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EXHIBIT 99.5
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SEASONAL CREDIT AGREEMENT
DATED AS OF OCTOBER 5, 1995
among
KMART CORPORATION,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
As Documentation Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
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$300,000,000
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TABLE OF CONTENTS
Page
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1.01 Defined Terms.................................................... 1
1.02 Other Definitional Provisions.................................... 12
(a) Defined Terms............................................... 12
(b) The Agreement............................................... 12
(c) Certain Common Terms........................................ 13
(d) Performance; Time........................................... 13
(e) Contracts................................................... 13
(f) Laws........................................................ 13
(g) Captions.................................................... 13
1.03 Accounting Principles............................................ 13
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments................................. 14
2.02 Loan Accounts; Notes............................................. 14
2.03 Procedure for Borrowings......................................... 15
2.04 Conversion and Continuation Elections for Borrowings............. 16
2.05 Voluntary Termination or Reduction of Commitments................ 17
2.06 Optional Prepayments of Loans.................................... 18
2.07 Repayment........................................................ 18
2.08 Interest......................................................... 18
2.09 Fees............................................................. 19
(a) Syndication Fees............................................ 19
(b) Transaction Fees............................................ 19
(c) Closing Fee................................................. 19
2.10 Computation of Fees and Interest................................. 19
2.11 Payments by the Company.......................................... 20
2.12 Payments by the Banks to the Documentation Agent................. 21
2.13 Sharing of Payments, Etc......................................... 22
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes............................................................ 23
3.02 Inability to Determine Rates..................................... 26
3.03 Increased Costs; Capital Adequacy................................ 26
3.04 Illegality....................................................... 28
3.05 Funding Losses................................................... 28
3.06 Survival......................................................... 29
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ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions to Occurrence of the Closing Date and
Effectiveness of this Agreement.................................. 29
(a) Credit Agreement............................................ 29
(b) By-laws; Resolutions; Incumbency............................ 29
(c) Articles of Incorporation................................... 29
(d) Legal Opinions.............................................. 30
(e) Payment of Transaction Fees and Expenses.................... 30
(f) Certificate................................................. 30
(g) Financial Statements........................................ 30
(h) 364 Day Facility............................................ 30
(i) Other Documents............................................. 30
4.02 Conditions to All Borrowings..................................... 31
(a) Notice of Borrowing......................................... 31
(b) Continuation of Representations and Warranties.............. 31
(c) No Existing Default......................................... 31
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Organization and Good Standing................................... 31
5.02 Authorization; No Contravention.................................. 31
5.03 Consents and Approvals........................................... 32
5.04 Binding Effect................................................... 32
5.05 Litigation....................................................... 32
5.06 Financial Statements............................................. 32
5.07 Use of Proceeds; Margin Regulations.............................. 32
5.08 No Default....................................................... 33
5.09 Taxes............................................................ 33
5.10 Insurance........................................................ 33
5.11 Compliance With Laws............................................. 33
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01 Payment of Taxes................................................. 33
6.02 Insurance........................................................ 33
6.03 Preservation of Corporate Existence, Etc......................... 34
6.04 Maintenance of Property.......................................... 34
6.05 Compliance With Laws............................................. 34
6.06 Books and Records; Other Information............................. 34
6.07 Financial Information............................................ 34
6.08 Notices.......................................................... 35
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ARTICLE VII
NEGATIVE COVENANTS
7.01 Consolidations and Mergers....................................... 36
7.02 Disposition of Assets............................................ 36
7.03 Limitation on Liens.............................................. 37
7.04 EBITDAR Coverage Ratio........................................... 38
7.05 Consolidated Net Worth........................................... 38
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default................................................. 38
(a) Non-Payment of Principal.................................... 38
(b) Non-Payment of Interest or Fees............................. 38
(c) Specific Defaults........................................... 38
(d) Other Defaults.............................................. 38
(e) Representation or Warranty.................................. 39
(f) Cross Default; Cross-Acceleration........................... 39
(g) ERISA....................................................... 39
(h) Monetary Judgments.......................................... 39
(i) Insolvency; Voluntary Proceedings........................... 40
(j) Involuntary Proceedings..................................... 40
8.02 Remedies......................................................... 40
8.03 Rights Not Exclusive............................................. 41
ARTICLE IX
THE DOCUMENTATION AGENT
9.01 Authorization; "Documentation Agent"............................. 41
9.02 Delegation of Duties............................................. 41
9.03 Liability of Agent-Related Persons............................... 41
9.04 Reliance by Documentation Agent.................................. 42
9.05 Notice of Default................................................ 43
9.06 Credit Decision.................................................. 43
9.07 Indemnification.................................................. 43
9.08 Documentation Agent in Individual Capacity....................... 44
9.09 Successor Documentation Agent.................................... 45
9.10 Withholding Tax.................................................. 45
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers........................................... 47
10.02 Notices.......................................................... 48
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10.03 No Waiver........................................................ 48
10.04 Costs and Expenses............................................... 48
10.05 Indemnity........................................................ 49
10.06 Marshalling; Payments Set Aside.................................. 50
10.07 Successors and Assigns........................................... 50
10.08 Assignments, Participations, Etc................................. 50
10.09 Set-off.......................................................... 53
10.10 Notification of Addresses, Lending Offices, Etc.................. 53
10.11 Counterparts..................................................... 53
10.12 Severability..................................................... 53
10.13 No Third Parties Benefited....................................... 54
10.14 Governing Law and Jurisdiction................................... 54
10.15 Waiver of Jury Trial............................................. 54
10.16 Entire Agreement................................................. 55
SCHEDULES
Schedule 2.01 Commitments; Lending Offices
Schedule 5.03 Consents and Approvals
Schedule 7.03 Liens
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Note
Exhibit D-1 Form of Opinion of Counsel to the Company
Exhibit D-2 Form of Opinion of Special Counsel to the Company
Exhibit E Form of Assignment and Assumption Agreement
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SEASONAL CREDIT AGREEMENT
This SEASONAL CREDIT AGREEMENT is entered into as of October 5, 1995,
among KMART CORPORATION, a Michigan corporation (the "Company"), the several
financial institutions party to this Agreement (collectively, the "Banks";
individually, a "Bank") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Documentation Agent.
WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms. In addition to the terms defined elsewhere in
this Agreement, the following terms have the following meanings:
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is 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 and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. In no
event shall any Bank be deemed an "Affiliate" of the Company or any Subsidiary
of the Company.
"Agent-Related Persons" means BofA and any successor agent under
Section 9.09, together with their respective Affiliates (including, in the case
of BofA, BA Securities, Inc.) and the officers, directors, employees, agents
and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Commitment" means the sum of the Commitments of the Banks,
in the initial amount of Three Hundred Million Dollars ($300,000,000), as such
amount may be reduced from time to time pursuant to this Agreement.
"Agreement" means this Seasonal Credit Agreement, as amended,
restated, supplemented or modified form time to time.
"Arrangers" means Bankers Trust Company and BA Securities, Inc.
"Assignee" has the meaning specified in Section 10.08(a).
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"Assignment and Acceptance" has the meaning specified in Section
10.08(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all reasonable disbursements of
internal counsel.
"Bank" and "Banks" means any or all, as the case may be, of the banks
listed in Schedule 2.01 hereof and any entity which becomes a Bank pursuant to
Section 10.08.
"Bank Affiliate" means a Person engaged primarily in the business of
commercial banking that is an Affiliate of a Bank and (i) is organized under
the laws of the United States, or any state thereof, or (ii) is 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 is acting through a branch or agency located in the United States.
"BofA" means Bank of America National Trust and Savings Association,
a national banking association.
"Borrowing" means a borrowing consisting of Loans of the same Type made
to the Company on the same day by the Banks ratably according to their
respective Commitment Percentages and, in the case of LIBOR Loans or CD Loans,
having the same Interest Period.
"Borrowing Date" means a date on which a Borrowing is made hereunder.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
LIBOR Loan, means such a day on which dealings in Dollars are carried on in the
London interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any Bank.
"CD Rate" means the arithmetic average (rounded upward to the nearest
1/100th of 1%) of the sum of (x) the consensus bid rates determined by each
Reference Bank as the bid rates per annum, at 10:00 a.m. (New York City time)
on the first day of the Interest Period to be applicable, of two or more New
York or Chicago, as the case may be, certificate of deposit dealers of
recognized standing selected by such Reference Bank in New York or Chicago, as
the case may be, for certificates of deposit of such Reference Bank in an
amount approximately comparable to the principal amount of the CD
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Rate Loan for such Reference Bank and with a maturity equal to the Interest
Period applicable to such CD Rate Loan, provided, that if any Reference Bank
fails to provide the Documentation Agent with its aforesaid rate then the CD
Rate shall equal the arithmetic average of the rates provided to the
Documentation Agent by the other Reference Bank or Banks, such average rate to
be grossed up for the maximum cost of reserves applicable to certificates of
deposit under Regulation D of the Federal Reserve Board by dividing the same by
a percentage equal to 100% minus the maximum rate of all reserve requirements
(expressed as a percentage) as specified in Regulation D (including any
marginal, emergency, supplemental, special or other reserves) that for the date
the CD Rate is being determined would be applicable during the Interest Period
to a negotiable certificate of deposit of such Reference Bank in excess of
$100,000 and with a maturity period equal to such Interest period, plus (y) the
then daily net annual assessment payable to the Federal Deposit Insurance
Corporation for insuring such Certificate of Deposit by a member of the Bank
Insurance Fund that is classified as adequately capitalized and within
supervisory sub-group "A" (or a comparable successor assessment risk
classification within the meaning of 12 C.F.R. Section 327.3(d)).
"CD Rate Loan" means any Loan that bears interest at a rate determined
with reference to the CD Rate.
"Closing Date" means the date on which all conditions precedent set
forth in Section 4.01 are satisfied or waived by all Banks.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any regulations promulgated thereunder.
"Commitment" has the meaning specified in Section 2.01 with respect to
each Bank.
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of such Bank's Commitment divided by the Aggregate Commitment.
"Consolidated Net Worth" means as of the date of any determination
thereof, the consolidated net worth of the Company, determined in accordance
with GAAP; provided, however, that any gains or losses from the disposition of
any Specialty Retail Subsidiary and any changes after October 7, 1994 in the
foreign currency translation adjustment account as presented in the Company's
financial statements (and in accordance with GAAP) shall be excluded from the
determination of Consolidated Net Worth.
"Continuation Date" has the meaning set forth in Section 2.04(a).
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"Contract Documents" has the meaning specified in Section 10.05.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company pursuant to Sections 414(b), (c), (m) or (o) of the Code.
"Conversion Date" means any date on which the Company elects to convert
one Type of Loan to another Type of Loan.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Document Agent" means BofA in its capacity as documentation agent for
the Banks hereunder, and any successor agent in such capacity.
"EBITDAR" means, for any applicable period, for the Company the
aggregate of the following, without duplication: (a) consolidated net income
for such period, plus (b) consolidated interest expense (net of any interest
income) for such period, plus (c) consolidated provision for taxes for such
period, plus (d) consolidated depreciation expense for such period, plus
(e) consolidated amortization expense for such period, plus (f) consolidated
Rent Expenses for such period, minus (or plus, as applicable) (g) on a
consolidated basis, any extraordinary gains (or plus extraordinary losses) for
such period, minus (or plus, as applicable) (h) any gains (or plus any losses)
attributable to the Specialty Retail Subsidiaries for such period other than
results of operations in the ordinary course of business.
"Eligible Assignee" means (i) a commercial bank or other financial
institution organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus of at least One Hundred
Million Dollars ($100,000,000); (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 a combined capital and surplus of at least One Hundred Million
Dollars ($100,000,000), provided that such bank is acting through a branch or
agency located in the United States; and (iii) any Bank Affiliate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"Event of Default" means any of the events or circumstances specified
in Section 8.01.
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"Existing Facility" means the revolving credit facility evidenced by
that certain 364 Day Credit Agreement dated as of October 7, 1995 among the
Company, BofA, as documentation agent thereunder, and the financial
institutions signatory thereto.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the preceding Business Day) in the
weekly statistical release designated as H.15 (519), or any successor
publication, by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average of the quotations
for such day on such transactions received by the Documentation Agent from
three (3) Federal funds brokers of recognized standing selected by the
Documentation Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereof.
"Form 1001" has the meaning specified in Section 9.10(a)(i).
"Form 4224" has the meaning specified in Section 9.10(a)(ii).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be in general use by significant segments of the U.S.
accounting profession, which are applicable to the circumstances as of the date
of determination.
"Governmental Authority" means any nation or government, any state or
other politicial subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Guaranty Obligation" means, as applied to any Person, any obligation,
direct or indirect, of that Person guaranteeing any Indebtedness of any other
Person, and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person:
(i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness (whether arising by agreement to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise);
or
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(ii) entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part);
provided, that the term Guaranty Obligation shall not include:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) obligations that are not required in accordance with GAAP to be
included in the financial statements of such Person or the footnotes
thereto; or
(c) "unconditional purchase obligations" (including take-or-pay
contracts) as defined in and as required to be disclosed pursuant to
Statement of Financial Accounting Standards No. 47 and the related
interpretations, as the same may be amended from time to time.
"Indebtedness" of any Person means at any date without duplication,
(a) all obligations of such Person for borrowed money;
(b) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments;
(c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable and other
expenses and accounts payable arising in the ordinary course of business;
(d) all reimbursement obligations with respect to letters of credit
(other than the "Letters of Credit" and the "LC Obligations" under the
credit agreement described in clause (a) of the definition of Other Credit
Facilities) and bankers' acceptances except ordinary trade credits;
(e) all Indebtedness of others secured by a Lien on any asset of
such Person whether or not such Indebtedness is assumed by such Person;
(f) all obligations (to the extent capitalized for accounting
purposes) of such Person as lessee under any lease of any property by that
Person as lessee which, in conformity with GAAP, is accounted for as a
capital lease on the balance sheet of that Person.
(g) all Guaranty Obligations of such Person.
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"Indemnified Person" has the meaning specified in Section 10.05.
"Insolvency Proceeding" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, involvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case (a) and (b) undertaken under U.S. Federal, State or
foreign law.
"Interest Payment Date" means, with respect to any LIBOR Loan or CD
Rate Loan, the last day of each Interest Period applicable to such Loan, and,
with respect to any Reference Rate Loan, the last Business Day of each calendar
quarter and the Termination Date; provided, that if any Interest Period for a
LIBOR Loan exceeds three months, the date which falls three months after the
beginning of such Interest Period shall also be an Interest Payment Date.
"Interest Period" means: (a) with respect to any LIBOR Loan, the period
commencing on the Business Day the LIBOR Loan is disbursed or continued (or on
the Conversion Date on which any Loan is converted to a LIBOR Loan) and ending
on the date one, two, three or six months thereafter, as selected by the
Company in its Notice of Borrowing or Notice of Conversion/Continuation; and
(b) with respect to any CD Rate Loan, the period commencing on the Business Day
the CD Rate Loan is disbursed or continued (or on the Conversion Date on which
any Loan is converted to a CD Rate Loan) and ending 30, 60, or 90 days
thereafter, as selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation;
provided, that:
(i) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a LIBOR Loan, the result of
such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the
immediately preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Loan that begins on
the last Business Day of a calendar month (or on a day for which there is
not numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month
which is one, two, three or six months, as the case may be, after the
calendar month in which such Interest Period began; and
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(iii) no Interest Period for any Loan shall extend beyond the
Termination Date.
"IRS" means the Internal Revenue Service, or any successor thereto.
"Lending Office" means, with respect to each Bank, the office of that
Bank designated as such on Schedule 2.01 hereto or such other office of the
Bank as it may from time to time specify to the Company and the Documentation
Agent in accordance with this Agreement.
"LIBOR" means, with respect to any Interest Period, the rate of
interest per annum determined by the Documentation Agent to be equal to:
(a) the rate of interest per annum for deposits in U.S. Dollars
for a period equal to the relevant Interest Period quoted on Telerate,
page 3750 (or its successor if such page number changes) at or about
11:00 a.m. (London time) on the second Business Day before the
commencement of such Interest Period,
divided (and rounded upward to the nearest 1/16 of 1%) by
(b) a percentage equal to 100% minus the then stated maximum
rate of all reserve requirements (including any marginal, emergency,
supplemental, special or other reserves required by applicable law)
applicable to any member bank of the Federal Reserve System in respect
of eurocurrency funding or liabilities as defined in Regulation D of
the Federal Reserve Board.
If no quotation is available on Telerate, the rate of interest under
clause (a) above for any Interest Period shall be determined by the
Documentation Agent to be the arithmetic mean (rounded upward to the nearest
1/16 or 1%) of the rates of interest per annum notified to the Documentation
Agent by each Reference Bank as the rate of interest (rounded upward to the
nearest 1/16 of 1%) at which deposits in an amount approximately equal to the
aggregate amount of the LIBOR Loans requested to be borrowed, and having a
maturity equal to such Interest Period, are offered to major banks in the
London interbank market at or about 11:00 a.m. (London time) on the second
Business Day before the commencement of such Interest Period.
"LIBOR Loan" means any Loan that bears interest at a rate determined
with reference to LIBOR.
"Lien" means any mortgage, deed of trust, pledge, charge, encumbrance,
lien (statutory or other) or security interest of any nature whatsoever
(including those created by, arising under or
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evidenced by any conditional sale or other title retention agreement), and any
assignment or deposit arrangement intended as or having the effect of security.
"Loan" means an extension of credit by a Bank to the Company under
Section 2.01 and may be a LIBOR Loan, a CD Rate Loan or a Reference Rate Loan,
and "Loans" means Loans made by all of the Banks.
"Loan Documents" means this Agreement, each Note and any other
agreement, instrument, certificate or other document evidencing, guaranteeing
or securing the Loans.
"Loss" has the meaning specified in Section 3.05.
"Materially Adverse Effect" means a material adverse change in, or a
material adverse effect upon, the assets, liabilities, business, operations or
condition of the Company and its Subsidiaries taken as a whole.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. or any successor to the
rating agency business thereof.
"Notes" means those promissory notes of the Company to the order of
each of the Banks, substantially in the form of Exhibit C, as the same may be
amended, restated, supplemented, or modified and in effect from time to time.
"Notice of Borrowing" means a notice given by the Company to the
Documentation Agent pursuant to Section 2.03 in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice given by the Company
to the Documentation Agent pursuant to Section 2.04 in substantially the form
of Exhibit B.
"Obligations" means all Loans and all other Indebtedness, advances,
debts, liabilities, obligations, covenants and duties owing by the Company to
any Bank, the Documentation Agent, or to any other Person required to be
indemnified under any Loan Document, of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, arising
under this Agreement or under any other Loan Document, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however acquired.
"Other Credit Facilities" means, collectively: (a) the revolving
credit facility evidenced by that certain Three Year Credit Agreement dated as
of October 7, 1994 among the Company, BofA, as documentation agent thereunder,
and the financial institutions signatory thereto, as amended, restated,
supplemented
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or modified from time to time; (b) the 364 Day Credit Facility; and (c) the
credit facilities evidenced by that certain Warehouse Facility Credit Agreement
dated as of October 7, 1994 among the Company, the other borrowers named
therein, Bankers Trust Company, as documentation agent thereunder, and the
financial institutions signatory thereto, as amended, restated, supplemented or
modified from time to time.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan Document.
"Participant" has the meaning specified in Section 10.08(d).
"Payment Office" means the address for payments set forth on the
signature page hereto in relation to the Documentation Agent, or such other
address as the Documentation Agent may from time to time specify in accordance
with Section 10.02.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, estate, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company or any member of the Controlled Group sponsors or
maintains or to which the Company or any member of the Controlled Group makes,
is making or is obligated to make contributions.
"Potential Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied) constitute an Event of Default.
"Reference Banks" means Bankers Trust Company and BofA.
"Reference Rate" means, for any day, the higher of:
(a) 0.5% per annum above the latest Federal Funds Rate for such
day; and
(b) the rate of interest publicly announced from time to time
by BofA in San Francisco, California, as its "reference rate" for such
day.
The "reference rate" is a rate set by BofA based upon various factors including
BofA's costs and desired return, general economic
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conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such announced rate. Any change
in the Reference Rate announced by BofA shall take effect at the opening of
business on the day specified in the public announcement of such change.
"Reference Rate Loan" means a Loan that bears interest based on the
Reference Rate.
"Rent Expenses" means, for any period, consolidated rent expense of the
Company for such period determined in accordance with GAAP, less consolidated
rental income for such period.
"Reportable Event" means, as to any Plan, (a) any of the events set
forth in Section 4043(b) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has been waived
in regulations issued by the PBGC, (b) a withdrawal from a Plan described in
Section 4063 of ERISA, or (c) a cessation of operations described in Section
4062(e) of ERISA.
"Required Banks" means at any time Banks holding at least 51% of the
aggregate of (a) the then Aggregate Commitment (or, if the Commitments shall
have then been terminated in full, the then aggregate unpaid principal amount
of the Loans) plus (b) the then aggregate commitments under the Other Credit
Facilities (or, if the commitments under any of such facilities shall have then
been terminated in full, then with respect to such terminated facilities the
then aggregate unpaid principal amount of all loans and letter of credit
obligations outstanding under such terminated facilities).
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of a court or of a
Governmental Authority, in each case applicable to or binding upon the Person
or any of its property or to which the Person or any of its property is
subject.
"Responsible Officer" means the Company's chief executive officer,
chief financial officer or treasurer.
"S&P" means Standard & Poor's Ratings Group or any successor to the
rating agency business thereof.
"Specialty Retail Subsidiary" means any of the following Subsidiaries
of the Company (or the continuing investment of the Company in any such
entity): Builders Square, Inc.; Borders, Inc.; Coles ▇▇▇▇, Ltd.; OfficeMax,
Inc.; PACE Membership Warehouse, Inc.; PayLess Drug Stores Northwest, Inc.; The
Sports Authority, Inc.; and ▇▇▇▇▇▇ Book Company, Inc.
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"Subsidiary" means any corporation of which stock having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors of said corporation is at the time directly or indirectly owned by
the Company or by the Company and one or more Subsidiaries or by one or more
Subsidiaries.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank and the Documentation Agent, such taxes
(including income taxes and franchise taxes) as are imposed on or measured by
such Bank's or the Documentation Agent's net income.
"Termination Date" means the earlier to occur of
(a) December 29, 1995; and
(b) the date on which the Commitments shall terminate in accordance
with the provisions of this Agreement.
"364 Day Credit Facility" means the revolving credit facility evidenced
by that certain 364 Day Credit Agreement dated as of October 5, 1995 among the
Company, BofA, as documentation agent thereunder, and the financial
institutions signatory thereto, as amended, restated, supplemented or modified
from time to time.
"Transferee" has the meaning specified in Section 10.08(e).
"Type" means, with respect to any Loan, its nature as a Reference Rate
Loan, a CD Rate Loan or a LIBOR Loan.
"United States" and "U.S." each means the United States of America.
1.02 Other Definitional Provisions.
(a) Defined Terms. Unless otherwise specified herein or
therein, all terms defined in this Agreement shall have such defined
meanings when used in any certificate or other document made or
delivered pursuant hereto. The meaning of defined terms shall be
equally applicable to the singular and plural forms of the defined
terms.
(b) The Agreement. The words "hereof", "herein", "hereunder"
and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement; and section, schedule and exhibit references are to this
Agreement unless otherwise specified.
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(c) Certain Common Terms.
(i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(d) Performance; Time. Subject to the definition of "Interest
Period" in Section 1.01, whenever any performance obligation hereunder
(other than a payment obligation) shall be stated to be due or required
to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding", and the word "through"
means "to and including". If any provision of this Agreement refers to
any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not
taking, such action.
(e) Contracts. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document.
(f) Laws. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation.
(g) Captions. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the construction
of this Agreement.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and
all financial computations required under this Agreement shall be made,
in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
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ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on
the terms and conditions hereinafter set forth, and upon request by the
Company, to make Loans in Dollars to the Company from time to time on any
Business Day during the period from the Closing Date to the Termination Date,
in an aggregate principal amount not to exceed at any time outstanding the
amount set forth opposite the Bank's name in Schedule 2.01, (such amount as the
same may be reduced pursuant to Section 2.05 or reduced or increased as a
result of one or more assignments pursuant to Section 10.08, being herein
referred to as a Bank's "Commitment"); provided, that, after giving effect to
any Borrowing, the aggregate principal amount of all outstanding Loans shall
not exceed the Aggregate Commitment. Within the limits of each Bank's
Commitment, and subject to the other terms and conditions hereof, the Company
may borrow under this Section 2.01, prepay pursuant to Section 2.06 and
reborrow pursuant to this Section 2.01.
2.02 Loan Accounts; Notes. (a) The Loans made by each Bank shall be
evidenced by one or more loan accounts maintained by such Bank in the ordinary
course of business. The loan accounts maintained by the Documentation Agent and
each Bank shall be prima facie evidence of the amount of the Loans made by the
Banks to the Company and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or otherwise affect
the Obligations of the Company hereunder to pay any amount owing with respect
to the Loans. In case of a discrepancy between the entries in the Documentation
Agent's books and any Bank's books relating to such loan accounts, the Bank's
books shall be considered correct in the absence of manifest error.
(b) If any Bank shall so request, for purposes of Section 10.08(f), the
obligation to repay the Loans may also be evidenced by a Note. Each such Bank
shall endorse on the schedules annexed to its Note the date, amount, applicable
interest rate and maturity of each Loan made by it and the amount of each
payment of principal and interest made by the Company with respect thereto.
Each Bank is irrevocably authorized by the Company to so endorse its Note and
each Bank's record shall constitute prima facie evidence of the accuracy of the
information so recorded; provided, however, that the failure of a Bank to make,
or an error in making, a notation thereon with respect to any Loan shall not
limit or otherwise affect the obligations of the Company hereunder or under
such Note to pay any amount with respect to the Loans made by such Bank. Any
such request shall be made by such Bank to the Documentation Agent, which will
prepare (or cause to be prepared) such Note and send the same to the Company
for execution by the Company. Upon such execution, the Company will promptly
deliver such Note to the Bank which requested the same.
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2.03 Procedure for Borrowings.
(a) Each Borrowing shall be made upon the irrevocable request of the
Company by a facsimile to the Documentation Agent (which shall be confirmed
promptly by a telephone call) in the form of a Notice of Borrowing which
facsimile must be received by the Documentation Agent prior to 11:00 a.m. (New
York City time) (i) three (3) Business Days prior to the requested borrowing
date, in the case of LIBOR Loans, (ii) two Business Days prior to the requested
borrowing date, in the case of CD Rate Loans and (iii) on the requested
borrowing date, in the case of Reference Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an aggregate
minimum principal amount of Ten Million Dollars ($10,000,000) or any
multiple of Five Million Dollars ($5,000,000) in excess thereof;
(B) the requested borrowing date, which shall be a Business
Day;
(C) whether the Borrowing is to be comprised of LIBOR Loans, CD
Rate Loans or Reference Rate Loans; and
(D) if the Borrowing is to be comprised of LIBOR Loans or CD
Rate Loans, the duration of the initial Interest Period applicable to
such Loans. If the Notice of Borrowing shall fail to specify the
duration of the initial Interest Period for any LIBOR Loans or CD Rate
Loans, the Company shall be deemed to have elected an Interest Period
of one months or 30 days, respectively;
provided, however, that with respect to any Borrowing to be made on the Closing
Date, a Notice of Borrowing shall be delivered to the Documentation Agent not
later than 11:00 a.m. (New York City time) on the Closing Date (such Borrowing
will consist of Reference Rate Loans only).
(b) Upon receipt of the Notice of Borrowing, the Documentation Agent
shall promptly notify each Bank thereof and of the amount of such Bank's share
of the requested Borrowing based on such Bank's Commitment Percentage.
(c) Each Bank will make its Commitment Percentage of each Borrowing
available to the Documentation Agent for the account of the Company at the
Documentation Agent's Payment Office by 2:00 p.m. (New York City time) on the
borrowing date requested by the Company by payment in Dollars and in funds
immeduately available to the Documentation Agent. Unless any applicable
condition specified in Article IV has not been satisfied, the proceeds of all
such Loans will then be made available to the Company by the Documentation
Agent at such office by crediting the account of the
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Company with the aggregate of the amounts made available to the Documentation
Agent by the Banks and in like funds as received by the Documentation Agent.
(d) After giving effect to any Borrowing, unless consented to by the
Documentation Agent in its sole discretion, there shall not be more than ten
(10) different Interest Periods in effect in respect of all Loans then
outstanding.
2.04 Conversion and Continuation Elections for Borrowings.
(a) The Company way upon notice to the Documentation Agent in
accordance with Section 2.04(b):
(i) elect to convert, as of any Business Day, any
Reference Rate Loans (or any part thereof in an aggregate amount not
less than Ten Million Dollars ($10,000,000), or that is in an integral
multiple of Five Million Dollars ($5,000,000) in excess thereof) into
LIBOR Loans or CD Rate Loans; or
(ii) elect to convert, as of the last day of any Interest
Period, any LIBOR Loans maturing on such day (or any part thereof in
an aggregate amount not less than Ten Million Dollars ($10,000,000),
or that is in an integral multiple of Five Million Dollars
($5,000,000) in excess thereof) into Reference Rate Loans or CD Rate
Loans; or
(iii) elect to convert, as of the last day of any Interest
Period, any CD Rate Loans maturing on such day (or any part thereof in
an aggregate amount not less than Ten Million Dollars ($10,000,000),
or that is in an integral multiple of Five Million Dollars
($5,000,000) in excess thereof) into Reference Rate Loans or LIBOR
Loans; or
(iv) elect to continue as of the last day of any Interest
Period (a "Continuation Date") any LIBOR Loans or CD Rate Loans
maturing on such day (or any part thereof in an aggregate amount not
less than Ten Million Dollars ($10,000,000), or that is in an integral
multiple of Five Million Dollars ($5,000,000) in excess thereof);
provided, that if the aggregate amount of all LIBOR Loans or CD Rate Loans
comprised in any Borrowing shall have been or would be reduced, by payment,
prepayment, or conversion of part thereof to an amount less than Ten Million
Dollars ($10,000,000), such LIBOR Loans or CD Rate Loans shall automatically
convert into Reference Rate Loans, on and as of the end of the applicable
Interest Period.
(b) If the Company desires to convert or continue any Loan
pursuant to Section 2.04 (a) , it shall irrevocably request a conversion or
continuation by a facsimile (confirmed promptly by
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telephone) of a Notice of Conversion/Continuation to be received by the
Documentation Agent not later than 11:00 a.m. (New York time) at least (i)
three (3) Business Days in advance of the Conversion Date or Continuation Date,
if the Loans are to be converted into or continued as LIBOR Loans, (ii) two (2)
Business Days in advance of the Conversion Date or Continuation Date, if the
Loans are to be converted into or continued as CD Rate Loans and (iii) on the
same Business Day as the Conversion Date, if the Loans are to be converted into
Reference Rate Loans, specifying:
(A) the proposed Conversion Date or Continuation Date;
(B) the aggregate amount of Loans to be converted or continued;
(C) the nature of the proposed conversion or continuation; and
(D) the duration of the requested Interest Period, if the
Loans are to be converted into or continued as LIBOR Loans or CD Rate
Loans.
(c) If prior to the time set forth in Section 2.04(b), (i) the Company
has failed to give a timely Notice of Conversion/Continuation with respect to
such LIBOR Loans or CD Rate Loans or (ii) the Company has failed to select a
new Interest Period to be applicable to such LIBOR Loans or CD Rate Loans, the
Company shall be deemed to have elected to convert such Loans into Reference
Rate Loans effective as of the expiration of the applicable Interest Period.
(d) During the existence of a Potential Default or Event of Default,
unless the Required Banks otherwise agree, the Company may not elect to have a
Loan be converted into or continued as a LIBOR Loan or a CD Rate Loan pursuant
to Section 2.04.
(e) Upon receipt of a Notice of Conversion/Continuation, the
Documentation Agent will promptly notify each Bank thereof, or, if no timely
notice is provided, the Documentation Agent will promptly notify each Bank of
the details of any automatic conversion or continuation. All conversions and
continuations pursuant to this Section 2.04 shall be made pro rata according to
the respective outstanding principal amounts of the Loans being converted or
continued held by each Bank.
2.04 Voluntary Termination or Reduction of Commitments. The Company
may, upon not less than five (5) Business Days' prior notice to the
Documentation Agent, terminate the Aggregate Commitment or permanently reduce
the Aggregate Commitment by a minimum amount of Ten Million Dollars
($10,000,000) or in multiples of Five Million Dollars ($5,000,000) in excess
thereof; provided, that no such reduction or termination of the Aggregate
Commitment
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shall be permitted if, after giving effect thereto and to any prepayments of
the Loans made on the effective date thereof, the then outstanding aggregate
principal amount of all Loans would exceed the amount of the Aggregate
Commitment; provided, further, that once reduced in accordance with this
Section 2.05, the Aggregate Commitment may not thereafter be increased. Any
reduction of the Aggregate Commitment shall be applied to each Bank's
Commitment pro rata in accordance with such Bank's relevant Commitment
Percentage. If the Aggregate Commitment is terminated in its entirety, all
accrued unpaid interest and all fees with respect thereto accrued to the
effective date of such termination shall be payable on the effective date of
such termination without any premium or penalty.
2.06 Optional Prepayments of Loans. Subject to Section 3.05, the
Company may, at any time or from time to time, upon at least five (5) Business
Days' notice to the Documentation Agent prepay LIBOR Loans or CD Rate Loans or
upon at least one Business Day's notice to the Documentation Agent prepay
Reference Rate Loans, in whole or in part, in minimum amounts of Ten Million
Dollars ($10,000,000) or in multiples of Five Million Dollars ($5,000,000) in
excess thereof. Such notice of prepayment shall specify the date and amount of
such prepayment and whether such prepayment is of Reference Rate Loans, LIBOR
Loans or CD Rate Loans. Such notice shall not thereafter be revocable by the
Company, and the Documentation Agent will promptly notify each Bank thereof and
of such Bank's Commitment Percentage of such prepayment. If such notice is
given, the Company shall make such prepayment and the payment amount specified
in such notice shall be due and payable on the date specified therein, together
with accrued interest to each such date on the amount prepaid and the amounts
required pursuant to Section 3.05.
2.07 Repayment. The Company shall repay the aggregate outstanding
principal amount of the Loans on the Termination Date.
2.08 Interest.
(a) Subject to Sections 2.08(c) and 2.08(d), each Loan shall bear
interest on the outstanding principal amount thereof from the date when made
until paid in full, at the option of the Company as set forth in its Notice of
Borrowing or Notice of Conversion/Continuation,
(i) if such Loan is a Reference Rate Loan, at a rate per annum
equal to the Reference Rate;
(ii) if such Loan is a LIBOR Loan, at a rate per annum equal to
the sum of LIBOR plus .3000%; and
(iii) if such Loan is a CD Rate Loan, at a rate per annum equal
to the sum of the CD Rate plus .4250%.
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(b) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date. Interest shall also be payable on the date of
any prepayment of Loans for the portion of the Loans so prepaid and, in the
case of conversion of any Reference Rate Loan, on the date of conversion
thereof into a LIBOR Loan or a CD Rate Loan.
(c) During the continuation of any Event of Default or after
acceleration, the Company shall pay, on demand, interest (after as well as
before judgment) on the principal amount of all Loans then outstanding, at a
rate per annum which is determined by increasing the rate of interest then in
effect by 2% per annum; provided, however, that, on and after the expiration of
the Interest Period applicable to any LIBOR Loan or CD Rate Loan on the date of
occurrence of such Event of Default or acceleration, the principal amount of
such Loan shall, during the continuation of such Event of Default or
acceleration, bear interest at a rate per annum equal to the Reference Rate
plus 2%.
(d) Anything herein to the contrary notwithstanding, the obligations of
the Company hereunder shall be subject to the limitation that payments of
interest shall be subject to the limitation that payments of interest shall not
be required, for any period for which interest is computed hereunder, to the
extent (but only to the extent) that contracting for or receiving such payment
by any Bank would be contrary to the provisions of any law applicable to such
Bank limiting the highest rate of interest which may be lawfully contracted
for, charged or received by such Bank, and in such event the Company shall pay
such Bank interest at the highest rate permitted by applicable law.
2.09 Fees.
(a) Syndication Fees. The Company shall pay in Dollars to the Arrangers
on the Closing Date fees in the amount set forth in a letter agreement between
the Company and BofA and Bankers Trust Company dated July 7, 1995.
(b) Transaction Fees. The Company shall pay to the Documentation Agent
transaction fees in Dollars in the amounts and at the time set forth in a
letter agreement between the Company and BofA and Bankers Trust Company dated
July 7, 1995.
(c) Closing Fee. The Company shall pay to the Documentation Agent on
the Closing Date for the account of each Bank a closing fee equal to .05% of
such Bank's Commitment.
2.10 Computation of Fees and Interest.
(a) All computations of fees and interest under this Agreement shall be
made on the basis of a 360-day year and actual days elapsed. Interest and fees
shall accrue during each period during which interest or such fees are
computed from and including
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the first day thereof to but excluding the last day thereof. Any interest or
fees not paid when due after any applicable grace period, shall bear interest
at a rate equal to the Reference Rate plus 2% per annum.
(b) The Documentation Agent will, with reasonable promptness, notify
the Company and the Banks of each determination of LIBOR, the CD Rate and the
Reference Rate; provided, that any failure to do so shall not relieve the
Company of any liability hereunder. The Documentation Agent will, with
reasonable promptness, notify the Company and the Banks of the effective date
and the amount of any change in the Debt Rating resulting in a change in the
applicable rate of interest or fees; provided, that any failure to do so shall
not relieve the Company of any liability hereunder.
(c) Each determination of an interest rate by the Documentation Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Company and the Banks in the absence of manifest error. The Documentation
Agent, at the request of the Company or any Bank, will deliver to the Company
or such Bank, as the case may be, a statement showing the quotations used by
the Documentation Agent in determining any interest rate.
(d) If either Reference Bank's Commitment shall terminate (otherwise
than on termination of the Aggregate Commitment), or for any reason whatsoever
either Reference Bank shall cease to be a Bank hereunder, then such Reference
Bank shall thereupon cease to be a Reference Bank, and, when necessary (until
such Reference Bank shall have been replaced pursuant to Section 2.10(e)),
LIBOR and the CD Rate shall be determined on the basis of the rates as notified
by the remaining Reference Bank.
(e) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Documentation Agent as contemplated hereby. If
either Reference Bank shall be unable or otherwise fail to supply such rates to
the Documentation Agent upon its request, the rate of interest shall be
determined on the basis of the quotations of the remaining Reference Bank. The
Company and the Documentation Agent may select a new Reference Bank to replace
any Reference Bank that shall cease to be a Bank hereunder or that fails to
supply rates as required hereunder.
2.11 Payments by the Company.
(a) All payments (including prepayments) to be made by the Comopany on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off or counterclaim and shall, except as otherwise
expressly provided herein, be made to the Documentation Agent at its Payment
Office for the ratable account of the Banks in Dollars and in immediately
available funds, no later than 2:00 p.m. (New York City time) on the date
specified herein. The Documentation Agent will promptly distributed to each
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Bank its Commitment Percentage (or other applicable share as expressly provided
herein) of such principal, interest, fees or other amounts, in like funds as
received. Unless otherwise waived by the Documentation Agent with respect to a
payment, any payment which is received by the Documentation Agent later than
2:00 p.m. (New York City time) shall be deemed to have been received on the
immediately succeeding Business Day and any applicable interest or fee shall
continue to accrue until such payment is deemed to have been received.
(b) Except as otherwise set forth in the definition of Interest Period,
whenever any payment hereunder shall be stated to be due on a day other than 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
interest or fees, as the case may be.
(c) Unless the Documentation Agent shall have received notice from the Company
prior to the date on which any payment is due to the Banks hereunder that the
Company will not make such payment in full, the Documentation Agent may assume
that the Company has made such payment in full to the Documentation Agent as
required hereunder on such date and the Documentation Agent may (but shall not
be so required), in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due such Bank. If
and to the extent the Company shall not have made such payment in full to the
Documentation Agent, each Bank shall repay to the Documentation Agent on demand
such amount distributed to such Bank, together with interest thereon for each
day from the date such amount was distributed to such Bank until the date such
Bank repays such amount to the Documentation Agent at the Federal Funds Rate.
2.12 Payments by the Banks to the Documentation Agent.
(a) Unless the Documentation Agent shall have received notice from a
Bank on the Closing Date or, with respect to each Borrowing after the Closing
Date, at least one (1) Business Day prior to the date of any proposed Borrowing
of LIBOR Loans or CD Rate Loans or prior to 11:00 a.m. (New York City time) on
the date of the proposed Borrowing of any Reference Rate Loans, that such Bank
will not make available to the Documentation Agent for the account of the
Company the amount of that Bank's share of Loans included in the Borrowing, the
Documentation Agent may assume that each Bank has made such amount available to
the Documentation Agent as required hereunder on the Borrowing Date and the
Documentation Agent may (but shall not be so required), in reliance upon such
assumption, make available to the Company on such date a corresponding amount.
If and to the extent any Bank shall not have made its full amount available to
the Documentation Agent and the Documentation Agent in such circumstances has
made available to the Company such amount, that Bank shall on the next Business
Day
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following the date of such Borrowing make such amount available to the
Documentation Agent, together with interest at the Federal Funds Rate, in each
case as in effect for each such day. A notice of the Documentation Agent
submitted to any Bank with respect to amounts owing under this Section 2.12(a)
shall be conslusive, absent manifest error. If such amount is so made
available, such payment to the Documentation Agent shall constitute such Bank's
Loan on the date of Borrowing for all purposes of this Agreement. If such
amount is not made available to the Documentation Agent on the next Business
Day following the date of such Borrowing, the Documentation Agent shall notify
the Company of such failure to fund and, upon demand by the Documentation
Agent, the Company shall pay such amount to the Documentation Agent for the
Documentation Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing
without making or being responsible for any payment under Section 3.05.
(b) The failure of any Bank to make any Loan on any date of Borrowing
shall not relieve any other Bank of any obligation hereunder to make a Loan on
the date of such Borrowing, but no Bank shall be responsible for the failure of
any other Bank to make the Loan to be made by such other Bank on the date of
any Borrowing.
2.13 Sharing of Payments, Etc.
(a) If, other than as expressly set forth elsewhere herein, any Bank
shall obtain on account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its Commitment Percentage of ayments on account of the Loans obtained
by all the Banks, such Bank shall forthwith (x) notify the Documentation Agent
of such fact, and (y) purchase from the other Banks such participations in the
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from the purchasing
Bank, such purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid thereto together with an
amount equal to such paying Bank's Commitment Percentage (according to the
proportion of (i) the amount of such paying Bank's required repayment to (ii)
the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Documentation Agent will keep records (which shall be
conclusive and binding in the absence of a manifest error), of participations
purchased pursuant to this Section 2.13(a) and will in each case notify the
Banks and the Company following any such purchases.
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(b) The Company agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 2.13 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off, but
subject to Section 10.09) with respect to such participation as fully as if
such Bank were the direct creditor of the Company in the amount of such
participation.
(c) Nothing herein shall require any Bank to exercise any right of
set-off or similar rights or shall affect the right of any Bank to exercise,
and retain the benefits of exercising any such right with respect to any other
indebtedness or obligation of the Company.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) All payments of principal of and interest on the Loans (other than
Reference Rate Loans) shall be made by the Company without set-off or
counterclaim for or on account of, and free and clear of, and without deduction
or withholding for, or on account of, any Taxes. In addition, the Company shall
pay all Other Taxes.
(b) The Company agrees to indemnify and hold harmless each Bank and the
Documentation Agent for the full amount of Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 3.01 paid by such Bank or
the Documentation Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within thirty (30) days after
the date any Bank or the Documentation Agent makes written demand therefor.
(c) If the Company shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or the Documentation Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section 3.01) such Bank or the Documentation Agent, as the case
may be, receives an amount equal to the sum it would have received had
no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
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(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Company shall also pay to each Bank or the
Documentation Agent for the account of such Bank, at the time interest
is paid, all additional amounts which the respective Bank specifies as
necessary to preserve the after-tax yield such Bank would have received
if such Taxes or Other Taxes had not been imposed.
(d) Within thirty (30) days after its receipt thereof, the Company
shall furnish the Documentation Agent the original or a certified copy of a
receipt evidencing payment of such Taxes or Other Taxes, or other evidence of
payment satisfactory to the Documentation Agent.
(e) Each Bank which is a foreign person (i.e., a person other than a
United States person for United States Federal income tax purposes) agrees that
it will comply with the requirements of Section 9.10 hereof and further agrees
that if such Bank claims or is entitled to claim exemption from withholding tax
under a United States tax treaty by providing a Form 1001 and such Bank sells
or grants a participation of all or part of its rights under this Agreement,
such Bank shall notify the Documentation Agent of the percentage amount in
which it is no longer the beneficial owner under this Agreement. To the extent
of this percentage amount, the Company or the Documentation Agent shall treat
such Bank's Form 1001 as no longer in compliance with this Section 3.01(e). In
the event a Bank claiming exemption from United States withholding tax by
filing Form 4224 with the Company or the Documentation Agent sells or grants a
participation in its rights under this Agreement, such Bank agrees to undertake
sole responsibility for complying with the withholding tax requirements imposed
by Sections 1441 and 1442 of the Code.
(f) Notwithstanding anything herein to the contrary, the Company will
not be required to pay any additional amounts in respect of Taxes described
below:
(i) if such Bank shall have delivered to the Company and the
Documentation Agent a Form 4224 or a Form 1001 in respect of its
Lending Office and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income
tax in respect of payments by the Company hereunder for the account of
such Lending Office for any reason other than a change in United States
law or regulations or in the official interpretation of such law or
regulations by any governmental authority charged with the
interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form 4224 or Form
1001, as applicable;
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(ii) taxes that are imposed as a result of any sale,
assignment, transfer or other disposition (whether voluntary or
involuntary) by such Bank of any interest in such Bank's Commitment,
Loans or the Loan Documents, unless such sale, assignment, transfer or
disposition by such Bank takes place while an Event of Default has
occurred and is continuing or pursuant to Section 3.03(c);
(iii) taxes to the extent resulting from (A) the gross
negligence, fraud or willful misconduct of a Bank or the Documentation
Agent, (B) any act or omission of a Bank or the Documentation Agent
that is in violation of any of the terms of the Loan Documents, or (C)
the inaccuracy or breach of any representation, warranty or covenant by
a Bank or the Documentation Agent in any document required to be
furnished thereby.
(g) If the Company is required to pay additional amounts to any Bank
pursuant to this Section 3.01, then such Bank shall use its reasonable best
efforts (consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Company which may thereafter accrue if such change in the
judgment of such Bank is not otherwise materially disadvantageous to such Bank.
(h) If any Bank or the Documentation Agent receives a written
notification from a taxing authority of proposed taxes for which an amount may
be payable by the Company in accordance with this Section 3.01, such Bank or
the Documentation Agent shall notify the Company promptly after receipt of such
notification and shall furnish the Company with such related information as the
Company may reasonably request. If requested by the Company in writing, such
Bank or the Documentation Agent shall in good faith diligently contest
(including pursuing all judicial appeals as of right, if any) the validity,
applicability and amount of such Taxes or Other Taxes; provided, that (x) prior
to taking such action the Company shall have agreed to indemnify such Bank or
the Documentation Agent for all reasonable out of pocket costs and expenses
that such indemnitee may incur in connection with contest such claim and (y)
the amount of such claim, when aggregated with all amounts owing to such Bank
under comparable provisions of the Other Credit Facilities to which such Bank
is a party, shall exceed $5,000.
(i) Each Bank receiving a receipt or other evidence of payment
pursuant to Section 3.01(d) shall reimburse the Company for the amount of any
credit or other economic benefit available to such Bank by reason or on account
of such payment by the Company or such Bank's possession of such receipt or
other evidence of payment under any tax, levy, impost, duty, fee, assessment or
other charge of any nature imposed by any Governmental Authority applicable to
such Bank. The amount of such reimbursement calculated by such
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Bank shall be conclusive and binding absent manifest error in computation.
3.02 Inability to Determine Rates. If and to the extent that market or
other conditions existing in the domestic money market relevant to CD Rate
Loans or in the London inter-bank market relevant to LIBOR Loans make it
impossible or impracticable for the Banks to make such Loans, then the
obligations of the Banks to make CD Rate Loans or LIBOR Loans, as applicable,
and the right of the Company to originate, continue or convert any Loan as or
to a CD Rate Loan or a LIBOR Loan shall be suspended until the circumstances
giving rise to such suspension shall no longer exist.
Upon receipt from the Documentation Agent of a notice of the Banks'
inability to make, convert or continue the requested Loan due to any of the
reasons referred to above, notwithstanding anything in this Agreement to the
contrary, the Company may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Company does not revoke
such notice relating to a LIBOR Loan or CD Rate Loan, the Banks shall, with
respect to such LIBOR Loan or CD Rate Loan only, make or convert such Loan in
the amount specified in the applicable notice submitted by the Company, but
such Loan shall be made as or converted into a Reference Rate Loan instead of a
LIBOR Loan or a CD Rate Loan. Except as provided in the immediately preceding
sentence, if, notwithstanding the provisions of this Section 3.02, any Bank has
made available to the Company its Commitment Percentage of any such proposed
Loan, then the Company shall immediately repay the amount so made available to
it by such Bank, together with accrued interest thereon, if any.
3.03 Increased Costs; Capital Adequacy.
(a) If, after the Closing Date, a Bank shall reasonably determine that
any change in applicable laws, rules or regulations or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law):
(i) shall change the basis of taxation to such Bank of any
amounts payable by the Company under this Agreement (other than taxes
imposed on or measured by the overall income of such Bank in the
jurisdiction in which such Bank has its principal office), or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, such Bank with respect to
this Agreement or any Note, or
(iii) shall impose any other condition with respect to this
Agreement or any Note,
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and the result of any of the foregoing is to increase the cost to such Bank or
to reduce the amount of any sum receivable by such Bank with respect to making
or maintaining any CD Rate Loan or LIBOR Loan by an amount reasonably deemed by
such Bank to be material, then the Company shall from time to time, upon
written demand by such Bank, pay to such Bank additional amounts sufficient to
compensate such Bank for any such increased cost or reduced sum receivable to
the extent resulting from outstanding CD Rate Loans or LIBOR Loans and not
compensated in connection with the computation of the CD Rate or LIBOR (as
applicable).
(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance
by such Bank (or its Lending Office) with any such change in Capital Adequacy
Regulations, affects or would affect the amount of capital required or expected
to be maintained by such Bank and (taking into consideration such Bank's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased by an amount
deemed material by such Bank as a consequence of its Commitment, Loans (other
than Reference Rate Loans) or other obligations under this Agreement, then,
upon demand of such Bank to the Company through the Agent, the Company shall
pay to such Bank, from time to time as specified by such Bank, additional
amounts sufficient to compensate for such increase.
(c) Upon receipt of notice from any Bank of a claim for compensation
under this Section 3.03, the Company shall be afforded ninety (90) days to find
a replacement financial institution reasonably acceptable to the Documentation
Agent and, if an acceptable replacement financial institution is available such
replacement institution will purchase such Bank's Loans and Commitment and
other interests under the Loan Documents in accordance with Section 10.08 or
such Bank will withdraw such request for payment.
(d) A detailed statement as to the amount of such increased cost or
reduced sum receivable, along with documentation supporting the payment of such
amount under this subsection, shall be prepared by such Bank and submitted to
the Company (with a copy to the Documentation Agent) with such Bank's written
demand. Such Bank's statement of such increased cost or reduced sum receivable
shall be prima facie evidence of such increased cost or reduced sum absent
manifest error.
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3.04 Illegality.
(a) If any Bank shall determine that, after the date hereof, (i) the
introduction of any Requirement of Law or any change in or in the
interpretation or administration thereof has made it unlawful, or (ii) any
central bank or other Governmental Authority has asserted that it is unlawful,
for such Bank or its Lending Office to make any Loan of the Type requested by
the Company, then, on notice thereof by such Bank to the Company through the
Documentation Agent, the obligation of such Bank to make any such Loans shall
be suspended until such Bank shall have notified the Documentation Agent and
the Company that the circumstances giving rise to such determination no longer
exists.
(b) If a Bank shall determine that it is unlawful to maintain any Loan
then outstanding, then, on notice thereof by such Bank to the Company through
the Documentation Agent, the Company shall prepay in full all such Loans of
such Bank then outstanding, together with interest accrued thereon, either on
the last day of the Interest Period thereof if such Bank may lawfully continue
to maintain such Loans to such day, or immediately, if such Bank may not
lawfully continue to maintain such Loans.
(c) If the Company is required to prepay any LIBOR Loan or CD Rate
Loan as provided in Section 3.04(b), then concurrently with such prepayment,
the Company shall borrow from the affected Bank, in the amount of such
repayment, a Reference Rate Loan.
3.05 Funding Losses. The Company agrees to reimburse each Bank and to
hold each Bank harmless from any loss, cost or expense which such Bank may
sustain or incur as a consequence of:
(a) any failure by the Company to borrow, or to continue or convert a
Loan (other than a Reference Rate Loan) after it has given (or is deemed to
have given) a Notice of Borrowing or a Notice of Conversion/Continuation, as
the case may be;
(b) any payment by it of a LIBOR Loan or a CD Rate Loan or on a day
which is not the last day of the Interest Period with respect thereto; or
(c) the conversion of a LIBOR Loan or a CD Rate Loan to a Reference
Rate Loan on a day that is not the last day of the respective Interest Period
pursuant to Section 2.04;
by paying to each Bank, on demand by such Bank, an additional amount equal to
the amount of any interest which such Bank would have earned for the remainder
of the Interest Period in question reduced by the amount of income earned by
such Bank during such Interest Period with respect to the amount prepaid or not
borrowed (the "Loss"). A detailed statement as to the amount of such Loss,
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prepared by the Bank incurring the same, shall be prima facie evidence of such
Loss absent manifest error.
3.06 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions to Occurrence of the Closing Date and Effectiveness of
this Agreement. The occurrence of the Closing Date and the binding effect of
this Agreement on each Bank are subject to the condition that the Documentation
Agent shall have received on or before the Closing Date all of the following,
in form and substance satisfactory to the Documentation Agent and each Bank, in
sufficient copies for each Bank:
(a) Credit Agreement. This Agreement executed by the Company, the
Documentation Agent and each of the Banks;
(b) By-laws; Resolutions; Incumbency.
(i) Copies of the by-laws of the Company and of the
resolutions of the board of directors of the Company approving and
authorizing the execution, delivery and performance by the Company of
this Agreement and the other Loan Documents to be delivered hereunder,
and authorizing the borrowing of the Loans, each certified as of the
Closing Date by the Secretary or an Assistant Secretary of the Company;
and
(ii) A certificate of the Secretary or Assistant Secretary of
the Company certifying the names and true signatures of its respective
officers authorized to execute and deliver and perform, as applicable,
this Agreement and all other Loan Documents and notices to be delivered
by it hereunder;
(c) Articles of Incorporation. (i) A copy of the Company's Articles
of Incorporation as in effect on the Closing Date, including any amendments
thereto, certified by the Michigan Department of Commerce, and (ii) good
standing certificates for the Company from the Michigan Department of Commerce
and from the Secretaries of State of California and New York, each dated not
more than seven (7) days prior to the Closing Date;
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(d) Legal Opinions.
(i) an opinion of A.N. ▇▇▇▇▇▇▇, counsel to the Company, and
addressed to the the Documentation Agent and the Banks, substantially
in the form of Exhibit D-1; and
(ii) an opinion of Dickinson, Wright, Moon, Van Dusen &
▇▇▇▇▇▇▇, special counsel to the Company and addressed to the
Documentation Agent and the Banks in substanially the form of Exhibit
D-2;
(e) Payment of Transaction Fees and Expenses. Evidence of payment
of all costs, accrued and unpaid fees and expenses (including Attorney Costs)
to the extent then due and payable on the Closing Date;
(f) Certificate. A certificate signed by a Responsible Officer of
the Company, dated as of the Closing Date, stating that:
(i) the representations and warranties of the Company
contained in Article V are true and correct on and as of such date, as
though made on and as of such date;
(ii) no Potential Default or Event of Default exists as of
the date of such certificate;
(iii) no material adverse change in the assets, liabilities,
business, operations or condition of the Company and its Subsidaries
has occurred since January 25,1995;
(iv) no default has occurred and is continuing in respect of
any Indebtedness of the Company and its Subsidaries with an aggregate
principal amount in excess of $100,000,000; and
(v) all consents and approvals required to consumate the
transaction contemplated by this Agreement have been obtained or
wavied;
(g) Financial Statements. The financial statements of the Company
referred to in Section 5.06;
(h) 364 Day Facility. The Borrower shall have entered into the 364
Day Facility and the conditions to closing thereunder shall have been
satisfied; and
(i) Other Documents. Such other approvals, opinions or documents
as the Documentation Agent may reasonably request.
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4.02 Conditions to All Borrowings. The obligation of each Bank to
make any Loan to be made by it hereunder is subject to the satisfaction of the
following conditions precedent on the relevant Borrowing Date:
(a) Notice of Borrowing. In the case of any Loan, the
Documentation Agent shall have received a Notice of Borrowing and
executed Notes evidencing the requested Loans to the extent required
hereby;
(b) Continutation of Representations and Warranties. The
representations and warranties made by the Company contained in Article V
shall be true and correct on and as of such Borrowing Date with the same
effect as if made on and as of such Borrowing Date (except to
the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such
earlier date); and
(c) No Existing Default. No Potential Default or Event of Default
shall exist or shall result from such Borrowing.
Each Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company, as of the date of each such notice
and as of the Borrowing Date relating thereto, that the conditions in Section
4.02 are satisfied.
ARTICLE V
REPRESENTATION AND WARRANTIES
The Company represents and warrants to the Documentation Agent and each
Bank that:
5.10 Organization and Good Standing. The Company and is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and is duly qualified to do
business and is in good standing in each additional jurisdiction where failure
to so qualify would have an effect which, when taken together with the
simultaneous effect of failure to qualify in any other jurisdictions, would in
the aggregate have a Material Adverse Effect.
5.02 Authorization; No Contravention. The execution, delivery and
performance of this Agreement and the issuance of the Notes by the Company are
within its corporate powers, have been duly authorized by all necessary
corporate action, and are not in contravention of any Requirement of Law or of
the terms of the Company's Articles of Incoporation or by-laws, or of any
agreement, undertaking, contract or other obligation to which the Company is a
party or by which it is bound.
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5.03 Consents and Approvals. No consent, waiver, approval,
notification of, or registration or filing with, any Governmental Authority or
any non-governmental Person is required in connection with the execution and
delivery by the Company of this Agreement or any Notes or the borrowing by the
Company hereunder or in connection with the consummation of any transaction
contemplated hereby, except those disclosed in Schedule 5.03 and which the
Company has obtained or made.
5.04 Binding Effect. This Agreement is, and each Note when issued
will be, valid, binding and enforceable against the Company in accordance with
the terms thereof (subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting the enforcement of creditors' rights and general equitable
principles which may limit the right to obtain the remedy of specific
performance of executory covenants and other equitable remedies).
5.05 Litigation. No litigation or governmental proceeding is
pending or, to the knowledge of the Company, threatened, against the Company
for which sufficient provision has not been made in the financial statements of
the Company and which could have a material adverse effect on the Company's
condition or business, financial or otherwise, or which purport to affect or
pertain to this Agreement or any of the transactions contemplated hereby.
5.06 Financial Statements. The balance sheet dated as of January
25, 1995 and the related statements of income and stockholders' equity and cash
flows of the Company and its Subsidiaries contained in the annual report of the
Company to its stockholders have been audited and certified by Price
Waterhourse, independent certified public accountants, and are complete and
accurate in all material respects and present fairly the financial condition of
the Company and its Subsidiaries as of the date of such statements and the
results of their operations for the periods covered thereby, in accordance with
GAAP, consistently applied. The balance sheet dated as of July 26, 1995 and
the related statements of income, stockholders' equity and cash flows of the
Company and its Subsidiaries contained in the quarterly report of the Company
filed with the U.S. Securities and Exchange Commission (the "SEC") on Form 10-Q
are complate and accurate in all material respects and present fairly the
financial condition of the Company and its Subsidiaries as of the dates of such
statements and the results of their operations for the periods covered thereby,
in accordance with GAAP, consistently applied.
5.07 Use of Proceeds; Margin Regulations. The proceeds of the Loans
will be used for general corporate and working capital purposes, including
commercial paper backup. After applying the proceeds of any borrowings
hereunder, not more than 25% of the value of the assets of the Company and its
Subsidiaries will consist of "margin stock" as such term is defined in
Regulation G,
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T, U, or X of the Federal Reserve Board. The Company is not generally engaged
in the business of purchasing or selling margin stock or extending credit for
the purpose of purchasing or carrying margin stock.
5.08 No Default. No Potential Default or Event of Default exists or
would result from the incurring of any Obligations by it.
5.09 Taxes. The Company has filed all Federal and other material
tax returns and reports required to be filed, and has paid all Federal and
other material taxes, assessments, fees and other governmental charges levied
or imposed upon it or its properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP. There is no proposed tax assessment against the Company that could,
if made, have a Material Adverse Effect.
5.10 Insurance. The properties and business of the Company are
insured in such amounts, with such deductibles and covering such risks as are
customarily carried by similar companies of comparable size engaged in similar
businesses and owning or operating similar properties in localities where the
Company operates.
5.11 Compliance With Laws. The Company is in compliance with all
applicable laws, rules and regulation (including environmental laws, rules and
regulations and the Employee Retirement Income Security Act of 1976, as
amended, and all regulations thereunder) except where the failure to be in such
compliance could not reasonably be expected to have a Material Adverse Effect.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Bank shall have
any Commitment hereunder, or any Loan or other Obligation shall remain unpaid
or unsatisfied:
6.01 Payment of Taxes. The Company will pay, when due, all taxes
assessed against the Company or its property and all other claims which may
become a Lien upon any of its property, except to the extent that (a) the same
are being contested in good faith by appropriate proceedings, and (b) adequate
reserves for payment thereof have been established in accordance with GAAP.
6.02 Insurance. The Company shall maintain insurance with respect
to its properties and business in such amounts, with such deductibles and
covering such risks as are customarily carried by similar companies of
comparable size engaged in similar businesses
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and owning or operating similar properties in localities where the Company
operates.
6.03 Preservation of Corporate Existence, Etc. The Company shall:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction
of incorporation; and
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises
necessary or desirable in the noraml conduct of its business except in
connection with transactions permitted by Section 7.01 and dispositions
of assets permitted by Section 7.02.
6.04 Maintenance of Property. The Company shall maintain and
preserve all its property which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted, and make all
necessary repairs thereto and renewals and replacements thereof except where
the failure to do so could not reasonably be expected to have a Material
Adverse Effect, and except as permitted by Section 7.02.
6.05 Compliance with Laws. The Company shall comply in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business, except such as may be contested in good
faith or as to which a bona fide dispute may exist.
6.06 Books and Records; Other Information. The Company shall
maintain proper books of record and account in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Company, and will provide to the Documentation Agent and the Banks such other
information as they may reasonably request and which is reasonably available to
the Company or can be reasonably computed from the Company's books and records.
6.07 Financial Information. The Company shall deliver to the
Documentation Agent for distribution to the Banks (and, if requested, with
sufficient copies for each Bank):
(a) within sixty (60) days after the end of each of the
first three (3) fiscal quarters of the Company, copies of (i) the
consolidated balance sheet of the Company and its Subsidiaries as of
the end of such quarter, (ii) the consoldiated statement of income of
the Company and its Subsidiaries for such quarter and for the period
from the end of the most recent fiscal year of the Company through the
end
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of such quarter, (iii) the consolidated statement of cash flows of the Company
and its Subsidiaries for the period from the end of the most recent fiscal year
of the Company through the end of such quarter, all prepared in accordance with
GAAP and certified by a Responsible Officer as being a fair statement of
results for the periods covered thereby, subject to ordinary year-end audit
adjustments;
(b) concurrently with the delivery of the financial statements referred
to in Sections 6.07(a) and (c) a certificate duly completed and executed by a
Responsible Officer, as to compliance by the Company with the covenants
contained in Sections 7.04 and 7.05 hereof, and stating that no Potential
Default or Event of Default then exists (or, if any should then exist,
identifying the same and stating any actions being taken by the Company with
respect thereto);
(c) within one hundred twenty (120) days after the end of each fiscal
year of the Company, copies of (i) the consolidated balance sheet of the
Company and its Subsidiaries as at the end of such fiscal year, (ii) the
consolidated statement of income of the Company and its Subsidiaries for such
fiscal year, and (iii) the consolidated statement of cash flows of the Company
and its Subsidiaries for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP and certified by a
nationally recognized independent public accounting firm; and
(d) promptly, copies of all financial statements and reports that the
Company sends to its shareholders and copies of all Forms 10K, 10Q and 8K that
the Company files with the SEC.
6.08 Notices.
(a) The Company shall notify each Bank promptly, but not later than
three (3) Business Days after the Company becomes aware thereof, of the
occurrence of any Event of Default.
(b) The Company shall notify the Documentation Agent for distribution
to the Banks promptly, but not later than three (3) Business Days after the
Company becomes aware thereof, of the occurrence of:
(i) any Potential Default;
(ii) any Material Adverse Effect or any event or other
development which could have a Material Adverse Effect;
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(iii) any change in the Debt Rating by ▇▇▇▇▇'▇ or S&P; or
(iv) any Reportable Event.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Bank shall
have any Commitment hereunder, or any Loan or other Obligation shall remain
unpaid or unsatisfied:
7.01 Consolidating and Mergers. The Company shall not merge or
consolidate with any other Person, unless:
(a) the successor formed by or resulting from such
consolidation or merger is the Company or a Subsidiary of the Company
(and, if the survivor is a Subsidiary of the Company, such Subsidiary
shall affirm the Company's Obligations under the Loan Documents in
writing), and
(b) no Event of Default or Potential Default shall have
occurred and then be continuing or would arise after giving effect
thereto.
7.02 Disposition of Assets. The Company shall not, directly or
indirectly, sell, assign, lease, convey, transfer or otherwise dispose
of (whether in one or a series of transactions) any property (including
accounts and notes receivable, with or without recourse) or enter into any
agreement to do any of the foregoing except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement equipment;
(c) dispositions of inventory or equipment by the Company to any
Subsidiary pursuant to reasonable business requirements; and
(d) other dispositions of assets having, in any fiscal year of the
Company, an aggregate book value not exceeding 10% of the Company's
consolidated total assets as of the end of the most recently ended
fiscal year of the Company, as reflected
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in the Company's balance sheet contained in its audited financial
statements for such fiscal year;
provided, however, that this Section 7.02 shall not be deemed to prohibit the
sale of all, substantially all, or a part Of the capital stock or of all,
substantially all, or a part of the assets of any Specialty Retail Subsidiary
of the Company, even it such an entity is no longer a Subsidiary of the
Company, if (x) consideration received is fair market value (as determined by
the Company) , or (y) the Company's board of directors deems such transaction
to be necessary by reason of applicable laws, regulations or governmental
policies applicable to the Company.
7.03 Limitation on Liens. The Company shall not incur any
Indebtedness which is secured by a Lien on any assets of the Company, whether
now owned or hereafter acquired, unless, concurrently with creation of any such
Lien securing Indebtedness in an aggregate amount of $50,000,000 or more, the
Company shall cause the Obligations and its obligations under the Other Credit
Facilities to be equally and ratably secured by the same assets, provided,
however, that such restriction shall not apply with respect to any of the
following types of Liens:
(a) Liens for taxes not delinquent or being contested in
good faith;
(b) Liens created in connection with workers'
compensation, unemployment insurance and other social security
legislation, or to secure the performance of bids, tenders, contracts
(other than for the repayment of borrowed money), statutory
obligations, surety and appeal bonds and other similar obligations
incurred in the ordinary course;
(c) purchase money mortgages (including vendors, rights
under purchase or land contracts or under other agreements whereby
title or other interest is retained by the vendor for the purpose of
securing the purchase price thereof) on property acquired or
constructed after the Closing Date, or the acquisition after the
Closing Date of property subject to such a Lien which is limited to
such property and was not created in anticipation of such acquisition;
(d) mortgages on real property which is the sole security
for Indebtedness the amount of which does not exceed the greater of
the cost of such property and improvements or the fair market value
thereof;
(e) mortgages, security interests and Liens on assets of
the Company existing on the Closing Date and set forth on Schedule
7.03, or any refundings or extensions for an amount not exceeding the
principal amount of such Indebtedness and applying only to the same
property or assets; and
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(f) mortgages, security interests and Liens in connection
with indebtedness under industrial revenue bond financings or similar
government agency supported financings.
7.04 EBITDAR Coverage Ratio. The Company shall not permit its ratio of
(a) EBITDAR (measured as of the end of any fiscal quarter
ending after the Closing Date for the four fiscal quarters then ended)
to
(b) the sum of (i) consolidated net interest expense for
such four fiscal quarter period plus (ii) consolidated Rent Expense
for such four fiscal quarter period
to be less than 1.50 to 1.00.
7.05 Consolidated Net Worth. The Company shall not permit its
Consolidated Net Worth at any time to be less than Four Billion Five Hundred
Million Dollars ($4,500,000,000).
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment of Principal. The Company fails to pay,
when and as required to be paid herein, any amount of principal of any
Loan and such default shall continue unremedied for a period of two
(2) Business Days after the date upon which notice thereof is received
by the Company from the Documentation Agent; or
(b) Non-Payment of Interest or Fees. The Company fails
to pay, when and as required to be paid herein, any interest or any
fees payable hereunder and such default shall continue unremedied for
a period of five (5) Business Days after the date upon which notice
thereof is received by the Company from the Documentation Agent; or
(c) Specific Defaults. The Company fails to perform or
observe any term, covenant or agreement contained in Sections 6.02,
6.03, 6.08(a), 7.01, 7.02 and 7.03; or
(d) Other Defaults. The Company fails to perform or
observe any other term or covenant contained in this Agreement and
such default shall continue unremedied for a period of thirty (30)
days after the date upon which written notice
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thereof is given to the Company by the Documentation Agent or any
Bank; or
(e) Representation or Warranty. Any representation or
warranty by the Company made or deemed made herein proves to have been
inaccurate or untrue in any material respect on or as of the date made
or deemed made; or
(f) Cross Default; Cross-Acceleration. (i) The Company
fails to make any payment of principal or interest or fees under any of
the Other Credit Facilities when due after taking into account any
applicable grace periods, or (ii) by reason of any action taken by the
Company with the intent and capacity promptly to satisfy any obligation
of the Company resulting therefrom, including, without limitation, the
calling for payment by the Company of any of its Indebtedness or the
termination by the Company of any of its guaranty obligations, any
Indebtedness shall mature or be declared due and payable prior to its
stated maturity and such Indebtedness shall remain unpaid for a period
of two (2) Business Days thereafter, or (iii) the Company fails to
perform or observe any condition or covenant or any other event shall
occur or condition exist (other than with respect to matters described
under clause (ii) immediately preceding) relating to Indebtedness
(other than Indebtedness under the Other Credit Facilities) having an
aggregate principal amount (including undrawn committed or available
amounts) of more than Hundred Million Dollars ($100,000,000) if the
effect of such failure, event or condition is to cause such
Indebtedness to be declared to be due and payable or otherwise become
due and payable prior to its stated maturity, or (iv) the Company
fails to pay any such other Indebtedness in full at its stated
maturity; or
(g) ERISA. The occurrence of a Reportable Event which
the PBGC deems grounds to terminate any employee pension benefit plan
or for the appointment of a trustee to administer such plan and such
Reportable Event is not corrected and such determination by the PBGC
is not revoked within thirty (30) days after notice thereof; or the
institution of proceedings by the PBGC to terminate any such plan; or
the appointment of a trustee to administer any such plan; or
(h) Monetary Judgments. A final judgment or judgments in
excess of One Hundred Million Dollars ($100,000,000) shall be entered
against the Company by a court of record and not discharged in
accordance with its terms or, within sixty (60) days from the date of
entry thereof, stayed from execution (within said period of sixty
(60) days or such longer period during which execution of such
judgments) shall have been stayed) appeal taken therefrom and
execution thereof stayed during such appeal; or
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(i) Insolvency: Voluntary Proceedings. The Company (i)
generally fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise; (ii) voluntarily ceases to
conduct its business in the ordinary course; (iii) commences any
Insolvency Proceeding with respect to itself; or (iv) takes any action
to effectuate or authorize any of the foregoing; or
(j) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company, or
any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the
Company's properties, and any such proceeding or petition is not
dismissed, or such writ, judgment, warrant of attachment, execution or
similar process is not released, vacated or fully bonded within 60
days after commencement, filing or levy; (ii) the Company admits the
material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief is entered in any Insolvency
Proceeding; or (iii) the Company acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in
possession (or agent therefor), or other similar Person for itself or
a substantial portion of its business.
8.02 Remedies. If any Event of Default occurs, the Documentation
Agent shall, at the request of, or may, with the consent of, the Required
Banks,
(a) declare the Commitment of each Bank to make Loans to
be terminated, whereupon such Commitments shall forthwith be
terminated;
(b) declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and all
other amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable; without presentment,
demand, protest or other notice of any kind, all of which are hereby
expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights
and remedies available to it and the Banks under the Loan Documents or
applicable law;
provided, that upon the occurrence of any event specified in Section 8.01(i) or
8.01(j) above (upon the expiration of the 60-day period mentioned therein, if
applicable), the Commitment of each Bank shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of the Documentation Agent or any Bank. Any payments
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received after the Banks have taken action pursuant to Section 8.02(b) shall be
allocated ratably among the Loans.
8.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
ARTICLE IX
THE DOCUMENTATION AGENT
9.01 Authorization; "Documentation Agent". Each Bank hereby
irrevocably (except as otherwise set forth in Section 9.09) appoints,
designates and authorizes the Documentation Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Documentation Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Documentation Agent have or be deemed to have any fiduciary relationship with
any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Documentation Agent. Without limiting
the generality of the foregoing sentence, the use of the term "agent" in this
Agreement with reference to the Documentation Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter
of market custom and is intended to create or reflect only an administrative
relationship between independent contracting parties.
9.02 Delegation of Duties. The Documentation Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Documentation
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
9.03 Liability of Agent-Related Persons. No Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own negligence under or breach
or default of its
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obligations under this Agreement) , or (ii) be responsible in any manner to any
of the Banks for any recital, statement, representation or warranty made by the
Company or any Subsidiary or Affiliate of the Company, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Documentation Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
Properties, books or records of the Company or any the Company's Subsidiaries
or Affiliates.
9.04 Reliance by Documentation Agent.
(a) The Documentation Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Documentation Agent. The Documentation Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Documentation Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of all of the Banks
or the Required Banks, as applicable and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter either sent by the Documentation Agent to such Bank
for consent, approval, acceptance or satisfaction or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
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9.05 Notice of Default. The Documentation Agent shall not be
deemed to have knowledge or notice of the occurrence of any Potential Default
or Event of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Documentation Agent for
the account of the Banks, unless the Documentation Agent shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Potential Default or Event of Default and stating that such
notice is a "notice of default". The Documentation Agent will notify the Banks
of its receipt of any such notice. The Documentation Agent shall take such
action with respect to such Potential Default or Event of Default as shall be
requested by the Required Banks in accordance with Article VIII; provided,
however, that unless and until the Documentation Agent has received any such
request, the Documentation Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Potential
Default or Event of Default as it shall deem advisable or in the best interest
of the Banks.
9.06 Credit Decision. Each Bank expressly acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it and
that no act by the Documentation Agent hereinafter taken, including any review
of the affairs of the Company and its Subsidiaries shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Bank. Each Bank represents to the Documentation Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby and made its own decision to enter into this
Agreement and extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company. Except for
notices, reports and other documents expressly herein required to be furnished
to the Banks by the Documentation Agent, the Documentation Agent shall not have
any duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of the Company which may come into the
possession of any of the Agent-Related Persons.
9.07 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon
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demand the Agent-Related Persons (to the extent not reimbursed by or on behalf
of the Company and without limiting the obligation of the Company to do so),
pro rata (as determined in accordance with their respective Commitment
Percentages) from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind whatsoever which may at any time (including at any
time following the repayment of the Loans) be imposed on, incurred by or
asserted against any such Person any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by any such Person under or in connection with any of the foregoing; provided,
however, that no Bank shall be liable for the payment to the Agent-Related
Persons of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank shall reimburse the
Documentation Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Documentation
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein to the extent that the
Documentation Agent is not reimbursed for such expenses by or on behalf of the
Company. The obligation of the Banks in this Section 9.07 shall survive the
payment of all Obligations hereunder and the resignation or replacement of the
Documentation Agent.
9.08 Documentation Agent in Individual Capacity. BofA and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
the Company and its Affiliates as though BofA were not the Documentation Agent
hereunder and without notice to or consent of the Banks. The Banks acknowledge
that, pursuant to such activities, BofA or its Affiliates may receive
information regarding the Company or its Subsidiaries and Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Subsidiary or Affiliate) and acknowledge that the Documentation
Agent shall be under no obligation to provide such information to them. With
respect to its Loans, the Documentation Agent shall have the same rights and
powers under this Agreement as any other Bank and may exercise the same as
though it were not the Documentation Agent and the terms "Bank" and "Banks'
shall include BofA in its individual capacity. The Banks further acknowledge
that BofA acts as documentation agent under the credit facilities described in
clauses (a) and (b) of the definition of "Other Credit Facilities".
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9.09 Successor Documentation Agent. The Documentation Agent may,
and at the request of the Required Banks shall, resign as Documentation Agent,
upon thirty days' notice to the Banks and the Company. If the Documentation
Agent resigns under this Agreement, the Required Banks shall appoint from among
the Banks a successor Documentation Agent which successor Documentation Agent
shall be subject to the reasonable approval of the Company, provided no Event
of Default then exists. If no successor Documentation Agent is appointed prior
to the effective date of the resignation of the resigning Documentation Agent,
the Documentation Agent may appoint, after consulting with the Banks and
subject to the approval of the Company, a successor Documentation Agent from
among the Banks. Upon the acceptance of its appointment as successor
Documentation Agent hereunder, such successor Documentation Agent shall succeed
to all the rights, powers and duties of the retiring Documentation Agent and
the term "Documentation Agent" shall mean such successor Documentation Agent
and the retiring Documentation Agent's appointment, rights, powers and duties
in such capacity shall be terminated. After any retiring Documentation Agent's
resignation hereunder as Documentation Agent, the provisions of this Article IX
and Sections 10.04 and 10.05 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Documentation Agent under this
Agreement. If no successor Documentation Agent has accepted appointment as
Documentation Agent by the date which is thirty days following a retiring
Documentation Agent's notice of resignation, the retiring Documentation Agent's
notice of resignation shall nevertheless thereupon become effective and the
Banks shall perform all of the duties of the Documentation Agent until such
time, if any, as the Required Banks appoint a successor Documentation Agent as
provided for above.
9.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Bank agrees with and in favor of the Documentation Agent, to deliver to
the Documentation Agent:
(i) if such Bank claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, two (2) properly
completed and executed originals of IRS Form 1001 ("Form 1001") before
the payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Bank, two (2) properly completed and executed
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originals of IRS Form 4224 ("Form 4224") before the payment of any
interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid
under this Agreement; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Documentation Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Company to such Bank, such Bank agrees to
notify the Documentation Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to such Bank. To the
extent of such percentage amount, the Documentation Agent will treat such
Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Documentation Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations of
the Company to such Bank, such Bank agrees to undertake sole responsibility
for complying with the withholding tax requirements imposed by Sections 1441
and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Documentation Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation
required by subsection (a) of this Section are not delivered to the
Documentation Agent, then the Documentation Agent may withhold from any
interest payment to such Bank not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Documentation Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or properly executed, because
such Bank failed to notify the Documentation Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Bank shall indemnify the
Documentation Agent fully for all amounts paid, directly or
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indirectly, by the Documentation Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Documentation Agent under this Section, together with all costs
and expense (including Attorney Costs). The obligation of the Banks under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Documentation Agent.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company therefrom, shall be effective unless
the same shall be in writing and signed by the Required Banks and acknowledged
in writing by the Documentation Agent, and then such waiver shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Banks, do any of the following:
(a) increase the Commitment of any Bank;
(b) postpone or delay any date fixed for any payment of
principal, interest, fees or other amounts due hereunder or under any
Loan Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or of any fees or other amounts payable
herunder or under any Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be required
for the Banks or any of them to take any action hereunder;
(e) amend this Section 10.01 or Section 2.10;
(f) extend the Termination Date; or
(g) amend the definition of "Required Banks";
provided, further, that no amendment, waiver or consent shall, unless in writing
and consented to and signed by the Documentation Agent, in addition to the
Required Banks or all the Banks, as case may be, affect the rights or duties of
the Documentation Agent under this Agreement or any other Loan Document.
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10.02 Notices.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission) and mailed, faxed or delivered,
(i) if to the Company, to its address specified on the signature pages hereof,
(ii) if to any Bank, to its Lending Office, and (iii) if to the Documentation
Agent, to its address specified on the signature pages hereof; or (iv) as to
any party to such other address as shall be designated by such party in a
written notice to the other parties.
(b) All such notices and communications shall, when transmitted by
overnight delivery or by facsimile, be effective when delivered for overnight
delivery or transmitted by facsimile (to be promptly confirmed by sender by
telephone), respectively, or if delivered, upon delivery, except that notices
pursuant to Article II or VIII shall not be effective until actually received by
the Documentation Agent.
(c) The Company acknowledges and agrees that any agreement of the
Documentation Agent and the Banks in Article II herein to receive certain
notices by telephone and facsimile is solely for the convenience and at the
request of the Company. The Documentation Agent and the Banks shall be
entitled to rely in good faith on the authority of any Person purporting to be
a Person authorized by the Company to give such notice and the Documentation
Agent and the Banks shall not have any liability to the Company or other Person
on account of any action taken or not taken by the Documentation Agent and the
Banks in good faith reliance upon such telephonic or facsimile notice. The
obligation of the Company to repay the Loans or any other Obligations shall not
be affected in any way or to any extent by any failure by the Documentation
Agent and the Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Documentation Agent and the Banks of a
confirmation which is at variance with the terms conveyed to the Documentation
Agent and the Banks in the telephonic or facsimile notice.
10.03 No Waiver. No failure to exercise and no delay in
exercising, on the part of the Documentation Agent or any Bank, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
10.04 Costs and Expenses. The Company shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) pay or reimburse the Documentation Agent on demand for all
costs and expenses incurred by the Documentation Agent
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in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver
or modification to, this Agreement, any Loan Document and any other
documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby,
including the Attorney Costs incurred by it with respect thereto;
provided that the allocated cost of internal legal services and the
disbursements of internal counsel incurred in connection with the
development, preparation, delivery and execution of this Agreement and
the other Loan Documents shall not be reimbursed by the Company;
(b) pay or reimburse each Bank and the Documentation Agent
on demand for all reasonable costs and expenses incurred by them in
connection with the enforcement, attempted enforcement, or preservation
of any rights or remedies (including in connection with any "workout"
or restructuring regarding the Loans or any Event of Default or
Potential Default) under this Agreement, any other Loan Document, and
any such other documents, including Attorney Costs incurred by the
Documentation Agent and any Bank; and
(c) pay or reimburse the Documentation Agent on demand for
all reasonable appraisal (including the allocated cost of internal
appraisal services), audit, environmental inspection and review
(including the allocated cost of such internal services), search and
filing costs, fees and expenses incurred or sustained by the
Documentation Agent in connection with the matters referred to under
clause (b) of this Section 10.04.
10.05 Indemnity. The Company agrees to indemnify and hold harmless
the Banks, the Documentation Agent, the Arrangers and each director, officer
and employee of each of them (each, an "Indemnified Person") from and against
any and all actions, suits, proceedings, damages, liabilities or expenses of
any kind or nature whatsoever which may be incurred by or asserted against any
such Indemnified Person: (a) as a result of the Company's making any untrue
statement of a material fact or omitting to state a material fact under or
pursuant to the Contract Documents, or the Company's negligence under, or
breach or default of, the Contract Documents; or (b) by any third party who has
a relationship with the Company and asserts in connection therewith that an
Indemnified Person is liable to such third party by reason of the Contract
Documents between the Company and the Banks, the Documentation Agent and/or the
Arrangers; provided, that no Indemnified Person shall be indemnified with
respect to such party's breach, default negligence or bad faith in performing
its duties and obligations under any of the Contract Documents. For purposes
hereof, the term "Contract Documents" means the Loan Documents and any further
agreements or instruments entered into pursuant to this Agreement.
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Any Indemnified Person seeking indemnification pursuant hereto with respect to
a third party claim must give the Company timely notice of any such claim and
cooperate in the defense thereof, and the Company shall have the right to
control the defense thereof and, if the same shall not involve any payment or
performance by the Indemnified Person, settlement of such claim.
10.06 Marshalling; Payments Set Aside. Neither the Documentation
Agent nor any Bank shall be under any obligation to ▇▇▇▇▇▇▇▇ any assets in
favor of the Company or any other Person or against or in payment of any or all
of the Obligations. To the extent that the Company makes a payment or payments
to the Documentation Agent or the Banks, or the Documentation Agent or the
Banks enforce their Liens or exercise their rights of set-off, and such payment
or payments or the proceeds of such enforcement or set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party in
connection with any Insolvency Proceeding, or otherwise, then to the extent of
such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred.
10.07 Successors and Assigns. Subject to Section 10.08 hereof,
the provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Company may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of the Documentation Agent and
each Bank.
10.08 Assignments, Participations, Etc,
(a) Any Bank may, with the written consent of the Company and the
Documentation Agent, which consents shall not be unreasonably withheld, at any
time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Company or the Documentation Agent shall be required in
connection with any assignment and delegation by a Bank to a Bank Affiliate of
such Bank or to any other Bank) (each an "Assignee") all, or any part of all,
of its Loans, its Commitment and the other rights and obligations of such Bank
hereunder, in a minimum amount (except with respect to assignments to other
Banks or Bank Affiliates) of Ten Million Dollars ($10,000,000); provided,
however, that the Company and the Documentation Agent may continue to deal
solely and directly with such Bank in connection with the interest so assigned
to an Assignee until (A) written notice of such assignment in form and
substance satisfactory to the Company and the Documentation Agent, together
with payment instructions, addresses and related information with respect to
the Assignee, shall have been given to the Company and the Documentation Agent
by such Bank and the
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56
Assignee; (B) such Bank and its Assignee shall have delivered to the Company
and the Documentation Agent an Assignment and Acceptance in the form of Exhibit
E ("Assignment and Acceptance"); (C) such Bank or its Assignee shall have paid
the processing fee of $3,000 to the Documentation Agent (with only one such fee
to be payable in respect of all concurrent assignments made by such Bank to
such Assignee regarding this Agreement and such of the Other Credit Facilities
as to which BofA acts as documentation agent); and (D) the assigning Bank shall
have delivered any Note payable to such Bank to the Documentation Agent.
(b) From and after the date that the Documentation Agent notifies
the assignor Bank that the requirements of Section 10.08(a) are satisfied (i)
the Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its additional
obligations under the Loan Documents.
(c) Immediately upon each Assignee's making its payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom.
The Commitment allocated to each Assignee shall reduce the Commitment of the
assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks
(a "Participant") participating interests in any Loans, the Commitment of that
Bank and the other interests of that Bank (the "Originating Bank") hereunder
and under the other Loan Documents; provided, however, that (i) the Originating
Bank's obligations under this Agreement shall remain unchanged, (ii) the
Originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Company and the Documentation Agent shall continue to
deal solely and directly with the Originating Bank in connection with the
Originating Bank's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant shall have rights to approve any amendment
to, or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent as described in clause (b), (c) or (f) of the first proviso
to Section 10.01. In the case of any such participation, the Participant shall
be entitled to the benefits of Sections 3.01, 3.03 and 3.05 but only to the
extent it would be entitled to the same if it were also a Bank which is an
Eligible Assignee, but shall not have any other rights under this Agreement,
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57
or any of the other Loan Documents, and all amounts payable by the Company
hereunder shall be determined as if such Bank had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing
under this Agreement and the obligation under Section 2.13 to share any excess
payment received by such Participant, all to the same extent as if the amount
of its participating interest were owing directly to it as a Bank under this
Agreement.
(e) Each Bank and the Documentation Agent agrees to take normal
and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" by the Company
provided to it by the Company or by the Documentation Agent on the Company's
behalf, in connection with this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use or disclose any such information
for any purpose or in any manner other than pursuant to the terms contemplated
by this Agreement, except to the extent such information (i) was or becomes
generally available to the public other than as a result of a disclosure by a
party to this Agreement, or (ii) was or becomes available on a non-confidential
basis from a source other than the Company, provided that such source is not
bound by a confidentiality agreement with the Company known to the Bank;
provided, however, that the Documentation Agent or any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Documentation Agent or such Bank is
subject or in connection with an examination of the Documentation Agent or such
Bank by any such authority; (B) pursuant to subpoena or other court process;
(C) when required to do so in accordance with the provisions of any applicable
Requirement of Law; and (D) to the Documentation Agent's or such Bank's
independent auditors and other professional advisors in the ordinary course of
and within the scope of such advisors' engagements. Notwithstanding the
foregoing, the Company authorizes each Bank to disclose to any Participant or
Assignee (each, a "Transferee") and to any prospective Transferee, such
financial and other information in such Bank's possession concerning the
Company or its Subsidiaries which has been delivered to the Documentation Agent
or the Banks pursuant to this Agreement or which has been delivered to the
Documentation Agent or the Banks by the Company in connection with the Banks'
credit evaluation of the Company prior to entering into this Agreement;
provided, that unless otherwise agreed by the Company, such Transferee or
prospective Transferee agrees in writing to such Bank to keep such information
confidential to the same extent required of the Banks hereunder. Each Bank
agrees that its obligations under this Section 10.08 shall survive any sale or
assignment of its interests to a Transferee.
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(f) Notwithstanding any other provision contained in this
Agreement or any other Loan Document to the contrary, any Bank may assign all or
any portion of the Loans held by it to any Federal Reserve Bank or the United
States Treasury as collateral security pursuant to Regulation A of the Federal
Reserve Board and any Operating Circular issued by such Federal Reserve Bank,
provided that any payment in respect of such assigned Loans or Notes made by the
Company to or for the account of the assigning Bank accordance with the terms
of this Agreement shall satisfy the Company's obligations hereunder in respect
to such assigned Loan or Notes to the extent of such payment. No such
assignment shall release the assigning Bank from its obligations hereunder.
Each Bank agrees to give the Company prompt written notice prior to a
disclosure or release of any confidential material pursuant to the first
proviso of Section 10.08(e).
10.09 Set-off. In addition to any rights and remedies of the Banks
provided by law, if the Obligations shall have become due a payable in full,
each Bank is authorized at any time and from time to time, without prior notice
to the Company, any such notice being waived by the Company to the fullest
extent permitted by law to set off and apply any and all deposits (general or
special, time demand, provisional or final) at any time held by, and other
indebtedness at any time owing to, such Bank to or for the credit or the
account of the Company against any and all Obligations owing to such Bank, now
or hereafter existing, irrespective of whether not the Documentation Agent or
such Bank shall have made demand under this Agreement or any Loan Document.
Each Bank agrees promptly to notify the Company and the Documentation Agent
after any such set-off and application made by such Bank; provided, that the
failure to give such notice shall not affect the validity such set-off and
application. The rights of each Bank under this Section 10.09 are in addition
to the other rights and remedies (including other rights of set-off) which such
Bank may have.
10.10 Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Documentation Agent and the Company in writing of any changes
in the address to which notices to the Bank should be directed, of the
addresses of any of its Lending Offices of payment instructions in respect of
all payments to be made to hereunder and of such other administrative
information as Documentation Agent or the Company shall reasonably request.
10.11 Counterparts. This Agreement may be executed by one more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed original, and all of said counterparts
taken together shall be deemed to constitute but one and the same instrument.
A set of the copies of this Agreement signed by all the parties shall be lodged
with the Company and the Documentation Agent.
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59
10.12 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.13 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Company, the
Banks and the Documentation Agent and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents. Neither the Documentation Agent
nor any Bank shall have any obligation to any Person not a party to this
Agreement or other Loan Documents.
10.14 Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS THEREOF); PROVIDED THAT THE COMPANY, THE DOCUMENTATION AGENT
AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE
DOCUMENTATION AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE
DOCUMENTATION AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE COMPANY, THE DOCUMENTATION AGENT AND THE BANKS EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
10.15 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE
DOCUMENTATION AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE
DOCUMENTATION AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS
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SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEED SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
1O.16 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Documentation Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof,, except for the
fee letters referenced in and Sections 2.09(b), and any prior arrangements
made with respect to the payment by the Company of (or any indemnification for)
any fees, costs or expenses payable to or incurred (or to be incurred) by or on
behalf of the Documentation Agent or the Banks.
[BALANCE OF PAGE LEFT INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW.)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly authorized officers as of the day and year first above written.
KMART CORPORATION
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President and Treasurer
Address for Notices:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Documentation Agent
By:
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Agency Management Services
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
KMART CORPORATION
By:
-----------------------------------
Title:
--------------------------------
Address for Notices:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Documentation Agent
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
--------------------------------
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Agency Management Service
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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Banks Signatory to Credit Agreement
Bankers Trust Company
Bank of America National Trust and
Savings Association
The Bank of New York
Canadian Imperial Bank of Commerce
Credit Lyonnais Chicago Branch
Credit Lyonnais Cayman Island Branch
The Dai-Ichi Kangyo Bank, Ltd., Chicago
Branch
First Interstate Bank of California
The Fuji Bank, Limited
The Long-Term Credit Bank of Japan, Ltd.
Chicago Branch
NationsBank, N.A. (Carolinas)
NBD Bank
Royal Bank of Canada
The Sumitomo Bank, Limited, Chicago
Branch
The Tokai Bank, Ltd., Chicago Branch
Union Bank
Union Bank of Switzerland - Chicago
Branch
64
SCHEDULE 5.03
CONSENTS AND APPROVALS
None.
65
SCHEDULE 7.03
EXISTING MORTGAGES, SECURITY INTERESTS AND
LIENS ON ASSETS OF THE COMPANY
Liens/Security Interests/Mortgages on PACE properties
Current Mortgages existing on Kmart corporation's properties as of
August 23, 1995 was $312 million
Kmart Corporation has guaranteed indebtedness related to certain of its
properties financed by industrial revenue bonds. At January 25, 1995, the
total amount of such guaranteed indebtedness was $238 million, of which $92
million was included in capital lease obligations.
66
EXHIBIT A
Form of Notice of Borrowing
____________________, 19____
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the Seasonal Credit Agreement referred
to below (the "Documentation Agent")
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Agency Management Services
Re: Seasonal Credit Agreement dated as of October 5, 1995 (as
from time to time amended, restated, supplemented or otherwise
modified, the "Credit Agreement") among KMART CORPORATION (the
"Company"), the Banks named therein and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Documentation Agent
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, the terms defined therein
being used herein as therein defined, and hereby gives you notice irrevocably,
pursuant to Section 2.03 of the Credit Agreement, of the Borrowing specified
herein:
(1) The Business Day of the proposed Borrowing is __________________,
19___.
(2) The aggregate amount of the proposed Borrowing is $______________.
(3) The proposed Borrowing is to be comprised of [LIBOR] [CD Rate]
[Reference Rate] Loans.
[(4) The duration of the initial Interest Period for the (LIBOR Loans]
[CD Rate Loans] included in the proposed Borrowing shall be __________
(months) (days].]
(5) Payment for this Borrowing is to be made to account number _____
at the Documentation Agent.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
67
(a) the representations and warranties of the undersigned contained
in Article V of the Credit Agreement are true and correct on and as of each
such date as if made on and as of each such date (except to the extent such
representations and warranties expressly, refer to an earlier date, in which
case they shall be true and correct as of such earlier date); and
(b) no Potential Default or Event of Default exists or shall
result from such proposed Borrowing.
KMART CORPORATION
By: ____________________________
Title: _________________________
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
FORM OF NOTICE OF CONVERSION/CONTINUATION
____________________, 19___
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the Seasonal Credit Agreement referred
to below (the "Documentation Agent")
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Agency Management Services
Re: Seasonal Credit Agreement dated as of October 5, 1995 (as
from time to time amended, restated, supplemented or otherwise
modified, the "Credit Agreement") among KMART CORPORATION (the
"Company"), the Banks named therein and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Documentation Agent
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, the terms defined therein
being used herein as therein defined, and hereby gives you notice irrevocably,
pursuant to Section 2.04 of the Credit Agreement, of the [conversion)
(continuation] of the Loans specified herein:
(1) The (Conversion Date] [Continuation Date] is ___________________,
19__.
(2) The aggregate amount of the Loans to be [converted]
[continued] is $_____________________.
(3) The Loans are to be [converted into] [continued as]
[LIBOR] [CD Rate] (Reference Rate] Loans.
(4) Unless the Loans are to be converted into Reference Rate
Loans, the duration of the Interest Period for the Loans
included in the [conversion] [continuation] shall be
_______________ [months] [days].
The undersigned hereby certifies that no Potential Default or
Event of Default exists as of the date hereof.
KMART CORPORATION
By: __________________________
Title: _______________________
69
EXHIBIT C
FORM OF NOTE
$________________ _______________, 19___
FOR VALUE RECEIVED, the undersigned, KMART CORPORATION, a Michigan
corporation (the "Company") , hereby promises to pay to the order of
________________________ (the "Bank") the principal sum of__________________
Dollars ($________) or, if less, the aggregate unpaid principal amount of the
Loans made by the Bank to the Company pursuant to the Seasonal Credit Agreement
dated as of October 5, 1995 (as from time to time amended, restated,
supplemented or otherwise modified, the "Credit Agreement") , among the
Company, the Bank, the other banks parties thereto and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation Agent, on the
Termination Date.
The Company also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rates and at the times which
shall be determined in accordance with the provisions of the Credit Agreement.
This promissory note (this "Note") is one of the Company's Notes issued
pursuant to and entitled to the benefits of the Credit Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions under which the Loans evidenced hereby are made and are to be
repaid. Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in immediately available
funds at the office of the Administrative Agent at San Francisco, California or
at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Each of the Bank and any
subsequent holder of this Note agrees that before disposing of this Note or any
part hereof it will make a notation hereon of all principal payments previously
made hereunder and of the date to which interest hereon has been paid;
provided, that the failure to make a notation of any payment made on this Note
shall not limit or otherwise affect the obligation of the Company hereunder
with respect to payments of principal or interest on this Note.
This Note is subject to prepayment as provided in the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Note may become, or may be declared to be, due and payable in
the manner, upon the conditions and with the effect provided in the Credit
Agreement.
The Company promises to pay all actual and reasonable costs and expenses,
including Attorney Costs, incurred in the collection and enforcement of this
Note. The Company and endorsers of this
70
Note hereby consent to renewals and extensions of time at or after the maturity
hereof, without notice, and hereby waive diligence, presentment, protest, demand
and notice of every kind and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS THEREOF).
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first above
written.
KMART CORPORATION
By: __________________________
Title:________________________
C-2
71
TRANSACTIONS ON NOTE
(REFERENCE RATE)
AMOUNT
INTEREST AMOUNT OF PRINCIPAL OR OUTSTANDING
RATE LOAN MADE PAID BALANCE PRINCIPAL NOTATION
DATE ON LOAN THIS DATE THIS DATE IS DATE MADE BY
-----------------------------------------------------------------------------------------
C-3
72
TRANSACTIONS ON NOTE
(LIBOR)
AMOUNT
APPLICABLE AMOUNT OF PRINCIPAL OR OUTSTANDING
MARGIN LOAN MADE INTEREST PAID BALANCE PRINCIPAL NOTATION
DATE LIBOR THIS DATE PERIOD THIS DATE THIS DATE MADE BY
---------------------------------------------------------------------------------------------------------------
C-4
73
TRANSACTIONS ON NOTE
(CD RATE)
AMOUNT
APPLICABLE AMOUNT OF PRINCIPAL OR OUTSTANDING
MARGIN LOAN MADE INTEREST PAID BALANCE PRINCIPAL NOTATION
DATE CD RATE THIS DATE PERIOD THIS DATE THIS DATE MADE BY
---------------------------------------------------------------------------------------------------------------
C-5
74
Exhibit D-1
[Letterhead of A. N. ▇▇▇▇▇▇▇, Esq.]
October 5, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ National Trust
and Savings Association,
individually and as Documentation Agent
under the Seasonal Credit Agreement referred
to below (the "Documentation Agent")
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
The Financial Institutions
listed on Schedule I hereto
Ladies and Gentlemen:
I am General Counsel to Kmart Corporation, a Michigan corporation
("Kmart"). In my capacity as General Counsel, I am authorized to furnish
opinions on behalf of Kmart that may be required in connection with various
matters, including that certain Seasonal Credit Agreement dated as of October
5, 1995 (the "Credit Agreement") among Kmart, the financial institutions
signatory thereto (the "Banks") and Bank of America National Trust and Savings
Association, as Documentation Agent ("Documentation Agent").
The Credit Agreement and certain Notes dated as of October 5, 1995
payable to certain of the Banks executed and delivered by Kmart thereunder (the
"Notes") are hereinafter collectively referred to as the "Transaction
Documents." Notes evidencing the obligations of Kmart to repay the Loans under
the Credit Agreement that may be issued from time to time by Kmart pursuant to
Section 2.02(b) of the Credit Agreement are hereinafter collectively referred
to as "other Notes". Capitalized terms appearing herein but not otherwise
defined herein shall have the meanings ascribed thereto in the Credit
Agreement.
In rendering the opinions set forth herein, I have examined originals
of the Transaction Documents executed by Kmart and originals or copies,
certified to my satisfaction, of such (i) certificates of public officials;
(ii) certificates of officers and representatives of Kmart; and (iii) other
documents, records and papers, and I have made such inquiries of officers and
representatives of Kmart as I have deemed relevant or necessary as
75
the basis for such opinions. I have relied upon, and assume the accuracy of,
such certificates and other statements, documents, records, and papers with
respect to the factual matters set forth therein and I have assumed the
genuineness of all of the signatures (other than the signatures of Kmart) and
the authenticity of all documents submitted to me as originals and the
conformity to original documents of all documents submitted to me as certified
or photostatic copies.
With your permission, I have further assumed the due authorization,
execution and delivery of the Credit Agreement by all of the parties thereto
other than Kmart, and that all parties thereto other than Kmart have complied
or will comply with all applicable laws and regulations in connection with the
consummation of the transactions contemplated thereby. I have also assumed
that each of the Transaction Documents and the other Notes is legal, valid,
binding and enforceable under the laws of the State of New York, by which each
such Transaction Document and other Note is stated to be governed.
Based on the foregoing and subject to the qualifications stated
herein, I am of the opinion that:
1. Kmart (i) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization; (ii) is
duly authorized to do business in each jurisdiction in which it owns or leases
property and where failure to do so would have a material adverse effect on its
condition (financial or otherwise), properties, business, assets or results of
operations; and (iii) has all requisite corporate power and authority to enter
into and perform its obligations under the Transaction Documents to which it
is a party and under any other Notes which it may issue from time to time.
2. The execution, delivery and performance by Kmart of each
Transaction Document, and the consummation of each of the transactions and
performance of each of the obligations on its part contemplated thereby:
(i) have been duly authorized by all necessary corporate
proceedings;
(ii) are not in contravention of its articles of
incorporation, bylaws or other organizational documents;
(iii) will not violate any provisions of any law, rule,
regulation (including any order, writ, judgment, decree, determination or
award of any court or governmental instrumentality) presently in effect having
applicability to it;
(iv) will not conflict with or result in a breach of or
constitute a default under or tortious interference with any
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indenture or loan or credit agreement, or any other agreement or instrument of
which I have knowledge, to which it is a party or by which it or any of its
properties may be bound (which conflict, breach, default or tortious
interference would have a material adverse effect on its condition (financial
or otherwise), properties, business, assets or results of operations);
(v) will not result in or require the creation or
imposition of any Lien of any nature upon or with respect to any of the
properties now owned or hereafter acquired by it; and
(vi) except as already applied for or received as of the
date hereof, do not require any authorization, consent, certificate,
inspection, franchise, approval, license, qualification or formal exemption
from, or any filing, declaration or registration with, any court, governmental
agency or regulatory authority or any other Person.
3. Kmart has duly executed and delivered the Transaction
Documents, and each such Transaction Document constitutes and each other Note
when issued will constitute its valid and binding obligation, enforceable
against it in accordance with its respective terms.
4. There are no actions, suits, proceedings, investigations or
judgments before any court, governmental agency or regulatory authority
(foreign, Federal, state or local) outstanding, pending, or, to the best of my
knowledge and belief, threatened against or in any other way involving or
affecting Kmart or its properties, which, if determined adversely to it (i)
would enjoin or otherwise materially interfere with the completion of any of
the transactions contemplated by the Transaction Documents or any other Note,
or (ii) would materially impair its ability to perform its obligations under
the Transaction Documents or any other Note.
5. To the best of my knowledge after due inquiry, Kmart is not
in default with respect to any order of any court, arbitrator or governmental
body where such default would have a material adverse effect on its condition
(financial or otherwise), properties, business, assets or results of
operations, and it is not subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding against it
under any statute or other law respecting antitrust, monopoly, restraint of
trade, unfair competition or similar matters the effect of which could be
reasonably expected to have a material adverse effect on its condition
(financial or otherwise), properties, business, assets or results of
operations.
6. To the best of my knowledge after due inquiry, Kmart is not in
violation of any statute, rule or regulation of any governmental authority
where such violation would have a material
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adverse effect on its condition (financial or otherwise), properties, business,
assets or results of operations.
7. To the best of my knowledge after due inquiry, there is no
existing material default by Kmart under any written contract, lease agreement,
or other material agreement to which it is a party or by which any of its
assets is bound which has, or could be reasonably expected to have, a material
adverse effect upon its condition (financial or otherwise), properties,
business, assets or results of operations.
8. Kmart is not an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.
9 . Kmart is not a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" within the meaning
of the Public Utility Holding company Act of 1935, as amended.
The opinions herein expressed are subject to the following limitations
and qualifications:
(a) The enforceability of the rights and remedies of the
Documentation Agent and the Banks under each of the Transaction Documents and
any other Notes is subject to the effect of any applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws of general application affecting creditors' rights generally.
(b) Enforceability of each of the Transaction Documents and any
other Notes is subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law),
including requirements of reasonableness and good faith in the exercise of
rights and remedies under any loan documents, and no opinion is expressed as to
any specific remedy that may be granted, imposed or rendered, including
equitable remedies such as those of specific performance, receivership and
injunction.
(c) The enforceability of particular rights and remedies
provided in the Transaction Documents may be limited by applicable laws,
provided, however, that sufficient rights and remedies are available to afford
the Documentation Agent and the Banks the practical realization of the benefits
afforded by the Transaction Documents and any other Notes.
Without limitation of the foregoing, I express no opinion: (i) as to
any provisions for acceleration of indebtedness or imposition of penalties in
the event of, or remedies available for, breaches of the Transaction Documents
or any other Notes which might be determined by a court to be non-material
(including
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78
material breaches of non-material provisions) , or where the enforcement of
such provisions or remedies might be found not to have been taken in good faith
and in a reasonable manner; (ii) as to remedies available in respect of
breaches of the Transaction Documents or any other Notes or provisions for
indemnification against liabilities or losses thereunder which breaches,
liabilities or losses might be found to be the proximate result of actions or
omissions by the Documentation Agent or the Banks; (iii) as to any provisions
of the Transaction Documents or any other Notes to the extent such provisions
would constitute waivers of rights that may be found to constitute waivers that
are against public policy; (iv) as to any provision of the Transaction
Documents or any other Notes to the extent that it purports to waive the
requirements of good faith, notice and commercial reasonableness under the
U.C.C. which requirements cannot be waived by consent; (v) as to provisions in
the Transaction Documents or any other Notes which provide for the imposition
of penalties, the payment or reimbursement of costs and expenses or the
indemnification of claims, losses or liabilities that may be found to be
unrelated to the damage suffered by the Documentation Agent or the Banks or in
excess of a reasonable amount; (vi) as to any provisions of the Transaction
Documents or any other Notes which constitute rights that may be found to be
against public policy; (vii) as to the validity of any provision of any
Transaction Document or any other Notes which provides for the compounding of
interest or payment or accrual of interest on interest; (viii) as to provisions
in the Transaction Documents or any other Notes which waive objection to
jurisdiction, the manner of service of process, notice or the effects of delay
or failure to exercise rights and remedies; (ix) as to the enforceability of
Sections 2.11, 2.13, 3.01 and 10.09 of the Credit Agreement pursuant to which
payments are to be made without set-off, defenses or counterclaims and free and
clear of Taxes; (x) as to any exhibits to the Credit Agreement not mentioned in
this letter; and (xi) as to Section 10.14 of the Credit Agreement and any
similar provision of any other Transaction Document or any other Note providing
for the application of New York law thereto.
(d) I am qualified to practice law in the State of Michigan and I
do not purport to express any opinion herein concerning any laws other than the
laws of the State of Michigan and applicable federal law. In this regard I
call to your attention that the Transaction Documents and the other Notes
expressly provide that they are to be governed by the laws of the State of New
York.
(e) This opinion is predicated solely upon laws and regulations in
existence as of the present date and as they presently apply, and to the facts
as they presently exist. I assume no obligation to revise or supplement this
opinion should the present laws be changed by legislative action, judicial
decision or otherwise.
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Whenever in this opinion I have used the phrase "to the best of our
knowledge" (or similar terms), this means the conscious awareness of those
attorneys in my department who have active involvement in the preparation of
this opinion or who are primarily responsible for providing the response
concerning a particular opinion issue or information regarding factual matters.
This opinion is rendered to you solely for your benefit in connection
with the above transactions and may not be relied upon by you for any other
purpose or by any other persons without my prior written consent. This opinion
is limited to the matters set forth herein and no opinion is intended to be
implied or inferred beyond those expressly stated herein.
Very Truly yours,
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Schedule I
Financial Institutions
[to come]
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81
EXHIBIT D-2
(letterhead of Dickinson, Wright, Moon, Van Dusen & ▇▇▇▇▇▇▇]
October 5, 1995
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the Seasonal Credit Agreement referred
to below (the "Documentation Agent")
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
The Financial Institutions
listed on Schedule I hereto
Ladies and Gentlemen:
We have acted as special counsel to Kmart Corporation, a Michigan
corporation ("Kmart") , in connection with the following agreements and
documents and the transactions contemplated thereby:
(i) that certain Seasonal Credit Agreement dated as of October 5,
1995 by and among Kmart, the financial institutions signatory thereto (the
"Banks") and the Documentation Agent (the "Credit Agreement"); and
(ii) those certain Notes dated as of October 5, 1995 payable to
certain of the Banks, executed and delivered by Kmart thereunder (the "Notes").
The Credit Agreement and the Notes are hereinafter collectively
referred to as the "Transaction Documents." Notes evidencing the obligation of
Kmart to repay the Loans under the Credit Agreement that may be issued from
time to time by Kmart pursuant to Section 2.02(b) of the Credit Agreement are
hereinafter collectively referred to as "other Notes". Capitalized terms
appearing herein but not otherwise defined herein shall have the meanings
ascribed thereto in the Credit Agreement. Pursuant to Section 4.01(d) of the
Credit Agreement, this opinion is delivered to you upon the instruction of
Kmart.
In rendering the opinions set forth herein, we have examined originals
of the Transaction Documents executed by Kmart
82
and originals or copies, certified to our satisfaction, of Such (i)
certificates of public officials; (ii) certificates of officers and
representatives of Kmart; and (iii) other documents records and papers, and we
have made such inquiries of officers and representatives of such entity, as we
have deemed relevant or necessary as the basis for such opinions. We have
relied upon, and assume the accuracy of, such certificates and other
statements, documents, records and papers with respect to the factual matters,
set forth therein and we have assumed the genuineness of all the signatures
(other than the signatures of Kmart) and the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as certified or photostatic copies. We have further
assumed that negotiations with respect to the transactions contemplated by the
Transaction Documents took place in the State of New York and that the Notes
have been delivered by Kmart for value to the Documentation Agent in New York.
With your permission, we have further assumed the due authorization,
execution and delivery of the Credit Agreement by all of the parties thereto
other than Kmart, and that all parties thereto other than Kmart have complied
or will comply with all applicable laws and regulations in connection with the
consummation of the transactions contemplated thereby. We have also assumed
that each of the Transaction Documents and the other Notes is legal, valid,
binding and enforceable under the laws of the State of New York, by which each
such Transaction Document and other Note is stated to be governed.
Based on the foregoing and subject to the qualifications stated herein
we are of the opinion that:
1. Kmart has duly executed and delivered the Transaction
Documents, and each such Transaction Document constitutes and each other Note
when issued will constitute the valid and binding obligation of Kmart,
enforceable against it in accordance with its respective terms.
2. The state of the law in Michigan makes it impossible to set
forth with assurance a single conflict of laws rule applicable to contract
cases. In general, Michigan courts historically have followed the approach of
the Restatement of Conflict of Laws, Section 332 (1934), by holding that the
local law of the place of formation of a contract governs the nature, validity,
effect, and obligation thereof. Bissell ▇. ▇▇▇▇▇, 4 Mich. 450 (1857); ▇▇▇▇▇▇
National Bank ▇. ▇▇▇ ▇▇▇▇▇, 260 Mich. 310 (1932); ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, 294 Mich.
124 (1940); Waldorf v. KMS Industries, Inc., 25 Mich. App. 20 (1970);
▇▇▇▇▇▇▇▇▇▇'▇ Importing Co. v. Keramische Industrie M. de Wit, 199 Mich. App.
359, 364 (1993). In determining the place of formation of a contract, Michigan
courts apply the local law of Michigan, the lex fori House ▇. ▇▇▇▇▇▇▇▇, 303
Mich. 207 (1942). Michigan law indicates
D/2-2
83
that a contract is formed at the place where the last act necessary to make it
a binding agreement took place. Ohio ▇. ▇▇▇▇▇▇, 295 Mich. 230 (1940).
Another line of Michigan authority recognizes an exception to the
foregoing general rule. These cases state that a contract, formed in one state
but to be performed in another, is governed by the local law of the place of
performance. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 141 Mich. 485 (1905); ▇▇▇▇▇▇ Realty Co. v. Gulf
Refining Co., 275 Mich. 442 (1936); Podlaha v. MRI, Inc., 71 Mich. App. 1
(1988). These cases are variants of the rule of the Restatement, Section 358.
Since 1962, the general conflict of laws rule applicable to matters
governed by the Uniform Commercial Code of Michigan ("UCC") has presumably been
stated by Section 1-105 of the UCC, M.C.L. Section 440.1105, which currently
provides in pertinent part that "when a transaction bears a reasonable relation
to this state and also to another state or nation the parties may agree that
the law either of this state or of such other state or nation shall govern
their rights and duties." The Michigan Court of Appeals has recently applied
this section, for the first time in a reported decision of which we are aware,
to validate the parties' choice of another State's law as the law applicable to
a contract governed by the Uniform Commercial Code. Zantop International
Airlines, Inc, v. Eastern Airlines, 200 Mich. App. 344, 351-352 (1993).
Federal courts applying Michigan law have expressed the view that Section 1-105
may be regarded as a validation of party autonomy in choice of law matters
(applicable even beyond the precise scope of the UCC itself). See, e.g.,
Homac, Inc, v. DSA Financial Corp., 661 F. Supp. 776, 784 (E.D. Mich. 1987).
Even prior to adoption of Section 1-105, however, Michigan conflict of laws
decisions would sometimes respect the choice of law made by the parties
provided that the transaction bore a reasonable relationship to the
jurisdiction selected and that the parties were acting in good faith. ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, 189 Mich. 635, 641 (1915) (dictum); ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, 294 Mich.
124 (1940); ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, 121 Mich. 208 (1899); Home Savinqs ▇. ▇▇▇▇▇, 127
Mich. 676 (1901). also, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 85 Mich. 561, 566-68 (1891).
The Michigan Supreme Court recently has suggested, however, that
Michigan courts henceforth will no longer be bound to apply the bright-line
rules of the First Restatement in determining choice of law issues in contract
cases. In Chrysler Corporation v. Skyline Industrial Services, Inc., 448 Mich.
113 (1995), the Supreme Court characterized the rigid "law of the place of
contracting" approach as "formalism", 448 Mich. at 124, which "may prove
unworkable under certain factual situations . . . ." 448 Mich. at 124 n.28.
Instead, the Court looked to the Restatement of
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Conflicts of Laws, Second, Sections 187-188 (1971, 1988), 1/ as providing "a
sound basis" for moving to a more modern approach emphasizing an examination of
relevant contacts and policies of the interested states (in this case, Illinois
and Michigan). 448 Mich. at 124. At the same time, the Court recognized the
existence of significant criticisms of the Second Restatement approach, 448
Mich. at 124 n.28, and expressly declined to abandon the "law of the place of
contracting" as a basis for decision. Ibid. Rather, the Court emphasized its
concern to balance parties' expectations and the interests of the affected
States in resolving specific choice law problems. In the event, the Court
applied the principles Sections 187 and 188 of the Second Restatement, reversed
the Court of Appeals' decision and validated the parties, express choice of
Michigan law, notwithstanding the Illinois Supreme Court, characterization of
the competing Illinois statute involved as a "fundamental policy" of Illinois.
448 Mich. at 130-131, notes 44 & 45. See, Restatement Second Section 187(2)(b);
Section 187 comment g.
In this transaction, the Transaction Documents and the other Notes
provide that they are to be governed by and construed in accordance with New
York law. As noted above, with your permission we have assumed that the
Transaction Documents were negotiated in significant part in New York and the
Notes were delivered for value by Kmart to the Documentation Agent in New York.
Moreover, it appears that the selection of New York law as the governing law of
the Transaction Documents and the other Notes was the product of negotiation by
the parties, undertaken in good faith. In addition, the sophistication of the
parties (each advised by counsel) and the commercial nature and significant
principal amount of the Credit Agreement all suggest that validating the
parties' reasonable choice of governing law would the correct result as a
matter of sound public policy. The foregoing facts suggest the existence of a
reasonable basis for the parties' choice of New York law and, subject to the
opinions, limitations and qualifications set forth below, we are aware of no
---------------
1/ Under Sections 187 and 188 of the Second Restatement, the court will apply
the law of the state expressly chosen by the parties to govern their
contractual rights and duties if particular issue could have been resolved by
the parties by an explicit agreement provision directed to that issue, and also
with respect to other issues unless either (a) the chosen state has no
substantial relation to the parties or the transaction and there is no other
reasonable basis for the parties' choice, or (b) application of the chosen
states law would be contrary to a fundamental policy of a state which has a
materially greater interest than the chosen state in the determination of
particular issue and which other state would be, in the absence an effective
choice by the parties, the state of the applicable Law (because with respect
to that issue it had the most significant
D/2-4
85
fundamental policy of Michigan which would be contravened by the application of
New York law to the Transaction Documents. In light of the foregoing, and
notwithstanding the fact that the Credit Agreement provides for disbursement
and repayment of the Loans at the Payment Office of the Documentation Agent in
California, while the question is not free from doubt, we are of the opinion
that the choice of New York law set forth in the Transaction Documents and the
other Notes should be recognized and given effect in any action or proceeding
by any party to the Transaction Documents in the State of Michigan arising out
of or relating to any of the Transaction Documents or any other Notes. If
nevertheless a court were to apply Michigan law as the governing law of the
Transaction Documents and the other Notes, each of the Transaction Documents
and each other Note when issued would be legal, valid, binding and enforceable
under the laws of the State of Michigan.
3. The rates of interest applicable to the obligations of Kmart under
the Credit Agreement do not violate any law, rule or regulation of the State of
Michigan prescribing a maximum rate of interest. We call to your attention,
however, that the Michigan criminal usury statute makes it unlawful to
knowingly charge, take or receive interest on a loan at a rate exceeding 25%
per annum.
The opinions herein expressed are subject to the following limitations
and qualifications:
(a) The enforceability of the rights and remedies of the Documentation
Agent and the Banks under each of the Transaction Documents and any other Notes
is subject to the effect of any applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws of general
application affecting creditors' rights generally.
(b) Enforceability of each of the Transaction Documents and any other
Notes is subject to general principles of equity (regardless of whether such
enforceability is considered in proceeding in equity or at law), including
requirements of reasonableness and good faith in the exercise of rights and
remedies under any loan documents, and no opinion is expressed as to any
specific remedy that may be granted, imposed or rendered, including equitable
remedies such as those of specific performance, receivership and injunction.
Without limitation of the foregoing, we express no opinion: (i)
as to any provisions for acceleration of indebtedness or imposition of
penalties in the event of, or remedies available for, breaches of the
Transaction Documents or any other Notes which might be determined by a court
to be non-material (including material breaches of non-material provisions), or
where the enforcement of such provisions or remedies might be found not to have
been taken in good faith and in a reasonable manner; (ii) as to remedies
available in respect of breaches of the Transaction
D/2-5
86
Documents or any other Notes or provisions for indemnification against
liabilities or losses thereunder which breaches, liabilities or losses might be
found to be the proximate result of actions or omissions by the Documentation
Agent or the Banks; (iii) as to any provisions of the Transaction Documents to
the extent such provisions would constitute waivers of rights that may be found
to constitute waivers that are against public policy; (iv) as to any provision
of the Transaction Documents or any other Notes to the extent that it purports
to waive the requirements of good faith, notice and commercial reasonableness
under the U.C.C. which requirements cannot be waived by consent; (v) as to
provisions in the Transaction Documents or any other Notes which provide for the
imposition of penalties, the payment or reimbursement of costs and expenses or
the indemnification of claims, losses or liabilities that may be found to be
unrelated to the damage suffered by the Documentation Agent or the Banks or in
excess of a reasonable amount; (vi) as to any provisions of the Transaction
Documents or any other Notes which constitute rights that may be found to be
against public policy; (vii) as to the validity of any provision of any
Transaction Document or any other Notes which provides for the compounding of
interest or payment or accrual of interest on interest; (viii) as to provisions
in the Transaction Documents or any other Notes which waive objection to
jurisdiction, the manner of service of process, notice or the effects of delay
or failure to exercise rights and remedies; (ix) as to the enforceability of
Sections 2.11, 2.13, 3.01 and 10.09 of the Credit Agreement pursuant to which
payments are to be made without set-off, defense or counterclaims and free and
clear of Taxes; and (x) as to any exhibits to the Credit Agreement not
mentioned in this letter.
(c) We are qualified to practice law in the State of Michigan and
we do not purport to express any opinion herein concerning any laws other than
the laws of the State of Michigan and applicable federal law. In this regard,
we have noted that the Transaction Documents and the other Notes expressly
provide that they are to be governed by the laws of the State of New York.
(d) This opinion is predicated solely upon laws and regulations in
existence as of the present date and as they presently apply, and to the facts
as they presently exist. We assume no obligation to revise or supplement this
opinion should the present laws be changed by legislative action, judicial
decision or otherwise.
Whenever in this opinion we have used the phrase "to the best of our
knowledge" (or similar terms), this means the conscious awareness of those
attorneys in the Firm who have active involvement in the preparation of this
opinion or who are primarily responsible for providing the response concerning
a particular opinion issue or information regarding factual matters.
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87
This opinion is rendered to you solely for your benefit in connection
with the above transactions and may not be relied upon by you for any other
purpose or by any other persons without our prior written consent. This
opinion is limited to the matters set forth herein and no opinion is intended
to be implied or inferred beyond those expressly stated herein.
Very truly yours,
D/2-7
88
Schedule I
Financial Institutions
[to come]
D/2-8
89
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") dated as
of_____________, 19__ is made between ______________________________________
(the "Assignor") and ___________________________________ (the "Assignee).
RECITALS
WHEREAS, the Assignor is party to that certain Seasonal Credit
Agreement dated as of October 5, 1995 among KMART CORPORATION, a Michigan
corporation (the "Company") , the banks named therein (including the Assignor,
the "Banks") and Bank of America National Trust and Savings Association, as
Documentation Agent (as from time to time amended, restated, supplemented or
otherwise modified, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings;
[WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to make Loans (the "Loans") to the Company in an aggregate principal
amount at any one time outstanding not to exceed _____________________________
($_________) (the "Aggregate Commitment");]
WHEREAS, [the Assignor has made Loans in the aggregate outstanding
principal amount of $__________________________ to the Company] [no Loans are
outstanding under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee part of the
rights and obligations of the Assignor under the Credit Agreement in respect of
its Aggregate Commitment [together with a corresponding portion of each of its
outstanding Loans,] in an amount equal to $_________________________ (the
"Assigned Amount") on the terms listed on Schedule I hereto and subject to the
conditions set forth herein, and the Assignee wishes to accept assignment of
such rights and to assume such obligations from the Assignor on such terms and
subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Assumption.
(a) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, the Assigned
Amount, which shall be equal to _____ percent (_________%) (the "Assignee's
Percentage Share") of all of the Assignor's rights and obligations under the
Credit Agreement, including, without limitation, the Assignee's Percentage
Share of the Aggregate Commitment (and any outstanding Loans]. The sale,
90
assignment, purchase and assumption set forth in this Section 1(a) shall be
without recourse to, or representation or warranty except as expressly
provided in this Agreement) by, the Assignor.
(b) With effect on and after the Effective Date, the Assignee shall
be a party to the Credit Agreement and succeed to all of the rights and be
obligated to perform all of the obligations of a Bank under the Credit
Agreement, including the requirements concerning confidentiality, with a
Commitment in an amount equal to the Assigned Amount. The Assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a Bank.
It is the intent of the parties hereto that the Commitment of the Assignor
shall, as of the Effective Date, be reduced by an amount equal to the Assigned
Amount and the Assignor shall relinquish its rights and be released from its
obligations under the Credit Agreement to the extent such obligations have been
assumed by the Assignee.
(c) After giving effect to the assignment and assumption, on the
Effective Date the Assignee's Commitment will be $ _________________________.
After giving effect to the assignment and assumption, on the Effective Date the
Assignor's Commitment will be $_______________________.
2. Payments
(a) As consideration for the sale and assignment contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount equal to $_____________________
representing the Assignee's Percentage Share of the principal amount of all
Loans previously made, and currently owned, by the Assignor to the Company
under the Credit Agreement and outstanding on the Effective Date.
(b) The Documentation Agent has received a processing fee in the
amount of $3,000.
(c) To the extent payment to be made by the Assignee pursuant to
Section 2(a) hereof is not made when due, the Assignor shall be entitled to
recover from the Assignee such amount together with interest thereon at the
Federal Funds Rate per annum accruing from the date such amounts were due.
3. Reallocation of Payments.
Any interest, commissions, fees and other payments accrued to but
excluding the Effective Date with respect to the Loans and the Assignor's
Commitment, shall be for the account of the Assignor. Any interest, fees and
other payments accrued on and after the Effective Date with respect to the
Assigned Amount shall be for the account of the Assignee. Each of the Assignor
and the Assignee agrees that it will hold in trust for the other party any
interest,
E - 2
91
commissions, fees and other amounts which it may receive to which the other
party is entitled pursuant to the preceding two sentences and pay to the other
party any such amounts which it may receive promptly upon receipt. The
Assignor's and the Assignee's obligations to make the payments referred to in
this Section 3 are non-assignable.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the
Credit Agreement and the Schedules and Exhibits thereto, together with copies
of the financial statements referred to in Section 6.01 thereof, and such other
documents and information as it has deemed appropriate to make its own credit
and legal analysis and decision to enter into this Agreement; and (b) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit and legal decisions in taking or not taking action under the Credit
Agreement.
5. Effective Date; Notices.
(a) The effective date for this Agreement is ___________ (the
"Effective Date"); provided, that the following conditions precedent have
been satisfied on or before the Effective Date:
(i) this Agreement shall be executed and delivered by the
Assignor and the Assignee;
[(ii) the consent of the Company and the Documentation Agent
required for an effective assignment of the Assigned Amount by the
Assignor to the Assignee shall have been duly obtained and shall be in
full force and effect as of the Effective Date;]
(iii) the Assignee shall pay to the Assignor all amounts due
to the Assignor under this Agreement; and
(iv) the processing fee referred to in Section 2(b) of
this Agreement, and in Section 10.08(a) of the Credit Agreement shall
have been paid by the [Assignor] [Assignee] to the Documentation Agent.
(b) Promptly following the execution of this Agreement, the
Assignor shall deliver to the Documentation Agent for acceptance and recording
by the Documentation Agent, such notices, agreements or other documents as may
be required under the Credit Agreement.
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6. Agent.
The Assignee hereby appoints and authorizes the Documentation Agent to
take such action as Documentation Agent on its behalf and to exercise such
powers under the Credit Agreement as are delegated to the Documentation Agent by
the Banks pursuant to the terms of the Credit Agreement.
7. Withholding Tax.
If the Assignee is a foreign person within the meaning of the Code,
the Assignee agrees to comply with Section 9.10 of the Credit Agreement as if
the Effective Date were the Closing Date of the Credit Agreement and, if such
Assignee fails to comply with Section 9.10 of the Credit Agreement, then this
Agreement shall not become effective.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any lien security interest or other adverse
claim; (ii) it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and deliver
this Agreement and any other documents required or permitted to be executed or
delivered by it in connection with this Agreement and to fulfill its
obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or
obtained) for its due execution, delivery and performance of this Agreement,
and apart from any agreements or undertaking or filings required by the Credit
Agreement, no further action by, or notice to, or filing with, any Person is
required of it for such execution, delivery or performance; and (iv) this
Agreement has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of the Assignor, enforceable against the Assignor
in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Company or any Subsidiary or the performance or observance by the
Company of any
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of its obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Agreement and any other
documents required or permitted to be executed or delivered by it in connection
with this Agreement, and to fulfill its obligations hereunder; (ii) no notices
to, or consents, authorizations or approvals of, any Person are required (other
than any already given or obtained) for its due execution, delivery and
performance of this Agreement; and apart from any agreements or undertaking or
filings required by the Credit Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Agreement has been duly executed and delivered by it
and constitutes the legal, valid and binding obligation of the Assignee,
enforceable against the Assignee in accordance with the terms hereof, except
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; and (iv) it is an
Eligible Assignee under the Credit Agreement.
9. Further Assurances.
The Assignor and the Assignee each hereby agrees to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, including, without limitation, the delivery of any notices or other
documents or instruments to the Company or the Documentation Agent which may be
required in connection with the assignment and assumption contemplated hereby.
10. Indemnity.
The Assignee agrees to indemnify and hold harmless the Assignor against
any and all losses, costs, expenses (including, without limitation, Attorney
Costs) and liabilities incurred by the Assignor in connection with or arising
in any manner from the non-performance by the Assignee of any obligation
assumed by the Assignee under this Agreement.
11. Miscellaneous.
(a) Any amendment or waiver of any provision of this Agreement
shall be in writing signed by the parties hereto, and consented to in writing
by the Documentation Agent. No failure or delay by either party hereto in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof and any waiver of any breach of the provisions of this Agreement shall
be
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without prejudice to any rights with respect to any other or further breach
hereof.
(b) All payments made hereunder shall be made without any set-off
or counterclaim.
(c) All communications among the parties or notices in connection
herewith shall be in writing (including facsimile transmission or telex) and
delivered, telexed or telecopied, addressed as follows: (i) if to the Assignor
or the Assignee, at their respective addresses set forth on the signature pages
hereof and (ii) if to the Company or the Documentation Agent, at their
respective addresses set forth in the Credit Agreement or any other documents
or instruments delivered pursuant thereto. All such communications and notices
shall be effective upon receipt. The Assignee specifies as its Lending Office
the office set forth beneath its name on the signature pages hereof.
(d) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution
and performance of this Agreement.
(e) The representations and warranties made herein shall survive
the consummation of the transactions contemplated hereby.
(f) This Agreement shall be binding upon and inure to the benefit
of the Assignor and the Assignee and their respective successors and assigns;
provided, however, that no party shall assign its rights hereunder without the
prior written consent of the other party and any purported assignment, absent
such consent, shall be void. The preceding sentence shall not limit the right
of the Assignee to assign or participate all or part of the Assignee's
Percentage Share and the Assigned Amount and any outstanding Loans attributable
thereto in accordance with and subject to the Credit Agreement.
(g) The Assignor may at any time or from time to time grant to
others assignments or participations in Assignor's Aggregate Commitment or the
Loans but not in the portions thereof assigned to the Assignee pursuant to this
Agreement.
(h) This Agreement may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.
(i) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. The Assignor and the Assignee each
irrevocably submits to the non-exclusive jurisdiction of any New York State or
Federal court sitting in The City of New York over any suit, action or
proceeding arising out of or relating to this Agreement and irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
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determined in such New York State or Federal court. Each party to this
Agreement hereby irrevocably waives, to the fullest extent may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.
(j) This Agreement and any agreement, document or instrument
attached hereto or referred to herein integrate all the terms and conditions
mentioned herein or incidental hereto, constitute the entire agreement and
understanding between the parties hereto and supersede any and all prior
agreements and understandings related to the subject matter hereof. In the
event of any conflict between the terms, conditions and provisions of this
Agreement and any such agreement, document or instrument, the terms, conditions
and provisions of this Agreement shall prevail.
(k) In the event of any inconsistency between the provisions of
this Agreement and Schedule I hereto, this Agreement shall control. Headings
are for reference only and are to be ignored in interpreting this Agreement.
(l) The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any
way affect or impair the legality or enforceability of the remaining provisions
of this Agreement or any instrument or agreement required hereunder.
(m) The Assignor and the Assignee each hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with this Agreement, the Credit Agreement, any related documents and
agreements or any related course of conduct, course of dealing or statements
(whether oral or written).
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
__________________________________
Assignor
By:_______________________________
Title:____________________________
Address for Notices:
Lending Office:
Address for Payments
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[Address]
__________________________________
Assignor
By:_______________________________
Title:____________________________
Address for Notices:
Lending Office:
Address for Payments
[Address]
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SCHEDULE I
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. Company:
2. Date of Credit Agreement:
3. Assignor:
4. Assignee:
5. Date of Assignment Agreement:
6. Effective Date:
7. Assignee's Share
(a) Assignee's Percentage Share
(b) Assigned Amount
8. Fees: Payment by Company
to Assignee
Facility Fee
9. Interest: Payment by Company
to Assignee
(i) Reference Rate Loan(s)
(ii) LIBOR Loan(s)
(iii) CD Rate Loan(s)
10. Payment Instructions:
Assignor:
Assignee:
11. Other Information:
▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
___________, 19___
Bank of America National Trust
and Savings Association,
as Documentation Agent
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Agency Management Services
Kmart Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ , ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Ladies and Gentlemen:
We refer to the Seasonal Credit Agreement dated as of October 5, 1995
(as amended, supplemented or modified from time to time the "Credit Agreement")
among Kmart Corporation (the "Company" the Banks referred to therein and Bank
of America National Trust and Savings Association, as Documentation Agent.
Terms defined in the Credit Agreement are used herein as therein defined.
1. We hereby give you notice of [, and request the consent of the
Company and the Administrative Agent to,] the assignment by
____________________(the "Assignor") to ________________________________(the
"Assignee") of ___% of the right, title and interest of the Assignor in and to
the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitment of the Assignor and all
outstanding Loans made by the Assignor) (the "Assigned Amount") pursuant to
that certain Assignment and Assumption Agreement, dated as of ____________,
19___ (the "Assignment and Assumption Agreement"), by and between Assignor and
Assignee. Before giving effect to such assignment the Assignor's Commitment is
$_________ and the aggregate principal amount of its outstanding Loans is
$___________________.
2. The Assignee agrees that [, upon receiving the consent the
Company and the Administrative Agent to such assignment and from and after the
Effective Date (as such term is defined in Section 5 of the Assignment and
Assumption Agreement), the Assignee will be bound by the terms of the Credit
Agreement, with respect to the interest in the Credit Agreement assigned to it
as specified above, as fully and to the same extent as if the Assignee were the
Bank originally holding such interest in the Credit Agreement. The
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Assignor and the Assignee agree that any interest, fees and other payments
accrued to but excluding the Effective Date with respect to the Assigned Amount
shall be for the account of the Assignee.
3. The following administrative details apply to the Assignee:
(A) Lending Office:
Assignee name:__________________________
Address:________________________________
________________________________
Attention:______________________________
Telephone: ( )_________________________
Telecopier: ( )________________________
(B) Notice Address:
Assignee name:__________________________
Address:________________________________
________________________________
Attention:______________________________
Telephone: ( )_________________________
Telecopier: ( )________________________
(C) Payment Instructions:
Account No.:____________________________
At:_________________________________
_________________________________
_________________________________
Reference:______________________________
Attention:______________________________
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IN WITNESS WHEREOF, the Assignor and the Assignor have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
(Name of Assignor]
By:_______________________
Title:____________________
(Name of Assignee]
By:_______________________
Title:____________________
[Agreed and Consented to this
_______ day of ___________, 19___.
KMART CORPORATION
By:_____________________
Title:__________________
Agreed and Consented to this
_____ day of ______________, 19___.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent
By:_____________________
Title:__________________]
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