Exhibit 99.2
CSK AUTO, INC.
CREDIT AGREEMENT
dated as of December 21, 2001
$300,000,000
Credit Facility
JPMORGAN CHASE BANK,
as Administrative Agent,
CREDIT SUISSE FIRST BOSTON,
as Syndication Agent,
and
UBS AG, STAMFORD BRANCH,
as Documentation Agent
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.,
and
CREDIT SUISSE FIRST BOSTON,
as Joint Lead Arrangers and Joint Book Managers
TABLE OF CONTENTS
Page
Section 1. DEFINITIONS.................................................... 5
1.1 Defined Terms.................................................. 5
1.2 Other Definitional Provisions.................................. 30
Section 2. TERM LOANS..................................................... 31
2.1 Term Loan Commitments.......................................... 31
2.2 Repayment of Term Loans........................................ 31
2.3 Use of Proceeds................................................ 31
Section 3. AMOUNT AND TERMS OF REVOLVING COMMITMENTS...................... 31
3.1 Revolving Commitments.......................................... 31
3.2 Commitment Fee................................................. 32
3.3 Proceeds of Revolving Loans.................................... 32
3.4 Swing Line Commitment.......................................... 32
3.5 Issuance of Letters of Credit.................................. 34
3.6 Participating Interests........................................ 34
3.7 Procedure for Opening Letters of Credit........................ 34
3.8 Payments in Respect of Letters of Credit....................... 35
3.9 Letter of Credit Fees.......................................... 35
3.10 Letter of Credit Reserves...................................... 36
3.11 Further Assurances............................................. 37
3.12 Obligations Absolute........................................... 37
3.13 Assignments.................................................... 38
3.14 Participations................................................. 38
Section 4. GENERAL PROVISIONS APPLICABLE TO LOANS......................... 38
4.1 Procedure for Borrowing........................................ 38
4.2 Conversion and Continuation Options............................ 39
4.3 Changes of Commitment Amounts.................................. 40
4.4 Optional and Mandatory Prepayments; Repayments of Term Loans... 40
4.5 Interest Rates and Payment Dates............................... 43
4.6 Computation of Interest and Fees............................... 43
4.7 Certain Fees................................................... 44
4.8 Inability to Determine Interest Rate........................... 44
4.9 Pro Rata Treatment and Payments................................ 44
4.10 Illegality..................................................... 47
4.11 Requirements of Law............................................ 47
4.12 Indemnity...................................................... 50
4.13 Repayment of Loans; Evidence of Debt........................... 50
4.14 Replacement of Lenders......................................... ▇▇
-▇-
▇▇▇▇▇▇▇ ▇. REPRESENTATIONS AND WARRANTIES................................. 52
5.1 Financial Condition............................................ 52
5.2 No Change...................................................... 53
5.3 Corporate Existence; Compliance with Law....................... 53
5.4 Corporate Power; Authorization................................. 53
5.5 Enforceable Obligations........................................ 54
5.6 No Legal Bar................................................... 54
5.7 No Material Litigation......................................... 54
5.8 Investment Company Act......................................... 54
5.9 Federal Regulation............................................. 55
5.10 No Default..................................................... 55
5.11 Taxes.......................................................... 55
5.12 Subsidiaries................................................... 55
5.13 Ownership of Property; Liens................................... 55
5.14 ERISA.......................................................... 56
5.15 Security Documents............................................. 57
5.16 Copyrights, Permits, Trademarks and Licenses................... 57
5.17 Environmental Matters.......................................... 57
5.18 Accuracy and Completeness of Information....................... 58
Section 6. CONDITIONS PRECEDENT........................................... 58
6.1 Conditions to Initial Extension of Credit...................... 58
6.2 Conditions to All Loans and Letters of Credit.................. 61
Section 7. AFFIRMATIVE COVENANTS.......................................... 62
7.1 Financial Statements........................................... 62
7.2 Certificates; Other Information................................ 63
7.3 Payment of Obligations......................................... 64
7.4 Conduct of Business and Maintenance of Existence............... 64
7.5 Maintenance of Property; Insurance............................. 65
7.6 Inspection of Property; Books and Records; Discussions......... 65
7.7 Notices........................................................ 66
7.8 Environmental Laws............................................. 67
7.9 Additional Collateral, etc..................................... 68
7.10 Registration................................................... 69
7.11 Landlord Lien Waivers.......................................... 69
Section 8. NEGATIVE COVENANTS............................................. 70
8.1 Indebtedness................................................... 70
8.2 Limitation on Liens............................................ 71
8.3 Limitation on Contingent Obligations........................... 73
8.4 Prohibition of Fundamental Changes............................. 74
8.5 Prohibition on Sale of Assets.................................. 74
-ii-
8.6 Limitation on Investments, Loans and Advances.................. 75
8.7 Leverage Ratio................................................. 76
8.8 Interest Coverage Ratio........................................ 77
8.9 Capital Expenditures........................................... 77
8.10 Limitation on Dividends........................................ 78
8.11 Transactions with Affiliates................................... 79
8.12 Prepayments and Amendments of Permanent Subordinated
Debt, Convertible Debt and Senior Unsecured Debt............... 79
8.13 Limitation on Changes in Fiscal Year........................... 80
8.14 Limitation on Lines of Business................................ 80
8.15 Limitation on Interest Rate Agreements......................... 80
Section 9. EVENTS OF DEFAULT.............................................. 80
Section 10. THE ADMINISTRATIVE AGENT; THE ISSUING LENDER;
OTHER AGENTS......................................................... 83
10.1 Appointment.................................................... 83
10.2 Delegation of Duties........................................... 83
10.3 Exculpatory Provisions......................................... 83
10.4 Reliance by Administrative Agent............................... 84
10.5 Notice of Default.............................................. 84
10.6 Non-Reliance on Administrative Agent, Syndication Agent,
Documentation Agent and Other Lenders.......................... 84
10.7 Indemnification................................................ 85
10.8 The Administrative Agent, Syndication Agent and Documentation
Agent, Each in its Individual Capacity......................... 85
10.9 Successor Agent................................................ 86
10.10 Issuing Lender as Issuer of Letters of Credit.................. 86
Section 11. MISCELLANEOUS.................................................. 86
11.1 Amendments and Waivers......................................... 86
11.2 Notices........................................................ 88
11.3 No Waiver; Cumulative Remedies................................. 89
11.4 Survival of Representations and Warranties..................... 89
11.5 Payment of Expenses and Taxes.................................. 89
11.6 Successors and Assigns; Participations and Assignments......... 90
11.7 Adjustments; Set-off........................................... 94
11.8 Counterparts................................................... 95
11.9 Governing Law; No Third Party Rights........................... 95
11.10 Submission to Jurisdiction; Waivers............................ 95
11.11 Releases....................................................... 96
11.12 Interest....................................................... 96
11.13 Special Indemnification........................................ 96
11.14 Permitted Payments and Transactions............................ 97
-iii-
SCHEDULES
Schedule I List of Addresses for Notices; Lending Offices;
Commitment Amounts
Schedule 3.5(c) Outstanding Letters of Credit
Schedule 5.12 Subsidiaries
Schedule 5.13 Fee and Leased Properties
Schedule 5.15(a) UCC Filing Offices
Schedule 5.16 Intellectual Property
Schedule 6.1(m) Appraised Assets
Schedule 8.1(a) Indebtedness to Remain Outstanding
Schedule 8.2 Existing Liens
Schedule 8.3(d) Existing Contingent Obligations
EXHIBITS
EXHIBIT A Form of Revolving Note
EXHIBIT B Form of Term Loan Note
EXHIBIT C Form of Swing Line Note
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Guarantee and Collateral Agreement
EXHIBIT F Form of L/C Participation Certificate
EXHIBIT G Form of Swing Line Loan Participation Certificate
EXHIBIT H-1 Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
EXHIBIT H-2 Form of Opinion of ▇▇▇▇▇ ▇▇▇▇ LLP
EXHIBIT I Form of Subsection 4.11(d)(2) Certificate
EXHIBIT J-1 Form of Company Closing Certificate
EXHIBIT J-2 Form of Holdings Closing Certificate
EXHIBIT J-3 Form of Subsidiary Closing Certificate
EXHIBIT K Form of Borrowing Base Certificate
5
CREDIT AGREEMENT, dated as of December 21, 2001, among CSK AUTO,
INC., an Arizona corporation (the "Company"), the several lenders from time to
time parties hereto (the "Lenders"), JPMORGAN CHASE BANK, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"), CREDIT
SUISSE FIRST BOSTON, as syndication agent for the Lenders (in such capacity, the
"Syndication Agent") and UBS AG, STAMFORD BRANCH, as documentation agent for the
Lenders (in such capacity, the "Documentation Agent").
W I T N E S S E T H:
WHEREAS, the Company, entered into the Third Amended and Restated
Credit Agreement, dated as of September 30, 1999, as amended ("Existing Credit
Agreement"), among the Company, the several lenders from time to time parties
thereto, The Chase Manhattan Bank, a New York banking corporation, as
administrative agent, DLJ Capital Funding, Inc., a Delaware corporation, as
syndication agent and ▇▇▇▇▇▇ Commercial Paper Inc., a Delaware corporation, as
documentation agent; and
WHEREAS, the Company intends to refinance the credit facilities
available pursuant to the Existing Credit Agreement with proceeds from the
following sources: the issuance by Holdings of $50,000,000 of convertible debt
securities (the net proceeds of which will be downstreamed to the Company in the
form of equity) that are anticipated to be converted into common equity of
Holdings upon the effectiveness of a registration statement ("Holdings
Convertible Securities"); (b) the issuance by the Company of $280,000,000 of
senior unsecured notes in a public offering or Rule 144A private placement
("Senior Unsecured Notes") and (c) the Loans made on the Closing Date pursuant
to this Agreement (collectively, the "Transaction").
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, and for other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms defined in
the caption hereto shall have the meanings set forth therein, and the following
terms have the following meanings:
"Accounts": as to any Person, all rights to receive payment for
goods sold or leased by such Person or for services rendered in the ordinary
course of business of such Person to the extent not evidenced by an instrument
or chattel paper, including any rights in, to and under all purchase orders or
receipts now owned or hereafter acquired for goods and services, and all
collateral security and guarantees with respect to any of the foregoing.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": JPMorgan Chase Bank, in its capacity as
administrative agent hereunder.
6
"Advance Stores": Advance Stores Company Incorporated, a
Virginia corporation.
"Affiliate": of any Person (a) any Person (other than a Subsidiary)
which, directly or indirectly, is in control of, is controlled by, or is under
common control with such Person, (b) any Person who is a director or officer (i)
of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above or (c) in the case of a trust, its protectors or
trustees, any Person who is or has been a beneficiary thereof, or any Person who
is or has been able to appoint a beneficiary thereof. For purposes of this
definition, control of a Person shall mean the power, direct or indirect (i) to
vote 25% or more of the securities having ordinary voting power for the election
of directors of such Person, whether by ownership of securities, contract, proxy
or otherwise, or (ii) to direct or cause the direction of the management and
policies of such Person, whether by ownership of securities, contract, proxy or
otherwise.
"Agents": collectively, the Administrative Agent, the
Syndication Agent and the Documentation Agent.
"Agreement": this Credit Agreement, as amended, supplemented or
modified from time to time.
"Alternate Base Rate": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean
the rate of interest per annum publicly announced from time to time by the
Administrative Agent as its prime rate in effect at its principal office in New
York City (the Prime Rate not being intended to be the lowest rate of interest
charged by the Administrative Agent in connection with extensions of credit to
debtors); and "Federal Funds Effective Rate" shall mean, for any day, 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 on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it. Any change in the Alternate Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Alternate Base Rate Lending Office": as to each Lender, the
office of such Lender located within the United States which shall be making
or maintaining Alternate Base Rate Loans.
"Alternate Base Rate Loans": Loans at such time as they are made
and/or being maintained at a rate of interest based upon the Alternate Base
Rate.
"Applicable Margin":(a) From the Closing Date until (but excluding)
the Delivery Date, for each Loan, 3.50% for Eurodollar Rate Loans and 2.50% for
Alternate Base Rate Loans.
7
(b) From and after the Delivery Date, for each Type of Loan, the
rate per annum determined pursuant to the Pricing Grid.
"Asset Sale": any sale, sale-leaseback, or other disposition by the
Company or any Subsidiary thereof of any of its property or assets, including
the stock of any Subsidiary of the Company that is restricted by subsection 8.5
hereof, other than sales and dispositions permitted by subsections 8.5(a), (b),
(c), (e), (f) and (g) (except to the extent that the Net Proceeds of any such
sale or disposition permitted thereby would be required to be used to purchase
any of the Permanent Subordinated Notes or the Senior Unsecured Notes).
"Assignee": as defined in subsection 11.6(c).
"Assignment and Acceptance": an assignment and acceptance
substantially in the form of Exhibit D.
"Available Accounts Receivable": Eligible Accounts Receivable
less the Dilution Reserve.
"Available Revolving Commitment": as to any Lender, at a particular
time, an amount equal to (a) the amount of such Lender's Revolving Commitment at
such time, less (b) the sum of (i) the aggregate unpaid principal amount at such
time of all Revolving Loans made by such Lender pursuant to subsection 3.1, (ii)
such Lender's Revolving Commitment Percentage of the aggregate unpaid principal
amount at such time of all Swing Line Loans, provided that for purposes of
calculating the Revolving Commitments pursuant to subsection 3.2 the amount
referred to in this clause (ii) shall be zero, (iii) such Lender's L/C
Participating Interest in the aggregate amount available to be drawn at such
time under all outstanding Letters of Credit issued by the Issuing Lender and
(iv) such Lender's Revolving Commitment Percentage of the aggregate outstanding
amount of L/C Obligations; collectively, as to all the Lenders, the "Available
Revolving Commitments".
"Base Amount": as defined in subsection 8.9(b).
"benefitted Lender": as defined in subsection 11.7.
"Board": as defined in the definition of "Alternate Base Rate".
"Borrowing Base": shall mean, at any time of any determination, an
amount equal to the sum, without duplication, of (i) 75% of Available Accounts
Receivable and (ii)(A) 65% of Eligible DC Inventory, (B) 60% of Eligible Store
Inventory, (C) 60% of In Transit Inventory and (D) 25% of Slow Moving Inventory
up to a maximum of $7,500,000. In the determination of the amount determined
pursuant to the forgoing clause (ii), in no event shall such amount exceed the
Net Recovery Percentage times the Gross Inventory. Each Borrowing Base
Certificate shall remain in effect from and including the date on which such
Borrowing Base Certificate is delivered, to, but excluding the date on which the
next Borrowing Base Certificate is delivered. The Borrowing Base shall be
determined by the Administrative Agent in its sole reasonable discretion from
time to time by reference to the most recent monthly Borrowing Base Certificate
delivered to the Administrative Agent pursuant to Section 7.2(g). Standards of
eligibility and reserves and advance rates of the Borrowing Base may be adjusted
8
and revised from time to time by the Administrative Agent in its sole reasonable
discretion, provided that any increase in any such percentages above the
original levels (or modifications of the definitions of Eligible Accounts
Receivable or Eligible Inventory which would have the effect of increasing any
such percentages) is subject to the consent of the Supermajority Lenders, with
any changes in such standards to be effective within ten days after notice to
the Company.
"Borrowing Base Certificate": a certificate substantially in the
form of Exhibit K hereto (with such changes therein as may be required by the
Administrative Agent from time to time to reflect the components of, and
reserves against, the Borrowing Base as provided for hereunder from time to
time) executed and certified as accurate and complete by a Responsible Officer
of the Company, which shall include appropriate exhibits, schedules and
supporting documentation as outlined in Exhibit K, as well as additional reports
requested by the Administrative Agent and as provided in subsection 7.2.
"Borrowing Base Deficiency": a condition wherein the sum of (a) the
aggregate principal amount of all Term Loans, Revolving Loans and Swing Line
Loans outstanding at such time, (b) the aggregate unexpired and undrawn face
amount of all Letters of Credit outstanding at such time and (c) the aggregate
amount of L/C Obligations outstanding at such time exceeds the Borrowing Base as
set forth on the most recent Borrowing Base Certificate delivered by the
Company.
"Borrowing Date": any Business Day specified in a notice pursuant to
(a) subsection 3.4 or 4.1 as a date on which the Company requests the Swing Line
Lender or the Lenders to make Loans hereunder or (b) subsection 3.5 as a date on
which the Company requests the Issuing Lender to issue a Letter of Credit
hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close; provided, that with respect to notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, such day is
also a day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.
"Capital Expenditures": for any period, all amounts which would, in
accordance with GAAP, be set forth as capital expenditures (exclusive of any
amount attributable to capitalized interest) on the consolidated statement of
cash flows or other similar statement of the Company and its Subsidiaries for
such period and shall in any event include expenditures to acquire all or a
portion of the Capital Stock or assets of any Person (exclusive of expenditures
for the acquisition of cash) but shall exclude (a) any expenditures made with
the proceeds of condemnation or eminent domain proceedings affecting real
property or with insurance proceeds and (b) any amounts invested in joint
ventures pursuant to subsection 8.6(j); provided that any Capital Expenditures
financed with the proceeds of any Indebtedness permitted hereunder (other than
Indebtedness incurred hereunder) shall be deemed to be a Capital Expenditure
only in the period in which, and by the amount which, any principal of such
Indebtedness is repaid.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests
9
in a Person (other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"Carmel Trust": the Carmel Trust, a trust governed by the laws
of Canada.
"Cash Equivalents": (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition, (b) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any Lender or with any domestic commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (a) and (b) entered into with any financial institution
meeting the qualifications specified in clause (b) above, and (d) commercial
paper issued by any Lender or the parent corporation of any Lender, and
commercial paper rated A-1 or the equivalent thereof by Standard & Poor's
Ratings Group or P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service,
Inc. and in each case maturing within six months after the date of acquisition.
"Change in Law": with respect to any Lender, the adoption of any
law, rule, regulation, policy, guideline or directive (whether or not having the
force of law) or any change therein or in the interpretation or application
thereof by any Governmental Authority having jurisdiction over such Lender, in
each case after the Closing Date.
"Change of Control": shall be considered to have occurred if (a)(1)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), whether acting singly or in
concert with one or more "person" or "group", other than the Investcorp
Shareholders or any Person acting in the capacity of an underwriter, shall,
directly or indirectly, have acquired, or acquire the power to vote or direct
the voting of, 30% or more on a fully diluted basis, of the outstanding Capital
Stock of Holdings or (2) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the board of
directors of Holdings together with any new members of such board of directors
whose elections by such board of directors or whose nomination for election by
the stockholders of Holdings was approved by a vote of a majority of the members
of such board of directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved shall cease for any reason to constitute a majority of
the directors of Holdings then in office, or (b) Holdings shall cease to own and
control directly, of record and beneficially, 100% of each class of outstanding
Capital Stock of the Company, free and clear of all Liens, other than Liens in
favor of the Administrative Agent and the Lenders pursuant to the Credit
Documents.
"Class": (a) as to any Loan, its designation as a Term Loan or
Revolving Loan and (b) as to any Commitment, its designation as a Term Loan
Commitment or Revolving Commitment.
"Closing Date": the date on which each of the conditions
precedent contained in Section 6 of this Agreement are satisfied or waived,
which date is December 21, 2001.
10
"Code": the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral": all assets of the Credit Parties, now owned or
hereinafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Collateral Agent": JPMorgan Chase Bank, in its capacity as
collateral agent.
"Commercial L/C": a commercial documentary Letter of Credit under
which the Issuing Lender agrees to make payments in Dollars for the account of
the Company, on behalf of the Company or a Subsidiary thereof, in respect of
obligations of the Company or such Subsidiary in connection with the purchase of
goods or services in the ordinary course of business.
"Commitment": as to any Lender at any time, such Lender's Swing
Line Commitment, Term Loan Commitment and Revolving Commitment; collectively,
as to all the Lenders, the "Commitments".
"Commitment Fee Rate": .50% per annum.
"Commitment Percentage": as to any Lender at any time, its Term
Loan Commitment Percentage or Revolving Commitment Percentage, as the context
may require.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4.14(b) or (c) of the Code.
"Company": CSK Auto, Inc., an Arizona corporation.
"Conduit Lender": any special purpose corporation organized and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and designated by such Lender in a written instrument;
provided, that the designation by any Lender of a Conduit Lender shall not
relieve the designating Lender of any of its obligations to fund a Loan under
this Agreement if, for any reason, its Conduit Lender fails to fund any such
Loan, and the designating Lender (and not the Conduit Lender) shall have the
sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender, and provided,
further, that no Conduit Lender shall (a) be entitled to receive any greater
amount pursuant to Section 4.11, 4.12 or 11.5 than the designating Lender would
have been entitled to receive in respect of the extensions of credit made by
such Conduit Lender, (b) be deemed to have any Commitment or (c) be afforded
voting rights hereunder.
"Consolidated Current Assets": at a particular date, all amounts
which would, in conformity with GAAP, be included under current assets on a
consolidated balance sheet of the Company and its Subsidiaries as at such
date.
"Consolidated Current Liabilities": at a particular date, all
amounts which would, in conformity with GAAP, be included under current
liabilities on a consolidated balance sheet
11
of the Company and its Subsidiaries as at such date, excluding the current
portion of long-term debt and the entire outstanding principal amount of the
Revolving Loans.
"Consolidated EBITDA": for any period, the Consolidated Net Income
of the Company and its Subsidiaries for such period, plus, without duplication
and to the extent reflected as a charge in the statement of such Consolidated
Net Income for such period, the sum of (a) total income tax expense (including
any tax benefit or expense related to the dividend on any preferred stock), (b)
interest expense, amortization or writeoff of debt discount, debt issuance,
warrant and other equity (including any preferred stock) issuance costs and
commissions, discounts, redemption premium and other fees and charges associated
with the Loans (including commitment fees and other periodic bank charges),
Standby L/Cs, the Permanent Subordinated Debt and the Senior Unsecured Notes or
with the acquisition or repayment of any debt securities of the Company
permitted hereunder, and net costs associated with Interest Rate Agreements to
which the Company is a party in respect of the Loans, (c) costs of surety bonds,
(d) depreciation and amortization expense, (e) amortization of inventory
write-up under APB 16, amortization of intangibles (including, but not limited
to, goodwill and costs of interest-rate caps, leasehold interests and the cost
of non-competition agreements) and organization costs, (f) non-cash amortization
of Financing Leases, (g) franchise taxes, (h) all cash dividend payments, (i)
any fees and expenses incurred in connection with the Transaction, (j) any other
write-downs, write-offs, minority interests and other non-cash charges in
determining such Consolidated Net Income for such period and (k) all
extraordinary losses in determining such Consolidated Net Income for such
period, and minus, without duplication and to the extent reflected as a credit
in the statement of such Consolidated Net Income for such period, the sum of (i)
extraordinary gains, (ii) non-cash income and (iii) non-cash gains; provided
that: (i) the cumulative effect of a change in accounting principles (effected
either through cumulative effect adjustment or a retroactive application) shall
be excluded and (ii) the impact of foreign currency translations shall be
excluded.
"Consolidated Funded Indebtedness": at a particular date, all
Indebtedness (other than Indebtedness described in clauses (b), (c) or (d) of
the definition of "Indebtedness" included in this subsection 1.1) of the Company
and its Subsidiaries determined on a consolidated basis in accordance with GAAP
at such date.
"Consolidated Leverage Ratio": as at the last day of any period,
the ratio of (a) Consolidated Total Funded Debt on such day to (b)
Consolidated EBITDA for such period.
"Consolidated Net Income": for any period, net income of the Company
and its Subsidiaries, determined on a consolidated basis in accordance with
GAAP; provided that: (i) the net income (but not loss) of any Person that is not
a Subsidiary or that is accounted for by the equity method of accounting shall
be included only to the extent of the amount of dividends or distributions paid
in cash to the Company or a wholly-owned Subsidiary, (ii) the net income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded and (iii) net income of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that net income is
prohibited or not permitted at the date of determination.
12
"Consolidated Senior Funded Indebtedness": the Consolidated
Funded Indebtedness minus the Permanent Subordinated Debt, and other
subordinated Indebtedness permitted pursuant to subsections 8.1(d), 8.1(f)
and 8.1(j).
"Consolidated Total Funded Debt": at a particular date, all
Indebtedness (other than Indebtedness described in clauses (b) or (c) of the
definition of "Indebtedness" included in this subsection 1.1) of the Company and
its Subsidiaries determined on a consolidated basis in accordance with GAAP at
such date; provided that, for purposes of calculating the Consolidated Leverage
Ratio for the fourth fiscal quarter of 2001 and the first fiscal quarter of 2002
only, the amount of any Intercompany Notes included in Indebtedness shall be
excluded from Consolidated Total Funded Debt.
"Contingent Obligation": as to any Person, any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, dividends or
other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount (based on the maximum reasonably anticipated net liability
in respect thereof as determined by the Company in good faith) of the primary
obligation or portion thereof in respect of which such Contingent Obligation is
made or, if not stated or determinable, the maximum reasonably anticipated net
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by the Company in good faith.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking
to which such Person is a party or by which it or any of the property owned
by it is bound.
"Convertible Securities": the Holdings Convertible Securities and
Existing Convertible Notes.
"Convertible Debt": Indebtedness under the Existing Convertible
Notes and the Holdings Convertible Securities.
"Core Reserve": a reserve for core values included in Inventory
which shall be updated and revised from time to time in the Administrative
Agent's sole reasonable discretion.
"Credit Documents": the collective reference to this Agreement,
the Security Documents and the Notes.
13
"Credit Parties": the collective reference to Holdings, the
Company and each Subsidiary of the Company from time to time party to a
Credit Document.
"CSFB": Credit Suisse First Boston.
"DC Inventory": all Inventory of the Company and its Subsidiaries
located at any Company distribution center, regional distribution center and/or
main depot.
"Default": any of the events specified in Section 9, whether or
not any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Delivery Date": the date on which the Company shall have
delivered to the Administrative Agent and the Lenders its financial
statements referred to in Section 7.1(b) for the second quarter of Fiscal
Year 2002.
"Dilution Factors": with respect to any period, the aggregate
amount of all gross deductions, credit memos, returns, adjustments, allowances,
bad debt write-offs and other non-cash credits to Accounts of the Company
arising from transactions conducted in the normal course of business.
"Dilution Ratio": at any date, the amount (expressed as a
percentage) equal to (a) the aggregate amount of the applicable Dilution Factors
for the 12 most recently ended fiscal months divided by (b) total gross sales of
the related Accounts, for the 12 most recently ended fiscal months; provided
that the Dilution Ratio shall not be calculated for Borrowing Base purposes
until (6) six months after the Closing Date.
"Dilution Reserve": at any date the applicable Dilution Ratio
multiplied by the Eligible Accounts Receivable on such date.
"Dirty Core Reserve": a reserve for dirty cores on hand
included in Inventory which shall be updated and revised from time to time in
the Administrative Agent's sole reasonable discretion.
"Documentation Agent": UBS, in its capacity as documentation
agent hereunder.
"Dollars" and "$": dollars in lawful currency of the United States
of America.
"Domestic Subsidiary": any Subsidiary of the Company other than
a Foreign Subsidiary.
"Eligible Accounts Receivable": at the time of any determination
thereof, all Accounts that satisfy the following criteria at the time of
creation and continue to meet the same at the time of such determination: such
Accounts (i) have been invoiced and represent the bona fide sale and delivery
from the Company to the purchaser of merchandise or services, in each case in
the ordinary course of business of the Company in connection with its trade
operations and (ii) are not ineligible for inclusion in the calculation of the
Borrowing Base pursuant to any of clauses (a) through (p) below or otherwise
deemed by the Administrative Agent in good faith to be ineligible for inclusion
in the calculation of the Borrowing Base as described below.
14
Without limiting the foregoing, to qualify as an Eligible Account Receivable, an
Account shall indicate as sole payee and as sole remittance party the Company.
In determining the amount to be so included, the face amount of Accounts shall
be reduced by, without duplication, to the extent not reflected in such face
amount, (i) the amount of all accrued and actual returns, discounts, claims,
credits or credits pending, charges, price adjustments, freight or finance
charges or other allowances (including any amount that the Company, as
applicable, may be obligated to rebate to a customer pursuant to the terms of
any agreement or understanding (written or oral)), (ii) the aggregate amount of
all reserves, limits and deductions provided for in this definition and
elsewhere in this Agreement and (iii) the aggregate amount of all cash received
in respect of Accounts but not yet applied by the Company to reduce the amount
of the Accounts. Standards of eligibility and reserves may be adjusted from time
to time solely by the Administrative Agent in its sole reasonable discretion,
with any changes in such standards to be effective 10 days after delivery of
notice thereof to the Company. Unless otherwise approved from time to time in
writing by the Collateral Agent, no Account shall be an Eligible Account
Receivable if, without duplication:
(a) the Company does not have sole lawful and absolute title to
such Account; or;
(b) it arises out of a sale made by the Company to an employee,
officer, agent, director, stockholder, or Affiliate of the Company; or
(c) (i) it is unpaid more than 90 days from the date of invoice or
60 days from the due date (with accounts being designated as national accounts
in accordance with the Company's existing accounts designation practices, such
accounts are unpaid more than 120 days from the date of invoice or 90 days from
the due date) or (ii) it has been written off the books of the Company or has
been otherwise designated on such books as uncollectible; or
(d) more than 50% in face amount of all Accounts of the same
Account Debtor are ineligible pursuant to clause (c) above; or
(e) the Account Debtor (i) is a creditor of any Credit Party, (ii)
has or has asserted a right of set-off against any Credit Party (unless such
Account Debtor has entered into a written agreement reasonably acceptable to the
Administrative Agent to waive such set-off rights) or (iii) has disputed its
liability (whether by chargeback or otherwise) or made any claim with respect to
the Account or any other Account of any Credit Party which has not been
resolved, in each case, without duplication, to the extent of the amount owed by
such Credit Party to the Account Debtor, the amount of such actual or asserted
right of set-off, or the amount of such dispute or claim, as the case may be; or
(f) the Account Debtor is insolvent or the subject of any
bankruptcy case or insolvency proceeding of any kind; or
(g) the Account is not payable in Dollars or the Account Debtor is
either not incorporated under the laws of the United States of America, any
state thereof or the District of Columbia or is located outside or has its
principal place of business or substantially all of its assets outside the
United States, except to the extent the Account is supported by an irrevocable
15
letter of credit reasonably satisfactory to the Administrative Agent (as to
form, substance and issuer) and assigned to and directly drawable by the
Administrative Agent; or
(h) the sale to the Account Debtor is on a ▇▇▇▇-and-hold, guaranteed
sale, sale-and-return, ship-and-return, sale on approval, extended terms or
consignment or other similar basis or made pursuant to any other agreement
providing for repurchase or return of any merchandise which has been claimed to
be defective or otherwise unsatisfactory; or
(i) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless (A) the Company, duly
assigns its rights to payment of such Account to the Administrative Agent
pursuant to the Assignment of Claims Act of 1940, as amended, which assignment
and related documents and filings shall be in form and substance reasonably
satisfactory to the Administrative Agent or (B) the amount of such Account is
less than 10% of the gross trades account receivables; or
(j) the goods giving rise to such Account have not been shipped and
title has not been transferred to the Account Debtor, or the Account represents
a progress-billing or otherwise does not represent a completed sale; for
purposes hereof, "progress-billing" means any invoice for goods sold or leased
or services rendered under a contract or agreement pursuant to which the Account
Debtor's obligation to pay such invoice is conditioned upon the Company's
completion of any further performance under the contract or agreement; or
(k) the Account does not comply in all material respects with the
requirements of all applicable laws and regulations, whether Federal, state or
local, including without limitation the Federal Consumer Credit Protection Act,
the Federal Truth in Lending Act and Regulation Z of the Board; or
(l) the Account is subject to any adverse security deposit,
retainage or other similar advance made by or for the benefit of the Account
Debtor, in each case to the extent thereof; or
(m) (i) it is not subject to a valid and perfected first priority
Lien in favor of the Administrative Agent for the benefit of the Secured
Parties, subject to no other Liens other than the Liens (if any) permitted by
the Credit Documents or (ii) it does not otherwise conform in all material
respects to the representations and warranties contained in the Credit Documents
relating to Accounts; or
(n) as to all or any part of such Account, a check, promissory note,
draft, trade acceptance or other Instrument for the payment of money has been
received, presented for payment and returned uncollected for any reason; or
(o) the Account is due and payable in less than seven days
(weekly accounts); or
(p) any Account that is subject to any defense, counterclaim,
setoff or dispute.
In determining the aggregate amount of Accounts from the same
Account Debtor that are unpaid more than 90 days from the date of invoice or
more than 60 days from the due date (or with accounts being designated as
national accounts in accordance with the Company's
16
existing accounts designation practices, such accounts are unpaid more than 120
days from the date of invoice or 90 days from the due date) pursuant to clause
(c) above, there shall be excluded the amount of any net credit balances
relating to Accounts with invoice dates more than 90 days prior to the date of
determination or more than 60 days from the due date.
Notwithstanding the foregoing, all Accounts of any single Account
Debtor and its Affiliates which in the aggregate exceed 10% of the total amount
of all Eligible Accounts receivable at the time of any determination shall be
deemed not to be Eligible Accounts receivable to the extent of such excess.
"Eligible DC Inventory": all Eligible Inventory of the Company and
its Subsidiaries, less Slow Moving Inventory, located at any Company
distribution center, regional distribution center and/or main depot.
"Eligible Inventory": at the time of any determination thereof,
without duplication, all Inventory at the time of such determination that is not
ineligible for inclusion in the calculation of the Borrowing Base pursuant to
any of clauses (a) through (k) below or otherwise deemed by the Administrative
Agent in good faith to be ineligible for inclusion in the calculation of the
Borrowing Base as described below. Without limiting the foregoing, to qualify as
"Eligible Inventory" no person other than the Company, as applicable, shall have
any direct or indirect ownership interest or title to such Inventory and no
person other than the Company, shall be indicated on any purchase order or
invoice with respect to such Inventory as having or purporting to have an
interest therein. Standards of eligibility may be fixed from time to time solely
by the Administrative Agent in its sole reasonable discretion, with any changes
in such standards to be effective 10 days after delivery of notice thereof to
the Company. In determining the amount to be so included, the amount of such
Inventory shall be valued at the lower of cost or market on a basis consistent
with the Company's or such Subsidiary's current and historical accounting
practice less reserves taken, if any, (i) on account of physical inventory
adjustments, (ii) for restructuring, store closings, warranties, shrink,
defective or return to vendor and price changes as recorded in the Company's
general ledger and accounting records, (iii) for any goods returned or rejected
by the Company's or such Subsidiary's customers as damaged or defective, scrap,
obsolete or otherwise non-salable, return to vendor goods, supplies, (iv) for
goods in transit to the Company from third parties not to exceed eligibility of
$3,000,000 that are not excluded pursuant to clause (a), (b), (c), (d) or (e)
below, (v) for Liens referred to in clause (c)(i) below, Eligible Inventory
shall exclude certain reserves determined by the Administrative Agent in its
sole reasonable discretion to be updated from time to time including a Rent
Reserve, Slow Moving Reserve, Core Reserve, Dirty Core Reserve, Return and Other
Reserve and (vi) for Liens referred to in clause (c)(ii) below as established by
the Administrative Agent in its sole reasonable discretion. Unless otherwise
approved in writing by the Collateral Agent, no Inventory shall be deemed
Eligible Inventory of the Company or its Subsidiaries if:
(a) the Company does not have sole and good, valid and unencumbered
title thereto (other than Liens held by the Administrative Agent for the benefit
of the Lenders under the Credit Documents) or is leased or on consignment;
17
(b) the Inventory is not located at or in transit to property that
is owned or leased by the Company or such Subsidiary or it is duties due and
payable for goods in transit to the Company from a third party;
(c) the Inventory is not subject to a perfected Lien in favor of the
Collateral Agent prior to all other Liens except for (i) Liens arising by
operation of law with respect to which either a Landlord Lien Waiver has been
obtained or a Rent Reserve has been established (a Rent Reserve with respect to
all such Liens shall be deemed to have been established if an amount equal to
the maximum amount set forth in clause (v) of this definition is established)
and (ii) with respect to Eligible Inventory located at or in transit to sites
described in clause (b) above, for Liens for normal and customary warehousing
and transportation charges (appropriate reserves for which have been reasonably
established for borrowing base purposes by the Company or such Subsidiary);
(d) the Inventory is not located in the United States;
(e) the Inventory does not conform in all material respects to
the representations and warranties contained in this Agreement or any of the
Security Documents;
(f) it is display items, samples or packing or shipping
materials or Supply Inventory;
(g) it is non-auto parts inventory such as soda, candy, snacks,
magazines, miscellaneous non-auto accessories, etc. whereby 50% of such non auto
parts inventory is considered Eligible Inventory not to exceed eligibility of
$3,000,000;
(h) it is goods returned or rejected, damaged, defective warranty
goods, and core returns held by the Company to be sent to Company Distribution
Centers or Regional Distribution Centers for redeployment or return to vendor;
(i) it is seconds or thirds, damaged or is designated by the Company
as obsolete, unmerchantable or otherwise unsaleable in the ordinary course of
business, or does not otherwise conform to the representations and warranties
contained in the Credit Documents;
(j) it is not located on property owned or leased by the Company or
in a contract warehouse, in each case, specified on Schedule 5.13, and, except
as otherwise approved by the Administrative Agent, covered by an agreement
reasonably satisfactory in form and substance to the Administrative Agent
covering the Administrative Agent's access to such Inventory and waiving the
lessor's or contract warehouseman's Liens therein and segregated or otherwise
separately identifiable from goods of all others, if any, stored on the premises
including inventory held at the Genco facility; or
(k) it is drop-ship merchandise in-transit from vendors directly to
customers including merchandise ordered by customers via the internet, through
the Company's catalog or through a commercial store.
"Eligible Store Inventory": all Eligible Inventory of the
Company and its Subsidiaries, less Slow Moving Inventory, located at any
store.
18
"Environmental Laws": any and all Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees
or requirements of any Governmental Authority or requirements of law (including
court-ordered requirements of common law) regulating or imposing liability or
standards of conduct concerning, environmental or public health protection
matters, including, without limitation, Hazardous Materials, as now or may at
any time hereafter be in effect.
"Environmental Reports": the Phase 1 environmental assessments
covering certain owned and leased real properties of the Company and its
Subsidiaries made available by the Company to the Administrative Agent prior
to October 30, 1996.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": as defined in the
definition of Eurodollar Rate.
"Eurodollar Lending Office": as to any Lender the office of such
Lender which shall be making or maintaining Eurodollar Loans.
"Eurodollar Loans": Loans at such time as they are made and/or
being maintained at a rate of interest based upon a Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate screen (or otherwise on such screen),
the "Eurodollar Rate" shall be determined by reference to such other comparable
publicly available service for displaying eurodollar rates as may be selected by
the Administrative Agent or, in the absence of such availability, by reference
to the rate at which the Administrative Agent is offered Dollar deposits at or
about 11:00 A.M., New York City time, two Business Days prior to the beginning
of such Interest Period in the interbank eurodollar market where its eurodollar
and foreign currency and exchange operations are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein.
"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Excess Cash Flow": at the end of any fiscal year of the Company
beginning with the 2002 fiscal year, the excess of (a) the sum, without
duplication, of (i) Consolidated EBITDA for the period from February 4, 2002 to
the end of such fiscal year and (ii) extraordinary cash gains with respect to
such period over (b) the sum, without duplication, of (i) the aggregate amount
actually paid by the Company and its Subsidiaries in cash since February 4, 2002
on account of capital expenditures (other than capital expenditures made with
the proceeds of eminent domain or condemnation proceedings to the extent such
proceeds are not included in the determination of Consolidated EBITDA for such
period), (ii) the aggregate
19
amount of payments of principal in respect of any Indebtedness since February 4,
2002 (other than any such payments of principal pursuant to subsections
4.4(b)(i), (ii), (iii) and (iv) or any such payment of principal in respect of
any revolving credit facility to the extent that there is not an equivalent
reduction in such facility), (iii) increases in working capital (calculated as
Consolidated Current Assets at the end of such period minus Consolidated Current
Liabilities as at the end of such period) of the Company and its Subsidiaries
since February 4, 2002 (excluding any increase in cash or Cash Equivalents above
an increase deemed in good faith by the Company to be necessary or desirable for
the operation of the business of the Company and its Subsidiaries), (iv) cash
interest expense (including fees paid in connection with Letters of Credit,
surety bonds, commitment fees and other periodic bank charges) of the Company
since February 4, 2002, (v) the amount of dividends actually paid in cash by the
Company to Holdings to the extent not deducted from revenues in determining
Consolidated Net Income of the Company and its Subsidiaries for such period, as
permitted by subsections 8.10(c)(i) and (ii), (vi) the amount of taxes actually
paid in cash by the Company and its Subsidiaries since February 4, 2002 either
during such period or within a normal payment period thereafter, (vii) the
amount of cash actually paid to repurchase Capital Stock of Holdings pursuant to
subsection 8.10(c)(iii) since February 4, 2002, (viii) extraordinary cash losses
with respect to such period, (ix) any fees and expenses incurred in connection
with the Transaction and (x) to the extent added to Consolidated Net Income of
the Company and its Subsidiaries in calculating Consolidated EBITDA for such
period, the net cost of Interest Rate Agreements, franchise taxes and management
fees during such period.
"Excluded Foreign Subsidiary": any Foreign Subsidiary in respect of
which either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the obligations of the
Company hereunder, would, in the good faith judgment of the Company, result in
adverse tax consequences to the Company.
"Existing Credit Agreement": as defined in the recitals hereto.
"Existing Convertible Debt": the Indebtedness under the Existing
Convertible Notes.
"Existing Convertible Notes": the existing $30,000,000 of
convertible debt of Holdings to be converted into equity of Holdings.
"Fee Property": as defined in subsection 5.13.
"Financing Lease": (a) any lease of property, real or personal, the
obligations under which are capitalized on a consolidated balance sheet of the
Company and its consolidated Subsidiaries and (b) any other such lease to the
extent that the then present value of any rental commitment thereunder should,
in accordance with GAAP, be capitalized on a balance sheet of the lessee.
"Fiscal Year": the fiscal year of the Company ending on the
Sunday closest to January 31 of the following year.
"Foreign Subsidiary": any Subsidiary of the Company which is not
organized under the laws of the United States of America or any state thereof
or the District of Columbia.
20
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Going Out of Business Sale": as of the date of any determination
thereof, a professional opinion of the estimated most probable price expressed
in terms of Dollars which the inventory of the Company and its Subsidiaries
typically could realize in a going out of business sale, properly advertised and
professionally managed, by a seller obligated to sell over a defined period not
to exceed 10 weeks from the date of the sale commencement.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Gross Inventory": for any period, the total gross first-in
first-out general ledger inventory of such period, as determined in
accordance with the Company's historical accounting practices.
"Group Members": the collective reference to the Company and its
wholly-owned domestic Subsidiaries.
"Hazardous Materials": any hazardous materials, hazardous wastes,
hazardous pesticides, hazardous or toxic substances, defined, listed, classified
or regulated as such in or under any Environmental Law, including, without
limitation, asbestos, petroleum, any other petroleum products (including
gasoline, crude oil or any fraction thereof) polychlorinated biphenyls and
urea-formaldehyde insulation.
"Highest Lawful Rate": as defined in subsection 11.12.
"Holdings": CSK Auto Corporation.
"Holdings Convertible Securities": as defined in the recitals
hereto.
"In Transit Inventory": Inventory in transit to the Company from
a third party.
"Indebtedness": of a Person, at a particular date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (b) the undrawn face amount of all letters of
credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder and unpaid reimbursement obligations with respect
thereto, (c) all liabilities (other than Lease Obligations) secured by any Lien
on any property owned by such Person, even though such Person has not assumed or
become liable for the payment thereof, (d) Financing Leases and (e) all
indebtedness of such Person arising under acceptance facilities; but excluding
(i) trade and other accounts payable and accrued expenses payable in the
ordinary course of business, (ii) letters of credit supporting the purchase of
goods in the ordinary course of business and expiring no more than six months
from the date of issuance and (iii) obligations in respect of Interest Rate
Agreements.
"indemnified liabilities": as defined in subsection 11.5.
21
"Insolvency": with respect to a Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as used
in Section 4245 of ERISA.
"Intercompany Notes": the note issued by the Company to
Holdings, in connection with the Existing Convertible Securities, the
proceeds of which have been downstreamed to the Company.
"Interest Coverage Ratio": on the last day of any fiscal quarter of
the Company, the ratio of (a) Consolidated EBITDA for the period of four fiscal
quarters ending on such day to (b) cash interest expense (excluding fees payable
on account of Letters of Credit and, to the extent included in interest expense
in accordance with GAAP, net costs associated with Interest Rate Agreements to
which the Company is party in respect of the Loans, amortization of debt
discount (including discount of liabilities and reserves established under APB
16), costs of debt issuance and interest expense on customer deposits) for the
period described in clause (a) above net of interest income, in each case for or
during such period on a consolidated basis for the Company and its Subsidiaries.
"Interest Payment Date": (a) as to Alternate Base Rate Loans, the
last day of each March, June, September and December, commencing on the first
such day to occur after any Alternate Base Rate Loans are made or any Eurodollar
Loans are converted to Alternate Base Rate Loans, (b) as to any Eurodollar Loan
in respect of which the Company has selected an Interest Period of one, two or
three months, the last day of such Interest Period and (c) as to any Eurodollar
Loan in respect of which the Company has selected an Interest Period longer than
three months, on each successive date three months after the first day of such
Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on, as the case may be,
the Borrowing Date or conversion date with respect to such Eurodollar Loan and
ending one, two, three, six or, if and when available to all of the relevant
Lenders, nine or twelve months thereafter as selected by the Company in its
notice of borrowing as provided in subsection 4.1 or its notice of conversion as
provided in subsection 4.2; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three, six or, if and when available to all the relevant Lenders, nine
or twelve months thereafter as selected by the Company by irrevocable notice to
the Administrative Agent not less than three Business Days prior to the last day
of the then current Interest Period with respect to such Eurodollar Loan;
provided that the foregoing provisions relating to Interest Periods are
subject to the following:
(A) 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 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;
22
(B) the Company may not select an Interest Period that would
extend beyond the Revolving Termination Date or beyond the Maturity Date, as the
case may be; provided that, if the Revolving Termination Date or the Maturity
Date shall not be a Business Day, such Interest Period shall end on the next
preceding Business Day, as the case may be;
(C) if the Company shall fail to give notice as provided above
in clause (b), it shall be deemed to have selected a conversion of a Eurodollar
Loan into an Alternate Base Rate Loan (which conversion shall occur
automatically and without need for compliance with the conditions for conversion
set forth in subsection 4.2);
(D) any Interest Period that begins on the last day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
(E) the Company shall select Interest Periods so as not to
require a prepayment (to the extent practicable) or a scheduled payment of a
Eurodollar Loan during an Interest Period for such Eurodollar Loan.
"Interest Rate Agreement": any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, currency hedge
agreement or other similar agreement or arrangement; provided that the amount of
any such Interest Rate Agreement for purposes of subsection 9(e) shall be based
on calculation of payments for early termination in a reasonable manner in
accordance with customary industry practices.
"Inventory": as defined in the Uniform Commercial Code as in effect
in the State of New York; and, with respect to the Company and its Subsidiaries,
all such Inventory of the Company or such Subsidiary including, without
limitation, all finished goods, wares and merchandise, finished or unfinished
parts, components, assemblies held for sale to third party customers by the
Company or such Subsidiary.
"Investcorp Shareholders": INVESTCORP S.A. and its Affiliates
(provided that the reference to 25% in the definition of Affiliate contained
in this subsection 1.1 shall be deemed to be 51%) and Subsidiaries.
"Investors": Investcorp Investment Equity Limited and certain
of its Affiliates and other international investors and the Carmel Trust and
its Affiliates.
"Issuing Lender": JPMorgan Chase Bank and any of its Affiliates or
such other financial institution selected by the Company and approved by
JPMorgan Chase Bank, as issuers of the Letters of Credit.
"JPMorgan Chase Bank": JPMorgan Chase Bank, a New York banking
corporation, and its successors.
"Landlord Lien Waiver": a written agreement or as otherwise is
reasonably acceptable to the Administrative Agent, pursuant to which a Person
shall waive or subordinate its rights and claims as landlord in any Inventory of
the Company or its Subsidiaries for unpaid
23
rents, grant access to the Administrative Agent for the repossession and sale of
such inventory and make other agreements relative thereto.
"L/C Application": as defined in subsection 3.5(a).
"L/C Obligations": the obligations of the Company to reimburse the
Issuing Lender for any payments made by the Issuing Lender under any Letter of
Credit that have not been reimbursed by the Company pursuant to subsection
3.8(a).
"L/C Participating Interest": an undivided participating interest
(equal to such Lender's Revolving Commitment Percentage) in the face amount of
each issued and outstanding Letter of Credit and the L/C Application relating
thereto.
"L/C Participation Certificate": the certificate in substantially
the form of Exhibit F.
"Lead Arrangers": collectively, ▇.▇. ▇▇▇▇▇▇ Securities Inc. and
CSFB, as joint lead arrangers and joint book managers.
"Lease Obligations": of the Company and its Subsidiaries, as of the
date of any determination thereof, the rental commitments of the Company and its
Subsidiaries determined on a consolidated basis, if any, under leases for real
and/or personal property (net of rental commitments from sub-leases thereof),
excluding however, obligations under Financing Leases.
"Leased Property": as defined in subsection 5.13.
"Lenders": as defined in the preamble hereto; provided, that
unless the context otherwise requires, each reference herein to the Lenders
shall be deemed to include any Conduit Lender.
"Letters of Credit": the collective reference to the Commercial
L/Cs and the Standby L/Cs; individually, a "Letter of Credit".
"Leverage Ratio": as defined in subsection 8.7.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction in respect of
any of the foregoing except for the filing of financing statements in connection
with Lease Obligations incurred by the Company or its Subsidiaries to the extent
that such financing statements relate to the property subject to such Lease
Obligations).
"Loans": the collective reference to the Swing Line Loans, the
Term Loans and the Revolving Loans; individually, a "Loan".
24
"Maturity Date": December 21, 2004.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds": the aggregate cash proceeds received by
Holdings, the Company or any Subsidiary of the Company in respect of:
(a) (i) any issuance or borrowing of any debt securities or
loans by the Company or any Subsidiary other than debt or loans permitted to be
incurred or borrowed pursuant to subsection 8.1 or (ii) any issuance of Capital
Stock;
(b) any Asset Sale, excluding (i) any net proceeds received
upon any condemnation or exercise of rights of eminent domain to the extent the
same shall be deemed not to constitute Net Proceeds pursuant to the proviso to
subsection 8.5(d) and (ii) any proceeds of insurance received upon any casualty
or loss;
(c) any cash received in respect of substantially
like-kind exchanges of property to the extent provided in the proviso to
subsection 8.5(e); and
(d) any cash payments received in respect of promissory
notes delivered to the Company or such Subsidiary in respect of an Asset Sale;
in each case net of (without duplication) (A) the amount required to repay any
Indebtedness (other than the Loans) secured by a Lien on any assets of the
Company or a Subsidiary of the Company that are collateral for any such debt
securities or loans that are sold or otherwise disposed of in connection with
such Asset Sale, (B) the reasonable expenses (including legal fees and brokers'
and underwriters' commissions, lenders fees or credit enhancement fees, in any
case, paid to third parties or, to the extent permitted hereby, Affiliates)
incurred in effecting such issuance or sale and (C) any taxes reasonably
attributable to such sale and reasonably estimated by the Company or such
Subsidiary to be actually payable.
"Net Recovery Percentage": as of the date of any determination
thereof, the net recovery percentage as determined by an independent appraisal
for a sale of the inventory of the Company and its Subsidiaries, performed on a
Going Out of Business Sale and Orderly Liquidation Sale basis.
"Non-Funding Lender": as defined in subsection 4.9(c).
"Orderly Liquidation Sale": as of the date of any determination
thereof, a professional opinion of the net proceeds that could be expected from
an orderly liquidation sale of the inventory of the Company and its
Subsidiaries, professionally managed, over a term of 12 weeks. It is based on
the premise that the Company and its Subsidiaries are in limited operation,
utilizing select current employees of the Company and its Subsidiaries, for the
purpose of liquidating the inventory. The inventory would be disposed of on a
piecemeal basis or through appropriate groupings, under a scenario whereby the
purchaser(s) are buying "as is where is" for cash or Cash Equivalents. The
inventory would be sold on a free on board warehouse basis. The
25
estimated net proceeds would take into consideration current economic trends and
the condition, location and marketability of such inventory.
"Notes": the collective reference to the Swing Line Note, the
Revolving Notes and the Term Loan Notes; each of the Notes, a "Note".
"Participants": as defined in subsection 11.6(b).
"Participating Lender": any Lender (other than the Issuing
Lender) with respect to its L/C Participating Interest in each Letter of
Credit.
"PartsAmerica Services Agreement": the services agreement among
PartsAmerica, Advance Stores and the Company and any related agreements, as
the same may be amended, modified, restated or supplemented from time to time.
"Payment Sharing Notice": a written notice from the Company or any
Lender informing the Administrative Agent that an Event of Default has occurred
and is continuing and directing the Administrative Agent to allocate payments
thereafter received from or on behalf of the Company in accordance with the
provisions of subsection 4.9.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.
"Permanent Subordinated Debt": (a) the Indebtedness under the
Permanent Subordinated Notes and (b) unsecured notes or debentures of the
Company, subordinated to the prior payment of the Loans and the other
obligations under the Credit Documents, that may be issued by the Company in
order to refinance the Permanent Subordinated Debt and/or prepay the Loans,
provided that (i) the maturity date, the interest rate, the scheduled
amortization, the final maturity and the subordination provisions shall be at
least as favorable to the Company and the Lenders as such Permanent Subordinated
Notes and the other terms and conditions thereof (including, without limitation,
the covenant and event of default provisions thereof but excluding any call
protection provisions) taken as a whole shall be at least as favorable to the
Company and the Lenders as such Permanent Subordinated Notes, (ii) no covenant
contained in this Agreement or any of the other Credit Documents would be
violated on the proposed issuance date after giving effect to (A) the issuance
of such notes or debentures, (B) the payment of all issuance costs, commissions,
discounts, redemption premiums and other fees and charges associated therewith,
(C) the use of proceeds thereof and (D) the redemption, repayment, retirement
and repurchase of all Indebtedness of the Company and its Subsidiaries to be
redeemed, repaid or repurchased in connection therewith and (iii) substantially
final drafts of the documentation governing any such notes or debentures,
showing the terms thereof, shall have been furnished to the Lenders at least 10
days prior to the date of issuance of such notes or debentures.
"Permanent Subordinated Note Indenture": the Indenture, dated as
of October 30, 1996, between the Company and The Bank of New York (as
successor to ▇▇▇▇▇ Fargo, N.A.), as trustee.
"Permanent Subordinated Notes": the 11% senior subordinated
notes due 2006 issued by the Company pursuant to the Permanent Subordinated
Note Indenture.
26
"Permitted Liens": Liens permitted to exist under subsection 8.2.
"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at any particular time, any employee benefit plan as defined
in Section 3(3) of ERISA and not excluded by Section 4(b) of ERISA and in
respect of which the Company or a Commonly Controlled Entity is (or, if such
plan were terminated at such time, would under Section 4069 of ERISA be deemed
to be) an "employer" as defined in Section 3(5) of ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Refunded Swing Line Loans": as defined in subsection 3.4(b).
"Register": as defined in subsection 11.6(d).
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System, as from time to time in effect.
"Rent Reserve": with respect to any store, distribution center,
regional distribution center or depot where any Inventory subject to Liens
arising by operation of law that has not been waived by a Landlord Lien Waiver
is located, a reserve equal to two (2) months' rent at such store, distribution
center, regional distribution center or depot.
"Reorganization": with respect to a Multiemployer Plan, the
condition that such Plan is in reorganization as such term is used in Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. Section 2615.
"Required Lenders": at a particular time, the holders of at least
51% of the sum of (i) the aggregate unpaid principal amount of the Term Loans,
if any, and (ii) the Revolving Commitments or, if the Revolving Commitments are
terminated, the aggregate unpaid principal amount of the Revolving Loans, and
participations in Swing Line Loans, the aggregate amount available to be drawn
at such time under all outstanding Letters of Credit and L/C Obligations. The
Term Loans and the Revolving Commitments of any Non-Funding Lender shall be
disregarded in determining Required Lenders at any time.
"Requirement of Law": as to any Person, the Articles or Certificate
of Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation, order, or determination of
an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property, or to which
such Person or any of its property is subject.
27
"Responsible Officer": with respect to any Person, the
president, chief executive officer, the chief operating officer, the chief
financial officer, treasurer, controller or any vice president of such Person.
"Return and Other Reserve": a reserve for damaged, defective or
warranty returns and other Inventory to be returned to vendors which shall be
updated and revised from time to time in the Administrative Agent's sole
reasonable discretion.
"Revolving Commitment": as to any Lender, its obligations to make
Revolving Loans to the Company pursuant to subsection 3.1, and to purchase its
L/C Participating Interest in any Letter of Credit, in an aggregate amount not
to exceed the amount set forth under such Lender's name in Schedule I opposite
the caption "Revolving Commitment" or in Schedule 1 to the Assignment and
Acceptance by which such Lender acquired its Revolving Commitment, as the same
may be reduced from time to time pursuant to subsection 4.3 or 4.4(b) or
adjusted pursuant to subsection 11.6(c); collectively, as to all the Lenders,
the "Revolving Commitments". The original aggregate principal amount of the
Revolving Commitments is $130,000,000.
"Revolving Commitment Percentage": as to any Lender at any time,
the percentage of the aggregate Revolving Commitments then constituted by
such Lender's Revolving Commitment.
"Revolving Commitment Period": the period from and including the
Closing Date to but not including the Revolving Termination Date.
"Revolving Lender": as defined in subsection 10.10.
"Revolving Loan" and "Revolving Loans": as defined in subsection
3.1(a).
"Revolving Note": as defined in subsection 4.13(e).
"Revolving Termination Date": the earlier of (a) December 21,
2004 and (b) such other date as the Revolving Commitments shall terminate
hereunder.
"Section 4.4 Lenders": at a particular time, the holders of (a) at
least 51% of the aggregate unpaid principal amount of the Term Loans, if any,
and (b) at least 51% of the Revolving Commitments or, if the Revolving
Commitments are terminated, the aggregate unpaid principal amount of the
Revolving Loans, and participations in Swing Line Loans and the aggregate amount
available to be drawn at such time under all outstanding Letters of Credit. The
Term Loans and the Revolving Commitments of any Non-Funding Lender shall be
disregarded in determining Section 4.4 Lenders at any time.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any property of any Person to secure the
obligations and liabilities of any Credit Party under any Credit Document.
"Senior Unsecured Debt": (a) the Indebtedness under the Senior
Unsecured Notes and (b) unsecured notes or debentures of the Company that may be
issued by the Company in
28
order to refinance the Senior Unsecured Debt and/or the repayment of the Loans,
provided that (i) the maturity date, the interest rate, the scheduled
amortization and the final maturity shall be at least as favorable to the
Company and the Lenders as such Senior Unsecured Notes and the other terms and
conditions thereof (including, without limitation, the covenant and event of
default provisions thereof but excluding any call protection provisions) taken
as a whole shall be at least as favorable to the Company and the Lenders as such
Senior Unsecured Notes, (ii) no covenant contained in this Agreement or any of
the other Credit Documents would be violated on the proposed issuance date after
giving effect to (A) the issuance of such notes or debentures, (B) the payment
of all issuance costs, commissions, discounts, redemption premiums and other
fees and charges associated therewith, (C) the use of proceeds thereof and (D)
the redemption, repayment, retirement and repurchase of all Indebtedness of the
Company and its Subsidiaries to be redeemed, repaid or repurchased in connection
therewith and (iii) substantially final drafts of the documentation governing
any such notes or debentures, showing the terms thereof, shall have been
furnished to the Lenders at least 10 days prior to the date of issuance of such
notes or debentures.
"Senior Unsecured Notes": as defined in the recitals hereto.
"Senior Unsecured Note Indenture": the Indenture, dated as of
December [ ], 2001, between the Company and The Bank of New York as trustee.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA and which is not a Multiemployer Plan.
"Slow Moving Reserve": a reserve equal to Inventory in excess of a
52 week supply based on sales for the preceding 52 weeks and determined on an
individual SKU basis excluding core Inventory which shall be updated and revised
from time to time in the Administrative Agent's sole reasonable discretion.
"Slow Moving Inventory": Inventory in excess of a 52 week supply
based on sales for the preceding 52 weeks and determined on an individual SKU
basis excluding core Inventory.
"Standby L/C": an irrevocable letter of credit under which the
Issuing Lender agrees to make payments in Dollars for the account of the
Company, on behalf of the Company or any Subsidiary thereof in respect of
obligations of the Company or such Subsidiary incurred pursuant to contracts
made or performances undertaken or to be undertaken or like matters relating to
contracts to which the Company or such Subsidiary is or proposes to become a
party in the ordinary course of the Company's or such Subsidiary's business,
including, without limiting the foregoing, for insurance purposes or in respect
of advance payments or as bid or performance bonds or for any other purpose for
which a standby letter of credit might customarily be issued.
"Subsection 4.11(d)(2) Certificate": as defined in subsection
4.11(d).
"Subsidiary": as to any Person, any corporation of which shares of
stock of each class having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of
29
such corporation are at the time owned by such Person or by one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person. (A Subsidiary shall be deemed wholly-owned by a Person who owns all
of the voting shares of stock of such Subsidiary having voting power under
ordinary circumstances to vote for directors, except for directors' qualifying
shares.) Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company; provided that any joint venture in which an investment is made
pursuant to subsection 8.6(j) shall at the option of the Company, so long as (a)
such investment is maintained in reliance on such subsection 8.6(j) and (b) such
joint venture is not included in the consolidated financial statements of the
Company, not be a "Subsidiary" of the Company for any purpose of this Agreement.
"Subsidiary Guarantor": each Subsidiary of the Company other
than any Excluded Foreign Subsidiary.
"Supermajority Lenders": at a particular time, the holders of at
least 66-2/3% of the sum of (i) the aggregate unpaid principal amount of the
Term Loans, if any, and (ii) the Revolving Commitments or, if the Revolving
Commitments are terminated, the aggregate unpaid principal amount of the
Revolving Loans, and participations in Swing Line Loans and the aggregate amount
available to be drawn at such time under all outstanding Letters of Credit. The
Term Loans and the Revolving Commitments of any Non-Funding Lender shall be
disregarded in determining Supermajority Lenders at any time.
"Supplemental Reporting": as described in Schedule 1 to the Form
of Borrowing Base Certificate.
"Supply Inventory": Inventory that is supplier, supply type
goods or designated/classified as supply inventory by the Company.
"Swing Line Commitment": the Swing Line Lender's obligation to
make Swing Line Loans pursuant to subsection 3.4.
"Swing Line Lender": Chase in its capacity as lender of the
Swing Line Loans.
"Swing Line Loan Participation Certificate": a certificate in
substantially the form of Exhibit G
"Swing Line Loans": as defined in subsection 3.4(a).
"Swing Line Note": as defined in subsection 4.13(e).
"Syndication Agent": CSFB, in its capacity as syndication agent
hereunder.
"Synthetic Purchase Agreement" shall mean any agreement pursuant to
which the Company or any of its Subsidiaries is or may become obligated to make
(a) any payment in connection with the purchase by any third party from a Person
other than the Company or any of its Subsidiaries of any capital stock of the
Company or any of its Subsidiaries or any Indebtedness referred to in subsection
8.10 (other than in connection with any such payment
30
which the Company or any of its Subsidiaries would be permitted to make pursuant
to subsection 8.10 or 8.12, as applicable) or (b) any payment (except as
otherwise expressly permitted by subsection 8.10 or 8.12) the amount of which is
determined by reference to the price or value at any time of any such capital
stock or Indebtedness; provided, that no phantom stock or similar plan providing
for payments only to current or former directors, officers or employees of the
Company or any of its Subsidiaries (or to their heirs or estates) shall be
deemed to be a Synthetic Purchase Agreement;
"Term Loan Commitment": as to any Lender, its obligation to make a
Term Loan to the Company pursuant to subsection 2.1 in an aggregate amount not
to exceed the amount set forth under such Lender's name in Schedule I opposite
the caption "Term Loan Commitment" or in Schedule 1 to the Assignment and
Acceptance pursuant to which a Lender acquires its Term Loan Commitment, as the
same may be adjusted pursuant to subsection 11.6(c); collectively, as to all the
Lenders, the "Term Loan Commitments". The original aggregate principal amount of
the Term Loan Commitments is $170,000,000.
"Term Loan Commitment Percentage": as to any Lender at any time,
the percentage of the aggregate Term Loan Commitments then constituted by
such Lender's Term Loan Commitment.
"Term Loan Lenders": at any time, any Lender with a Term Loan
Commitment or Term Loan.
"Term Loan Note": as defined in subsection 4.13(e).
"Term Loans": as defined in subsection 2.1.
"Transaction": as defined in the recitals hereto.
"Transferee": as defined in subsection 11.6(f).
"Type": as to any Loan, its nature as an Alternate Base Rate
Loan or Eurodollar Loan.
"UBS": UBS AG, Stamford Branch.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, or, as the case may be, International Standby Practices
ISP 98, International Chamber of Commerce Publication No. 59 and, in either
case, any amendments thereof.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Notes, any other Credit Document or any certificate or other
document made or delivered pursuant hereto.
(b) As used herein and in the other Credit Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Company and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in
31
Section 1.1, to the extent not defined, shall have the respective meanings given
to them under GAAP. To the extent there are any changes in GAAP from the date of
this Agreement, the financial covenants set forth herein at the option of the
Company will either continue to be determined in accordance with GAAP in effect
on the Closing Date, as applicable, or be adjusted or reset to reflect such
changes in GAAP, such adjustments or resets to be mutually agreed to by the
Company and the Administrative Agent. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation",
the word "incur" shall be construed to mean incur, create, issue, assume or
become liable in respect of (and the words "incurred" and "incurrence" shall
have correlative meanings), the words "asset" and "property" shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including Capital Stock, securities, accounts
and leasehold interests, and references to agreements or other Contractual
Obligations shall, unless otherwise specified, be deemed to refer to such
agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.
(c) The words "hereof", "herein" and "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,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to the singular and plural forms of such terms.
Section 2. TERM LOANS
2.1 Term Loan Commitments. Subject to the terms and conditions
hereof, each Lender severally agrees to make a loan in Dollars (individually, a
"Term Loan"; and collectively, the "Term Loans") to the Company on the Closing
Date, in an aggregate principal amount equal to such Lender's Term Loan
Commitment. The Term Loans shall be made initially as Alternate Base Rate Loans.
2.2 Repayment of Term Loans. The Company shall repay the Term
Loans on the Maturity Date or earlier as provided in subsection 4.4.
2.3 Use of Proceeds. The proceeds of the Term Loans, together with
part of the proceeds of the Revolving Loans, will be used to finance in part the
Transaction and to pay certain of the fees, expenses and financing costs related
to the Transaction.
Section 3. AMOUNT AND TERMS OF REVOLVING COMMITMENTS
3.1 Revolving Commitments. (a) Subject to the terms and conditions
hereof, each Lender severally agrees to the extent of its Revolving Commitment
(including such amount of the Revolving Loans (as defined below) outstanding on
the Closing Date) to extend credit to the Company from time to time on any
Borrowing Date during the Revolving Commitment Period (i) by purchasing an L/C
Participating Interest in each Letter of Credit issued by the Issuing Lender and
(ii) by making loans in Dollars (individually, such a Loan is a "Revolving
Loan", and collectively such Loans are the "Revolving Loans") to the Company
from time to time. Notwithstanding the above, (A) in no event shall any Letter
of Credit be issued if after
32
giving effect thereto the sum of the undrawn amount of all outstanding Letters
of Credit and the amount of all L/C Obligations would exceed $15,000,000 and (B)
in no event shall any Revolving Loans be made, or Letters of Credit be issued,
(x) if the aggregate amount of the Revolving Loans to be made or Letters of
Credit to be issued would, after giving effect to the use of proceeds, if any,
thereof, exceed the aggregate Available Revolving Commitments or (y) if, after
giving effect to such Revolving Loan or Letter of Credit, a Borrowing Base
Deficiency would exist. During the Revolving Commitment Period, the Company may
use the Revolving Commitments by borrowing, prepaying the Revolving Loans in
whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof, and/or by having the Issuing Lender issue Letters of Credit,
having such Letters of Credit expire undrawn upon or if drawn upon, reimbursing
the Issuing Lender for such drawing, and having the Issuing Lender issue new
Letters of Credit.
(b) The Revolving Loans made on the Closing Date shall be made
initially as Alternate Base Rate Loans. Each borrowing of Revolving Loans
pursuant to the Revolving Commitments shall be in an aggregate principal amount
of the lesser of (i) $1,000,000 or a whole multiple of $100,000 in excess
thereof, in the case of Alternate Base Rate Loans, and $2,000,000 or a whole
multiple of $1,000,000 in excess thereof, in the case of Eurodollar Loans and
(ii) the Available Revolving Commitments, except that any borrowing of Revolving
Loans to be used solely to pay a like amount of Swing Line Loans may be in the
aggregate principal amount of such Swing Line Loans.
3.2 Commitment Fee. The Company agrees to pay to the Administrative
Agent for the account of each Lender (other than any Non-Funding Lender) a
commitment fee from and including the Closing Date to and including the
Revolving Termination Date, computed at the Commitment Fee Rate on the average
daily amount of the Available Revolving Commitment of such Lender during the
period for which payment is made (whether or not the Company shall have
satisfied the applicable conditions to borrowing or issuance of a Letter of
Credit set forth in Section 6). Such commitment fee shall be payable quarterly
in arrears on the last day of each March, June, September and December and on
the Revolving Termination Date, commencing on the first such date to occur on or
following the Closing Date (or, if earlier, the Revolving Termination Date).
3.3 Proceeds of Revolving Loans. The Company shall use the
proceeds of Revolving Loans (a) as set forth in subsection 2.3 and (b) for
general corporate purposes of the Company and its Subsidiaries.
3.4 Swing Line Commitment. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees, so long as the Administrative Agent has
not received notice that an Event of Default has occurred and is continuing, to
make swing line loans (individually, a "Swing Line Loan"; collectively, the
"Swing Line Loans") to the Company from time to time during the Revolving
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed $15,000,000, provided that no Swing Line Loan may be made if the
aggregate principal amount of the Swing Line Loans to be made would exceed the
aggregate Available Revolving Commitments at such time and provided, further,
that no Swing Line Loan may be made if, after giving effect thereto, a Borrowing
Base Deficiency would exist. Amounts borrowed by the Company under this
subsection 3.4 may be repaid and, through but excluding
33
the Revolving Termination Date, reborrowed. All Swing Line Loans shall be made
as Alternate Base Rate Loans and shall not be entitled to be converted into
Eurodollar Loans. The Company shall give the Swing Line Lender irrevocable
notice (which notice must be received by the Swing Line Lender prior to 3:00
p.m., New York City time) on the requested Borrowing Date specifying the amount
of each requested Swing Line Loan, which shall be in an aggregate minimum amount
of $250,000 or a whole multiple of $100,000 in excess thereof. The proceeds of
each Swing Line Loan will be made available by the Swing Line Lender to the
Company by crediting the account of the Company at the office of the Swing Line
Lender with such proceeds. The proceeds of Swing Line Loans may be used solely
for the purposes referred to in subsection 3.3.
(b) The Swing Line Lender at any time in its sole and absolute
discretion may, and on the fifteenth day (or if such day is not a Business Day,
the next Business Day) and last Business Day of each month shall, on behalf of
the Company (which hereby irrevocably directs the Swing Line Lender to act on
its behalf) request each Lender, including the Swing Line Lender, to make a
Revolving Loan in an amount equal to such Lender's Revolving Commitment
Percentage of the amount of the Swing Line Loans (the "Refunded Swing Line
Loans") outstanding on the date such notice is given. Unless any of the events
described in paragraph (f) of Section 9 shall have occurred (in which event the
procedures of paragraph (c) of this subsection 3.4 shall apply) each Lender
shall make the proceeds of its Revolving Loan available to the Swing Line Lender
for the account of the Swing Line Lender at the Alternate Base Rate Lending
Office of the Swing Line Lender prior to 2:00 p.m. (New York City time) in funds
immediately available on the Business Day next succeeding the date such notice
is given. The proceeds of such Revolving Loans shall be immediately applied to
repay the Refunded Swing Line Loans.
(c) If prior to the making of a Revolving Loan pursuant to paragraph
(b) of this subsection 3.4 one of the events described in paragraph (f) of
Section 9 shall have occurred, each Lender will, on the date such Loan was to
have been made, purchase an undivided participating interest in the Refunded
Swing Line Loan in an amount equal to its Revolving Commitment Percentage of
such Refunded Swing Line Loan. Each Lender will immediately transfer to the
Swing Line Lender in immediately available funds, the amount of its
participation and upon receipt thereof the Swing Line Lender will deliver to
such Lender a Swing Line Loan Participation Certificate dated the date of
receipt of such funds and in such amount.
(d) Whenever, at any time after the Swing Line Lender has received
from any Lender such Lender's participating interest in a Refunded Swing Line
Loan, the Swing Line Lender receives any payment on account thereof, the Swing
Line Lender will distribute to such Lender its participating interest in such
amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's participating interest was outstanding
and funded) in like funds as received; provided, however, that in the event that
such payment received by the Swing Line Lender is required to be returned, such
Lender will return to the Swing Line Lender any portion thereof previously
distributed by the Swing Line Lender to it in like funds as such payment is
required to be returned by the Swing Line Lender.
(e) Each Lender's obligation to purchase participating interests
pursuant to subsection 3.4(c) shall be absolute and unconditional and shall not
be affected by any
34
circumstance, including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against the Swing
Line Lender, the Company or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of an Event of Default; (iii) any adverse change in
the condition (financial or otherwise) of the Company; (iv) any breach of this
Agreement by the Company or any other Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
3.5 Issuance of Letters of Credit. (a) The Company may from time to
time request the Issuing Lender to issue a Standby L/C or a Commercial L/C by
delivering to the Issuing Lender at its address specified in subsection 11.2 or
as otherwise agreed between the Company and the Issuing Lender a letter of
credit application in the Issuing Lender's then customary form (the "L/C
Application") completed to the satisfaction of the Issuing Lender, together with
the proposed form of such Letter of Credit (which shall comply with the
applicable requirements of paragraph (b) below) and such other certificates,
documents and other papers and information as the Issuing Lender may reasonably
request; provided that if the Issuing Lender informs the Company that it is for
any reason unable to open such Letter of Credit, the Company may request any
Lender to open such Letter of Credit upon the same terms offered to the Issuing
Lender and each reference to the Issuing Lender for purposes of subsections 3.5
through 3.14, 6.1 and 6.2 shall be deemed to be a reference to such Issuing
Lender.
(b) Each Standby L/C and Commercial L/C issued hereunder shall,
among other things, (i) be in such form requested by the Company as shall be
acceptable to the Issuing Lender in its sole reasonable discretion and (ii) in
the case of each Standby L/C, have an expiry date occurring not later than 365
days after the date of issuance of such Standby L/C and, in the case of each
Commercial L/C, have an expiry date occurring not later than 120 days after the
date of issuance of such Commercial L/C (or such longer time as shall be agreed
to by the Issuing Lender thereof, in its sole reasonable discretion) and, in all
cases, may be automatically renewed on its expiry date for an additional period
equal to the initial term but in no case shall any Letter of Credit have an
expiry date occurring later than three Business Days before the Revolving
Termination Date. Each L/C Application and each Letter of Credit shall be
subject to the Uniform Customs and, to the extent not inconsistent therewith,
the laws of the State of New York, in the case of JPMorgan Chase Bank and any of
its Affiliates, acting as Issuing Lender.
(c) Notwithstanding anything to the contrary herein, the letters of
credit listed on Schedule 3.5(c) shall be deemed to have been issued hereunder
and deemed to be Letters of Credit for all purposes hereof.
3.6 Participating Interests. Effective in the case of each Standby
L/C and Commercial L/C as of the date of the opening thereof, the Issuing Lender
agrees to allot and does allot, to itself and each other Lender, and each Lender
severally and irrevocably agrees to take and does take in such Letter of Credit
and the related L/C Application, an L/C Participating Interest in a percentage
equal to such Lender's Revolving Commitment Percentage.
3.7 Procedure for Opening Letters of Credit. The Issuing Lender will
notify the Administrative Agent and each Lender after the end of each calendar
month of any L/C Applications received by the Issuing Lender from the Company
during such month. Upon receipt of any L/C Application from the Company, the
Issuing Lender will process such L/C
35
Application, and the other certificates, documents and other papers delivered to
the Issuing Lender in connection therewith, in accordance with its customary
procedures and, subject to the terms and conditions hereof, shall promptly open
such Letter of Credit by issuing the original of such Letter of Credit to the
beneficiary thereof and by furnishing a copy thereof to the Company, provided
that no such Letter of Credit shall be issued if subsection 3.1 would be
violated thereby.
3.8 Payments in Respect of Letters of Credit. (a) The Company agrees
forthwith upon demand by the Issuing Lender and otherwise in accordance with the
terms of the L/C Application relating thereto (i) to reimburse the Issuing
Lender for any payment made by the Issuing Lender under any Letter of Credit
issued for the account of the Company and (ii) to pay interest on any
unreimbursed portion of any such payment from the date of such payment until
reimbursement in full thereof at a rate per annum equal to (A) on or prior to
the date which is one Business Day after the day on which the Issuing Lender
demands reimbursement from the Company for such payment, the Alternate Base Rate
plus the Applicable Margin for the Revolving Loans and (B) thereafter, the
Alternate Base Rate plus the Applicable Margin for Revolving Loans plus 2%.
(b) In the event that the Issuing Lender makes a payment under any
Letter of Credit and is not reimbursed in full therefor forthwith upon demand of
the Issuing Lender, and otherwise in accordance with the terms of the L/C
Application relating to such Letter of Credit, the Issuing Lender will promptly
notify each other Lender. Forthwith upon its receipt of any such notice, each
other Lender will transfer to the Issuing Lender, in immediately available
funds, an amount equal to such other Lender's pro rata share of the L/C
Obligation arising from such unreimbursed payment. Promptly, upon its receipt
from such other Lender of such amount, the Issuing Lender will complete, execute
and deliver to such other Lender an L/C Participation Certificate dated the date
of such receipt and in such amount.
(c) Whenever, at any time after the Issuing Lender has made a
payment under any Letter of Credit and has received from any other Lender such
other Lender's pro rata share of the L/C Obligation arising therefrom, the
Issuing Lender receives any reimbursement on account of such L/C Obligation or
any payment of interest on account thereof, the Issuing Lender will promptly
distribute to such other Lender its pro rata share thereof in like funds as
received; provided, however, that in the event that the receipt by the Issuing
Lender of such reimbursement or such payment of interest (as the case may be) is
required to be returned, such other Lender will return to the Issuing Lender any
portion thereof previously distributed by the Issuing Lender to it in like funds
as such reimbursement or payment is required to be returned by the Issuing
Lender.
3.9 Letter of Credit Fees. (a) In lieu of any letter of credit
commissions and fees provided for in any L/C Application relating to Standby or
Commercial L/Cs (other than standard issuance, amendment and negotiation fees),
the Company agrees to pay the Administrative Agent, for the account of the
Issuing Lender and the Participating Lenders, with respect to each Standby or
Commercial L/C issued for the account of the Company, a Standby or Commercial
L/C fee, as the case may be, equal to the Applicable Margin for Revolving Loans
which are Eurodollar Loans (of which the Issuing Lender shall retain for its own
account, as the issuing bank and not on account of its L/C Participating
Interest therein, 1/4 of 1% per annum) on the daily average amount available to
be drawn under each Standby L/C in the case of a
36
Standby L/C and on the maximum face amount of each Commercial L/C in the case of
a Commercial L/C, in either case payable, in arrears, on the last day of each
fiscal quarter of the Company. The Administrative Agent will disburse any
Standby or Commercial L/C fees received pursuant to this subsection 3.9(a) to
the respective Lenders and the Issuing Lender promptly following the receipt of
any such fees in the case of a Standby L/C and, in the case of a Commercial L/C,
promptly following the end of the calendar month in which such Commercial L/C
fees were received. Notwithstanding the foregoing, the Company agrees to pay
standard issuance, amendment and negotiation fees to the Issuing Lender.
(b) For purposes of any payment of fees required pursuant to this
subsection 3.9, the Administrative Agent agrees to provide to the Company a
statement of any such fees to be so paid; provided that the failure by the
Administrative Agent to provide the Company with any such invoice shall not
relieve the Company of its obligation to pay such fees.
3.10 Letter of Credit Reserves. (a) If any Change in Law shall
either (i) impose, modify, deem or make applicable any reserve, special deposit,
assessment or similar requirement against letters of credit issued by the
Issuing Lender or (ii) impose on the Issuing Lender any other condition
regarding this Agreement (with respect to Letters of Credit) or any Letter of
Credit, and the result of any event referred to in clause (i) or (ii) above
shall be to increase the cost of the Issuing Lender of issuing or maintaining
any Letter of Credit (which increase in cost shall be the result of the Issuing
Lender's reasonable allocation of the aggregate of such cost increases resulting
from such events), then, upon demand by the Issuing Lender, the Company shall
immediately pay to the Issuing Lender, from time to time as specified by the
Issuing Lender, additional amounts which shall be sufficient to compensate the
Issuing Lender for such increased cost, together with interest on each such
amount from the date demanded until payment in full thereof at a rate per annum
equal to the rate applicable to Alternate Base Rate Loans pursuant to subsection
4.5(b). The Company shall not be required to make any payments to the Issuing
Lender for any additional amounts pursuant to this subsection 3.10(a) unless the
Issuing Lender has given written notice to the Company of its intent to request
such payments prior to or within 60 days after the date on which the Issuing
Lender became entitled to claim such amounts. A certificate, setting forth in
reasonable detail the calculation of the amounts involved, submitted by the
Issuing Lender to the Company concurrently with any such demand by the Issuing
Lender, shall be conclusive, absent manifest error, as to the amount thereof.
(b) In the event that any Change in Law with respect to the Issuing
Lender shall, in the opinion of the Issuing Lender, require that any obligation
under any Letter of Credit be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
the Issuing Lender or any corporation controlling the Issuing Lender, and such
Change in Law shall have the effect of reducing the rate of return on the
Issuing Lender's or such corporation's capital, as the case may be, as a
consequence of the Issuing Lender's obligations under such Letter of Credit to a
level below that which the Issuing Lender or such corporation, as the case may
be, could have achieved but for such Change in Law (taking into account the
Issuing Lender's or such corporation's policies, as the case may be, with
respect to capital adequacy) by an amount deemed by the Issuing Lender to be
material, then from time to time following notice by the Issuing Lender to the
Company of such Change in Law, within 15 days after demand by the Issuing
Lender, the Company shall pay to the Issuing Lender such additional amount or
amounts as will compensate the Issuing Lender or such corporation, as the
37
case may be, for such reduction. The Issuing Lender agrees that, upon the
occurrence of any event giving rise to the operation of paragraph (a) or (b) of
this subsection 3.10 with respect to the Issuing Lender, it will, if requested
by the Company and to the extent permitted by law or by the relevant
Governmental Authority, endeavor in good faith to avoid or minimize the increase
in costs or reduction in payments resulting from such event; provided, however,
that such avoidance or minimization can be made in such a manner that the
Issuing Lender, in its sole determination, suffers no economic, legal or
regulatory disadvantage. The Company shall not be required to make any payments
to the Issuing Lender for any additional amounts pursuant to this subsection
3.10(b) unless the Issuing Lender has given written notice to the Company of its
intent to request such payments prior to or within 60 days after the date on
which the Issuing Lender became entitled to claim such amounts. A certificate,
in reasonable detail setting forth the calculation of the amounts involved,
submitted by the Issuing Lender to the Company concurrently with any such demand
by the Issuing Lender, shall be conclusive, absent manifest error, as to the
amount thereof.
(c) The Company and each Participating Lender agrees that the
provisions of the foregoing paragraphs (a) and (b) shall apply equally to each
Participating Lender in respect of its L/C Participating Interest in such Letter
of Credit, as if the references in such paragraphs and provisions referred to,
where applicable, such Participating Lender or, in the case of paragraph (b),
any corporation controlling such Participating Lender.
3.11 Further Assurances. The Company hereby agrees, from time to
time, to do and perform any and all acts and to execute any and all further
instruments reasonably requested by the Issuing Lender more fully to effect the
purposes of this Agreement and the issuance of Letters of Credit hereunder.
3.12 Obligations Absolute. The payment obligations of the Company
under this Agreement with respect to the Letters of Credit shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation,
the following circumstances:
(i) the existence of any claim, set-off, defense or other right
which the Company or any of its Subsidiaries may have at any time against
any beneficiary, or any transferee, of any Letter of Credit (or any
Persons for whom any such beneficiary or any such transferee may be
acting), the Issuing Lender, the Administrative Agent or any Lender, or
any other Person, whether in connection with this Agreement, any Credit
Document, the transactions contemplated herein, or any unrelated
transaction;
(ii) any statement or any other document presented under any Letter
of Credit proving to be forged, fraudulent or invalid or any statement
therein being untrue or inaccurate in any respect;
(iii) payment by the Issuing Lender under any Letter of Credit
against presentation of a draft or certificate or other document which
does not comply with the terms of such Letter of Credit or is insufficient
in any respect, except where such payment constitutes gross negligence or
willful misconduct on the part of the Issuing Lender; or
38
(iv) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing, except for any such circumstances or
happening constituting gross negligence or willful misconduct on the part
of the Issuing Lender.
3.13 Assignments. No Participating Lender's participation in any
Letter of Credit or any of its rights or duties hereunder shall be subdivided,
assigned or transferred (other than in connection with a transfer of part or all
of such Participating Lender's Revolving Commitment in accordance with
subsection 11.6(c)) without the prior written consent of the Issuing Lender,
which consent will not be unreasonably withheld. Such consent may be given or
withheld without the consent or agreement of any other Participating Lender.
Notwithstanding the foregoing, a Participating Lender may subparticipate its L/C
Participating Interest without obtaining the prior consent or agreement of the
Issuing Lender.
3.14 Participations. Each Lender's obligation to purchase
participating interests pursuant to subsection 3.6 shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Issuing Lender, the Company or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of an Event
of Default; (iii) any adverse change in the condition (financial or otherwise)
of the Company; (iv) any breach of this Agreement by the Company or any other
Lender; or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.
Section 4. GENERAL PROVISIONS APPLICABLE TO LOANS
4.1 Procedure for Borrowing. (a) The Company may borrow under the
Commitments on any Business Day, provided that, with respect to any borrowing,
the Company shall give the Administrative Agent irrevocable notice (which notice
must be received by the Administrative Agent prior to 2:00 p.m. (or, with
respect to Swing Line Loans, 3:00 p.m.), New York City time), (i) three Business
Days prior to the requested Borrowing Date if all or any part of the Loans are
to be Eurodollar Loans and (ii) one Business Day prior to the requested
Borrowing Date (or, in the case of Swing Line Loans, on the requested Borrowing
Date) if the borrowing is to be solely of Alternate Base Rate Loans and
specifying (A) the amount of the borrowing, (B) whether such Loans are initially
to be Eurodollar Loans or Alternate Base Rate Loans or a combination thereof,
(C) if the borrowing is to be entirely or partly Eurodollar Loans, the length of
the Interest Period for such Eurodollar Loans and (D) whether the Loan is a Term
Loan (with respect to Loans to be made on the Closing Date), a Swing Line Loan
or a Revolving Loan; provided, however, that the Loans made on the Closing Date
shall be made initially as Alternate Base Rate Loans. Upon receipt of such
notice the Administrative Agent shall promptly notify each Lender. Not later
than 2:00 p.m., New York City time, on the Borrowing Date specified in such
notice, each Lender shall make available to the Administrative Agent at the
office of the Administrative Agent specified in subsection 11.2 (or at such
other location as the Administrative Agent may direct) an amount in immediately
available funds equal to the amount of the Loan to be made by such Lender
(except that proceeds of Swing Line Loans will be made available to the Company
in accordance with subsection 3.4(a)). Loan proceeds received by the
Administrative Agent hereunder shall promptly be made available to the Company
by the Administrative Agent's crediting the account of the Company, at the
office of the Administrative Agent specified in subsection 11.2, with the
aggregate amount actually received by the
39
Administrative Agent from the Lenders and in like funds as received by the
Administrative Agent.
(b) Any borrowing of Eurodollar Loans hereunder shall be in such
amounts and be made pursuant to such elections so that, after giving effect
thereto, (i) the aggregate principal amount of all Eurodollar Loans having the
same Interest Period shall not be less than $2,000,000 or a whole multiple of
$1,000,000 in excess thereof and (ii) no more than sixteen Interest Periods
shall be in effect at any one time.
4.2 Conversion and Continuation Options. (a) Subject to subsection
4.12, the Company may elect from time to time to convert Eurodollar Loans into
Alternate Base Rate Loans by giving the Administrative Agent irrevocable notice
of such election, to be received by the Administrative Agent prior to 2:00 p.m.,
New York City time, at least three Business Days prior to the proposed
conversion date. The Company may elect from time to time to convert all or a
portion of the Alternate Base Rate Loans (other than Swing Line Loans) then
outstanding to Eurodollar Loans by giving the Administrative Agent irrevocable
notice of such election, to be received by the Administrative Agent prior to
2:00 p.m., New York City time, at least three Business Days prior to the
proposed conversion date, specifying the Interest Period selected therefor, and,
unless a Default or Event of Default has occurred and is continuing and the
Administrative Agent or the Required Lenders have given written notice thereof
to the Company, such conversion shall be made on the requested conversion date
or, if such requested conversion date is not a Business Day, on the next
succeeding Business Day. Upon receipt of any notice pursuant to this subsection
4.2, the Administrative Agent shall promptly notify each Lender thereof. All or
any part of the outstanding Loans (other than Swing Line Loans) may be converted
as provided herein, provided that partial conversions of Alternate Base Loans
shall be in the aggregate principal amount of $1,000,000 or a whole multiple of
$100,000 in excess thereof and the aggregate principal amount of the resulting
Eurodollar Loans outstanding in respect of any one Interest Period shall be at
least $2,000,000 or a whole multiple of $1,000,000 in excess thereof.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Company giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Loans,
provided that no Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Administrative Agent or the
Required Lenders have, by written notice to the Company, determined that such a
continuation is not appropriate, (ii) if, after giving effect thereto,
subsection 4.1(b) would be contravened or (iii) after the date that is one month
prior to the Revolving Termination Date (in the case of continuations of
Revolving Loans) or the Maturity Date of the Term Loans, as applicable.
(c) Notwithstanding anything in this Agreement to the contrary,
unless otherwise agreed to by the Administrative Agent, no Loan shall be made
as, converted to or continued as a Eurodollar Loan during the period commencing
on the Closing Date and ending on the 33rd day following the Closing Date;
provided that all or a portion of the Loans made on the Closing Date may, at the
Company's option, subject to the other provisions of this Agreement, be
converted to
40
Eurodollar Loans with an Interest Period of three months on or after the third
day following the Closing Date.
4.3 Changes of Commitment Amounts. (a) The Company shall have the
right, upon not less than three Business Days' notice to the Administrative
Agent, to terminate or, from time to time, permanently reduce the Revolving
Commitments, subject to the provisions of this subsection 4.3. To the extent, if
any, that the sum of the amount of the Revolving Loans, Swing Line Loans and L/C
Obligations then outstanding and the amounts available to be drawn under
outstanding Letters of Credit exceeds the amount of the Revolving Commitments as
then reduced, the Company shall be required to make a prepayment equal to such
excess amount, the proceeds of which shall be applied first, to payment of the
Swing Line Loans then outstanding, second, to payment of the Revolving Loans
then outstanding, third, to payment of any L/C Obligations then outstanding, and
fourth, to cash collateralize any outstanding Letters of Credit on terms
reasonably satisfactory to the Administrative Agent. Any such termination of the
Revolving Commitments shall be accompanied by prepayment in full of the
Revolving Loans, Swing Line Loans and L/C Obligations then outstanding and by
cash collateralization of any outstanding Letters of Credit on terms reasonably
satisfactory to the Administrative Agent. Upon termination of the Revolving
Commitments, any Letter of Credit then outstanding which has been so cash
collateralized shall no longer be considered a "Letter of Credit" as defined in
subsection 1.1 and any L/C Participating Interests heretofore granted by the
Issuing Lender to the Lenders in such Letter of Credit shall be deemed
terminated (subject to automatic reinstatement in the event that such cash
collateral is returned and the Issuing Lender is not fully reimbursed for any
such L/C Obligations) but the Letter of Credit fees payable under subsection 3.9
shall continue to accrue to the Issuing Lender and the Participating Lenders
(or, in the event of any such automatic reinstatement, as provided in subsection
3.9) with respect to such Letter of Credit until the expiry thereof.
(b) In the case of termination of the Revolving Commitments,
interest accrued on the amount of any prepayment relating thereto and any unpaid
commitment fee accrued hereunder shall be paid on the date of such termination.
Any such partial reduction of the Revolving Commitments shall be in an amount of
$2,000,000, or a whole multiple of $1,000,000 in excess thereof, and shall, in
each case, reduce permanently the amount of the Revolving Commitments then in
effect.
4.4 Optional and Mandatory Prepayments; Repayments of Term
Loans.
(a) Subject to subsection 4.12, the Company may at any time and from
time to time prepay Loans, in whole or in part, without premium or penalty, upon
at least one Business Day's (or, in the case of Swing Line Loans, by 2:00 p.m.,
New York City time, on the same Business Day) irrevocable notice to the
Administrative Agent in the case of Alternate Base Rate Loans, and three
Business Days' irrevocable notice to the Administrative Agent in the case of
Eurodollar Loans, specifying the date and amount of prepayment and whether the
prepayment is of Revolving Loans or Term Loans. Upon receipt of such notice the
Administrative Agent shall promptly notify each Lender thereof. 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. Partial prepayments (i) of Term Loans shall be in an aggregate
principal amount equal to the lesser of (A) (I) $2,000,000, or a whole multiple
of $1,000,000 in excess
41
thereof with respect to Eurodollar Loans or (II) $1,000,000, or a whole multiple
of $100,000 in excess thereof with respect to Alternate Base Rate Loans and (B)
the aggregate unpaid principal amount of the Term Loans and (ii) of Revolving
Loans shall be in an aggregate principal amount equal to the lesser of (A) (I)
$2,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to
Eurodollar Loans or (II) $1,000,000, or a whole multiple of $100,000 in excess
thereof with respect to Alternate Base Rate Loans and (B) the aggregate unpaid
principal amount of the Revolving Loans, as the case may be.
(b) (i) If Holdings, the Company or any of its Subsidiaries shall
issue any Capital Stock subsequent to the Closing Date, 50% of the Net Proceeds
thereof (excluding amounts provided by the Investors or by management of the
Company or realized from the conversion of the Convertible Securities) shall be
promptly applied ratably toward the prepayment of the Loans and reduction of the
Commitments as set forth in clause (v) of this subsection 4.4(b); provided,
however, that so long as the ratio of Consolidated Senior Funded Indebtedness to
Consolidated EBITDA for the four fiscal quarters most recently ended prior to
such issuance for which financial information is available shall be at or less
than 3.25 to 1, the percentage of Net Proceeds derived from the issuance of
Capital Stock required to be applied toward the prepayment of the Term Loans
shall be reduced to zero.
(ii) If the Company or any of its Subsidiaries shall incur or permit
the incurrence of any Indebtedness subsequent to the Closing Date (other than
Indebtedness permitted pursuant to subsections 8.1(b), (c), (d) (to the extent
the Net Proceeds of such Indebtedness are used to repay, redeem, retire or
repurchase the then outstanding Permanent Subordinated Debt in accordance with
subsection 8.1(d)), (e), (f), (g), (h), (i), (j) and (k) and subordinated
Indebtedness provided by the Investors), 100% of the Net Proceeds thereof shall
be promptly applied toward the prepayment of the Loans and reduction of the
Commitments as set forth in clause (v) of this subsection 4.4(b).
(iii) If the Company or any of its Subsidiaries shall receive Net
Proceeds from any Asset Sale subsequent to the Closing Date, such Net Proceeds
shall be promptly applied toward the prepayment of the Loans and reduction of
the Commitments as set forth in clause (v) of this subsection 4.4(b); provided,
that such Net Proceeds need not be applied to the prepayment of the Loans and
the reduction of the Commitments until the earlier of the date that the
aggregate amount of Net Proceeds received by the Company or any of its
Subsidiaries from any Asset Sales exceeds $4,000,000 since the Closing Date (and
has not yet been applied to the prepayment of the Loans and the reduction of the
Commitments hereunder) and the date which is 300 days after the last application
of Net Proceeds pursuant to this subsection 4.4(b)(iii).
(iv) If there shall be Excess Cash Flow as at the end of any fiscal
year commencing with the Company's fiscal year beginning February 4, 2002, 50%
of such Excess Cash Flow, less the portion of any Excess Cash Flow which has
been previously applied toward prepayments of the Loans and reduction of the
Commitments pursuant to this clause (iv), shall be applied toward the prepayment
of the Loans and reduction of the Commitments as set forth in clause (v) of this
subsection 4.4(b); provided, however, so long as the ratio of Consolidated
Senior Funded Indebtedness to Consolidated EBITDA for the four fiscal quarters
ending at the end of any fiscal year shall be at or less than 3.25 to 1, the
amount of Excess Cash Flow required
42
to be applied toward the prepayment of the Loans and reduction of the
Commitments pursuant to this subsection 4.4(b)(iv) shall be reduced to zero.
(v) Except as otherwise provided in this subsection 4.4(b),
prepayments made pursuant to this subsection 4.4(b) shall be applied by the
Company, pro rata to the prepayment of the Term Loans and to the permanent
reduction of the Revolving Commitments. Any such reduction of the Revolving
Commitments shall be accompanied by prepayment of, first, the Swing Line Loans,
second, the Revolving Loans and, third, the L/C Obligations to the extent, if
any, that the sum of the aggregate outstanding principal amount of Revolving
Loans, the aggregate outstanding principal amount of all Swing Line Loans, the
aggregate amount available to be drawn under all outstanding Letters of Credit
and the aggregate outstanding amount of all L/C Obligations, in each case of all
Lenders, exceeds the amount of the aggregate Revolving Commitments as so
reduced, provided that if the aggregate principal amount of Revolving Loans,
Swing Line Loans and L/C Obligations then outstanding is less than the amount of
such excess (because Letters of Credit constitute a portion thereof), the
Company shall, to the extent of the balance of such excess, replace outstanding
Letters of Credit and/or deposit an amount in cash in a cash collateral account
established for the benefit of the Lenders.
(vi) The Company shall give the Administrative Agent (which shall
promptly notify each Lender) at least one Business Day's notice of each
prepayment or mandatory reduction pursuant to this subsection 4.4(b) setting
forth the date and amount thereof. Except as otherwise may be agreed by the
Company and the Required Lenders, any prepayment of Loans pursuant to this
subsection 4.4 shall be applied, first, to any Alternate Base Rate Loans then
outstanding and the balance of such prepayment, if any, to the Eurodollar Loans
then outstanding; provided that prepayments of Eurodollar Loans, if not on the
last day of the Interest Period with respect thereto, shall, at the Company's
option, be prepaid subject to the provisions of subsection 4.12 or the amount of
such prepayment (after application to any Alternate Base Rate Loans) shall be
deposited with the Administrative Agent as cash collateral for the Loans on
terms reasonably satisfactory to the Administrative Agent and thereafter shall
be applied in the order of the Interest Periods next ending most closely to the
date such prepayment is required to be made and on the last day of each such
Interest Period. After such application, unless an Event of Default shall have
occurred and be continuing (in which case such interest shall be held as cash
collateral or applied by the Administrative Agent to any amounts then due and
payable), any remaining interest earned on such cash collateral shall be paid to
the Company.
(c) If, at any time, a Borrowing Base Deficiency shall exist, the
Company shall, without notice or demand, immediately prepay the Revolving Loans,
Swing Line Loans and L/C Obligations then outstanding in an aggregate principal
amount sufficient to eliminate such Borrowing Base Deficiency, provided that if
the aggregate principal amount of Revolving Loans, Swing Line Loans and L/C
Obligations then outstanding is less than the amount of such Borrowing Base
Deficiency (because Letters of Credit constitute a portion thereof), the Company
shall, to the extent of the balance of such Borrowing Base Deficiency in excess
of such amount of Revolving Loans, Swing Line Loans and L/C Obligations then
outstanding, immediately replace outstanding Letters of Credit and/or deposit an
amount in cash in a cash collateral account established for the benefit of the
Lenders. To the extent that after giving effect to any prepayment of any Loans
or cash collateralization of any L/C Obligations required by the preceding
sentence, a Borrowing Base Deficiency shall still exist, the Company shall,
without
43
notice or demand, immediately prepay the Term Loans in an aggregate principal
amount equal to such excess, together with interest accrued to the date of such
payment or prepayment to the Administrative Agent, and/or deposit such amount in
cash in a cash collateral account established for the benefit of the Lenders.
Prepayments of Loans made pursuant to this subsection 4.4(c) shall be applied,
first, to the aggregate outstanding Swing Line Loans, second, to the aggregate
outstanding Revolving Loans, third, to the aggregate outstanding L/C
Obligations, and fourth, to the aggregate outstanding Term Loans.
(d) Any and all amounts repaid on account of the Term Loans pursuant
to this subsection 4.4 or otherwise may not be reborrowed. Accrued interest on
the amount of any prepayments shall be paid on the Interest Payment Date next
succeeding the date of any partial prepayment and on the date on such prepayment
in the case of a prepayment in full of any Loans.
4.5 Interest Rates and Payment Dates. (a) Eurodollar Loans shall
bear interest for each day during each Interest Period applicable thereto,
commencing on (and including) the first day of such Interest Period to, but
excluding, the last day of such Interest Period, on the unpaid principal amount
thereof at a rate per annum equal to the Eurodollar Rate determined for such
Interest Period plus the Applicable Margin.
(b) Alternate Base Rate Loans shall bear interest for the period
from and including the date such Loans are made to, but excluding, the maturity
date thereof, or to, but excluding, the conversion date if such Loans are
earlier converted into Eurodollar Loans on the unpaid principal amount thereof
at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any of the
Loans or (ii) any interest payable thereon shall not be paid when due (whether
at the stated maturity, by acceleration or otherwise) such Loan, if a Eurodollar
Loan, shall be converted into an Alternate Base Rate Loan at the end of the
then-current Interest Period for said Eurodollar Loan (which conversion shall
occur automatically and without need for compliance with the conditions for
conversion set forth in subsection 4.2), and any such overdue amount shall,
without limiting the rights of the Lenders under Section 9, bear interest (which
shall be payable on demand) at a rate per annum which is 2% above the Alternate
Base Rate plus the Applicable Margin (or, in the case of a Eurodollar Loan, the
Eurodollar Rate for the Interest Period plus the Applicable Margin plus 2%, if
higher) from the date of such non-payment until paid in full (as well after as
before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date and on the date of payment in full of the respective Loans and in the case
of the Revolving Loans on date of termination of the Revolving Commitments.
4.6 Computation of Interest and Fees. (a) Interest in respect of
Alternate Base Rate Loans, at any time that the Alternate Base Rate is
determined by reference to the Prime Rate, and all fees hereunder shall be
calculated on the basis of a 365 (or 366 as the case may be) day year for the
actual days elapsed. Interest in respect of Eurodollar Loans and in respect of
Alternate Base Rate Loans, at any time that the Alternate Base Rate is
determined by reference to the Federal Funds Effective Rate, shall be calculated
on the basis of a 360 day year for the
44
actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Company and the Lenders of each determination of a Eurodollar Rate.
Any change in the interest rate on a Loan resulting from a change in the
Alternate Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change in the
Alternate Base Rate is announced or such change in the Eurocurrency Reserve
Requirements becomes effective, as the case may be. The Administrative Agent
shall as soon as practicable notify the Company and the Lenders of the effective
date and the amount of each such change.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Company and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Company, deliver to the
Company a statement showing the quotations used by the Administrative Agent in
determining the Eurodollar Rate.
4.7 Certain Fees. The Company agrees to pay to the Administrative
Agent the fees as set forth in the fee letter, dated as of November 27, 2001,
among JPMorgan Chase Bank, CSFB, UBS and the Company.
4.8 Inability to Determine Interest Rate. In the event that the
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that (a) by reason of circumstances
affecting the interbank eurodollar market, adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate for any Interest Period with respect
to (i) proposed Loans that the Company has requested be made as Eurodollar
Loans, (ii) any Eurodollar Loans that will result from the requested conversion
of all or part of the Alternate Base Rate Loans into Eurodollar Loans or (iii)
the continuation of any Eurodollar Loan as such for an additional Interest
Period, or (b) dollar deposits in the relevant amount and for the relevant
period with respect to any such Eurodollar Loan are not generally available to
the Lenders in their respective Eurodollar Lending Offices' interbank eurodollar
markets, the Administrative Agent shall forthwith give telecopy notice of such
determination, confirmed in writing, to the Company and the Lenders at least one
day prior to, as the case may be, the requested Borrowing Date, the conversion
date or the last day of such Interest Period. If such notice is given (i) any
requested Eurodollar Loans shall be made as Alternate Base Rate Loans, (ii) any
Alternate Base Rate Loans that were to have been converted to Eurodollar Loans
shall be continued as Alternate Base Rate Loans, and (iii) any outstanding
Eurodollar Loans shall be converted, on the last day of the then current
Interest Period applicable thereto, into Alternate Base Rate Loans. Until such
notice has been withdrawn by the Administrative Agent, no further Eurodollar
Loans shall be made and no Alternate Base Rate Loans shall be converted to
Eurodollar Loans.
4.9 Pro Rata Treatment and Payments. (a) Except to the extent
otherwise provided herein, each borrowing of Loans by the Company from the
Lenders and any reduction of the Commitments of the Lenders hereunder shall be
made pro rata according to the relevant Commitment Percentages of the Lenders
with respect to the respective Class of Loans borrowed or the respective Class
of Commitments to be reduced.
45
(b) Whenever any payment received by the Administrative Agent under
this Agreement or any Note or any Credit Document is insufficient to pay in full
all amounts then due and payable to the Administrative Agent and the Lenders
under this Agreement:
(i) If the Administrative Agent has not received a Payment Sharing
Notice (or, if the Administrative Agent has received a Payment Sharing
Notice but the Event of Default specified in such Payment Sharing Notice
has been cured or waived in accordance with the provisions of this
Agreement), such payment shall be distributed by the Administrative Agent
and applied by the Administrative Agent and the Lenders in the following
order: First, to the payment of fees and expenses due and payable to the
Administrative Agent under and in connection with this Agreement and the
other Credit Documents; Second, to the payment of all expenses due and
payable under subsection 11.5, ratably among the Lenders in accordance
with the aggregate amount of such payments owed to each such Lender;
Third, to the payment of fees due and payable under subsections 3.2 and
3.9, ratably among the Lenders in accordance with the Commitment
Percentage of each Lender of the Commitment for which such payment is owed
and, in the case of an Issuing Lender, the amount retained by such Issuing
Lender for its own account pursuant to subsection 3.9; Fourth, to the
payment of interest then due and payable on the Loans and on the L/C
Obligations, ratably in accordance with the aggregate amount of interest
owed to each such Lender; and Fifth, to the payment of the principal
amount of the Loans and the L/C Obligations which is then due and payable,
ratably among the Lenders in accordance with the aggregate principal
amount owed to each such Lender; or
(ii) If the Administrative Agent has received a Payment Sharing
Notice which remains in effect, all payments received by the
Administrative Agent under this Agreement or any Note shall be distributed
by the Administrative Agent and applied by the Administrative Agent and
the Lenders in the following order: First, to the payment of all amounts
described in clauses "First" through "Third" of the foregoing clause (i),
in the order set forth therein; Second, to the payment of the interest
accrued on all Loans and L/C Obligations, regardless of whether any such
amount is then due and payable, ratably among the Lenders in accordance
with the aggregate accrued interest plus the aggregate principal amount
owed to such Lender; and Third, to the payment of the principal amount of
all Loans and L/C Obligations, regardless of whether any such amount is
then due and payable, ratably among the Lenders in accordance with the
aggregate principal amount owed to such Lender.
(c) If any Lender (a "Non-Funding Lender") has (x) failed to make a
Revolving Loan required to be made by it hereunder, and the Administrative Agent
has determined that such Lender is not likely to make such Revolving Loan or (y)
given notice to the Company or the Administrative Agent that it will not make,
or that it has disaffirmed or repudiated any obligation to make, any Revolving
Loan, in each case by reason of the provisions of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989, as amended, or otherwise,
(i) any payment made on account of the principal of the Revolving
Loans outstanding shall be made as follows:
46
(A) in the case of any such payment made on any date when and
to the extent that, in the determination of the Administrative
Agent, the Company would be able, under the terms and conditions
hereof, to reborrow the amount of such payment under the Commitments
and to satisfy any applicable conditions precedent set forth in
Section 6 to such reborrowing, such payment shall be made on account
of the outstanding Revolving Loans held by the Lenders other than
the Non-Funding Lender pro rata according to the respective
outstanding principal amounts of the Revolving Loans of such
Lenders; and
(B) otherwise, such payment shall be made on account of the
outstanding Revolving Loans held by the Lenders pro rata according
to the respective outstanding principal amounts of such Revolving
Loans; and
(ii) any payment made on account of interest on the Revolving Loans
shall be made pro rata according to the respective amounts of accrued and
unpaid interest due and payable on the Revolving Loans with respect to
which such payment is being made. The Company agrees to give the
Administrative Agent such assistance in making any determination pursuant
to subparagraph (i)(A) of this paragraph as the Administrative Agent may
reasonably request. The Administrative Agent shall notify the Lenders of
any such determination, which shall be conclusive and binding on the
Lenders.
(d) All payments (including prepayments) to be made by the Company
on account of principal, interest and fees shall be made without set-off or
counterclaim and shall be made to the Administrative Agent, for the account of
the Lenders at the Administrative Agent's office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in lawful money of the United States of America and in
immediately available funds. The Administrative Agent shall promptly distribute
such payments in accordance with the provisions of subsection 4.9(b) promptly
upon receipt in like funds as received. If any payment hereunder (other than
payments on Eurodollar Loans) would become due and payable on a day other than a
Business Day, such payment shall become due and payable on the next succeeding
Business Day and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension. If any payment on
a Eurodollar Loan becomes due and payable on a day other than a Business Day,
the maturity thereof shall be extended to the next succeeding Business Day (and
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension), unless the result of such extension
would be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Business Day.
(e) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount which would constitute its Commitment Percentage of such borrowing
available to the Administrative Agent, the Administrative Agent may assume that
such Lender is making such amount available to the Administrative Agent in
accordance with subsection 4.1 and the Administrative Agent may, in reliance
upon such assumption, make available to the Company thereof a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for
47
the period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent submitted to any
Lender with respect to any amounts owing under this subsection 4.9(e) shall be
conclusive, absent manifest error. If such Lender's Commitment Percentage of
such borrowing is not in fact made available to the Administrative Agent by such
Lender within three Business Days of such Borrowing Date, the Administrative
Agent shall also be entitled to recover such amount with interest thereon at the
rate per annum applicable to Alternate Base Rate Loans hereunder, on demand,
from the Company, without prejudice to any rights which the Company or the
Administrative Agent may have against such Lender hereunder. Nothing contained
in this subsection 4.9 shall relieve any Lender which has failed to make
available its ratable portion of any borrowing hereunder from its obligation to
do so in accordance with the terms hereof.
(f) The failure of any Lender to make the Loan to be made by it on
any Borrowing Date shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on such Borrowing Date, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on such Borrowing Date.
(g) All payments and optional prepayments (other than prepayments as
set forth in subsection 4.11 with respect to increased costs) of Eurodollar
Loans hereunder shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of all
Eurodollar Loans with the same Interest Period shall not be less than $2,000,000
or a whole multiple of $1,000,000 in excess thereof.
4.10 Illegality. Notwithstanding any other provision herein, if any
Change in Law occurring after the date that any lender becomes a Lender party to
this Agreement, shall make it unlawful for such Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, the commitment of such
Lender hereunder to make Eurodollar Loans or to convert all or a portion of
Alternate Base Rate Loans into Eurodollar Loans shall forthwith be suspended
until such time, if any, as such illegality shall no longer exist and such
Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Alternate Base Rate Loans for the duration of the respective
Interest Periods (or, if permitted by applicable law, at the end of such
Interest Periods) and all payments of principal which would otherwise be applied
to such Eurodollar Loans shall be applied instead to such Lender's Alternate
Base Rate Loans. The Company hereby agrees to pay any Lender, promptly upon its
demand, any amounts payable pursuant to subsection 4.12 in connection with any
conversion in accordance with this subsection 4.10 (such Lender's notice of such
costs, as certified in reasonable detail as to such amounts to the Company
through the Administrative Agent, to be conclusive absent manifest error).
4.11 Requirements of Law. (a) In the event that any Change in Law or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority
occurring after the date that any lender becomes a Lender party to this
Agreement:
(i) does or shall subject any such Lender or its Eurodollar Lending
Office to any tax of any kind whatsoever with respect to this Agreement,
any Note or any Eurodollar Loans made by it, or change the basis of
taxation of payments to such Lender or its Eurodollar Lending Office of
principal, the commitment fee, interest or any other amount
48
payable hereunder (except for (x) net income and franchise taxes imposed
on the net income of such Lender or its Eurodollar Lending Office by the
jurisdiction under the laws of which such Lender is organized or any
political subdivision or taxing authority thereof or therein, or by any
jurisdiction in which such Lender's Eurodollar Lending Office is located
or any political subdivision or taxing authority thereof or therein,
including changes in the rate of tax on the overall net income of such
Lender or such Eurodollar Lending Office, and (y) taxes resulting from the
substitution of any such system by another system of taxation, provided
that the taxes payable by Lenders subject to such other system of taxation
are not generally charged to borrowers from such Lenders having loans or
advances bearing interest at a rate similar to the Eurodollar Rate);
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, or deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender which are not otherwise
included in the determination of the Eurodollar Rate; or
(iii) does or shall impose on such Lender any other condition;
(iv) and the result of any of the foregoing is to increase the cost
to such Lender or its Eurodollar Lending Office of making, converting,
renewing or maintaining advances or extensions of credit or to reduce any
amount receivable hereunder, in each case, in respect of its Eurodollar
Loans, then, in any such case, the Company shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such
Lender for such additional cost or reduced amount receivable which such
Lender deems to be material as determined by such Lender with respect to
such Eurodollar Loans, together with interest on each such amount from the
date demanded until payment in full thereof at a rate per annum equal to
the Alternate Base Rate plus 1%.
(b) In the event that any Change in Law occurring after the date
that any lender becomes a Lender party to this Agreement with respect to any
such Lender shall, in the opinion of such Lender, require that any Commitment of
such Lender be treated as an asset or otherwise be included for purposes of
calculating the appropriate amount of capital to be maintained by such Lender or
any corporation controlling such Lender, and such Change in Law shall have the
effect of reducing the rate of return on such Lender's or such corporation's
capital, as the case may be, as a consequence of such Lender's obligations
hereunder to a level below that which such Lender or such corporation, as the
case may be, could have achieved but for such Change in Law (taking into account
such Lender's or such corporation's policies, as the case may be, with respect
to capital adequacy) by an amount deemed by such Lender to be material, then
from time to time following notice by such Lender to the Company of such Change
in Law as provided in paragraph (c) of this subsection 4.11, within 15 days
after demand by such Lender, the Company shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such corporation,
as the case may be, for such reduction.
(c) The Company shall not be required to make any payments to any
Lender for any additional amounts pursuant to this subsection 4.11 unless such
Lender has given written notice to the Company, through the Administrative
Agent, of its intent to request such payments
49
prior to or within 60 days after the date on which such Lender became entitled
to claim such amounts. If any Lender has notified the Company through the
Administrative Agent of any increased costs pursuant to paragraph (a) of this
subsection 4.11, the Company at any time thereafter may, upon at least three
Business Days' notice to the Administrative Agent (which shall promptly notify
the Lenders thereof), and subject to subsection 4.12, prepay (or convert into
Alternate Base Rate Loans) all (but not a part) of the Eurodollar Loans then
outstanding. Each Lender agrees that, upon the occurrence of any event giving
rise to the operation of paragraph (a) of this subsection 4.11 with respect to
such Lender, it will, if requested by the Company and to the extent permitted by
law or by the relevant Governmental Authority, endeavor in good faith to avoid
or minimize the increase in costs or reduction in payments resulting from such
event (including, without limitation, endeavoring to change its Eurodollar
Lending Office); provided, however, that such avoidance or minimization can be
made in such a manner that such Lender, in its sole determination, suffers no
economic, legal or regulatory disadvantage. If any Lender requests compensation
from the Company under this subsection 4.11, the Company may, by notice to such
Lender (with a copy to the Administrative Agent), suspend the obligation of such
Lender thereafter to make or continue Loans of the Type with respect to which
such compensation is requested, or to convert Loans of any other Type into Loans
of such Type, until the Requirement of Law giving rise to such request ceases to
be in effect, provided that such suspension shall not affect the right of such
Lender to receive the compensation so requested.
(d) Each Lender that is not a United States Person (as defined in
Section 7701(a)(30) of the Code) for federal income tax purposes either (1) in
the case of a Lender that is a "bank" within the meaning of Section 881(c)(3)(A)
of the Code, (i) represents to the Company (for the benefit of the Company and
the Administrative Agent) that under applicable law and treaties no taxes are
required to be withheld by the Company or the Administrative Agent with respect
to any payments to be made to such Lender in respect of the Loans or the L/C
Participating Interests, (ii) agrees to furnish to the Company, with a copy to
the Administrative Agent, either U.S. Internal Revenue Service Form W-8BEN or
U.S. Internal Revenue Service Form W-8ECI (wherein such Lender claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) agrees (for the benefit of the Company
and the Administrative Agent), to the extent it may lawfully do so at such
times, to provide the Company, with a copy to the Administrative Agent, a new
Form W-8BEN or Form 1001 upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such Lender, and
to comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption or (2) in the case of a Lender that is
not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, (i)
represents to the Company (for the benefit of the Company and the Administrative
Agent) that it is not a bank within the meaning of Section 881(c)(3)(A) of the
Code, (ii) agrees to furnish to the Company, with a copy to the Administrative
Agent, (A) a certificate substantially in the form of Exhibit I hereto (any such
certificate, a "Subsection 4.11(d)(2) Certificate") and (B) two accurate and
complete original signed copies of Internal Revenue Service Form W-8, certifying
to such Lender's legal entitlement at the Closing Date to an exemption from U.S.
withholding tax under the provisions of Section 881(c) of the Code with respect
to all payments to be made under this Agreement, and (iii) agrees, to the extent
legally entitled to do so, upon reasonable request by the Company, to provide to
the Company (for the benefit of the Company and the Administrative
50
Agent) such other forms as may be required in order to establish the legal
entitlement of such Lender to an exemption from withholding with respect to
payments under this Agreement. Notwithstanding any provision of this subsection
4.11 to the contrary, the Company shall have no obligation to pay any amount to
or for the account of any Lender (or the Eurodollar Lending Office of any
Lender) on account of any taxes pursuant to this subsection 4.11, to the extent
that such amount results from (i) the failure of any Lender to comply with its
obligations pursuant to this subsection 4.11, (ii) any representation or
warranty made or deemed to be made by any Lender pursuant to this subsection
4.11(d) proving to have been incorrect, false or misleading in any material
respect when so made or deemed to be made or (iii) any Change in Law or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority, the
effect of which would be to subject to any taxes any payment made pursuant to
this Agreement to any Lender making the representation and covenants set forth
in subsection 4.11(d)(2), which payment would not be subject to such taxes were
such Lender eligible to make and comply with, and actually made and complied
with, the representation and covenants set forth in subsection 4.11(d)(1)
hereinabove.
(e) A certificate in reasonable detail as to any amounts submitted
by such Lender, through the Administrative Agent, to the Company, shall be
conclusive in the absence of manifest error. The covenants contained in this
subsection 4.11 shall survive the termination of this Agreement and repayment of
the Loans.
4.12 Indemnity. The Company agrees to indemnify each Lender and to
hold such Lender harmless from any loss or expense (but without duplication of
any amounts payable as default interest) which such Lender may sustain or incur
as a consequence of (a) default by the Company in payment of the principal
amount of or interest on any Eurodollar Loans of such Lender, including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Lender to lenders of funds obtained by it in order to make or maintain its
Eurodollar Loans hereunder, (b) default by the Company in making a borrowing
after the Company has given a notice in accordance with subsection 4.1 or in
making a conversion of Alternate Base Rate Loans to Eurodollar Loans or in
continuing Eurodollar Loans as such, in either case, after the Company has given
notice in accordance with subsection 4.2, (c) default by the Company in making
any prepayment after the Company has given a notice in accordance with
subsection 4.4 or (d) a payment or prepayment of a Eurodollar Loan or conversion
(including without limitation, a conversion pursuant to subsection 4.10) of any
Eurodollar Loan into an Alternate Base Rate Loan, in either case on a day which
is not the last day of an Interest Period with respect thereto, including, but
not limited to, any such loss or expense arising from interest or fees payable
by such Lender to lenders of funds obtained by it in order to maintain its
Eurodollar Loans hereunder (but excluding loss of profit). This covenant shall
survive termination of this Agreement and repayment of the Loans.
4.13 Repayment of Loans; Evidence of Debt. (a) The Company hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender (i) the then unpaid principal amount of each Revolving Loan of such
Lender on the Revolving Termination Date, (ii) the then unpaid principal amount
of each Term Loan of such Lender on the Maturity Date or the date that the Term
Loans become due and payable pursuant to Section 9 and (iii) the then unpaid
principal amount of the Swing Line Loans of the Swing Line Lender on the
Revolving Termination Date. The Company hereby further agrees to pay interest on
the
51
unpaid principal amount of the Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the dates,
set forth in subsection 4.5.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Company to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
subsection 11.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Revolving Loan, Term Loan made hereunder, the
Type thereof and each Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Company to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Company and each Lender's share
thereof.
(d) The Administrative Agent shall maintain the Register pursuant to
subsection 11.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Revolving Loan and each Term Loan made
hereunder, the Type thereof and each Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from the Company to each Lender hereunder and (iii) both the amount of
any sum received by the Administrative Agent hereunder from the Company and each
Lender's share thereof.
(e) The Company agrees that, upon the request to the Administrative
Agent by any Lender and receipt by the Company of any notes issued to such
Lender under the Existing Credit Agreement, the Company will execute and deliver
to such Lender (i) a promissory note of the Company evidencing the Revolving
Loans of such Lender, substantially in the form of Exhibit A with appropriate
insertions as to date and principal amount (a "Revolving Note"), and/or (ii) a
promissory note of the Company evidencing the Term Loan of such Lender,
substantially in the form of Exhibit B with appropriate insertions as to date
and principal amount (a "Term Loan Note"), and/or (iii) in the case of the Swing
Line Lender, a promissory note of the Company evidencing the Swing Line Loans of
the Swing Line Lender, substantially in the form of Exhibit C with appropriate
insertions as to date and principal amount (the "Swing Line Note").
4.14 Replacement of Lenders. In the event any Lender or the Issuing
Lender exercises its rights pursuant to subsection 4.10 or requests payments
pursuant to subsections 3.10 or 4.11, the Company may require, at the Company's
expense and subject to subsection 4.12, such Lender or the Issuing Lender to
assign, at par plus accrued interest and fees, without recourse (in accordance
with subsection 11.6) all of its interests, rights and obligations hereunder
(including all of its Commitments and the Loans and other amounts at the time
owing to it hereunder and its Notes and its interest in the Letters of Credit)
to a bank, financial institution or other entity specified by the Company,
provided that (i) such assignment shall not conflict with or violate any law,
rule or regulation or order of any court or other Governmental Authority, (ii)
the Company shall have received the written consent of the Administrative Agent,
which consent shall not be unreasonably withheld, to such assignment, (iii) the
Company shall have paid to the
52
assigning Lender or the Issuing Lender all monies other than principal, interest
and fees accrued and owing hereunder to it (including pursuant to subsections
3.10, 4.10 and 4.11) and (iv) in the case of a required assignment by the
Issuing Lender, the Letters of Credit shall be canceled and returned to the
Issuing Lender.
Section 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to
make the Loans and to induce the Issuing Lender to issue, and the Participating
Lenders to participate in, the Letters of Credit, the Company hereby represents
and warrants to each Lender and the Administrative Agent, as of the Closing Date
and as of the making of any extension of credit hereunder:
5.1 Financial Condition. (a) The consolidated balance sheet of the
Company and its consolidated Subsidiaries as at January 31, 2001 and the related
consolidated statement of operations for the fiscal year ended on such date,
audited by PricewaterhouseCoopers LLP, or any successor thereto, a copy of which
has heretofore been furnished to each Lender, present fairly in accordance with
GAAP the consolidated financial condition of the Company and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended. All such
financial statements have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants and as disclosed therein). Neither the Company nor any of its
consolidated Subsidiaries had, at the date of the most recent balance sheet
referred to above, any material Contingent Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any material interest rate or foreign
currency swap or exchange transaction, which is not reflected in the foregoing
statements or in the notes thereto or expressly permitted to be incurred
hereunder.
(b) The unaudited consolidated balance sheet of the Company and its
consolidated Subsidiaries as at November 1, 2001 and the related unaudited
consolidated statements of income and cash flows of the Company and its
Subsidiaries for the quarter ending November 1, 2001, certified by a Responsible
Officer of the Company, copies of which have heretofore been furnished to each
Lender, present fairly in accordance with GAAP the financial position of the
Company and its consolidated Subsidiaries as at such dates. Such balance sheet
and statements of income and cash flows, including the related schedules and
notes thereto, have been prepared in accordance with GAAP (except as approved by
such Responsible Officer and disclosed therein). The Company and its
consolidated Subsidiaries did not have at the date of such balance sheet and
statements of income and cash flows, any material Contingent Obligation,
contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency exchange transaction, which is not reflected in such
balance sheet, statements of income and cash flows or in the notes thereto.
During the period from November 1, 2001 to the Closing Date, no dividends or
other distributions have been declared, paid or made upon the Capital Stock of
the Company or any of its consolidated Subsidiaries nor has any of the Capital
Stock of the Company or any of its consolidated Subsidiaries been redeemed,
retired, purchased or otherwise acquired for value by the Company or any of its
consolidated Subsidiaries, respectively, except as permitted by subsection 8.11.
53
5.2 No Change. Since January 31, 2001, (a) there has been no change,
and (as of the Closing Date only) no development or event, which has had or
could reasonably be expected to have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole, and (b) no dividends or other
distributions have been declared, paid or made upon the Capital Stock of the
Company nor has any of the Capital Stock of the Company been redeemed, retired,
repurchased or otherwise acquired for value by the Company or any of its
Subsidiaries, except as permitted by subsection 8.11.
5.3 Corporate Existence; Compliance with Law. Each of the Company
and its Subsidiaries (a) is a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation, (b) has full corporate
power and authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to use its
corporate name and to own, lease or otherwise hold its properties and assets and
to carry on its business as presently conducted other than such franchises,
licenses, permits, authorizations and approvals the lack of which, individually
or in the aggregate, would not have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, (c) is duly qualified and in
good standing to do business in each jurisdiction in which the nature of its
business or the ownership, leasing or holding of its properties makes such
qualification necessary, except such jurisdictions where the failure so to
qualify would not have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole, and (d) except as disclosed in the
Environmental Reports, is in compliance with all applicable statutes, laws,
ordinances, rules, orders, permits and regulations of any governmental authority
or instrumentality, domestic or foreign (including, without limitation, those
related to Hazardous Materials and substances), except where noncompliance would
not be reasonably likely to have a material adverse effect on the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole. Except as disclosed in the
Environmental Reports, none of the Company or any of its Subsidiaries has
received any written communication from a Governmental Authority that alleges
that the Company or any of its Subsidiaries is not in compliance, in all
material respects, with all material federal, state, local or foreign laws,
ordinances, rules and regulations.
5.4 Corporate Power; Authorization. Each of the Company and its
Subsidiaries has the corporate power and authority to make, deliver and perform
each of the Credit Documents to which it is a party, and the Company has the
corporate power and authority and legal right to borrow hereunder and to have
Letters of Credit issued for its account hereunder. Each of the Company and its
Subsidiaries has taken all necessary corporate action to authorize the
execution, delivery and performance of each of the Credit Documents to which it
is or will be a party and the Company has taken all necessary corporate action
to authorize the borrowings hereunder and the issuance of Letters of Credit for
its account hereunder. No consent or authorization of, or filing with, any
Person (including, without limitation, any Governmental Authority) is required
in connection with the execution, delivery or performance by the Company or any
of its Subsidiaries, or for the validity or enforceability against the Company
or any of its Subsidiaries, of any Credit Document except for consents,
authorizations and filings which have been obtained or made and are in full
force and effect and except (i) such consents, authorizations and filings, the
failure to obtain or perform (x) which would not have a material
54
adverse effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries taken as a whole, and
(y) which would not adversely affect the validity or enforceability of any of
the Credit Documents or the rights or remedies of the Administrative Agent or
the Lenders thereunder and (ii) such filings as are necessary to perfect the
Liens of the Lenders created pursuant to this Agreement and the Security
Documents.
5.5 Enforceable Obligations. This Agreement and each of the other
Credit Documents and any other agreement to be entered into by any Credit Party
pursuant to the Credit Documents have been duly executed and delivered on behalf
of such Credit Party that is party thereto. This Agreement constitutes, and each
of the other Credit Documents and any other agreement to be entered into by any
Credit Party pursuant to the Credit Documents will constitute upon execution and
delivery, the legal, valid and binding obligation of such Credit Party, and is
enforceable against such Credit Party in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting creditors' rights generally and by general principles
of equity (regardless of whether enforcement is sought in a proceeding in equity
or at law).
5.6 No Legal Bar. The execution, delivery and performance of each
Credit Document, the incurrence or issuance of and use of the proceeds of the
Loans and of drawings under the Letters of Credit and the transactions
contemplated by Credit Documents, (a) will not violate any Requirement of Law or
any Contractual Obligation applicable to or binding upon the Company or any
Subsidiary of the Company or any of their respective properties or assets, in
any manner which, individually or in the aggregate, (i) would have a material
adverse effect on the ability of the Company or any such Subsidiary to perform
its obligations under the Credit Documents, (ii) would give rise to any
liability on the part of the Administrative Agent or any Lender or (iii) would
have a material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken as
a whole, and (b) will not result in the creation or imposition of any Lien on
any of its properties or assets pursuant to any Requirement of Law applicable to
it, as the case may be, or any of its Contractual Obligations, except for the
Liens arising under the Security Documents.
5.7 No Material Litigation. No litigation by, investigation known to
the Company by, or proceeding of, any Governmental Authority is pending against
the Company or any of its Subsidiaries (including after giving effect to the
Transaction) with respect to the validity, binding effect or enforceability of
this Agreement or any other Credit Document, the Loans made hereunder, the use
of proceeds hereof, or of any drawings under a Letter of Credit and the other
transactions contemplated hereby. No lawsuits, claims, proceedings or
investigations pending or, to the best knowledge of the Company, threatened as
of the Closing Date against or affecting the Company or any Subsidiary of the
Company or any of their respective properties, assets, operations or businesses
(including after giving effect to the Transaction) in which there is a
probability of an adverse determination, is reasonably likely, if adversely
decided, to have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole.
5.8 Investment Company Act. Neither the Company nor any Subsidiary
of the Company is an "investment company" or a company "controlled" by an
"investment company"
55
(as each of the quoted terms is defined or used in the Investment Company Act of
1940, as amended).
5.9 Federal Regulation. No part of the proceeds of any of the Loans
or any drawing under a Letter of Credit will be used for any purpose which
violates the provisions of Regulation T, U or X of the Board. Neither the
Company nor any of its Subsidiaries is engaged or will engage, principally or as
one of its important activities, in the business of extending credit for the
purpose of "buying" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under said Regulation U.
5.10 No Default. The Company and each of its Subsidiaries have
performed all material obligations required to be performed by them under their
respective Contractual Obligations (including after giving effect to the
Transaction) and they are not (with or without the lapse of time or the giving
of notice, or both) in breach or default in any respect thereunder, except to
the extent that such breach or default would not have a material adverse effect
on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole. Neither the
Company nor any of its Subsidiaries (including after giving effect to the
Transaction) is in default under any material judgment, order or decree of any
Governmental Authority, domestic or foreign, applicable to it or any of its
respective properties, assets, operations or business, except to the extent that
any such defaults would not, in the aggregate, have a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole.
5.11 Taxes. Each of the Company and its Subsidiaries (including
after giving effect to the Transaction) has filed or caused to be filed all
material tax returns which, to the best knowledge of the Company, are required
to be filed and has paid all taxes shown to be due and payable on said returns
or on any assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any amount of which is currently being
contested in good faith by appropriate proceedings and with respect to which
reserves (or other sufficient provisions) in conformity with GAAP have been
provided on the books of the Company or its Subsidiaries (including after giving
effect to the Transaction), as the case may be); no tax Lien has been filed,
and, to the best knowledge of the Company, no written claim is being asserted,
with respect to any such taxes, fees or other charges.
5.12 Subsidiaries. As of the Closing Date, the only Subsidiaries of
the Company are those listed on Schedule 5.12. On the Closing Date and at all
times thereafter, Holdings owns 100% of the issued and outstanding Capital Stock
of the Company.
5.13 Ownership of Property; Liens. As of the Closing Date and as of
the making of any extension of credit hereunder (subject to transfers and
dispositions of property permitted under subsection 8.5) each of the Company and
its Subsidiaries has good and valid title to all of its material assets (other
than real property or interests in real property) in each case free and clear of
all mortgages, liens, security interests or encumbrances of any nature
whatsoever except Permitted Liens. With respect to real property or interests in
real property, as of the Closing Date, each of the Company and its Subsidiaries
has (i) fee title to all of the real property listed on Schedule 5.13 under the
heading "Fee Properties" (each, a "Fee Property"), and (ii) good and
56
valid title to the leasehold estates in all of the real property leased by it
and listed on Schedule 5.13 under the heading "Leased Properties" (each, a
"Leased Property"), in each case free and clear of all mortgages, liens,
security interests, easements, covenants, rights-of-way and other similar
restrictions of any nature whatsoever, except Permitted Liens. The Fee
Properties and the Leased Properties constitute, as of the Closing Date, all of
the real property owned in fee or leased by the Company and its Subsidiaries.
5.14 ERISA. The "amount of unfunded benefit liabilities" (within the
meaning of Section 4001(a)(18) of ERISA) of any Single Employer Plan of the
Company or any Commonly Controlled Entity would not result in a material
liability to the Company if any or all such Single Employer Plans were
terminated. None of the Company, any Subsidiary of the Company or any Commonly
Controlled Entity would be liable for any amount pursuant to Sections 4063 or
4064 of ERISA, if any Single Employer Plan were to terminate. Neither the
Company nor any Commonly Controlled Entity has been involved in any transaction
that would cause the Company to be subject to material liability with respect to
a Single Employer Plan to which the Company or any Commonly Controlled Entity
contributed or was obligated to contribute during the six-year period ending on
the date this representation is made under Sections 4062 or 4069 of ERISA.
Neither the Company nor any Commonly Controlled Entity has incurred any material
liability under Title IV of ERISA which could become or remain a material
liability of the Company after the Closing Date and the consummation of the
Transaction. None of the Company, any Subsidiary of the Company, or, to the best
knowledge of the Company, any director, officer or employee thereof, or any of
the Plans or any trust created thereunder, or any fiduciary thereof, has engaged
in a transaction or taken any other action or omitted to take any action
involving any Plan which could constitute a prohibited transaction within the
meaning of Section 406 of ERISA which is not otherwise exempted and which would
result in a material liability to the Company, or would cause the Company to be
subject to either a material liability or material civil penalty assessed
pursuant to Sections 409 or 502(i) or (l) of ERISA or a material tax imposed
pursuant to Sections 4975 or 4976 of the Code. Each of the Plans (to the best
knowledge of the Company with respect to any Multiemployer Plan) has been
operated and administered in all material respects in accordance with applicable
laws, including but not limited to ERISA and the Code. There are no material
pending or, to the best knowledge of the Company, threatened claims by or on
behalf of any of the Plans or any fiduciary, by any employee or beneficiary
covered under any such Plan, or otherwise involving any such Plan or fiduciary
for which the Company could have any material liability (other than routine
claims for benefits). To the best knowledge of the Company, no condition exists,
and no event has occurred with respect to any Multiemployer Plan which presents
a material risk of a complete or partial withdrawal under Subtitle E of Title IV
of ERISA for which the Company could have any material liability, nor has the
Company or any Commonly Controlled Entity been notified that any such
Multiemployer Plan is insolvent or in reorganization within the meaning of
Section 4241 of ERISA. Neither the Company nor any Commonly Controlled Entity
nor any Subsidiary has been a party to any transaction or agreement to which the
provisions of Section 4204 of ERISA were applicable. None of the Company, or any
Commonly Controlled Entity or any of their respective Subsidiaries is obligated
to contribute to a Multiemployer Plan, on behalf of any current or former
employee of the Company, any Commonly Controlled Entity or such Subsidiary. The
liability to which the Company, any Commonly Controlled Entity or any of their
respective Subsidiaries would become subject under ERISA if all such Persons
were to withdraw completely from all Plans on the Closing Date (after giving
effect to the Transaction)
57
is not in excess of $2,000,000. None of the Plans or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each of the Plans. No
contribution failure has occurred with respect to any Plan sufficient to give
rise to a lien under Section 302(f) of ERISA.
5.15 Security Documents. At all times after the execution and
delivery of the Guarantee and Collateral Agreement, the Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
ratable benefit of the Lenders, a legal, valid and enforceable security interest
in the Collateral described therein. In the case of the Pledged Stock described
in the Guarantee and Collateral Agreement, so long as stock certificates
representing such Pledged Stock are in the possession of the Administrative
Agent, and in the case of the other Collateral described in the Guarantee and
Collateral Agreement, when financing statements and other filings specified on
Schedule 5.15(a) in appropriate form are filed in the offices specified on
Schedule 5.15(a), the Guarantee and Collateral Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Credit Parties in such Collateral, as security for the Obligations (as
defined in the Guarantee and Collateral Agreement), in each case prior and
superior in right to any other Person, except to the extent that a security
interest cannot be perfected therein by the filing of a financing statement or
the taking of possession under the Uniform Commercial Code of the relevant
jurisdiction and subject to Liens permitted by Section 8.2.
5.16 Copyrights, Permits, Trademarks and Licenses. Schedule 5.16
sets forth a true and complete list of all material trademarks (registered or
unregistered), trade names, service marks and copyrights and applications
therefor owned, used or filed by or licensed to the Company and its Subsidiaries
(after giving effect to the Transaction) and, with respect to registered
trademarks (if any), contains a list of all jurisdictions in which such
trademarks are registered or applied for and all registration and application
numbers. Except as disclosed on Schedule 5.16, the Company or a Subsidiary
(after giving effect to the Transaction) owns or has the right to use, without
payment to any other party, trademarks (registered or unregistered), trade
names, service marks, copyrights and applications therefor referred to in such
Schedule. To the best knowledge of the Company, no claims are pending by any
Person with respect to the ownership, validity, enforceability or the Company's
or any Subsidiary's use of any such trademarks (registered or unregistered),
trade names, service marks, copyrights, or applications therefor, challenging or
questioning the validity or effectiveness of any of the foregoing, in any
jurisdiction, domestic or foreign.
5.17 Environmental Matters. Except as set forth in the Environmental
Reports and except to the extent that the facts and circumstances giving rise to
the failure of any of the following to be true and correct would not be
reasonably likely to have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries taken as a whole:
(a) To the best knowledge of the Company, no parcel of real property
owned or operated by the Company or any of its Subsidiaries contains, and has
not previously contained, in, on or under including, without limitation, the
soil and groundwater thereunder, any
58
Hazardous Materials in amounts or concentrations that constitute or constituted
a material violation of, or could reasonably give rise to material liability
under, Environmental Laws.
(b) To the best knowledge of the Company, each parcel of real
property owned or operated by the Company or any of its Subsidiaries and all
operations and facilities at such properties taken as a whole are in material
compliance with all Environmental Laws, and there is no contamination or
violation of any Environmental Law which could materially interfere with the
continued operation of, or materially impair the fair saleable value of, the
such property taken as a whole.
(c) To the best knowledge of the Company, neither the Company nor
any of its Subsidiaries has received or is aware of any complaint, notice of
violation, alleged violation, or notice of investigation or of potential
liability under Environmental Laws with regard to any parcel of real property
owned or operated by the Company or any of its Subsidiaries or the operations of
the Company or its Subsidiaries, nor does the Company or any of its Subsidiaries
have knowledge that any such action is being contemplated, considered or
threatened.
(d) To the best knowledge of the Company, Hazardous Materials have
not been generated, treated, stored, disposed of, at, on or under any parcel of
real property owned or operated by the Company or any of its Subsidiaries, nor
have any Hazardous Materials been transported from such properties, in material
violation of or in a manner that could reasonably give rise to material
liability under any Environmental Laws.
(e) There are no governmental administrative actions or judicial
proceedings pending or, to the best knowledge of the Company and its
Subsidiaries, threatened, under any Environmental Law to which the Company or
any of its Subsidiaries is a party with respect to any parcel of real property
owned or operated by the Company or any of its Subsidiaries, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements, other than permits
authorizing operations at facilities at the real property, outstanding under any
Environmental Law with respect to such properties.
5.18 Accuracy and Completeness of Information. The factual
statements contained in the financial statements referred to in subsection
5.1(a), the Credit Documents and any other certificates or documents furnished
or to be furnished to the Administrative Agent or the Lenders from time to time
in connection with this Agreement, taken as a whole, do not and will not, to the
best knowledge of the Company, as of the date when made, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not misleading in light of the
circumstances in which the same were made, all except as otherwise qualified
herein or therein, such knowledge qualification being given only with respect to
factual statements made by Persons other than the Company or any of its
Subsidiaries.
Section 6. CONDITIONS PRECEDENT
6.1 Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction prior
59
to or concurrently with the making of such extension of credit on the Closing
Date, of the following conditions precedent:
(a) Credit Agreement; Guarantee and Collateral Agreement; Notes. The
Administrative Agent shall have received (i) this Agreement executed and
delivered by the Administrative Agent, the Company and each Person listed on
Schedule I, (ii) the Guarantee and Collateral Agreement, executed and delivered
by Holdings, the Company and each Subsidiary Guarantor and (iii) an
Acknowledgement and Consent in the form attached to the Guarantee and Collateral
Agreement, executed and delivered by each Issuer (as defined therein), if any,
that is not a Credit Party.
(b) Transaction. The following transactions shall have been
consummated, in each case on terms and conditions reasonably satisfactory to the
Lenders:
(i) Holdings shall have received at least $50,000,000 from the gross
proceeds of the Holdings Convertible Securities, the net proceeds of which
shall have been contributed to the Company in the form of equity, on terms
and conditions reasonably satisfactory to the Lead Arrangers;
(ii) Holdings has exercised its conversion rights under
the Existing Convertible Notes; and
(iii) the Company shall have received no less than $275,000,000 in
gross cash proceeds from the issuance of the Senior Unsecured Notes, on
terms and conditions reasonably satisfactory to the Lead Arrangers.
(c) Capital Structure.
(i) Holdings, the Company and its Subsidiaries shall have no
Indebtedness other than the Existing Convertible Securities, if
applicable, Holdings Convertible Securities, the Senior Unsecured Notes
and the Permanent Subordinated Notes and except as otherwise permitted by
this Agreement.
(ii) The execution, delivery and performance of this Agreement and
the other Credit Documents and the related documentation with respect to
the Commitments and the making of Loans and issuances of Letters of Credit
as contemplated hereby and the issuance of the Senior Unsecured Notes and
the Holdings Convertible Securities shall not violate any of the
provisions of the Permanent Subordinated Note Indenture and Senior
Unsecured Note Indenture and the Company shall have provided a certificate
in reasonable detail to such effect.
(iii) Any changes since June 30, 1999 to the certificate of
incorporation, by-laws, other governing documents and corporate structure
of the Company and its Subsidiaries, in each case after giving effect to
the consummation of the Transaction, shall be in form and substance
satisfactory to the Agents (the execution and delivery of this Agreement
by the Lenders and the Agents being deemed to evidence the satisfaction of
the Agents with such of the above-referenced matters as shall have been
disclosed and made available to the Agents prior to the date hereof).
60
(d) Pro Forma Balance Sheet. The Lenders shall have received the
unaudited pro forma consolidated balance sheet of the Company and its
consolidated Subsidiaries as at November 4, 2001 (including the notes thereto).
(e) Fees. The Agents, the Lead Arrangers and the Lenders shall have
received all fees, expenses and other consideration required to be paid or
delivered on or before the Closing Date.
(f) Lien Searches. The Administrative Agent shall have received the
results of searches requested by the Administrative Agent of Uniform Commercial
Code, tax and judgment filings made with respect to each of Holdings, the
Company and its Subsidiaries, together with copies of financing statements
disclosed by such searches and such searches shall disclose no Liens on any
assets encumbered by any Security Document, except for Liens permitted hereunder
or, if unpermitted Liens are disclosed, the Administrative Agent shall have
received satisfactory evidence of release of such Liens.
(g) Filings, Recordings; and Registrations. The Administrative Agent
shall have received evidence in form and substance satisfactory to it that all
(i) filings, recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on form UCC-1,
necessary or, in the opinion of the Administrative Agent, desirable to perfect
the Liens created by the Security Documents, and (ii) the Collateral Agent, for
the benefit of the Lenders, shall have a perfected security interest in all of
the Collateral.
(h) Pledged Stock; Stock Powers; Pledged Notes. The Collateral Agent
shall have received (i) the certificates representing the shares of Capital
Stock pledged pursuant to the Guarantee and Collateral Agreement, together with
an undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof and (ii) each promissory note (if any)
pledged to the Collateral Agent pursuant to the Guarantee and Collateral
Agreement endorsed (without recourse) in blank (or accompanied by an executed
transfer form in blank) by the pledgor thereof.
(i) Legal Opinions. The Administrative Agent shall have received,
dated the Closing Date and addressed to the Agents and the Lenders, (i) an
opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to Holdings and the Company, in
substantially the form of Exhibit H-1 with such changes thereto as may be
approved by the Administrative Agent and its counsel and (ii) an opinion of
▇▇▇▇▇ ▇▇▇▇ LLP, Arizona counsel to the Company, in substantially the form of
Exhibit H-2 with such changes as may be approved by the Administrative Agent and
its counsel.
(j) Closing Certificate. The Administrative Agent shall have
received a Closing Certificate of the Company, Holdings and each Subsidiary
dated the Closing Date, in substantially the form of Exhibit J-1, Exhibit J-2
and Exhibit J-3, respectively, with appropriate insertions and attachments, in
form and substance satisfactory to the Administrative Agent and its counsel,
executed by the President or any Vice President and the Secretary or any
Assistant Secretary of the Company, Holdings and each Subsidiary, respectively.
(k) Consents, Authorizations and Filings, etc. Except for financing
statements to be filed in connection herewith, all consents, approvals,
authorizations and filings with any
61
Person (including, without limitation, any Governmental Authority), if any,
required in connection with the Transaction and the execution, delivery and
performance by Holdings or the Company, and the validity and enforceability
against Holdings and the Company, of the Credit Documents to which any of them
is a party, shall have been obtained or made, and such consents, approvals,
authorizations and filings shall be in full force and effect, except such
consents, approvals, authorizations and filings, the failure to obtain which
would not have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole.
(l) Contractual Obligations. None of Holdings, the Company or its
Subsidiaries shall be subject to any material contractual (including material
supplier contracts) or other material restrictions that would be violated by the
Transaction, including the granting of security interests and guarantees.
(m) Appraisal. The Administrative Agent shall have received a
satisfactory appraisal of assets identified by the Collateral Agent and
specified on Schedule 6.1(m) (the execution and delivery of this Agreement by
the Lenders and the Agents being deemed to evidence the satisfaction of this
condition).
(n) Collateral Review. The Collateral Agent or its designee shall
have conducted a satisfactory collateral review of the accounts receivable,
inventory and related working capital matters and financial information of the
Company and its subsidiaries and of the data processing and other systems
related thereof.
(o) Cash Management System. The Company shall have established a
Cash Concentration Account (as defined in the Guarantee and Collateral
Agreement) pursuant to and in accordance with Section 8 of the Guarantee and
Collateral Agreement and establish the remainder of the cash management system
contemplated by the Guarantee and Collateral Agreement no later than 90 days
from the Closing Date.
(p) Borrowing Base. The Company shall have delivered a Borrowing
Base Certificate substantially in the form of Exhibit K, including all
supplemental reporting as outlined on Schedule I thereto, as of the Closing
Date.
6.2 Conditions to All Loans and Letters of Credit. The obligation of
each Lender to make any Loan (other than any Revolving Loan the proceeds of
which are to be used to repay Refunded Swing Line Loans) and the obligation of
the Issuing Lender to issue any Letter of Credit is subject to the satisfaction
of the following conditions precedent on the relevant Borrowing Date:
(a) Representations and Warranties. Each of the representations and
warranties made in or pursuant to Section 5 or which are contained in any other
Credit Document shall be true and correct in all material respects on and as of
the date of such Loan or of the issuance of such Letter of Credit as if made on
and as of such date (unless stated to relate to a specific earlier date, in
which case, such representations and warranties shall be true and correct in all
material respects as of such earlier date).
62
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such Borrowing Date or after giving
effect to such Loan to be made or such Letter of Credit to be issued on such
Borrowing Date.
(c) Borrowing Base. After giving effect to the extensions of
credit requested to be made on such date, a Borrowing Base Deficiency shall
not exist.
Each borrowing by the Company hereunder and the issuance of each
Letter of Credit by the Issuing Lender hereunder shall constitute a
representation and warranty by the Company as of the date of such borrowing or
issuance that the conditions in clauses (a), (b) and (c) and of this subsection
6.2 have been satisfied.
Section 7. AFFIRMATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments remain in
effect, any Loan, Note or L/C Obligation remains outstanding and unpaid, any
amount (unless cash in an amount equal to such amount has been deposited to a
cash collateral account established by the Administrative Agent) remains
available to be drawn under any Letter of Credit or any other amount is owing to
any Lender or the Administrative Agent hereunder or under any of the other
Credit Documents, it shall, and, in the case of the agreements contained in
subsections 7.3 through 7.6, 7.8, 7.9, and 7.11, the Company shall cause each of
its Subsidiaries to:
7.1 Financial Statements. Furnish to the Administrative Agent
(with sufficient copies for each Lender which the Administrative Agent shall
promptly furnish to each Lender):
(a) as soon as available, but in any event within 95 days after the
end of each fiscal year of the Company, a copy of the consolidated balance sheet
of the Company and its consolidated Subsidiaries as at the end of such fiscal
year and the related consolidated statements of stockholders' equity and cash
flows and the consolidated statements of income of the Company and its
Subsidiaries for such fiscal year, setting forth in each case in comparative
form the figures for the previous year and, in the case of the consolidated
balance sheet referred to above, reported on, without a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit, or qualification which would affect the computation of financial
covenants, by independent certified public accountants of nationally recognized
standing;
(b) as soon as available, but in any event not later than 50 days
after the end of each of the first three quarterly periods of each fiscal year
of the Company, the unaudited consolidated balance sheet of the Company and its
Subsidiaries as at the end of each such quarter and the related unaudited
consolidated statements of income and cash flows of the Company and its
Subsidiaries for such quarterly period and the portion of the fiscal year of the
Company through such date, setting forth in each case in comparative form the
figures for the corresponding quarter in, and year to date portion of, the
previous year, and the figures for such periods in the budget prepared by the
Company and furnished to the Administrative Agent, certified by the chief
financial officer, controller or treasurer of the Company as being fairly stated
in all material respects; and
63
(c) (i) as soon as available, but in any event not later than 30
days after the beginning of each fiscal year of the Company to which such budget
relates, a preliminary consolidated operating budget for the Company and its
Subsidiaries taken as a whole and (ii) as soon as available, any material
revision to or any final revision of, any such preliminary annual operating
budget or any such consolidated operating budget.
(d) as soon as available, but in any event not later than 35 days
after the end of each fiscal month of the Company (beginning with the period
ending January 1, 2002 but excluding any fiscal month which ends a fiscal year
or fiscal quarter of the Company), a report of sales and EBITDA for such fiscal
month, an unaudited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such fiscal month and a management discussion and
analysis of the results for such fiscal month.
(e) all such financial statements to be complete and correct in all
material respects (subject, in the case of interim statements, to normal
year-end audit adjustments) and to be prepared in reasonable detail and (except
in the case of the statements referred to in paragraphs (b), (c) and (d) of this
subsection 7.1) in accordance with GAAP.
7.2 Certificates; Other Information. Furnish to the
Administrative Agent (with sufficient copies for each Lender which the
Administrative Agent shall promptly deliver to each Lender):
(a) concurrently with the delivery of the consolidated financial
statements referred to in subsection 7.1(a), a letter from the independent
certified public accountants reporting on such financial statements stating that
in making the examination necessary to express their opinion on such financial
statements no knowledge was obtained of any Default or Event of Default under or
in respect of subsections 4.4(b), 8.1, 8.3, and 8.6 through 8.10, except as
specified in such letter;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a certificate of the chief financial
officer of the Company (i) stating that, to the best of such officer's
knowledge, each of the Company and its Subsidiaries has observed or performed
all of its respective covenants and other agreements, and satisfied every
material condition, contained in this Agreement, the Notes and the other Credit
Documents to be observed, performed or satisfied by it, and that such officer
has obtained no knowledge of any Default or Event of Default except as specified
in such certificate, (ii) showing in detail as of the end of the related fiscal
period the figures and calculations supporting such statement in respect of
subsections 8.7 through 8.11 and any other calculations reasonably requested by
the Administrative Agent with respect to the quantitative aspects of the other
covenants contained herein and (iii) if not specified in the financial
statements delivered pursuant to subsection 7.1, specifying the aggregate amount
of interest paid or accrued by the Company and its Subsidiaries, and the
aggregate amount of depreciation, depletion and amortization charged on the
books of the Company and its Subsidiaries, during such accounting period;
(c) promptly upon receipt thereof, copies of all final reports
submitted to the Company or to any of its Subsidiaries by independent certified
public accountants in connection with each annual, interim or special audit of
the books of the Company or any of its Subsidiaries
64
made by such accountants, including, without limitation, any final comment
letter submitted by such accountants to management in connection with their
annual audit;
(d) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available to
holders of the Permanent Subordinated Debt and the public generally by the
Company or any of its Subsidiaries, if any, and all regular and periodic reports
and all final registration statements and final prospectuses, if any, filed by
the Company or any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any Governmental Authority succeeding to
any of its functions;
(e) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a management summary describing and
analyzing the performance of the Company and its Subsidiaries during the periods
covered by such financial statements;
(f) within 45 days after the end of each fiscal quarter, a summary
of all Asset Sales during such fiscal quarter including the amount of all Net
Proceeds from such Asset Sales not previously applied to prepayments of the
Loans and reductions of the Commitments pursuant to the proviso to subsection
4.4(b)(iii);
(g) within 16 calendar days after the last day of each calendar
month and, if requested by the Collateral Agent, at any other time when the
Collateral Agent reasonably believes that the then existing Borrowing Base is
materially inaccurate (which requests may not be made more frequently than once
per calendar week), as soon as reasonably available but in no event later than
10 days after the date of such request, a Borrowing Base Certificate calculating
the Borrowing Base as of the last day in such calendar month, along with the
supplemental information as outlined on Schedule 1 thereto, executed by a
Responsible Officer of the Company; and
(h) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
obligations and liabilities of whatever nature including tax liabilities, except
(a) when the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of the Company or any of its
Subsidiaries, as the case may be, (b) for delinquent obligations which do not
have a material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken as
a whole, and (c) for trade and other accounts payable in the ordinary course of
business.
7.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it (after giving
effect to the Transaction), and preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to maintain all
material rights, material privileges, franchises, copyrights, trademarks and
trade names necessary or desirable in the normal conduct of its business except
65
for rights, privileges, franchises, copyrights, trademarks and tradenames the
loss of which would not in the aggregate have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries taken as a whole, and except as otherwise
permitted by subsections 8.4 and 8.5; and comply with all applicable
Requirements of Law and Contractual Obligations except to the extent that the
failure to comply therewith would not, in the aggregate, have a material adverse
effect on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole.
7.5 Maintenance of Property; Insurance. (a) Keep all property
useful and necessary in its business in good working order and condition
(ordinary wear and tear excepted); and
(b) Maintain with financially sound and reputable insurance
companies (x) insurance on all its property in at least such amounts and with
only such deductibles as are usually maintained by, and against at least such
risks (but including, in any event, public liability insurance) as are usually
insured against in the same general area, by companies engaged in the same or a
similar business and (y) flood insurance, if required, and furnish to each
Lender, (i) annually, a schedule disclosing all insurance against products
liability risk maintained by the Company and its Subsidiaries pursuant to this
subsection 7.5(b) or otherwise and (ii) upon written request of any Lender, full
information as to the insurance carried; provided that the Company may implement
programs of self insurance in the ordinary course of business and in accordance
with industry standards for a company of similar size so long as reserves are
maintained in accordance with GAAP for the liabilities associated therewith.
7.6 Inspection of Property; Books and Records; Discussions. (a) Keep
proper books of records and account in which full, complete and correct entries
in conformity with all material Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of any Lender upon reasonable notice (but, with respect to all
Lenders, no more frequently than monthly unless a Default or Event of Default
shall have occurred and be continuing) during business hours and with a
Responsible Officer present to visit and inspect any of its properties and
examine and, to the extent reasonable, make abstracts from any of its books and
records, including, without limitation, in connection with any collateral review
or appraisal described in paragraph (b) below, and to discuss the business,
operations, properties and financial and other condition of the Company and its
Subsidiaries with officers and employees of the Company and its Subsidiaries and
(in coordination with such officers and employees) with its independent
certified public accountants, in each case at any reasonable time, upon
reasonable notice, and as often as may reasonably be desired.
(b) At any time upon reasonable notice, during business hours and
with a Responsible Officer present and at the reasonable request of the
Administrative Agent, permit the Administrative Agent or its professionals
(including collateral monitoring specialists, consultants, accountants, lawyers
and appraisers) retained by the Administrative Agent to conduct (1) evaluations
and appraisals of (i) the Company's practices in the computation of the
Borrowing Base, (ii) the assets included in the Borrowing Base, (iii) systems
and procedures relating to the Borrowing Base items, and (iv) other related
procedures deemed necessary by the
66
Administrative Agent and pay the reasonable fees and expenses in connection
therewith (including, without limitation, the fees and expenses associated with
services performed by the Administrative Agent's Collateral Monitoring
Department); provided, however, that the Administrative Agent shall not be
entitled to conduct such evaluations and appraisals more frequently than once
per year unless (A) a Default or Event of Default has occurred and is continuing
or (B) the Administrative Agent determines that any material event or material
change has occurred with respect to the Credit Parties, their inventory
practices or the performance of the Collateral and that as a result of such
event or change more frequent evaluations or appraisals are required to
effectively monitor the Borrowing Base, in which case the Company will permit
the Administrative Agent to conduct such evaluations and appraisals at such
reasonable times and as often as may be reasonably requested, in each case so
long as any Revolving Loans or Letters of Credit shall be outstanding or shall
have been requested by the Company hereunder and (2) an appraisal by Hilco
Appraisal Services, LLC, or other appraisal company satisfactory to the
Administrative Agent, of the Inventory on a quarterly basis during the fiscal
year 2002, and pay the reasonable fees and expenses in connection therewith.
(c) In connection with any evaluation and appraisal relating to the
computation of the Borrowing Base, agree to maintain such additional reserves
(for purposes of computing the Borrowing Base) in respect of Eligible Inventory
and make such other adjustments to its parameters for including Eligible
Inventory in the Borrowing Base as the Administrative Agent shall reasonably
require based upon the results of such evaluation and appraisal, provided that
the reasons for any such additional reserves or adjustments shall be specified
in writing.
7.7 Notices. Promptly give notice to the Administrative Agent
and each Lender:
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any instrument or
other agreement, guarantee or collateral document of the Company or any of
its Subsidiaries which default or event of default has not been waived and
would have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole, or any other default or event of default
under any such instrument, agreement, guarantee or other collateral
document which, but for the proviso to clause (e) of Section 9, would have
constituted a Default or Event of Default under this Agreement, or (ii)
litigation, investigation or proceeding which may exist at any time
between the Company or any of its Subsidiaries and any Governmental
Authority, or receipt of any notice of any environmental claim or
assessment against the Company or any of its Subsidiaries by any
Governmental Authority, which in any such case would have a material
adverse effect on the business, assets, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries taken as a
whole;
(c) of any litigation or proceeding against the Company or any of
its Subsidiaries (i) in which more than $2,000,000 of the amount claimed
is not covered by insurance or (ii) in which injunctive or similar relief
is sought which if obtained would have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole;
67
(d) of the following events, as soon as practicable after, and in
any event within 30 days after, the Company knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to any
Plan which Reportable Event could reasonably result in material liability
to the Company and its Subsidiaries taken as a whole or (ii) the
institution of proceedings or the taking of any other action by PBGC, the
Company or any Commonly Controlled Entity to terminate, withdraw or
partially withdraw from any Plan and, with respect to a Multiemployer
Plan, the Reorganization or Insolvency of the Plan, in each of the
foregoing cases which could reasonably result in material liability to the
Company and its Subsidiaries taken as a whole, and in addition to such
notice, deliver to the Administrative Agent and each Lender whichever of
the following may be applicable: (A) a certificate of a Responsible
Officer of the Company setting forth details as to such Reportable Event
and the action that the Company or such Commonly Controlled Entity
proposes to take with respect thereto, together with a copy of any notice
of such Reportable Event that may be required to be filed with PBGC or (B)
any notice delivered by PBGC evidencing its intent to institute such
proceedings or any notice to PBGC that such Plan is to be terminated, as
the case may be; and
(e) of a material adverse change known to the Company or its
Subsidiaries in the business, assets, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries taken as a
whole.
(f) Each notice pursuant to this subsection 7.7 shall be accompanied
by a statement of a Responsible Officer of the Company setting forth
details of the occurrence referred to therein and (in the cases of clauses
(a) through (d)) stating what action the Company proposes to take with
respect thereto.
7.8 Environmental Laws. (a) Comply with, and use reasonable efforts
to insure compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply with and maintain, and require that all
tenants and subtenants obtain and comply with and maintain, all licenses,
approvals, registrations or permits required by Environmental Laws, except to
the extent that failure to do so would not be reasonably likely to have a
material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken as
a whole, or on the validity or enforceability of any of the Credit Documents or
the rights and remedies of the Administrative Agent or the Lenders thereunder;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions, lawfully required under
applicable Environmental Laws, and promptly comply with all lawful orders and
directives of all Governmental Authorities respecting Environmental Laws, except
to the extent that the same are being contested in good faith by appropriate
proceedings; and
(c) In regard to this Agreement or in any way relating to the
Company or its Subsidiaries or their current or former operations, defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or
68
otherwise, arising out of, or in any way relating to Hazardous Material or
Environmental Laws, including, without limitation, any orders, requirements or
demands of Governmental Authorities related thereto, including, without
limitation, reasonable attorney's and consultant's fees, investigation and
laboratory fees, remediation costs, court costs and litigation expenses, except
to the extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor. The agreements
in this subsection 7.8(c) shall survive repayment of the Loans and all other
amounts payable hereunder.
7.9 Additional Collateral, etc.. (a) With respect to any property
acquired after the Closing Date by any Group Member (other than (x) any property
described in paragraph (b) or (c) below, (y) property acquired by any Excluded
Foreign Subsidiary and (z) assets acquired pursuant to subsection 8.6(j) that
are not equity interests in, or assets held by, a wholly-owned domestic
Subsidiary) that is intended to be subject to the security interests created by
any of the Security Documents but which is not so subject thereto, promptly (i)
execute and deliver to the Administrative Agent such amendments to the Guarantee
and Collateral Agreement or such other documents as the Administrative Agent
deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a security interest in such property and (ii) take all
actions necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in such
property, including the filing of Uniform Commercial Code financing statements
in such jurisdictions as may be required by the Guarantee and Collateral
Agreement or by law or as may be reasonably requested by the Administrative
Agent.
(b) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by any Group
Member (which, for the purposes of this paragraph (b), shall include any
existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly
(i) execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement as the Administrative Agent deems necessary
or advisable to grant to the Administrative Agent, for the benefit of the
Lenders, a perfected first priority security interest in the Capital Stock of
such new Subsidiary that is owned by any Group Member, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly authorized
officer of the relevant Group Member, (iii) cause such new Subsidiary (A) to
become a party to the Guarantee and Collateral Agreement, (B) to take such
actions necessary to cause the Lien created by the Guarantee and Collateral
Agreement to be duly perfected to the extent required by such agreement in
accordance with all applicable Requirements of Law with respect to such new
Subsidiary, including the filing of Uniform Commercial Code financing statements
in such jurisdictions as may be reasonably required by the Guarantee and
Collateral Agreement or by law or as may be requested by the Administrative
Agent and (C) to deliver to the Administrative Agent a certificate of such
Subsidiary, substantially in the form of Exhibit J-3, with appropriate
insertions and attachments, and (iv) if reasonably requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(c) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by any Group Member (other than by any Group
Member that is an
69
Excluded Foreign Subsidiary), promptly (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
as the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in the Capital Stock of such new Subsidiary that is owned by
any such Group Member (provided that in no event shall more than 65% of the
total outstanding voting Capital Stock of any such new Subsidiary be required to
be so pledged), (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the relevant Group
Member, and take such other action as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Administrative Agent's security
interest therein, and (iii) if reasonably requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
(d) Upon the request of the Administrative Agent, the Company will,
and will cause its Domestic Subsidiaries to, promptly grant to the
Administrative Agent, within 60 days of such request, security interests and
mortgages in such owned real property of the Company and its Domestic
Subsidiaries as are acquired after the Closing Date by the Company or such
Subsidiary and that, together with any improvements thereon, have a value, in
the aggregate, in excess of $5,000,000, as additional security for the
obligations of the Credit Parties under any Credit Document (unless the subject
property is already mortgaged to a third party to the extent permitted by
subsection 8.2). Such mortgages shall be granted pursuant to documentation
reasonably satisfactory in form and substance to the Administrative Agent and
shall constitute valid and enforceable perfected Liens subject only to Permitted
Liens and such other Liens reasonably acceptable to the Administrative Agent.
The mortgages or instruments related thereto shall be duly recorded or filed in
such manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens in favor of the Administrative Agent required to
be granted pursuant to the mortgages and all taxes, fees and other charges
payable in connection therewith shall be paid in full. If requested by the
Administrative Agent or the Required Lenders, the Company shall provide a
lender's title policy with respect to each such mortgage paid for by the
Company, issued by a nationally recognized title insurance company, together
with such endorsements, coinsurance and reinsurance as may be reasonably
requested by the Administrative Agent, in form and substance reasonably
acceptable to the Administrative Agent, insuring each mortgage as a first lien
on the relevant mortgaged property and subject only to Liens expressly agreed to
by the Administrative Agent.
7.10 Registration. Use commercially reasonable efforts to file a
registration statement with respect to the Holdings Convertible Securities to be
converted into common stock to the extent practicable within 120 days of the
Closing Date.
7.11 Landlord Lien Waivers. Use commercially reasonable efforts to
obtain Landlord Lien Waivers with respect to each parcel of real property
subject to Liens described in clause (c)(i) of the definition of "Eligible
Inventory" leased by it existing on or after the Closing Date within 90 days
after the Closing Date or upon its entering into a lease therefor, but without
liability for its failure to do so (except for the imposition of Rent Reserves,
where permitted hereto).
70
Section 8. NEGATIVE COVENANTS
The Company hereby agrees that it shall not, and the Company shall
not permit any of its Subsidiaries to, directly or indirectly so long as the
Commitments remain in effect or any Loan, Note or L/C Obligation remains
outstanding and unpaid, any amount (unless cash in an amount equal to such
amount has been deposited to a cash collateral account established by the
Administrative Agent) remains available to be drawn under any Letter of Credit
or any other amount is owing to any Lender or the Administrative Agent hereunder
or under any other Credit Document (it being understood that each of the
permitted exceptions to each of the covenants in this Section 8 is in addition
to, and not overlapping with, any other of such permitted exceptions except to
the extent expressly provided):
8.1 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:
(a) the Indebtedness outstanding on the Closing Date and
reflected on Schedule 8.1(a), but excluding the refinancing of any such
Indebtedness;
(b) Indebtedness consisting of the Loans and in connection with
the Letters of Credit and this Agreement;
(c) Indebtedness (i) of the Company to any Subsidiary and (ii)
of any Subsidiary to the Company or any other Subsidiary;
(d) Indebtedness consisting of the Permanent Subordinated Debt
outstanding on the Closing Date and Indebtedness of the Company in respect of
any Permanent Subordinated Debt the net proceeds of which are used to prepay,
redeem, retire or repurchase the outstanding principal amount of the then
outstanding Permanent Subordinated Debt (if any) (including fees and expenses in
connection therewith) or to prepay the Loans and reduce the Commitments in
accordance with subsection 4.4(b)(ii), provided that, to the extent there are
additional Net Proceeds remaining after any such repayment, redemption,
retirement or repurchase of the then outstanding Permanent Subordinated Debt, or
to the extent such Net Proceeds are not used to repay, redeem, retire or
repurchase the then outstanding Permanent Subordinated Debt, such Net Proceeds
shall be used to prepay the Loans and reduce the Commitments in accordance with
subsection 4.4(b)(ii);
(e) Indebtedness of the Company and its Subsidiaries for (A)
industrial revenue bonds or other similar governmental and municipal bonds and
(B) the deferred purchase price of newly acquired property of the Company and
its Subsidiaries (pursuant to purchase money mortgages or otherwise, whether
owed to the seller or otherwise) used in the ordinary course of business of the
Company and its Subsidiaries (provided such financing is entered into within 270
days of the acquisition of such property) in an amount (based on the remaining
balance of the obligations therefor on the books of the Company and its
Subsidiaries) which in the case of preceding clauses (A) and (B) shall not
exceed $10,000,000 in the aggregate at any one time outstanding and (ii)
Indebtedness of the Company and its Subsidiaries in respect of Financing Leases
to the extent subsections 8.9 and 8.10 would not be contravened;
71
(f) Indebtedness of the Company and its Subsidiaries in an
aggregate principal amount not to exceed at any one time outstanding
$25,000,000;
(g) Indebtedness in respect of letters of credit (other than Letters
of Credit issued hereunder) in aggregate principal amount not to exceed at any
one time outstanding $10,000,000;
(h) (i) Indebtedness assumed in connection with acquisitions
permitted by subsection 8.6(h) (so long as such Indebtedness was not incurred in
anticipation of such acquisitions), (ii) Indebtedness of newly acquired
Subsidiaries acquired in such acquisitions (so long as such Indebtedness was not
incurred in anticipation of such acquisition) and (iii) Indebtedness owed to the
seller in any acquisition permitted by subsection 8.6(h) constituting part of
the purchase price thereof, all of which Indebtedness permitted by this
subsection 8.1(h) shall not exceed an aggregate principal amount at any one time
outstanding of $10,000,000;
(i) Indebtedness in connection with workers' compensation
obligations and general liability exposure of the Company and its
Subsidiaries;
(j) Subordinated Indebtedness in aggregate principal amount not to
exceed at any one time outstanding $15,000,000 plus any additional principal
amount of such subordinated Indebtedness issued in lieu of cash interest thereon
(and any refinancing thereof shall be permitted in the amount of such sum),
which subordinated Indebtedness (i) is subordinated to the Indebtedness
hereunder on terms not less favorable to the Lenders than the subordination
provisions of the Permanent Subordinated Debt and (ii) has a final maturity date
after the Maturity Date; and
(k) Indebtedness consisting of the Senior Unsecured Debt outstanding
on the Closing Date and Indebtedness of the Company in respect of any Senior
Unsecured Debt the net proceeds of which are used to prepay, redeem, retire or
repurchase the outstanding principal amount of the then outstanding Senior
Unsecured Debt (if any) (including fees and expenses in connection therewith) or
to prepay the Loans and reduce the Commitments in accordance with subsection
4.4(b)(ii), provided that, to the extent there are additional Net Proceeds
remaining after any such repayment, redemption, retirement or repurchase of the
then outstanding Senior Unsecured Debt, or to the extent such Net Proceeds are
not used to repay, redeem, retire or repurchase the then outstanding Senior
Unsecured Debt, such Net Proceeds shall be used to prepay the Loans and reduce
the Commitments in accordance with subsection 4.4(b)(ii).
8.2 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets, income or profits, whether now owned
or hereafter acquired, except:
(a) Liens for taxes, assessments or other governmental charges not
yet delinquent or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or such Subsidiary, as the case may be, in accordance with
GAAP;
(b) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business in respect of obligations which are not yet due or which are bonded or
which are being contested in good faith and by
72
appropriate proceedings if adequate reserves with respect thereto are maintained
on the books of the Company or such Subsidiary, as the case may be, in
accordance with GAAP;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, tenders, trade or
government contracts (other than for borrowed money), leases, licenses,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(e) easements (including, without limitation, reciprocal easement
agreements), rights-of-way, building, zoning and similar restrictions, utility
agreements, covenants, reservations, restrictions, encroachments, changes, and
other similar encumbrances or title defects incurred, or leases or subleases
granted to others, in the ordinary course of business, which do not in the
aggregate materially detract from the aggregate (i) value of the properties of
the Company and its Subsidiaries, taken as a whole or (ii) materially interfere
with or adversely affect in any material respect the ordinary conduct of the
business of the Company and its Subsidiaries taken as a whole;
(f) Liens in favor of the Administrative Agent and the Lenders
pursuant to the Credit Documents and bankers' liens arising by operation of
law;
(g) Liens on property of the Company or any of its Subsidiaries
created solely for the purpose of securing Indebtedness permitted by subsection
8.1(e) or 8.1(h)(i) or (ii) (so long as such Lien was not incurred in
anticipation of the related acquisition), representing or incurred to finance,
refinance or refund the purchase price of property, provided that no such Lien
shall extend to or cover other property of the Company or such Subsidiary other
than the respective property so acquired, and the principal amount of
Indebtedness secured by any such Lien shall at no time exceed the original
purchase price of such property;
(h) Liens existing on the Closing Date after giving effect to the
consummation of the Transaction, and described in subsection 5.13 or Schedule
8.2, provided that no such Lien shall extend to or cover other property of the
Company or the respective Subsidiary other than the respective property so
encumbered, and the principal amount of Indebtedness secured by any such Lien
shall at no time exceed the original principal amount of the Indebtedness so
secured;
(i) Liens on documents of title and the property covered thereby
(and Proceeds thereof) securing Indebtedness in respect of the Commercial L/Cs
or securing reimbursement obligations in respect of letters of credit permitted
under this Agreement;
(j) (i) mortgages, liens, security interests, restrictions,
encumbrances or any other matters of record that have been placed by any
developer, landlord or other third party on property over which the Company or
any Subsidiary of the Company has easement rights or on any Leased Property and
subordination or similar agreements relating thereto and (ii) any condemnation
or eminent domain proceedings affecting any real property;
73
(k) Liens in connection with workers' compensation obligations
and general liability exposure of the Company and its Subsidiaries; and
(l) Liens on Fee Properties and/or Leased Properties consisting of
(i) any conditions that may be shown by a current, accurate survey or physical
inspection of such Fee Property or Leased Property, (ii) as to Leased Property,
the terms and provisions of the respective lease therefor and any matters
affecting the fee title and any estate superior to the leasehold estate related
thereto, and (iii) title defects, or leases or subleases granted to others,
which are not material to the Fee Properties or Leased Properties, as the case
may be, taken as a whole.
8.3 Limitation on Contingent Obligations. Create, incur,
assume or suffer to exist any Contingent Obligation except:
(a) the Guarantee and Collateral Agreement;
(b) other guarantees by the Company incurred in the ordinary
course of business for an aggregate amount not to exceed $20,000,000 at any
one time;
(c) guarantees by the Company of obligations of its
Subsidiaries;
(d) Contingent Obligations existing on the Closing Date and
described in Schedule 8.3(d);
(e) guarantees of obligations to third parties in connection with
relocation of employees of the Company or any of its Subsidiaries, in an amount
which, together with all loans and advances made pursuant to subsection 8.6(f),
shall not exceed $4,000,000 at any time outstanding;
(f) Contingent Obligations in connection with workers'
compensation obligations and general liability exposure of the Company and
its Subsidiaries; and
(g) subordinated guarantees of the Permanent Subordinated Debt
issued by Subsidiaries of the Company which are also parties to the Guarantee
and Collateral Agreement, provided such subordinated guarantees are subordinated
to the Guarantee and Collateral Agreement on the same basis as the Permanent
Subordinated Debt is subordinated to the Loans;
(h) guarantees of the Senior Unsecured Notes issued by
Subsidiaries of the Company which are also parties to the Guarantee and
Collateral Agreement;
(i) guarantees by the Company of loans to employees of the Company
and its Subsidiaries, the proceeds of which are used to purchase stock of
Holdings, in an aggregate amount not to exceed, when added to the amount of
loans made by the Company to employees pursuant to subsection 8.6(g), at any one
time outstanding $8,000,000; and
(j) guarantees by the Company of loans to employees of the Company
and its Subsidiaries, the proceeds of which are used for travel and other
ordinary expenses for which advances to employees are generally made, in an
aggregate amount not to exceed, when added to
74
the amount of loans made by the Company to employees pursuant to subsection
8.6(i), at any one time outstanding $1,000,000.
8.4 Prohibition of Fundamental Changes. Enter into any merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or engage in any type of business other
than of the same general type now conducted by it, except (a) for the
transactions otherwise permitted pursuant to clause (b) of subsection 8.5, (b)
any Subsidiary of the Company may be merged with and into the Company or a
Subsidiary of the Company, (c) any Subsidiary may be dissolved, provided,
however, that prior to the dissolution of any Subsidiary whose book value
exceeds $100,000, the assets of such Subsidiary are transferred to the Company
or a wholly-owned Domestic Subsidiary of the Company subject to the conditions
set forth in subsection 8.5(b) and (d) the Company may be reincorporated under
the laws of Delaware, provided that the Administrative Agent, in its sole
reasonable discretion, determines that such reincorporation will not alter the
obligations of any Credit Party under any Credit Document or cause a material
impairment of the value of the Collateral taken as a whole, after giving effect
to such reincorporation.
8.5 Prohibition on Sale of Assets. Convey, sell, lease (other than a
sublease of real property), assign, transfer or otherwise dispose of (including
through a transaction of merger or consolidation of any Subsidiary of the
Company) any of its property, business or assets (including, without limitation,
tax benefits and receivables but excluding leasehold interests), whether now
owned or hereafter acquired, except:
(a) for (i) sales or other dispositions of inventory made in the
ordinary course of business, (ii) sales or other dispositions of uneconomic,
obsolete or worn-out property in the ordinary course of business and (iii) any
sale of a store and/or fixtures to a third party pursuant to a sale-leaseback
transaction;
(b) that any Subsidiary of the Company may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to, or merge with and into, the Company or a wholly-owned Subsidiary
of the Company and any Subsidiary of the Company may sell or otherwise dispose
of, or part with control of any or all of, the stock of any Subsidiary to a
wholly-owned Subsidiary of the Company, provided that no such transaction may be
effected if it would result in the transfer of any assets of, or any stock of, a
Subsidiary to, or the merger with and into, another Subsidiary all of the
Capital Stock of which owned by the Company or any Subsidiary has not been
pledged to the Administrative Agent and which has not guaranteed the obligations
of the Company under the Notes and this Agreement, and granted liens or security
interests in favor of the Administrative Agent, for the benefit of the Lenders,
on substantially all of its assets to secure such guarantee, pursuant to a
guarantee, security agreement and other documentation reasonably satisfactory to
the Administrative Agent;
(c) leases of Fee Properties and other real property owned in
fee and subleases of Leased Properties;
(d) any condemnation or eminent domain proceedings affecting any
real property, provided, however, that the parties hereto agree that the net
proceeds received in
75
connection with such proceeding shall be deemed not to constitute "Net Proceeds"
if such net proceeds are reinvested in new or existing properties within
eighteen months;
(e) substantially like-kind exchanges of real property, provided
that any cash received by the Company or any Subsidiary of the Company in
connection with such an exchange (net of all costs and expenses incurred in
connection with such transaction or with the commencement of operation of real
property received in such exchange) shall be deemed to be Net Proceeds and shall
be applied as provided for herein;
(f) for the sale or other disposition of any property the
aggregate amount of the net proceeds received in respect of which shall not
exceed $4,000,000;
(g) for the sale of owned real property and/or fixtures; and
(h) for conveyances and transfers specifically permitted under
subsection 8.6(j) to joint ventures.
8.6 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of, or make any other investment
(except as provided in subsection 8.12) in (including, without limitation, any
acquisition of all or any substantial portion of the assets, and any acquisition
of a business or a product line, of other companies, other than the acquisition
of inventory in the ordinary course of business), any Person, except:
(a) the Company may make loans or advances to any Subsidiary, and
any Subsidiary may make loans or advances to the Company or any other
Subsidiary, to the extent in each case the Indebtedness created thereby is
permitted by paragraph (c) of subsection 8.1;
(b) any Subsidiary may make investments in the Company (by way of
capital contribution or otherwise) and (ii) the Company and any Subsidiary may
make investments in, or create, any wholly-owned Domestic Subsidiary (by way of
capital contribution or otherwise) or make investments permitted by subsection
8.5(b), provided that, in any such case, (x) if stock is issued or otherwise
acquired in connection with such investment, or if the stock of such Subsidiary
was not previously pledged to the Administrative Agent, such stock is pledged to
the Administrative Agent for the benefit of the Lenders so that 100% of the
Capital Stock of such Subsidiary is pledged to the Administrative Agent and (y)
such Subsidiary guarantees the obligations of the Company under the Notes and
this Agreement, and grants liens or security interests in favor of the
Administrative Agent, for the benefit of the Lenders, on substantially all of
its assets to secure such guarantee, pursuant to a guarantee, a security
agreement and other documentation reasonably satisfactory to the Administrative
Agent;
(c) the Company and its Subsidiaries may invest in, acquire and
hold Cash Equivalents;
(d) the Company or any of its Subsidiaries may make payroll
advances in the ordinary course of business;
76
(e) the Company or any of its Subsidiaries may acquire and hold
receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms,
(provided that nothing in this clause (e) shall prevent the Company or any
Subsidiary from offering such concessionary trade terms, or from receiving such
investments in connection with the bankruptcy or reorganization of their
respective suppliers or customers or the settlement of disputes with such
customers or suppliers arising in the ordinary course of business, as management
deems reasonable in the circumstances);
(f) the Company or any of its Subsidiaries may make relocation and
other loans to officers and employees of the Company or any such Subsidiary,
provided that the aggregate principal amount of all such loans and advances
outstanding at any one time, together with the guarantees of such loans and
advances made pursuant to subsection 8.3(e), shall not exceed $4,000,000 at any
one time outstanding;
(g) the Company may make loans to employees of the Company and its
Subsidiaries the proceeds of which are used by such employees to purchase stock
of Holdings, provided that the aggregate principal amount of all such loans
shall not exceed, together with any guarantees of loans made pursuant to
subsection 8.3(i), at any one time outstanding $8,000,000;
(h) the Company and its Subsidiaries may make acquisitions of
companies engaged primarily in businesses similar to the businesses in which the
Company and its Subsidiaries are engaged to the extent that the amount expended
to make such acquisitions is permitted pursuant to subsection 8.9(b);
(i) the Company may make loans to employees of the Company and its
Subsidiaries, the proceeds of which are used by such employees for travel and
other ordinary expenses for which advances to employees are generally made in an
aggregate principal amount not to exceed when added to the amount of guarantees
made by the Company pursuant to subsection 8.3(j), at any one time outstanding
$1,000,000; and
(j) the Company or any of its Subsidiaries may make investments in,
or loans or investments to, joint ventures or other Persons engaged primarily in
one or more businesses in which the Company and its Subsidiaries are engaged or
directly related thereto in an aggregate amount not to exceed $2,000,000 plus
the sum of any cash amounts dividended or distributed to the Company or any
Subsidiary of the Company after the date hereof by such joint venture or other
Person.
8.7 Leverage Ratio. Permit the Consolidated Leverage Ratio as at the
last day of any period of four consecutive fiscal quarters of the Company ending
with any fiscal quarter set forth below to exceed the ratio set forth below
opposite such fiscal quarter, provided, that, with respect to any acquisition
permitted by subsection 8.6(h), the last four fiscal quarters of Consolidated
EBITDA (as may be adjusted for post-acquisition cost savings reasonably agreed
to by the Company and the Administrative Agent) of the acquired company shall be
added to the Consolidated EBITDA of the Company for the purposes of calculating
this ratio:
77
Fiscal Year Fiscal Quarter Leverage Ratio
----------- -------------- --------------
▇▇▇▇ ▇▇▇▇▇▇ 4.85 to 1.0
2002 First 4.75 to 1.0
Second 4.50 to 1.0
Third 4.50 to 1.0
Fourth 4.25 to 1.0
2003 First 4.25 to 1.0
Second 3.75 to 1.0
Third 3.75 to 1.0
Fourth 3.75 to 1.0
2004 First 3.75 to 1.0
Second 3.50 to 1.0
Third 3.50 to 1.0
Fourth 3.50 to 1.0
8.8 Interest Coverage Ratio. At the last day of any fiscal quarter
set forth below, permit the Interest Coverage Ratio to be less than the ratio
set forth below for such fiscal quarter:
Interest
Fiscal Year Fiscal Quarter Coverage Ratio
----------- -------------- --------------
▇▇▇▇ ▇▇▇▇▇▇ 1.90 to 1.0
2002 First 1.90 to 1.0
Second 1.90 to 1.0
Third 2.00 to 1.0
Fourth 2.00 to 1.0
2003 First 2.00 to 1.0
Second 2.25 to 1.0
Third 2.25 to 1.0
Fourth 2.25 to 1.0
2004 First 2.25 to 1.0
Second 2.50 to 1.0
Third 2.50 to 1.0
Fourth 2.50 to 1.0
8.9 Capital Expenditures. Make or commit to make any Capital
Expenditures, except that the Company and its Subsidiaries may make or commit
to make Capital Expenditures:
(a) consisting of investments in the development of new or relocated
stores in an aggregate amount not to exceed $15,000,000, against which amount
shall be credited any funds
78
from the subsequent sale of any real property (including leasehold interests) or
fixtures purchased or developed in connection therewith; plus
(b) of any other type in amounts not exceeding the amount set forth
below (the "Base Amount") for each of the fiscal years of the Company (or other
period) set forth below:
Fiscal Year Base Amount
----------- -----------
2001 $20,000,000
2002 $20,000,000
2003 $25,000,000
2004 $30,000,000
provided, however, that (i) for any fiscal year of the Company, the
Base Amount for such fiscal year set forth above shall be increased by an amount
equal to the aggregate amount of proceeds received by the Company or any of its
Subsidiaries in such fiscal year with respect to sales of real property by the
Company or such Subsidiary or dispositions under subsection 8.5(f) or 8.5(g),
(ii) for any fiscal year of the Company, the Base Amount for such fiscal year
set forth above shall be increased by the amount of any net cash proceeds from
the issuance of Capital Stock of Holdings to, or any capital contribution by,
the Investors and (iii) for any fiscal year of the Company, the Base Amount for
such fiscal year set forth above (as increased with respect to such fiscal year
pursuant to clause (i) of this proviso) may be increased by an amount not in
excess of $5,000,000 by carrying over to such fiscal year the unused portion of
the Base Amount for the immediately preceding fiscal year (as increased pursuant
to this proviso).
8.10 Limitation on Dividends. Declare any dividends on any shares of
any class of stock, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, retirement or
other acquisition of any shares of any class of stock, or any warrants or
options to purchase such stock, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Company or any of its
Subsidiaries; except that:
(a) Subsidiaries may pay dividends to the Company or to
Subsidiaries which are directly or indirectly wholly owned by the Company;
(b) the Company may pay or make dividends or distributions to any
holder of its capital stock in the form of additional shares of Capital Stock of
the same class and type, provided such shares of Capital Stock are pledged to
the Administrative Agent for the benefit of the Lenders; and
(c) the Company may pay dividends or make other distributions:
(i) to Holdings in amounts equal to amounts required for
Holdings to pay franchise taxes and other fees required to maintain its
corporate existence and provide for other operating costs;
79
(ii) to Holdings in amounts equal to amounts required for
Holdings to pay Federal, state and local income taxes to the extent such
income taxes are attributable to the income of the Company and its
Subsidiaries; and
(iii) to Holdings in amounts equal to amounts expended by
Holdings to repurchase Capital Stock of Holdings owned by former employees
of the Company or its Subsidiaries or their assigns, estates and heirs,
provided that the aggregate amount paid, loaned or advanced to Holdings
pursuant to this clause (iii) shall not, in the aggregate, exceed the sum
of $2,500,000 plus any amounts contributed by Holdings to the Company as a
result of resales of such repurchased shares of Capital Stock,
provided that the Company will not, and will not permit any of its Subsidiaries
to enter into or be party to, or make any payment under, any Synthetic Purchase
Agreement.
8.11 Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate except for transactions
which are otherwise permitted under this Agreement and which are in the ordinary
course of the Company's or a Subsidiary's business and which are upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than it
would obtain in a hypothetical comparable arm's length transaction with a Person
not an Affiliate; provided, however, that nothing in this subsection 8.11 shall
prohibit the Company or any of its Subsidiaries from engaging in the following
transactions: (i) the performance of the Company's or such Subsidiary's
obligations under any employment contract, collective bargaining agreement,
employee benefit plan, related trust agreement or any other similar arrangement
heretofore or hereafter entered into in the ordinary course, (ii) payment of
compensation to employees, officers, directors or consultants in the ordinary
course of business, (iii) maintenance of benefit programs or arrangements for
employees, officers or directors, including, without limitation, vacation plans,
health and life insurance plans, deferred compensation plans, and retirement or
savings plans and similar plans and (iv) the provision of services and the
performance of obligations contemplated to be provided and performed by the
Company under the PartsAmerica Services Agreement.
8.12 Prepayments and Amendments of Permanent Subordinated Debt,
Convertible Debt and Senior Unsecured Debt. (a) Optionally prepay, optionally
retire, optionally redeem, optionally purchase, optionally defease, optionally
exchange, or make any mandatory prepayment or any mandatory repurchase of any
Permanent Subordinated Debt, any Convertible Debt (except to convert the
Convertible Debt to equity) or any Senior Unsecured Debt (other than the
refinancing of the Permanent Subordinated Debt contemplated in the definition
thereof) or pay any interest on the Permanent Subordinated Debt, Convertible
Debt or on the Senior Unsecured Debt in cash if such interest may be paid by the
issuance of additional Permanent Subordinated Debt, the issuance of additional
Convertible Debt or by the issuance of additional Senior Unsecured Debt,
respectively, or (b) amend, supplement or otherwise modify any documentation
governing any Permanent Subordinated Debt, Convertible Debt or any Senior
Unsecured Debt (other than (i) amendments to such Permanent Subordinated Debt,
Convertible Debt or Senior Unsecured Debt which reduce the interest rate or
extend the maturity thereof and (ii) waivers of compliance by the Company with
any of the terms or conditions of such
80
Permanent Subordinated Debt, Convertible Debt or Senior Unsecured Debt (except
those terms or conditions which by their terms are for the benefit of the
Lenders)).
8.13 Limitation on Changes in Fiscal Year. Permit the fiscal year of
the Company to end on a day other than the Sunday closest to January 31.
8.14 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Company is engaged on the Closing Date or which are directly related
thereto.
8.15 Limitation on Interest Rate Agreements. Enter into, create,
incur, assume or suffer to exist any Interest Rate Agreements or obligations in
respect thereof except in the ordinary course of business for non-speculative
purposes.
Section 9. EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the
following events:
(a) The Company shall fail (i) to pay any principal of any Note when
due in accordance with the terms hereof or thereof or to reimburse the Issuing
Lender in accordance with subsection 3.8 or (ii) pay any interest on any Loan or
any other amount payable hereunder within five days after any such interest or
other amount becomes due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by any Credit
Party in any Credit Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) (i) The Company shall default in the observance or performance
of any agreement contained in subsection 7.7(a) or Section 8 of this Agreement
or Sections 6.8 and 6.10 of the Guarantee and Collateral Agreement; (ii)
Holdings shall default in the observance or performance of any agreement
contained in Section 7.1 and of the Guarantee and Collateral Agreement or (iii)
any Subsidiary shall default in the observance or performance of corresponding
provisions of the Guarantee and Collateral Agreement; or
(d) Any Credit Party shall default in the observance or performance
of any other agreement contained in any Credit Document and such default shall
continue unremedied for a period of 30 days; or
(e) Holdings, the Company or any of its Subsidiaries shall (i)
default in any payment of principal of or interest on or other amounts in
respect of any Indebtedness (other than the Loans, the L/C Obligations and any
inter-company debt) or Interest Rate Agreement or in the payment of any
Contingent Obligation, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness, Interest Rate Agreement
or Contingent Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness, Interest Rate Agreement or Contingent Obligation or contained in
any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or other
event or
81
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Contingent Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity, any applicable grace period having expired, or
such Contingent Obligation to become payable, any applicable grace period having
expired; in each case, provided that the aggregate principal amount of all such
Indebtedness, Interest Rate Agreements and Contingent Obligations under which a
payment default exists as in (a) above or which would then become due or payable
equals or exceeds $10,000,000; or
(f) (i) The Company or any of its Subsidiaries or Holdings shall
commence any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it as bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets, or the
Company or any of its Subsidiaries or Holdings shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against the
Company or any of its Subsidiaries or Holdings any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against the Company or any of its Subsidiaries or
Holdings any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Company or any
of its Subsidiaries or Holdings shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the Company or any of its
Subsidiaries or Holdings shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan
which is not otherwise exempted, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is
likely to result in the termination of such Single Employer Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA, (v) the Company or any Commonly Controlled Entity shall incur
any material liability in connection with a withdrawal from, or the Insolvency
or Reorganization of, a Multiemployer Plan; and in each case in clauses (i)
through (v) above, such event or condition, together with all other such events
or conditions relating to a Plan, if any, would be reasonably likely to subject
the Company or any of its Subsidiaries to any tax, penalty or other liabilities
in the aggregate material in relation to the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole; or
82
(h) One or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries involving in the aggregate a liability (not
paid or fully covered by insurance) of $10,000,000 or more and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within the time required by the terms of such judgment; or
(i) Any Credit Document shall cease, for any reason, to be in full
force and effect or any Credit Party or any of its Subsidiaries shall so assert
in writing, or the Guarantee and Collateral Agreement shall cease to be
effective to grant a perfected Lien on the collateral described therein with the
priority purported to be created thereby (other than as a result of any action
or inaction on the part of the Administrative Agent or the Lenders), subject to
such exceptions as may be permitted therein, and such condition shall continue
unremedied for 30 days after notice thereof to the Company by the Administrative
Agent or any Lender; or
(j) There shall have occurred (1) a Change of Control, (2) a "change
of control" under the Permanent Subordinated Note Indenture or (3) a "change of
control" under the Senior Unsecured Note Indenture; or
(k) Holdings shall engage in any business or activity other than
owning the Capital Stock of the Company and activities reasonably incidental
thereto;
(l) (i) There shall have occurred any amendment, supplement or other
modification of any of the Permanent Subordinated Debt or any Senior Unsecured
Debt, or the documents governing such Permanent Subordinated Debt or Senior
Unsecured Debt, which in any such case shall not have been consented to in
advance in writing by the Administrative Agent and the Required Lenders, except
(A) as otherwise expressly permitted by subsection 8.12 or (B) to the extent
such amendment, supplement or modification gives effect to any prepayment,
retirement or redemption of Permanent Subordinated Debt or Senior Unsecured Debt
expressly permitted by this Agreement or (ii) the subordination provisions of
any document governing any Permanent Subordinated Debt shall cease, for any
reason, to be valid or any Credit Party or any of its Subsidiaries shall so
assert in writing;
then, and in any such event, (a) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Company,
automatically (i) the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement, the Notes and the other Credit Documents shall immediately become due
and payable, and (ii) all obligations of the Company in respect of the Letters
of Credit, although contingent and unmatured, shall become immediately due and
payable and the Issuing Lender's obligations to issue the Letters of Credit
shall immediately terminate and (b) if such event is any other Event of Default,
so long as any such Event of Default shall be continuing, either or both of the
following actions may be taken: (i) with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Company, declare the Commitments
and the Issuing Lender's obligations to issue the Letters of Credit to be
terminated forthwith, whereupon the Commitments and such obligations shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice of default to the Company,
83
(A) declare all or a portion of the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the Notes to be
due and payable forthwith, whereupon the same shall immediately become due and
payable, and (B) declare all or a portion of the obligations of the Company in
respect of the Letters of Credit, although contingent and unmatured, to be due
and payable forthwith, whereupon the same shall immediately become due and
payable and/or demand that the Company discharge any or all of the obligations
supported by the Letters of Credit by paying or prepaying any amount due or to
become due in respect of such obligations. All payments under this Section 9 on
account of undrawn Letters of Credit shall be made by the Company directly to a
cash collateral account established by the Administrative Agent for such purpose
for application to the Company's reimbursement obligations under subsection 3.8
as drafts are presented under the Letters of Credit, with the balance, if any,
to be applied to the Company's obligations under this Agreement and the Notes as
the Administrative Agent shall determine with the approval of the Required
Lenders. Except as expressly provided above in this Section 9, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
Section 10. THE ADMINISTRATIVE AGENT; THE ISSUING LENDER;
OTHER AGENTS
10.1 Appointment. Each Lender hereby irrevocably designates and
appoints JPMorgan Chase Bank as the Administrative Agent, CSFB as the
Syndication Agent and UBS as the Documentation Agent under this Agreement and
irrevocably authorizes Chase as Administrative Agent for such Lender, to take
such action on its behalf under the provisions of the Credit Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of the Credit Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in this Agreement, neither the Administrative Agent,
the Syndication Agent nor the Documentation Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into the
Credit Documents or otherwise exist against the Administrative Agent, the
Syndication Agent or the Documentation Agent.
10.2 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement and each of the other Credit Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care, except as otherwise
provided in subsection 10.3.
10.3 Exculpatory Provisions. None of the Administrative Agent or any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with the Credit Documents (except for its
or such Person's own gross negligence or willful misconduct) or (ii) responsible
in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Credit Party or any officer thereof
contained in the Credit Documents or in any certificate, report, statement or
other document referred to or
84
provided for in, or received by the Administrative Agent under or in connection
with the Credit Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Credit Documents or for any
failure of any Credit Party to perform its obligations thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, any Credit Document or to inspect the
properties, books or records of any Credit Party.
10.4 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, the writings maintained in the Register, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order 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,
without limitation, counsel to the Company), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent may deem
and treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under any Credit Document
unless it shall first receive such advice or concurrence of the Required Lenders
(or, where a higher percentage of the Lenders is expressly required hereunder,
such Lenders) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders 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
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under any Credit Document in accordance with a request
of the Required Lenders (or, where a higher percentage of the Lenders is
expressly required hereunder, such Lenders), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Notes.
10.5 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received written notice from a
Lender or the Company referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall promptly give notice thereof to the Lenders. The Administrative
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; provided that unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
10.6 Non-Reliance on Administrative Agent, Syndication Agent,
Documentation Agent and Other Lenders. Each Lender expressly acknowledges that
none of the Administrative Agent, the Syndication Agent, the Documentation Agent
or any of their respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by the Administrative Agent, the Syndication Agent, the
Documentation Agent or any such Person hereinafter taken, including any review
of the affairs of the Credit Parties, shall be deemed to constitute any
representation or warranty by the
85
Administrative Agent, the Syndication Agent, the Documentation Agent or any
such Person to any Lender. Each Lender represents to the Administrative Agent,
the Syndication Agent and the Documentation Agent that it has, independently and
without reliance upon the Administrative Agent, the Syndication Agent, the
Documentation Agent or any such Person or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of Holdings, the Company and its
Subsidiaries and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent, the Syndication Agent, the
Documentation Agent or any such Person or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under the Credit Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of Holdings, the Company and its
Subsidiaries. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent, the Administrative
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property,
financial and other condition or creditworthiness of the Credit Parties which
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
10.7 Indemnification. The Lenders agree to indemnify each of the
Administrative Agent, the Syndication Agent, the Documentation Agent and the
Lead Arrangers in its capacity as such (to the extent not reimbursed by the
Credit Parties and without limiting the obligation of the Credit Parties to do
so), ratably according to the respective amounts of their respective Commitments
(or, to the extent such Commitments have been terminated, according to the
respective outstanding principal amounts of the Loans and the L/C Obligations
and the respective obligations, whether as Issuing Lender or a Participating
Lender, under the Letter of Credit), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the payment of the Notes) be
imposed on, incurred by or asserted against the Administrative Agent, the
Syndication Agent, the Documentation Agent or any Lead Arranger in any way
relating to or arising out of the Credit Documents or any documents contemplated
by or referred to herein or the transactions contemplated hereby or any action
taken or omitted by the Administrative Agent, the Syndication Agent, the
Documentation Agent or any Lead Arranger under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's, the Syndication Agent's, the Documentation Agent's or
either of the Lead Arranger's respective gross negligence or willful misconduct.
The agreements in this subsection 10.7 shall survive the payment of the Notes
and all other amounts payable hereunder.
10.8 The Administrative Agent, Syndication Agent and Documentation
Agent, Each in its Individual Capacity. The Administrative Agent, the
Syndication Agent, the Documentation Agent and their respective Affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with Holdings, the Company and its Subsidiaries as
86
though the Administrative Agent was not the Administrative Agent hereunder, the
Syndication Agent was not the Syndication Agent and the Documentation Agent was
not the Documentation Agent hereunder. With respect to its Loans made or renewed
by it and any Note issued to either of them, the Administrative Agent, the
Syndication Agent and the Documentation Agent shall each have the same rights
and powers, duties and liabilities under the Credit Documents as any Lender and
may exercise the same as though it were not the Administrative Agent, the
Syndication Agent and the Documentation Agent, respectively, and the terms
"Lender" and "Lenders" shall include the Administrative Agent, the Syndication
Agent and the Documentation Agent in their respective individual capacities.
10.9 Successor Agent. The Administrative Agent may resign as
Administrative Agent upon 30 days' notice to the Lenders. If the Administrative
Agent shall resign as Administrative Agent under the Credit Documents, then the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders which successor agent shall, so long as no Event of Default has occurred
and is continuing, be approved by the Company, which shall not unreasonably
withhold its approval, whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent and the term
"Administrative Agent" shall mean such successor agent effective upon its
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Notes. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under the Credit
Documents.
10.10 Issuing Lender as Issuer of Letters of Credit. Each Lender
which is a holder of a Revolving Commitment (collectively "Revolving Lenders")
hereby acknowledges that the provisions of this Section 10 shall apply to the
Issuing Lender, in its capacity as issuer of the Letters of Credit, in the same
manner as such provisions are expressly stated to apply to the Administrative
Agent, except that obligations to indemnify the Issuing Lender shall be ratable
among the Revolving Lenders in accordance with their respective Revolving
Commitments (or, if the Revolving Commitments have been terminated, the
outstanding principal amount of their respective Revolving Loans and L/C
Obligations and their respective participating interests in the outstanding
Letters of Credit).
Section 11. MISCELLANEOUS
11.1 Amendments and Waivers. Except as otherwise expressly set forth
in this Agreement, no Credit Document nor any terms thereof may be amended,
supplemented, waived or modified except in accordance with the provisions of
this subsection 11.1. With the written consent of the Required Lenders, the
Administrative Agent and the respective Credit Parties or their Subsidiaries
may, from time to time, enter into written amendments, supplements or
modifications hereto for the purpose of adding any provisions to any Credit
Document to which they are parties or changing in any manner the rights of the
Lenders or of any such Credit Party or its Subsidiaries thereunder or waiving,
on such terms and conditions as the Administrative Agent may specify in such
instrument, any of the requirements of any such Credit Document or any Default
or Event of Default and its consequences; provided, however, that:
87
(a) no such waiver and no such amendment, supplement or modification
shall (i) release all or substantially all of the collateral without the written
consent of all Lenders or (ii) release collateral not required or permitted by
any Credit Document to be released and which, in the aggregate with all other
collateral released pursuant to this clause (a) (ii) (other than collateral
released pursuant to the proviso to this clause (a)) during the calendar year in
which such proposed release would be effected and the immediately preceding
calendar year, has fair market value on the proposed date of release in excess
of 20% of the fair market value of all collateral on such date without the
written consent of the Supermajority Lenders; provided that, notwithstanding the
foregoing, this clause (a) shall not be applicable to and no consent shall be
required for (i) releases of collateral in connection with any Asset Sales
permitted by subsection 8.5, (ii) releases of collateral in accordance with
subsection 11.11 or (iii) upon the reincorporation of the Company or any
Subsidiary in a new jurisdiction or the creation of a new Subsidiary of the
Company, any release of collateral in connection with the transfer of such
released collateral to such reincorporated entity or new Subsidiary in
compliance with subsection 8.4, provided that the Administrative Agent, in its
sole discretion, determines that such release and transfer, together with any
grant and perfection of a new Lien therein in favor of the Administrative Agent,
will cause no material impairment of the value of the collateral taken as a
whole, after giving effect to such release and transfer;
(b) no such waiver and no such amendment, supplement or modification
shall extend the final maturity date of any Note or the scheduled payment date
of any Loan, or reduce the rate or extend the time of payment of interest
thereon, or change the method of calculating interest thereon, or reduce any fee
payable to the Lenders hereunder, or reduce the principal amount thereof, or
change the amount of any Lender's Commitment or Commitment Percentage, or amend,
modify or waive any provision of subsection 4.9(b) or this subsection 11.1 or
reduce the percentage specified in the definition of Required Lenders or reduce
the percentage specified in the definition of Supermajority Lenders or reduce
the percentage specified in the definition of Section 4.4 Lenders or consent to
the assignment or transfer by any Credit Party of any of its rights and
obligations under any Credit Document, in each case, without the prior written
consent of each Lender directly affected thereby;
(c) no such waiver and no such amendment, supplement or modification
affecting the then Administrative Agent or Issuing Lender shall amend, modify or
waive any provision of Section 10 without the written consent of such
Administrative Agent or Issuing Lender;
(d) without the consent of the Lenders which are holders of the
Revolving Loans only, the Lenders which are holders of all the Term Loans may
amend this Agreement and the Term Loan Notes to extend the maturities of the
Term Loans; and without the consent of the Lenders which are holders of the Term
Loans, all the Revolving Lenders may amend this Agreement and the Revolving
Notes to extend the Revolving Termination Date; and
(e) no such waiver, and no such amendment, supplement or
modification shall amend, modify or waive the order of application of
prepayments specified in subsection 4.4(a) or 4.4(b)(v) without the written
consent of the Section 4.4 Lenders.
Any such waiver and any such amendment, supplement or modification
described in this subsection 11.1 shall apply equally to each of the Lenders and
shall be binding upon each
88
Credit Party and its Subsidiaries, the Lenders, the Administrative Agent and
Issuing Lender and all future holders of the Notes and the Loans. Any extension
of a Letter of Credit by the Issuing Lender shall be treated hereunder as a new
Letter of Credit. In the case of any waiver, the Credit Parties, the Lenders,
the Administrative Agent and Issuing Lender shall be restored to their former
position and rights hereunder and under the outstanding Notes, and any Default
or Event of Default waived shall be deemed to be cured and not continuing; but
no such waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.
11.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy or telex, if one is listed), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or three Business Days after being deposited in the mail, postage prepaid, or,
in the case of telecopy notice, when sent, confirmation of receipt received, or,
in the case of telex notice, when sent, answerback received, addressed as
follows in the case of the Company and the Administrative Agent and as set forth
in Schedule I in the case of any Lender, or to such other address as may be
hereafter notified by the respective parties hereto and any future holders of
the Notes:
The Company: CSK Auto, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
The Administrative Agent: JPMorgan Chase Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: JPMorgan Chase Bank Loan and Agency Services
1 Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsections 3.4, 3.5, 4.1, 4.2, 4.3 and 4.4 shall not
be effective until received and
89
provided that the failure to provide the copies of notices to the Company
provided for in this subsection 11.2 shall not result in any liability to the
Administrative Agent.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, 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. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement, the Letters of Credit and the Notes.
11.5 Payment of Expenses and Taxes. The Company agrees (a) to pay or
reimburse each of the Administrative Agent, the Syndication Agent and the Lead
Arrangers for all its reasonable out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, the Credit Documents and any other
documents prepared in connection herewith, and the consummation of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of one counsel to the Administrative Agent and
the specialized due diligence fees and appraisal fees incurred in connection
with collateral reviews, (b) to pay or reimburse the Administrative Agent, the
Syndication Agent and each Lender for all their costs and expenses incurred in
connection with, and to pay, indemnify, and hold each of them harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever arising out of or in connection with, the enforcement or
preservation of any rights under any Credit Document and any such other
documents, including, without limitation, reasonable fees and disbursements of
counsel to the Administrative Agent, the Syndication Agent and each Lender
incurred in connection with the foregoing and in connection with advising each
of them with respect to its rights and responsibilities under this Agreement and
the documentation relating thereto, (c) to pay, indemnify, and to hold the
Administrative Agent, the Syndication Agent and each Lender harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other similar taxes
(other than withholding taxes), if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, any Credit
Document and any such other documents, and (d) to pay, indemnify and hold the
Administrative Agent, the Syndication Agent, each Lead Arranger and each Lender
and their respective Affiliates, officers, directors, trustees, employees or
agents harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including, without limitation,
reasonable fees and disbursements of counsel) which may be incurred by or
asserted against the Administrative Agent, the Syndication Agent, such Lead
Arranger, such Lender or such Affiliates, officers, directors, trustees,
employees, and agents (x)
90
arising out of or in connection with any investigation, litigation or proceeding
related to this Agreement, the other Credit Documents, the proceeds of the Loans
or the Permanent Subordinated Debt and the transactions contemplated by or in
respect of such use of proceeds, or any of the other transactions contemplated
hereby, whether or not the Company, the Administrative Agent, the Syndication
Agent, any Lead Arranger or any of the Lenders or such Affiliates, officers or
directors is a party thereto, including, without limitation, any of the
foregoing relating to the violation of, noncompliance with or liability under,
any Environmental Law applicable to the operations of the Company, any of its
Subsidiaries or any of the facilities and properties owned, leased or operated
by the Company or any of its Subsidiaries, or (y) without limiting the
generality of the foregoing, by reason of or in connection with the execution
and delivery or transfer of, or payment or failure to make payments under,
Letters of Credit (it being agreed that nothing in this subsection 11.5(d)(y) is
intended to limit the Company's obligations pursuant to subsection 3.8) (all the
foregoing, collectively, the "indemnified liabilities"), provided that the
Company shall have no obligation hereunder with respect to indemnified
liabilities of the Administrative Agent, the Syndication Agent, any Lead
Arranger or any Lender or any of their respective Affiliates, officers and
directors arising from (i) the gross negligence or willful misconduct of the
Administrative Agent, the Syndication Agent, such Lead Arranger or such Lender
or their respective directors or officers or (ii) legal proceedings commenced
against the Administrative Agent, the Syndication Agent, any Lead Arranger or
any Lender by any security holder or creditor thereof arising out of and based
upon rights afforded any such security holder or creditor solely in its capacity
as such or (iii) legal proceedings commenced against the Administrative Agent,
the Syndication Agent, any Lead Arranger or any such Lender by any Transferee
(as defined in subsection 11.6(f)). The agreements in this subsection 11.5 shall
survive repayment of the Loans and all other amounts payable hereunder.
11.6 Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of the Company,
the Lenders and the Agents, all future holders of the Notes and the Loans, 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 each Lender.
(b) Any Lender other than any Conduit Lender may, in the ordinary
course of its commercial banking or lending business and in accordance with
applicable law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such Lender, any
participating interest in the Letters of Credit of such Lender, any Note held by
such Lender, any Commitment of such Lender or any other interest of such Lender
hereunder. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under this Agreement and the other
Credit Documents to the other parties to this Agreement shall remain unchanged,
such Lender shall remain solely responsible for the performance thereof, such
Lender shall remain the holder of any such Note for all purposes under this
Agreement and Holdings, the Company and the Administrative Agent shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Credit Documents. The
Company agrees that if amounts outstanding under this Agreement and the Notes
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 setoff in respect of its participating interest in
amounts owing under this Agreement and any Note to the same extent as if the
amount of its
91
participating interest were owing directly to it as a Lender under this
Agreement or any Note; provided, that such right of setoff shall be subject to
the obligation of such Participant to share with the Lenders, and the Lenders
agree to share with such Participant, as provided in subsection 11.7. The
Company also agrees that each Participant shall be entitled to the benefits of
subsections 3.10, 4.11 and 4.12 with respect to its participation in the Letters
of Credit and in the Commitments and the Loans outstanding from time to time as
if it were a Lender; provided, that no Participant shall be entitled to receive
any greater amount pursuant to any such subsection than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred. Each Lender agrees that the participation agreement
pursuant to which any Participant acquires its participating interest (or any
other document) may afford voting rights to such Participant, or any right to
instruct such Lender with respect to voting hereunder, only with respect to
matters requiring the consent of either all of the Lenders hereunder or all of
the Lenders holding the relevant Term Loans or Revolving Commitments subject to
such participation.
(c) Subject to paragraph (g) of this subsection 11.6, any Lender
other than any Conduit Lender may, in the ordinary course of its commercial
banking, lending or other business and in accordance with applicable law, (i) at
any time and from time to time assign all or any part of its rights and
obligations under this Agreement and the Notes to any Lender or any Affiliate
thereof and (ii) with the consent of the Company and the Administrative Agent
(which in each case shall not be unreasonably withheld or delayed) at any time
and from time to time assign to one or more additional banks, mutual funds or
financial institutions or entities (each, an "Assignee"), all or any part of its
rights and obligations under this Agreement and the Notes, pursuant to an
Assignment and Acceptance, executed by such Assignee, such transferor Lender
(and, in the case of an Assignee that is not then a Lender or an Affiliate
thereof, by the Company and the Administrative Agent), and delivered to the
Administrative Agent for its acceptance and recording in the Register (as
defined below); provided that, unless otherwise consented to by the Company and
the Administrative Agent, (A) each such sale pursuant to clause (ii) of this
subsection 11.6(c), for (i) Term Loans, shall be $2,000,000, and, after giving
effect thereto, the assigning Lender shall have Term Loan Commitments and Term
Loans aggregating at least $2,000,000 and (ii) Revolving Loans shall be
$5,000,000, and, after giving effect thereto, the assigning Lender shall have
Revolving Commitments and Revolving Loans aggregating at least $5,000,000, in
each case unless the assigning Lender is transferring all of its rights and
obligations. Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Assignment and Acceptance,
(x) the Assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment, if any, as set forth therein, and (y) the assigning
Lender thereunder shall, to the extent of the interest transferred, as reflected
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of a Assignment and Acceptance covering all or the
remaining portion of a transferor Lender's rights and obligations under this
Agreement, such transferor Lender shall cease to be a party hereto, except that
it shall remain entitled to the benefit of all indemnities and other provisions
stated to survive the termination hereof). Notwithstanding the foregoing, any
Conduit Lender may assign at any time to its designating Lender hereunder
without the consent of the Company or the Administrative Agent any or all of
92
the Loans it may have funded hereunder and pursuant to its designation agreement
and without regard to the limitations set forth in the first sentence of this
Section 11.6(c).
(d) The Administrative Agent, which for purposes of this subsection
11.6(d) only shall be deemed the agent of the Company, shall maintain at the
address of the Administrative Agent referred to in subsection 11.2 a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amounts of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Company, the Administrative Agent and the Lenders shall
treat each Person whose name is recorded in the Register as the owner of a Loan
or other obligation hereunder as the owner thereof for all purposes of this
Agreement and the other Credit Documents, notwithstanding any notice to the
contrary. Any assignment of any Loan or other obligation hereunder shall be
effective only upon appropriate entries with respect thereto being made in the
Register. The Register shall be available for inspection by the Company or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, by the Company and the Administrative
Agent), together with payment to the Administrative Agent of a registration and
processing fee of $4,000 if the Assignee is not a Lender prior to the execution
of such supplement and $1,000 otherwise, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Company. On or prior to such effective date, the Company at its own expense,
shall execute and deliver to the Administrative Agent (in exchange for any or
all of the Term Loan Notes, or Revolving Notes of the assigning Lender, if any )
new Term Loan Notes, or Revolving Notes, as the case may be, to the order of
such Assignee (if requested by such Assignee) in an amount equal to the
Revolving Commitment or the Term Loans, as the case may be, assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Commitment or any Term Loans hereunder, new Term Loan Notes, or
Revolving Notes, as the case may be, to the order of the assigning Lender in an
amount equal to the Commitment or such Term Loans, as the case may be, retained
by it hereunder (if requested). Such new Notes shall be dated the Closing Date
and shall otherwise be in the form of the Notes replaced thereby.
(f) The Lenders agree that they will use reasonable efforts to
protect the confidentiality of any confidential information concerning Holdings,
the Company and its Subsidiaries and Affiliates. Notwithstanding the foregoing,
the Company authorizes each Lender to disclose to any Participant or Assignee
(each, a "Transferee") and any prospective Transferee or to any Person who is
required to approve, structure or administer the Loans on behalf of a Lender any
and all information in such Lender's possession concerning Holdings, the Company
and its Subsidiaries which has been delivered to such Lender by or on behalf of
Holdings or the Company pursuant to this Agreement or which has been delivered
to such Lender by or on behalf of Holdings, or the Company in connection with
such Lender's credit evaluation of Holdings, the Company and its Subsidiaries
and Affiliates prior to becoming a party to this Agreement; provided that each
Lender shall cause its respective prospective
93
Transferees and such other Persons to agree in writing to protect the
confidentiality of any confidential information concerning Holdings, the Company
and its Subsidiaries.
(g) If, pursuant to this subsection 11.6, any interest in this
Agreement or any Note is transferred to any Transferee which is organized under
the laws of any jurisdiction other than the United States or any State thereof,
the transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer either (1) in the case of a Transferee that is a
"bank" within the meaning of Section 881(c)(3)(A) of the Code, (i) to represent
to the transferor Lender (for the benefit of the transferor Lender, the
Administrative Agent and the Company) that under applicable law and treaties no
taxes will be required to be withheld by the Administrative Agent, the Company
or the transferor Lender with respect to any payments to be made to such
Transferee in respect of the Loans or L/C Participating Interests, (ii) to
furnish to the transferor Lender (and, in the case of any Transferee registered
in the Register, the Administrative Agent and the Company) either U.S. Internal
Revenue Service Form W-8BEN or U.S. Internal Revenue Service Form W-8ECI
(wherein such Transferee claims entitlement to complete exemption from U.S.
federal withholding tax on all interest payments hereunder) and (iii) to agree
(for the benefit of the transferor Lender, the Administrative Agent and the
Company) to provide the transferor Lender (and, in the case of any Transferee
registered in the Register, the Administrative Agent and the Company) a new Form
W-8BEN or Form W-8ECI upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such Transferee,
and to comply from time to time with all applicable U.S. laws and regulations
with regard to such withholding tax exemption or (2) in the case of any
Transferee that is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code, (i) to represent to the transferor Lender (for the benefit of the
transferor Lender, the Administrative Agent and the Company) that it is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Code, (ii) to furnish
to the transferor Lender (and, in the case of any Transferee registered in the
Register, to the Company), with a copy to the Administrative Agent, (A) a
Subsection 4.11(d)(2) Certificate and (B) two (2) accurate and complete original
signed copies of Internal Revenue Service form W-8BEN, certifying to such
Transferee's legal entitlement on the date of the effectiveness of such transfer
to an exemption from U.S. withholding tax under the provisions of Section 881(c)
of the Code with respect to all payments to be made under this Agreement, and
(iii) to agree (for the benefit of the transferor Lender, the Administrative
Agent and the Company), to the extent legally entitled to do so, upon reasonable
request by the transferor Lender (or, in the case of any Transferee registered
in the Register, the Administrative Agent or the Company), to provide to the
transferor Lender, the Administrative Agent and the Company such other forms as
may be required in order to establish the legal entitlement of such Transferee
to an exemption from withholding tax with respect to payments under this
Agreement.
(h) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
(i) Each of Holdings, the Company, each Lender and the Agents hereby
confirms that it will not institute against a Conduit Lender that has been
identified to the Company in
94
writing by such Conduit Lender in connection with the Credit Documents or join
any other Person in instituting against a Conduit Lender in connection with the
Credit Documents any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding under any state bankruptcy or similar law, for one year
and one day after the payment in full of the latest maturing commercial paper
note issued by such Conduit Lender; provided, however, that each Lender
designating any Conduit Lender hereby agrees to indemnify, save and hold
harmless each other party hereto for any loss, cost, damage or expense arising
out of its inability to institute such a proceeding against such Conduit Lender
during such period of forbearance.
11.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender")
shall at any time receive any payment of all or part of any of its Loans or L/C
Participating Interests, as the case may be, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in clause (f) of
Section 9, or otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender, if any, in respect of such other
Lender's Loans or L/C Participating Interests, as the case may be, or interest
thereon, such benefitted Lender shall purchase for cash from the other Lenders
such portion of each such other Lender's Loans or L/C Participating Interests,
as the case may be, or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. The
Company agrees that each Lender so purchasing a portion of another Lender's
Loans and/or L/C Participating Interests may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion. The
Administrative Agent shall promptly give the Company notice of any set-off,
provided that the failure to give such notice shall not affect the validity of
such set-off.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Company,
any such notice being expressly waived by the Company to the extent permitted by
applicable law, upon the filing of a petition under any of the provisions of the
federal bankruptcy code or amendments thereto, by or against; the making of an
assignment for the benefit of creditors by; the application for the appointment,
or the appointment, of any receiver of, or of any substantial portion of the
property of; the issuance of any execution against any substantial portion of
the property of; the issuance of a subpoena or order, in supplementary
proceedings, against or with respect to any substantial portion of the property
of; or the issuance of a warrant of attachment against any substantial portion
of the property of; the Company to set-off and apply against any indebtedness,
whether matured or unmatured, of the Company to such Lender, any amount owing
from such Lender to the Company, at or at any time after, the happening of any
of the above mentioned events, and as security for such indebtedness, the
Company hereby grants to each Lender a continuing security interest in any and
all deposits, accounts or moneys of the Company then or thereafter maintained
with such Lender, subject in each case to subsection 11.7(a) of this Agreement.
The aforesaid right of set-off may be exercised by such Lender against the
Company or against any trustee in bankruptcy, debtor in possession, assignee for
the benefit of creditors, receiver or execution, judgment or attachment creditor
of the Company, or against anyone else claiming
95
through or against the Company or such trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, receiver, or execution,
judgment or attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by such Lender prior to the making, filing
or issuance, or service upon such Lender of, or of notice of, any such petition;
assignment for the benefit of creditors; appointment or application for the
appointment of a receiver; or issuance of execution, subpoena, order or warrant.
Each Lender agrees promptly to notify the Company and the Administrative Agent
after any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application.
11.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute 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 Administrative Agent. This Agreement
shall become effective with respect to the Company, the Administrative Agent and
the Lenders when the Administrative Agent shall have received copies of this
Agreement executed by the Company and the Lenders, or, in the case of any
Lender, shall have received telephonic confirmation from such Lender stating
that such Lender has executed counterparts of this Agreement or the signature
pages hereto and sent the same to the Administrative Agent.
11.9 Governing Law; No Third Party Rights. This Agreement and the
Notes and the rights and obligations of the parties under this Agreement and the
Notes shall be governed by, and construed and interpreted in accordance with,
the law of the State of New York. This Agreement is solely for the benefit of
the parties hereto and their respective successors and assigns, and, except as
set forth in subsection 11.6, no other Persons shall have any right, benefit,
priority or interest under, or because of the existence of, this Agreement.
11.10 Submission to Jurisdiction; Waivers. (a) Each party
to this Agreement hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any of the other Credit
Documents, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such party at its address set forth in subsection 11.2 or at
such other address of which the Administrative Agent shall have been
notified pursuant thereto; and
96
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction.
(b) Each party hereto unconditionally waives trial by jury in any
legal action or proceeding referred to in paragraph (a) above and any
counterclaim therein.
11.11 Releases. The Administrative Agent and the Lenders agree to
cooperate with the Company and its Subsidiaries with respect to any sale or
other disposition permitted by subsection 8.5 or Liens permitted by subsection
8.2 or other transaction expressly permitted hereby and promptly take such
action and execute and deliver such instruments and documents necessary to
release or subordinate the liens and security interests created by the Security
Documents relating to any of the assets or property affected by any such sale
permitted by subsection 8.5 or Liens permitted by subsection 8.2 or other
transaction expressly permitted hereby including, without limitation, any
Uniform Commercial Code amendment, release or termination or partial release or
termination statements.
11.12 Interest. Each provision in this Agreement and each other
Credit Document is expressly limited so that in no event whatsoever shall the
amount paid, or otherwise agreed to be paid, by the Company for the use,
forbearance or detention of the money to be loaned under this Agreement or any
other Credit Document or otherwise (including any sums paid as required by any
covenant or obligation contained herein or in any other Credit Document which is
for the use, forbearance or detention of such money), exceed that amount of
money which would cause the effective rate of interest to exceed the highest
lawful rate permitted by applicable law (the "Highest Lawful Rate"), and all
amounts owed under this Agreement and each other Credit Document shall be held
to be subject to reduction to the effect that such amounts so paid or agreed to
be paid which are for the use, forbearance or detention of money under this
Agreement or such Credit Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. Notwithstanding any provision in this Agreement or any other Credit
Document to the contrary, if the maturity of the Loans or the obligations in
respect of the other Credit Documents are accelerated for any reason, or in the
event of any prepayment of all or any portion of the Loans or the obligations in
respect of the other Credit Documents by the Company or in any other event,
earned interest on the Loans and such other obligations of the Company may never
exceed the Highest Lawful Rate, and any unearned interest otherwise payable on
the Loans or the obligations in respect of the other Credit Documents that is in
excess of the Highest Lawful Rate shall be canceled automatically as of the date
of such acceleration or prepayment or other such event and (if theretofore paid)
shall, at the option of the holder of the Loans or such other obligations, be
either refunded to the Company or credited on the principal of the Loans. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Company and the Lenders shall,
to the maximum extent permitted by applicable law, amortize, prorate, allocate
and spread, in equal parts during the period of the actual term of this
Agreement, all interest at any time contracted for, charged, received or
reserved in connection with this Agreement.
11.13 Special Indemnification. Notwithstanding any provision in this
Agreement to the contrary, (A) each Lender, or Transferee of any Lender pursuant
to subsection 11.6(g) of this Agreement, shall indemnify the Company and the
Agents, and hold each of them harmless
97
against any and all payments, expenses or taxes which the Company or the Agents
may become subject to or obligated to pay if and to the extent that, (i) on the
Closing Date or the effective date of transfer, as the case may be, such Lender,
or such Transferee of a Lender pursuant to subsection 11.6(g) of this Agreement,
(a) makes the representation and covenants set forth in subsection 4.11(d)(2) of
this Agreement, or, in the case of a Transferee, pursuant to subsection
11.6(g)(2) of this Agreement and the Assignment and Acceptance and (b) is not in
fact also qualified to make the representation and covenants set forth in
subsection 4.11(d)(1) of this Agreement or, in the case of a Transferee,
pursuant to subsection 11.6(g)(1) of this Agreement and the Assignment and
Acceptance and (ii) as a result of any Change in Law or compliance by such
Lender, or Transferee, with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority the Company
or the Agents are required to make any additional payments on account of U.S.
withholding taxes and amounts related thereto with respect to any payments under
this Agreement, any Note, or a Eurodollar Loan, made prior to such Change in Law
or request or directive, none of which payments would have been required if such
Lender, or Transferee, was qualified on the Closing Date or the date of the
transfer, as the case may be, to make the representation and covenants set forth
in subsection 4.11(d)(1) of this Agreement or pursuant to subsection 11.6(g)(1)
of this Agreement and the Assignment and Acceptance, as the case may be, and (B)
each Lender, or Transferee, agrees that to the extent any amount payable by such
Lender or Transferee pursuant to this subsection 11.13 remains unpaid on any
Interest Payment Date or the date on which any prepayment is made, the Company
shall have the right to set-off against any payment due to such Lender or
Transferee on such date any amounts owing to the Company pursuant to this
subsection 11.13.
11.14 Permitted Payments and Transactions. Notwithstanding any
provision to the contrary contained in this Agreement, the Company and its
Subsidiaries shall be permitted to pay fees and expenses pursuant to or in
respect of, the following agreements, and, in the case of clauses (a) and (c)
below, to engage in the following transactions: (a) agreements with any Person
or Persons providing for the payment of customary fees in connection with
serving as a director of the Company or any Subsidiary of the Company; (b)
agreements providing for the payment of commercially reasonable fees in
connection with any permitted financing, refinancing, sale, transfer, sale and
leaseback or other permitted disposition of any stock or assets of the Company
or its Subsidiaries; (c) the borrowing of any Indebtedness to the extent, and
upon the terms and conditions, the same is expressly permitted under subsection
8.1; and (d) agreements providing for commercially reasonable fees in connection
with any permitted purchase or acquisition of assets by the Company or any of
its Subsidiaries.
[Balance of Page Intentionally Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
CSK AUTO, INC.
By:________________________________
Name:
Title:
JPMORGAN CHASE BANK,
as Administrative Agent, Issuing Lender
and a Lender
By:________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
as Documentation Agent
By:________________________________
Name:
Title:
UBS AG, STAMFORD BRANCH,
as Syndication Agent and a Lender
By:________________________________
Name:
Title:
[ADDITIONAL LENDERS]
Annex A
PRICING GRID
Revolving and Term Loans
------------------------
Leverage Ratio Alternate Eurodollar
Base Rate Rate
Loans Loans
----- -----
Greater than
or equal to 3.50
to 1 2.50% 3.50%
Greater than
or equal to 3.00
to 1 2.25% 3.25%
Less than 3.00
to 1 2.00% 3.00%
Changes in the Applicable Margin resulting from changes in the
Consolidated Leverage Ratio shall become effective on the date (the "Adjustment
Date") on which financial statements are delivered to the Lenders (which date
shall not be prior to the date of the delivery of financial statements for the
second quarter of fiscal year 2002) pursuant to subsection 7.1(a) or (b) (but in
any event not later than the 50th day after the end of each of the first three
quarterly periods of each fiscal year or the 95th day after the end of each
fiscal year, as the case may be) and (b) and shall remain in effect until the
next change to be effected pursuant to this paragraph. If any financial
statements referred to above are not delivered within the time periods specified
in subsection 7.1, then, until such financial statements are delivered, the
Leverage Ratio shall be deemed to be the same as with respect to the immediately
preceding period; provided, however, that if such financial statements, when
actually delivered, would have required an increase in the Applicable Margin
over the Applicable Margin, in effect immediately prior to the date such
financial statements were due, the Company shall promptly pay to the Lenders and
the Administrative Agent any additional amounts of interest or fees which would
have been payable on any previous Interest Payment Date had such higher
Applicable Margin, been in effect from the date such financial statements were
required to be delivered.
Schedule I
List of Addresses for Notices; Lending Offices; Commitment Amounts
Schedule 3.5(c)
Letters of Credit
Schedule 5.12
Subsidiaries
Schedule 5.13
Fee and Leased Properties
Schedule 5.15(a)
UCC Filing Offices
Schedule 5.16
Trademarks and Copyrights
Schedule 8.1(a)
Indebtedness to Remain Outstanding
Schedule 8.2
Existing Liens
Schedule 8.3(d)
Existing Contingent Obligations