbering only the property
purchased; (iv) statutory liens of bankers, carriers,
warehousemen, mechanics, materialmen, and other similar Liens
imposed by law, which are incurred in the ordinary course of
business for sums not more than 30 days delinquent or which are
being contested in good faith by appropriate proceedings; (v)
deposits made in the ordinary course of business to secure
liability to insurance carriers; (vi) attachment and judgment
Liens securing claims less than $1,000,000 in the aggregate
(excluding for purposes of said calculation any such Liens for
which execution has been stayed, payment is covered in full by
insurance, or the Borrower is prosecuting an appeal in good faith
by appropriate proceedings); and (vii) monetary obligations of
the Borrower under any leasing or similar arrangement which, in
accordance with Agreement Accounting Principles, is classified as
a Capitalized Lease. Notwithstanding the foregoing: (i) the
Borrower shall not at any time encumber any real property with a
purchase money security interest if (A) immediately after giving
effect to such encumbrances, the purchase money Debt secured by
said encumbrance will exceed 75% of the fair market value of the
Property encumbered by the encumbrance or (B) immediately after
giving effect to such encumbrance, the aggregate Debt of the
Borrower secured by purchase money security interests in real
property will exceed 5% of total assets of the Borrower and its
Subsidiaries on a consolidated basis; and (ii) the Borrower shall
not at any time encumber its Property with an additional Lien or
encumbrance if, immediately after giving effect to such
encumbrance, the Borrower would be required to file an SEC
Report.
6.23 Loans, Advances and Guaranties. The Borrower will not, and
will not permit any Subsidiary to, except in the ordinary course
of business as currently conducted, make any loans or advances,
become a guarantor or surety, pledge its credit or properties in
any manner or extend credit; provided that the foregoing shall
not be construed as a limitation on guaranties or any Liens
permitted hereunder.
6.24 Investments. The Borrower will not purchase the Debt of
another Person or entity except for:
(i) certificates of deposit, time deposits, Eurodollar time
deposits, repurchase agreements, reverse repurchase agreements,
or bankers' acceptances, having in each case a maturity date of
not more than twelve months from the date of acquisition by the
Borrower, issued by a Lender or any U.S. commercial bank or any
branch or agency of a non-U.S. bank licensed to conduct business
in the U.S. having combined capital and surplus or not less than
$50,000,000 whose short term securities are rated at least "A" by
Standard & Poor's Corporation (or the equivalent rating provided
by any of ▇▇▇▇▇'▇ Investors Service, Inc., Duff & ▇▇▇▇▇▇ Credit
Rating Co. or Fitch Investors Services, Inc.);
(ii) interest bearing or discounted obligations of the United
States Government, any agency thereof (including without
limitation the Federal Home Loan Mortgage Corporation, the
Government National Mortgage Association, the Federal National
Mortgage Association and the Federal Farm Credit System) or any
entities or pools of mortgages or other instruments formed by the
United States Government or any such agencies, and in any case
only if such obligation has a maturity date not more than twelve
months from the date of acquisition by the Borrower;
(iii) obligations issued by states and local governments
or their agencies, instrumentalities, authorities or
subdivisions, if such issuer has received a rating of at least
"A" by Standard & Poor's Corporation (or the equivalent rating
provided by any of ▇▇▇▇▇'▇ Investors Service, Inc., Duff & ▇▇▇▇▇▇
Credit Rating Co. or Fitch Investors Services, Inc.), and in any
case only if such obligation has a maturity date of not more than
twelve months from the date of acquisition by Borrower;
(iv) commercial paper of an issuer rated at least "A" by
Standard & Poor's Corporation (or the equivalent rating provided
by any of ▇▇▇▇▇'▇ Investors Service, Inc., Duff & ▇▇▇▇▇▇ Credit
Rating Co. or Fitch Investors Services, Inc.), and in any case
only if such obligation has a maturity date not more than twelve
months from the date of acquisition by Borrower;
(v) investments in money market funds including short-term
adjustable rate money market funds; or
(vi) inter-company Debt otherwise permitted by Section 6.10(iii)
hereof.
6.25 Minimum Fixed Charge Coverage Ratio. The Borrower shall at
all times maintain a ratio, determined as of the end of each
fiscal quarter, for the four consecutive fiscal quarters then
ended, of EBITDA to Consolidated Fixed Charges of not less than
2.0:1.0.
6.26 Guaranties, Etc. The Borrower will cause each of its
Subsidiaries hereafter formed or acquired to execute and deliver
to the Agent promptly upon the formation or acquisition thereof a
Guaranty in form and substance satisfactory to the Agent,
guaranteeing the Obligations on substantially the same terms as
the other Guarantors.
ARTICLE 7
DEFAULTS
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
7.1 Payment Defaults. The Borrower shall fail to pay when due
any payment of principal of any Loan, or the Borrower shall fail
to pay within 3 days of the date when due any reimbursement
obligation (with respect to a drawing under a Letter of Credit)
or interest or other charge or fee required under the terms of
this Agreement or the other Loan Documents.
7.2 Representations and Warranties. Any representation or
warranty made by the Borrower or any Guarantor under any Loan
Document shall prove to have been incorrect or misleading in any
material respect when made.
7.3 Other Loan Document Defaults. The Borrower or any
Guarantor shall fail to perform (a) any obligation set forth in
subsections 6.1, 6.3, 6.10, 6.11, 6.12, 6.13, 6.14, 6.17, 6.18,
6.21, 6.22, 6.23, 6.24 or 6.25 of the Agreement; (b) any
obligation set forth in subsection 6.20 of the Agreement and such
failure shall continue for 14 days following the occurrence
thereof; or (c) any other obligation contained in the Agreement
or the other Loan Documents, and such failure shall continue for
30 days after written notice thereof from the Lenders.
7.4 Bankruptcy. (a) The Borrower or any Guarantor shall fail
to pay its Debts generally as they become due or shall file any
petition or action for relief under any bankruptcy, insolvency,
reorganization, moratorium, creditor composition law, or any
other law for the relief of or relating to debtors; (b) an
involuntary petition under any bankruptcy law shall be filed
against the Borrower or any Guarantor and shall not be dismissed
or discharged within 60 days of filing; or (c)a custodian,
receiver, trustee, assignee for the benefit or creditors, or
other similar official, shall be appointed to take possession,
custody or control of the properties of the Borrower or any
Guarantor and not be dismissed or discharged with 60 days of
appointment.
7.5 Other Agreements. The Borrower shall fail to pay when due
principal or interest payments required under the terms of any
bonds, notes, debentures or other agreements evidencing, in the
aggregate, at least $5,000,000 of indebtedness (excluding, for
purposes of this calculation, payments required under this
Agreement or any of the other Loan Documents) and such non-
payment shall continue beyond any period of grace provided with
respect thereto, or the Borrower shall default in the observance
or performance of any other agreement contained in any such
bonds, notes, debentures or other agreements evidencing
indebtedness, and the effect of such failure or default is to
cause the indebtedness evidenced thereby to become due prior to
its stated date of maturity.
7.6 ERISA. Any Governmental Person shall take any action under
ERISA, with respect to any Plan, that could have a Material
Adverse Effector that the unfunded liabilities exceed $1,000,000.
7.7 Judgments. A final judgment or order for the payment of
money in excess of $5,000,000 (exclusive of amounts covered by
insurance) shall be rendered against the Borrower or any
Guarantor and the same shall remain undischarged for a period of
30 days during which execution shall not be effectively stayed,
or any judgment, writ, warrant of attachment, or execution or
similar process, shall be issued or levied against a substantial
part of the Borrower's or any Guarantor's property and such
judgment, writ, warrant of attachment, or execution or similar
process, shall not be released, stayed, vacated, bonded or
otherwise dismissed within 20 days after its issue or levy.
7.8 Loan Documents. The Guaranties or any other Loan Document
shall fail to remain in full force or effect or any action shall
be taken by the Borrower or any Guarantor to discontinue or to
assert the invalidity or unenforceability of any Guaranty or any
other Loan Document, or any Guarantor denies that it has any
further liability under any Guaranty to which it is a party, or
gives notice to such effect.
ARTICLE 8
ACCELERATION, WAIVERS AND AMENDMENTS
8.1 Acceleration. If any Event of Default described in Section
7.4 occurs with respect to the Borrower, the obligations of the
Lenders to make Loans and issue and participate in Letters of
Credit hereunder shall automatically terminate and the
Obligations shall immediately become due and payable without any
election or action on the part of the Agent or any Lender. If
any other Event of Default occurs, the Required Lenders may
terminate or suspend the obligations of the Lenders to make Loans
and issue and participate in Letters of Credit hereunder, or
declare the Obligations to be due and payable, or both, whereupon
the Obligations shall become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which
the Borrower hereby expressly waives.
8.2 Cash Collateral. To the extent that any Letters of Credit
are outstanding at the time of any Event of Default, the Borrower
shall deliver to the Agent, for the benefit of the Lenders, a
cash collateral deposit in an amount equal to the aggregate
Letter of Credit Amount for all Letters of Credit then
outstanding.
8.3 Additional Remedies. The rights, powers and remedies given
to the Agent and the Lenders hereunder shall be cumulative and
not alternative and shall be in addition to all rights, powers
and remedies given to the Agent and the Lenders by law against
the Borrower or any other person, including but not limited to
any Lender's right of setoff or banker's lien.
8.4 Amendments. Subject to the provisions of this Article 8,
the Required Lenders (or the Agent with the consent in writing of
the Required Lenders) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the
rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental
agreement shall, without the consent of each Lender affected
thereby:
(i) Extend the maturity of any Loan or Note or forgive all or
any portion of the principal amount thereof, or
reduce the rate or extend the time of payment of
interest or fees thereon.
(ii) Reduce the percentage specified in the definition of
Required Lenders.
(iii) Increase the amount of the Commitment of any Lender
hereunder or permit the Borrower to assign its
rights under this Agreement.
(iv) Amend this Section 8.4.
(v) Release any guarantor of the Loans or modify any guaranty
in any material respect.
No amendment of any provision of this Agreement relating to the
Agent shall be effective without the written consent of the
Agent. The Agent may waive payment of the fees required under
Section 12.3(ii) without obtaining the consent of any other party
to this Agreement.
8.5 Preservation of Rights. No delay or omission of the
Lenders or the Agent to exercise any right under the Loan
Documents shall impair such right or be construed to be a waiver
of any Default or an acquiescence therein, and the making of a
Loan notwithstanding the existence of a Default or the inability
of the Borrower to satisfy the conditions precedent to such Loan
shall not constitute any waiver or acquiescence. Any single or
partial exercise of any such right shall not preclude other or
further exercise thereof or the exercise of any other right, and
no waiver, amendment or other variation of the terms, conditions
or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to
Section 8.4, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan
Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have
been paid in full.
ARTICLE 9
GENERAL PROVISIONS
9.1 Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall
survive delivery of the Notes and the making of the Loans and
issuance of the Letters of Credit herein contemplated.
9.2 Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be
obligated to extend credit to the Borrower in violation of any
limitation or prohibition provided by any applicable statute or
regulation.
9.3 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the
interpretation of any of the provisions of the Loan Documents.
9.4 Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent and the
Lenders and supersede all prior agreements and understandings
among the Borrower, the Agent and the Lenders relating to the
subject matter thereof.
9.5 Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and
not joint and no Lender shall be the partner or agent of any
other (except to the extent to which the Agent is authorized to
act as such). The failure of any Lender to perform any of its
obligations hereunder shall not relieve any other Lender from any
of its obligations hereunder. This Agreement shall not be
construed so as to confer any right or benefit upon any Person
other than the parties to this Agreement and their respective
successors and assigns.
9.6 Expenses; Indemnification. The Borrower shall reimburse
the Agent for any costs, internal charges and out-of-pocket
expenses (including reasonable attorneys' fees and time charges
of attorneys for the Agent, not to exceed, however, amounts set
forth in a letter to the Borrower by UBOC dated September 26,
1996) paid or incurred by the Agent in connection with the
negotiation and documentation of this Agreement. The Borrower
shall also reimburse the Agent and each Lender for any costs,
internal charges and out-of-pocket expenses (including reasonable
attorneys' fees and time charges of attorneys for the Agent and
each Lender) paid or incurred by the Agent or any Lender in
connection with the collection and enforcement of the Loan
Documents. The Borrower further agrees to indemnify the Agent
and each Lender, its directors, officers and employees against
all losses, claims, damages, penalties, judgments, liabilities
and expenses (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent or
any Lender is a party thereto) which any of them may pay or incur
arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby or the direct or
indirect application or proposed application of the proceeds of
any Loan or Letter of Credit hereunder, provided that no Person
shall have the right to be indemnified hereunder for such
Person's own gross negligence or willful misconduct as determined
by a court of competent jurisdiction.
9.7 Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent
with sufficient counterparts so that the Agent may furnish one to
each of the Lenders.
9.8 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance
with Agreement Accounting Principles; provided that, if the
Borrower notifies the Agent that the Borrower wishes to amend any
covenant contained in Article 6 to eliminate the effect of any
change after the date hereof in Agreement Accounting Principles
(which, for purposes of this proviso shall include the generally
accepted application or interpretation thereof) on the operation
of such covenants (or if the Agent notifies the Borrower that the
Required Lenders wish to amend any such covenant for such
purpose), then the Borrower's compliance with such covenant shall
be determined on the basis of Agreement Accounting Principles in
effect immediately before the relevant change in Agreement
Accounting Principles became effective, until either such notice
is withdrawn or such covenant is amended in a manner satisfactory
to the Borrower and the Required Lenders.
9.9 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or
invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
9.10 Nonliability of Lenders. The relationship between the
Borrower and the Lenders and the Agent shall be solely that of
borrower and lender. Neither the Agent nor any Lender shall have
any fiduciary responsibilities to the Borrower. Neither the
Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or
operations.
9.11 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW
OF CONFLICTS) OF THE STATE OF CALIFORNIA, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.12 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR CALIFORNIA STATE COURT SITTING IN LOS ANGELES IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT
OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL
PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY
AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT
IN LOS ANGELES, CALIFORNIA.
9.13 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING
IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
9.14 Integration Clause. Except for documents and instruments
specifically referenced herein, this Agreement constitutes the
entire agreement among the Agent, the Lenders and the Borrower
regarding the Loans and Letters of Credit and all prior
communications verbal or written between the Borrower and the
Agent or any Lender shall be of no further effect or evidentiary
value.
9.15 Confidentiality. The Lenders shall take normal and
reasonable precautions to maintain the confidentiality of all
non-public information obtained pursuant to the requirements of
this Agreement which has been identified as such by the Borrower
but may, in any event, make disclosures (i) reasonably required
by any bona fide transferee, assignee or participant in
connection with the contemplated transfer or assignment of any of
the Commitments or Loans or participations therein or
participations in Letters of Credit or (ii) as required or
requested by any governmental agency or representative thereof or
as required pursuant to any legal process or (iii) to its
attorneys and accountants or (iv) as required by law or (v) in
connection with litigation involving any Lender.
ARTICLE 10
THE AGENT
10.1 Appointment. UBOC is hereby appointed Agent hereunder and
under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to act as the agent of such
Lender. The Agent agrees to act as such upon the express
conditions contained in this Article 10. The Agent shall not
have a fiduciary relationship in respect of the Borrower or any
Lender by reason of this Agreement.
10.2 Powers. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the
Agent by the terms of each thereof, together with such powers as
are reasonably incidental thereto. The Agent shall have no
implied duties to the Lenders, or any obligation to the Lenders
to take any action thereunder except any action specifically
provided by the Loan Documents to be taken by the Agent.
10.3 General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the
Borrower or any Lender for any action taken or omitted to be
taken by it or them hereunder or under any other Loan Document or
in connection herewith or therewith except for its or their own
gross negligence or willful misconduct.
10.4 No Responsibility for Loans, Recitals, etc. Neither the
Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire
into, or verify (i) any statement, warranty or representation
made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document,
including, without limitation, any agreement by an obligor to
furnish information directly to each Lender; (iii) the
satisfaction of any condition specified in Article 4 except
receipt of items required to be delivered to the Agent; or (iv)
the validity, effectiveness or genuineness of any Loan Document
or any other instrument or writing furnished in connection
therewith. The Agent shall have no duty to disclose to the
Lenders information that is not required to be furnished by the
Borrower to the Agent at such time, but is voluntarily furnished
by the Borrower to the Agent (either in its capacity as Agent or
in its individual capacity).
10.5 Action on Instructions of Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with
written instructions signed by the Required Lenders, and such
instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders and on all holders
of Notes. The Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to
take any such action.
10.6 Employment of Agents and Counsel. The Agent may execute
any of its duties as Agent hereunder and under any other Loan
Document by or through employees, agents, and attorneys-in-fact
and shall not be answerable to the Lenders, except as to money or
securities received by it or its authorized agents, for the
default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled
to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder and under any
other Loan Document.
10.7 Reliance on Documents; Counsel. The Agent shall be
entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document
believed by it to be genuine and correct and to have been signed
or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.
10.8 Agent's Reimbursement and Indemnification. The Lenders
agree to reimburse and indemnify the Agent ratably in proportion
to their respective Commitments (i) for any other expenses
incurred by the Agent on behalf of the Lenders, in connection
with the preparation, execution, delivery, administration and
enforcement of the Loan Documents and (ii) for any liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of the
Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other
documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent. The obligations of the Lenders
under this Section 10.8 shall survive payment of the Obligations
and termination of this Agreement.
10.9 Rights as a Lender. In the event the Agent is a Lender,
the Agent shall have the same rights and powers hereunder and
under any other Loan Document as any Lender and may exercise the
same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, at any time when the Agent is a Lender, unless
the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of trust, debt, equity
or other transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of
its Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person. The Agent
shall, as long as it shall be the Agent, retain at least a 25%
interest in the Commitment or, if the Commitment has been
terminated at least a 25% interest in Loans outstanding.
10.10 Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or
any other Lender and based on the financial statements prepared
by the Borrower and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement and the other Loan Documents. Each
Lender also acknowledges that it will, independently and without
reliance upon the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Agreement and the other Loan Documents.
10.11 Successor Agent. The Agent may resign at any time
by giving written notice thereof to the Lenders and the Borrower,
such resignation to be effective upon the appointment of a
successor Agent or, if no successor Agent has been appointed,
forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required
Lenders shall have the right to appoint, with the consent (which
shall not be unreasonably withheld) of the Borrower, if no
Default has occurred and is continuing, on behalf of the Borrower
and the Lenders, a successor Agent. If no successor Agent shall
have been so appointed by the Required Lenders within thirty days
after the resigning Agent's giving notice of its intention to
resign, then the resigning Agent may appoint, on behalf of the
Borrower and the Lenders, a successor Agent. If the Agent has
resigned and no successor Agent has been appointed, the Lenders
may perform all the duties of the Agent hereunder and the
Borrower shall make all payments in respect of the Obligations to
the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to
be appointed hereunder until such successor Agent has accepted
the appointment. Any such successor Agent shall be a commercial
bank having capital and retained earnings of at least
$50,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the resigning Agent. Upon the
effectiveness of the resignation of the Agent, the resigning
Agent shall be discharged from its duties and obligations
hereunder and under the Loan Documents. After the effectiveness
of the resignation of an Agent, the provisions of this Article 10
shall continue in effect for the benefit of such Agent in respect
of any actions taken or omitted to be taken by it while it was
acting as the Agent hereunder and under the other Loan Documents.
ARTICLE 11
SETOFF; RATABLE PAYMENTS
11.1 Setoff. Upon the occurrence and during the continuance of
any Event of Default, the Lenders are hereby authorized at any
time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held
and other indebtedness at any time owing by any Lender to or for
the credit or the account of the Borrower against any and all
obligations of the Borrower now or hereafter existing under the
Loan Documents, irrespective of whether or not any Lender shall
have made any demand under this Agreement and although such
obligations may be unmatured. The Agent agrees to notify the
Borrower promptly after any such setoff and application;
provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights
of the Lenders under this Section are in addition to other rights
and remedies (including other rights of setoff) that the Lenders
may have.
11.2 Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than
payments received pursuant to Section 3.1 or 3.2) in a greater
proportion than that received by any other Lender, such Lender
agrees, promptly upon demand, to purchase a portion of the Loans
held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of Loans. If any Lender,
whether in connection with setoff or amounts which might be
subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans.
In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.
ARTICLE 12
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns. The terms and provisions of the
Loan Documents shall be binding upon and inure to the benefit of
the Borrower and the Lenders and their respective successors and
assigns, except that (i) the Borrower shall not have the right to
assign its rights or obligations under the Loan Documents and
(ii) any assignment by any Lender must be made in compliance with
Section 12.3. Notwithstanding clause (ii) of this Section, any
Lender may at any time, without the consent of the Borrower or
the Agent, assign all or any portion of its rights under this
Agreement and its Notes to a Federal Reserve Bank; provided,
however, that no such assignment shall release the transferor
Lender from its obligations hereunder. The Agent may treat the
payee of any Note as the owner thereof for all purposes hereof
unless and until such payee complies with Section 12.3 in the
case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the
Agent. Any assignee or transferee of a Note agrees by acceptance
thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who
at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and
binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
12.2 Participations.
(i) Permitted Participants; Effect. Any Lender
may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or
more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held
by such Lender, any Commitment of such Lender or any other
interest of such Lender under the Loan Documents. In the
event of any such sale by a Lender of participating
interests to a Participant, such Lender's obligations under
the Loan Documents shall remain unchanged, such Lender
shall remain solely responsible to the other parties hereto
for the performance of such obligations, such Lender shall
remain the holder of any such Note for all purposes under
the Loan Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if such Lender
had not sold such participating interests, and the Borrower
and the Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights
and obligations under the Loan Documents.
(ii) Voting Rights. Each Lender shall retain
the sole right to approve, without the consent of any
Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment,
modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which
forgives principal, interest or fees or reduces the
interest rate or fees payable with respect to any such Loan
or Commitment, postpones any date fixed for any regularly-
scheduled payment of principal of, or interest or fees on,
any such Loan or Commitment, or releases any guarantor of
any such Loan or any substantial amount of Collateral
securing any such Loan.
(iii) Benefit of Setoff. The Borrower agrees that
each Participant shall be deemed to have the right of
setoff provided in Section 11.1 in respect of its
participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its
participating interest were owing directly to it as a
Lender under the Loan Documents, provided that each Lender
shall retain the right of setoff provided in Section 11.1
with respect to the amount of participating interests sold
to each Participant. The Lenders agree to share with each
Participant, and each Participant, by exercising the right
of setoff provided in Section 11.1, agrees to share with
each Lender, any amount received pursuant to the exercise
of its right of setoff, such amounts to be shared in
accordance with Section 11.2 as if each Participant were a
Lender.
12.3 Assignments.
(i) Permitted Assignments. Any Lender may, in
the ordinary course of its business and in accordance with
applicable law, at any time assign to one or more Eligible
Assignees ("Purchasers") all or any part of its rights and
obligations under the Loan Documents, provided, however,
such assignments must be in a minimum amount at least equal
to $5,000,000; provided, however, that if such Purchaser is
a Lender or an Affiliate thereof, no minimum amount shall
be applicable. Such assignment shall be substantially in
the form of Exhibit C hereto or in such other form as may
be agreed to by the parties thereto. The consent of the
Borrower and the Agent shall be required prior to an
assignment becoming effective with respect to a Purchaser
which is not a Lender or an Affiliate thereof; provided,
however, that if a Default has occurred and is continuing,
the consent of the Borrower shall not be required. Such
consent shall not be unreasonably withheld.
(ii) Effect; Effective Date. Upon (i) delivery
to the Agent of a notice of assignment, substantially in
the form attached as Exhibit I to Exhibit C hereto (a
"Notice of Assignment"), together with any consents
required by Section 12.3(i), and (ii) payment of a $2,500
fee to the Agent for processing such assignment, such
assignment shall become effective on the effective date
specified in such Notice of Assignment. The Notice of
Assignment shall contain a representation by the Purchaser
to the effect that it is an Eligible Assignee and that none
of the consideration used to make the purchase of the
Commitment and Loans under the applicable assignment
agreement are "plan assets" as defined under ERISA and that
the rights and interests of the Purchaser in and under the
Loan Documents will not be "plan assets" under ERISA. On
and after the effective date of such assignment, such
Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the
Lenders and shall have all the rights and obligations of a
Lender under the Loan Documents, to the same extent as if
it were an original party hereto, and no further consent or
action by the Borrower, the Lenders or the Agent shall be
required to release the transferor Lender with respect to
the percentage of the Aggregate Commitment and Loans
assigned to such Purchaser. Upon the consummation of any
assignment to a Purchaser pursuant to this Section
12.3(ii), the transferor Lender, the Agent and the Borrower
shall make appropriate arrangements so that replacement
Notes are issued to such transferor Lender and new Notes
or, as appropriate, replacement Notes, are issued to such
Purchaser, in each case in principal amounts reflecting
their Commitment, as adjusted pursuant to such assignment.
12.4 Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other
Person acquiring an interest in the Loan Documents by operation
of law (each a "Transferee") and any prospective Transferee any
and all information in such Lender's possession concerning the
creditworthiness of the Borrower and its Subsidiaries, provided
that each prospective Transferee shall execute and deliver to the
Agent a confidentiality agreement (in form and substance
reasonably satisfactory to the Borrower and the Agent).
12.5 Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws
of any jurisdiction other than the United States or any State
thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 2.21.
ARTICLE 13
NOTICES
13.1 Giving Notice. Except as otherwise permitted by Section
2.11 with respect to notices regarding conversion or continuation
of Advances, all notices and other communications provided to any
party hereto under this Agreement or any other Loan Document
shall be in writing or by facsimile and addressed or delivered to
the Borrower and the Agent at their respective addresses set
forth below its signature hereto and to each Lender at its
address set forth on Schedule 1 hereto or at such other address
as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with
postage prepaid, shall be deemed given when received; any notice,
if transmitted by facsimile, shall be deemed given when
transmitted (answerback confirmed in the case of telexes).
13.2 Change of Address. The Borrower, the Agent and any Lender
may each change the address for service of notice upon it by a
notice in writing to the other parties hereto.
ARTICLE 14
COUNTERPARTS
This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing
any such counterpart. This Agreement shall be effective when it
has been executed by the Borrower, the Agent and the Lenders and
each party has notified the Agent by telex or telephone, that it
has taken such action.
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have
executed this Agreement as of the date first above written.
PETCO ANIMAL SUPPLIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President-
Finance
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President -
Finance
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
UNION BANK OF CALIFORNIA, N.A.,
as Agent and Lender
By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Print Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Print Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
UNITED STATES NATIONAL BANK OF OREGON, as
Lender
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇
Print Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Corporate Banking
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇. ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE 1
LENDERS AND APPLICABLE LENDING OFFICES
Lender Commitment Applicable Lending Office
Union Bank of $30,000,000 ▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, N.A. 16th Floor
Agent and Lender ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Assistant Vice
President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
United States $10,000,000 Corporate Banking
National Bank 111 Southwest 5th Pl.4
of Oregon ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE 2
SUBSIDIARIES
(See Section 5.8)
Jurisdiction
Investment Owned Amount of Percent of
In By Investment Ownership Organization
International Borrower $100 100% California
Pet Supplies
and
Distribution,
Inc.
Pet Nosh, Borrower $100 100% New York
Consolidated
Co., Inc.
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS 1
ARTICLE 2
THE CREDIT 12
2.1 Commitment 12
2.2 Commitment Percentage 12
2.3 Types of Loans 13
2.4 Notes 13
2.5 Notice of Borrowing 13
2.6 Commitment Reduction 14
2.7 Commitment Obligations 14
2.8 Commitment Termination 15
2.9 Required Payments 15
2.10 Issuance of Letters of Credit 15
2.11 Fees 19
2.12 Voluntary Conversion of Advances 19
2.13 Interest. 20
2.14 Rates Applicable After Default 20
2.15 Method of Payment 20
2.16 Telephonic Notices 21
2.17 Interest Payment Dates; Interest and Fee Basis 21
2.18 Notification of Loan, Interest Rates, Prepayments and
Commitment Reductions 22
2.19 Applicable Lending Offices 22
2.20 Non-Receipt of Funds by the Agent 22
2.21 Withholding Tax Exemption 22
2.22 Optional Prepayments 23
ARTICLE 3
CHANGE IN CIRCUMSTANCES 24
3.1 Yield Protection 24
3.2 Taxes 25
ARTICLE 4
CONDITIONS PRECEDENT 25
4.1 Initial Loan or Letter of Credit 25
4.2 All Loans 27
4.3 All Letters of Credit 27
ARTICLE 5
REPRESENTATIONS AND WARRANTIES 28
5.1 Authorization 28
5.2 Governmental Action 28
5.3 Enforceability 28
5.4 Use of Proceeds 28
5.5 Litigation 29
5.6 Financial Statements 29
5.7 Taxes 29
5.8 Subsidiaries 29
5.9 ERISA 29
5.10 Accuracy of Information 29
5.11 Organization and Existence 30
5.12 Consents 30
5.13 Intellectual Property 30
5.14 Default 30
5.15 Nature of Business 30
5.16 Ranking of Loans 31
5.17 Compliance with Laws 31
5.18 Investment Company Acts; Other Regulations 31
5.19 Environmental Matters 31
5.20 Title 31
ARTICLE 6
COVENANTS 31
6.1 Financial Reporting 32
6.2 Use of Proceeds 34
6.3 Notice of Default 34
6.4 Conduct of Business 34
6.5 Records 35
6.6 Insurance 35
6.7 Compliance with Laws 35
6.8 Maintenance of Properties 35
6.9 Inspection 35
6.10 Debt 35
6.11 Merger 36
6.12 Sale of Assets 36
6.13 Sale of Accounts 36
6.14 Acquisitions 36
6.15 Affiliates 37
6.16 ERISA 37
6.17 Capital Expenditures 37
6.18 Total Debt Ratio 38
6.19 Payment of Obligations 38
6.20 Consolidated Net Worth 38
6.21 Minimum Interest Coverage Ratio 38
6.22 Encumbrances and Liens 38
6.23 Loans, Advances and Guaranties 39
6.24 Investments 39
6.25 Minimum Fixed Charge Coverage Ratio 40
6.26 Guaranties, Etc 40
ARTICLE 7
DEFAULTS 40
7.1 Payment Defaults. 40
7.2 Representations and Warranties. 41
7.3 Other Loan Document Defaults. 41
7.4 Bankruptcy. 41
7.5 Other Agreements. 41
7.6 ERISA. 41
7.7 Judgments. 42
7.8 Loan Documents 42
ARTICLE 8
ACCELERATION, WAIVERS AND AMENDMENTS 42
8.1 Acceleration 42
8.2 Cash Collateral 42
8.3 Additional Remedies 42
8.4 Amendments 43
8.5 Preservation of Rights 43
ARTICLE 9
GENERAL PROVISIONS 44
9.1 Survival of Representations 44
9.2 Governmental Regulation 44
9.3 Headings 44
9.4 Entire Agreement 44
9.5 Several Obligations; Benefits of this Agreement 44
9.6 Expenses; Indemnification 44
9.7 Numbers of Documents 45
9.8 Accounting 45
9.9 Severability of Provisions 45
9.10 Nonliability of Lenders 45
9.11 CHOICE OF LAW 45
9.12 CONSENT TO JURISDICTION 46
9.13 WAIVER OF JURY TRIAL 46
9.14 Integration Clause 46
9.15 Confidentiality 46
ARTICLE 10
THE AGENT 47
10.1 Appointment 47
10.2 Powers 47
10.3 General Immunity 47
10.4 No Responsibility for Loans, Recitals, etc. 47
10.5 Action on Instructions of Lenders 47
10.6 Employment of Agents and Counsel 48
10.7 Reliance on Documents; Counsel 48
10.8 Agent's Reimbursement and Indemnification 48
10.9 Rights as a Lender 48
10.10 Lender Credit Decision 49
10.11 Successor Agent 49
ARTICLE 11
SETOFF; RATABLE PAYMENTS 50
11.1 Setoff 50
11.2 Ratable Payments 50
ARTICLE 12
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 50
12.1 Successors and Assigns 50
12.2 Participations 51
12.3 Assignments 52
12.4 Dissemination of Information 53
12.5 Tax Treatment 53
ARTICLE 13
NOTICES 53
13.1 Giving Notice 53
13.2 Change of Address 54
ARTICLE 14
COUNTERPARTS 54
SCHEDULE 1 - LENDERS AND APPLICABLE LENDING OFFICES
SCHEDULE 2 - SUBSIDIARIES
SCHEDULE 3 - DEBT
EXHIBIT A - FORM OF NOTE
EXHIBIT B - COMPLIANCE CERTIFICATE
EXHIBIT C - ASSIGNMENT AGREEMENT
EXHIBIT D - LEVERAGE RATIO LEVEL CERTIFICATE
EXHIBIT E - FORM OF LETTER OF CREDIT REQUEST
EXHIBIT F - FORM OF NOTICE OF BORROWING
$40,000,000
CREDIT AGREEMENT
===============================================
PETCO ANIMAL SUPPLIES, INC.
BORROWER
THE BANKS NAMED HEREIN
LENDERS
AND
UNION BANK OF CALIFORNIA, N.A.
Agent
===============================================
Dated as of December 6, 1996