EXHIBIT 4a
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REVOLVING CREDIT AND GUARANTY AGREEMENT
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Among
KMART CORPORATION,
a Debtor and a Debtor-in-Possession under Chapter 11 of the Bankruptcy Code
as Borrower
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and
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THE SUBSIDIARIES OF THE BORROWER NAMED HEREIN,
Each a Debtor and a Debtor-in-Possession under Chapter 11 of the Bankruptcy Code
as Guarantors
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and
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THE BANKS PARTY HERETO,
and
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JPMORGAN CHASE BANK,
as Administrative Agent, Collateral Agent and Co-Collateral Monitor
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▇.▇. ▇▇▇▇▇▇ SECURITIES INC.,
as Co-Lead Arranger and Joint Bookrunner
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FLEET SECURITIES, INC.,
as Co-Lead Arranger and Joint Bookrunner,
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FLEET RETAIL FINANCE INC.
as Co-Collateral Monitor and Documentation Agent
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GENERAL ELECTRIC CAPITAL CORPORATION,
as Co-Syndication Agent and Co-Collateral Monitor
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CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH,
as Co-Syndication Agent
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Dated as of January 22, 2002
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TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS................................................................................2
SECTION 1.01 Defined Terms................................................................2
SECTION 1.02 Terms Generally.............................................................15
SECTION 2. AMOUNT AND TERMS OF CREDIT................................................................16
SECTION 2.01 Commitment of the Banks; Total Commitment Usage.............................16
SECTION 2.02 Borrowing Base..............................................................16
SECTION 2.03 Letters of Credit...........................................................16
SECTION 2.04 Issuance....................................................................18
SECTION 2.05 Nature of Letter of Credit Obligations Absolute.............................18
SECTION 2.06 Making of Loans.............................................................19
SECTION 2.07 Repayment of Loans; Evidence of Debt........................................20
SECTION 2.08 Interest on Loans...........................................................21
SECTION 2.09 Default Interest............................................................21
SECTION 2.10 Optional Termination or Reduction of Commitment.............................21
SECTION 2.11 Alternate Rate of Interest..................................................21
SECTION 2.12 Refinancing of Loans........................................................22
SECTION 2.13 Mandatory Prepayment; Commitment Termination; Cash Collateral...............23
SECTION 2.14 Optional Prepayment of Loans; Reimbursement of Banks........................23
SECTION 2.15 Reserve Requirements; Change in Circumstances...............................25
SECTION 2.16 Change in Legality..........................................................26
SECTION 2.17 Pro Rata Treatment, etc.....................................................27
SECTION 2.18 Taxes.......................................................................27
SECTION 2.19 Certain Fees................................................................28
SECTION 2.20 Commitment Fee..............................................................28
SECTION 2.21 Letter of Credit Fees.......................................................28
SECTION 2.22 Nature of Fees..............................................................29
SECTION 2.23 Priority and Liens..........................................................29
SECTION 2.24 Right of Set-Off............................................................30
SECTION 2.25 Security Interest in Letter of Credit Account...............................31
SECTION 2.26 Payment of Obligations......................................................31
SECTION 2.27 No Discharge; Survival of Claims............................................31
SECTION 3. REPRESENTATIONS AND WARRANTIES............................................................31
SECTION 3.01 Organization and Authority..................................................31
SECTION 3.02 Due Execution...............................................................32
SECTION 3.03 Statements Made.............................................................32
SECTION 3.04 Financial Statements........................................................33
SECTION 3.05 Ownership...................................................................33
SECTION 3.06 Liens.......................................................................33
SECTION 3.07 Compliance with Law.........................................................33
SECTION 3.08 Insurance...................................................................34
SECTION 3.09 Use of Proceeds.............................................................34
SECTION 3.10 Litigation..................................................................34
SECTION 3.11 Inventory Value.............................................................34
SECTION 3.12 Labor Relations.............................................................34
TABLE OF CONTENTS
(CONTINUED)
PAGE
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SECTION 4. CONDITIONS OF LENDING.....................................................................35
SECTION 4.01 Conditions Precedent to Initial Loans and Initial Letters of Credit.........35
SECTION 4.02 Conditions Precedent to Each Loan and Each Letter of Credit.................37
SECTION 5. AFFIRMATIVE COVENANTS.....................................................................38
SECTION 5.01 Financial Statements, Reports, etc..........................................38
SECTION 5.02 Corporate Existence.........................................................41
SECTION 5.03 Insurance...................................................................41
SECTION 5.04 Obligations and Taxes.......................................................41
SECTION 5.05 Notice of Event of Default, etc.............................................41
SECTION 5.06 Access to Books and Records.................................................42
SECTION 5.07 Blocked Account Arrangements................................................42
SECTION 5.08 Borrowing Base Certificate..................................................42
SECTION 5.09 Collateral Monitoring and Review............................................42
SECTION 5.10 Operating Plan..............................................................42
SECTION 5.11 Additional UCC Searches.....................................................43
SECTION 5.12 Delivery of Schedules; Supplemental Schedules...............................43
SECTION 6. NEGATIVE COVENANTS........................................................................43
SECTION 6.01 Liens.......................................................................43
SECTION 6.02 Merger, etc.................................................................44
SECTION 6.03 Indebtedness................................................................44
SECTION 6.04 Capital Expenditures........................................................44
SECTION 6.05 EBITDA......................................................................45
SECTION 6.06 Guarantees and Other Liabilities............................................45
SECTION 6.07 Chapter 11 Claims...........................................................45
SECTION 6.08 Dividends; Capital Stock....................................................45
SECTION 6.09 Transactions with Affiliates................................................45
SECTION 6.10 Investments, Loans and Advances.............................................45
SECTION 6.11 Disposition of Assets.......................................................46
SECTION 6.12 Nature of Business..........................................................46
SECTION 7. EVENTS OF DEFAULT.........................................................................46
SECTION 7.01 Events of Default...........................................................46
SECTION 8. THE AGENT.................................................................................49
SECTION 8.01 Administration by Agent.....................................................49
SECTION 8.02 Advances and Payments.......................................................50
SECTION 8.03 Sharing of Setoffs..........................................................50
SECTION 8.04 Agreement of Required Banks and Super-majority Banks........................51
SECTION 8.05 Liability of Agent..........................................................51
SECTION 8.06 Reimbursement and Indemnification...........................................51
SECTION 8.07 Rights of Agent.............................................................52
SECTION 8.08 Independent Banks...........................................................52
ii
TABLE OF CONTENTS
(CONTINUED)
PAGE
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SECTION 8.09 Notice of Transfer..........................................................52
SECTION 8.10 Successor Agent.............................................................52
SECTION 9. GUARANTY..................................................................................53
SECTION 9.01 Guaranty....................................................................53
SECTION 9.02 No Impairment of Guaranty...................................................54
SECTION 9.03 Subrogation.................................................................54
SECTION 10. MISCELLANEOUS.............................................................................54
SECTION 10.01 Notices.....................................................................54
SECTION 10.02 Survival of Agreement, Representations and Warranties, etc..................55
SECTION 10.03 Successors and Assigns......................................................55
SECTION 10.04 Confidentiality.............................................................57
SECTION 10.05 Expenses....................................................................58
SECTION 10.06 Indemnity...................................................................58
SECTION 10.07 Choice of Law...............................................................59
SECTION 10.08 No Waiver...................................................................59
SECTION 10.09 Extension of Maturity.......................................................59
SECTION 10.10 Amendments, etc.............................................................59
SECTION 10.11 Severability................................................................60
SECTION 10.12 Headings....................................................................60
SECTION 10.13 Execution in Counterparts...................................................61
SECTION 10.14 Prior Agreements............................................................61
SECTION 10.15 Further Assurances..........................................................61
SECTION 10.16 WAIVER OF JURY TRIAL........................................................61
ANNEX A Commitment Amounts
EXHIBIT A-1 - Form of Interim Order
EXHIBIT A-2 - Form of Final Order
EXHIBIT B - Form of Security and Pledge Agreement
EXHIBIT C - Form of Opinion of Counsel
EXHIBIT D - Form of Assignment and Acceptance
SCHEDULE 3.05 - Subsidiaries
SCHEDULE 3.10 - Litigation
SCHEDULE 3.12 Labor Relations
SCHEDULE 6.10 - Existing Investments
SCHEDULE 6.11 - Asset Sales
SCHEDULE 7.01(m) First Day Orders
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REVOLVING CREDIT AND GUARANTY AGREEMENT
DATED AS OF JANUARY 22, 2002
REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of January
22, 2002, among
KMART CORPORATION, a Michigan corporation (the "Borrower"), a
debtor and debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code, and certain of the direct or indirect subsidiaries of the
Borrower signatory hereto (each a "Guarantor" and collectively, the
"Guarantors"), each of which Guarantors referred to in this paragraph is a
debtor and debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code (the cases of the Borrower and the Guarantors, each a "Case" and
collectively, the "Cases"), JPMORGAN CHASE BANK, a New York banking corporation
("JPMorgan Chase"), each of the other financial institutions from time to time
party hereto (together with JPMorgan Chase, the "Banks") and JPMORGAN CHASE
BANK, as administrative agent (in such capacity, the "Agent") for the Banks.
INTRODUCTORY STATEMENT
On January 22, 2002, the Borrower and the Guarantors filed
voluntary petitions with the Bankruptcy Court initiating the Cases and have
continued in the possession of their assets and in the management of their
business pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
The Borrower has applied to the Banks for a revolving credit
and letter of credit facility in an aggregate principal amount not to exceed
$2,000,000,000, all of the Borrower's obligations under which are to be
guaranteed by the Guarantors.
The proceeds of the Loans will be used for working capital and
other general corporate purposes of the Borrower and the Guarantors and for the
other purposes described in Section 3.09.
To provide guarantees and security for the repayment of the
Loans, the reimbursement of any draft drawn under a Letter of Credit and the
payment of the other obligations of the Borrower and the Guarantors hereunder
and under the other Loan Documents (including, without limitation, but subject
to the "provided" clause of the last sentence of Section 2.23(a), the
Obligations of the Borrower to any Bank (or any of their respective Bank
Affiliates) under Section 6.03(vii)), the Borrower and the Guarantors will
provide to the Agent and the Banks the following (each as more fully described
herein):
(a) a guaranty from each of the Guarantors of the due and punctual
payment and performance of the obligations of the Borrower hereunder;
(b) an allowed administrative expense claim in each of the Cases
pursuant to Section 364(c)(1) of the Bankruptcy Code having priority over all
administrative expenses of the kind specified in Sections 503(b) and 507(b) of
the Bankruptcy Code;
(c) a perfected first priority Lien, pursuant to Section 364(c)(2) of
the Bankruptcy Code, upon all unencumbered property of the Borrower and the
Guarantors (limited, in the case of leasehold interests, to the proceeds
received upon any sale, disposition or
termination thereof) that is not subject to valid, perfected and non-avoidable
liens as of the commencement of the Cases, including, without limitation,
substantially all inventory of the Borrower and the Guarantors (excluding the
Borrower's and the Guarantors' rights in respect of avoidance actions under the
Bankruptcy Code, it being understood that, notwithstanding such exclusion of
avoidance actions, the proceeds of such actions shall be available to repay the
Obligations), and on all cash and cash equivalents in the Letter of Credit
Account; and
(d) a perfected Lien, pursuant to Section 364(c)(3) of the Bankruptcy
Code, upon all property of the Borrower and the Guarantors (limited, in the case
of leasehold interests, to the proceeds received upon any sale, disposition or
termination thereof) that is subject to valid, perfected and non-avoidable Liens
in existence on the Filing Date that is subject to valid Liens in existence on
the Filing Date that are perfected subsequent to the Filing Date as permitted by
Section 546(b) of the Bankruptcy Code or that is subject to Permitted Liens,
junior to such valid, perfected and non-avoidable Liens.
All of the claims and the Liens granted hereunder in the Cases
to the Agent and the Banks shall be subject to the Carve-Out to the extent
provided in Section 2.23.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
SECTION 1.01. DEFINED TERMS.
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Section 2.
"Additional Credit" shall have the meaning given such term in
Section 4.02(d) hereof.
"Adjusted LIBOR Rate" shall mean, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the quotient of
(a) the LIBOR Rate in effect for such Interest Period divided by (b) a
percentage (expressed as a decimal) equal to 100% minus Statutory Reserves. For
purposes hereof, the term "LIBOR Rate" shall mean the rate at which dollar
deposits approximately equal in principal amount to such Eurodollar Borrowing
and for a maturity comparable to such Interest Period are offered to the
principal London office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Affiliate" shall mean, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person (a
"Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
2
"Agent" shall have the meaning set forth in the Introduction.
"Agreement" shall mean this
Revolving Credit and Guaranty
Agreement, as the same may from time to time be further amended, modified or
supplemented.
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the
Base CD Rate in effect on such day plus 1% and (c) 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 Agent as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective on the date such change
is publicly announced. "Base CD Rate" shall mean the sum of (a) the quotient of
(i) the Three-Month Secondary CD Rate divided by (ii) a percentage expressed as
a decimal equal to 100% minus Statutory Reserves and (b) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it. "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 Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate
or both for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"Assessment Rate" shall mean for any date the annual rate
(rounded upwards, if necessary, to the next 1/100 of 1%) most recently estimated
by the Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Agent to the Federal Deposit
Insurance Corporation (or any successor) for insurance by such Corporation (or
any successor) of time deposits made in dollars at the Agent's domestic offices.
3
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Bank and an Eligible Assignee, and accepted by the
Agent, substantially in the form of Exhibit D.
"Bank Affiliate" means, (a) with respect to any Bank, (i) an
Affiliate of such Bank or (ii) any entity (whether a corporation, partnership,
trust or otherwise) that is engaged in making, purchasing, holding or otherwise
investing in bank loans and similar extensions of credit in the ordinary course
of its business and is administered or managed by a Bank or an Affiliate of such
Bank and (b) with respect to any Bank that is a fund which invests in bank loans
and similar extensions of credit, any other fund that invests in bank loans and
similar extensions of credit and is managed by the same investment advisor as
such Bank or by an Affiliate of such investment advisor.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of
1978, as heretofore and hereafter amended, and codified as 11 U.S.C. Section 101
et seq.
"Bankruptcy Court" shall mean the United States Bankruptcy
Court for the Northern District of Illinois or any other court having
jurisdiction over the Cases from time to time.
"Banks" shall have the meaning set forth in the Introduction.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Borrower" shall have the meaning set forth in the
Introduction.
"Borrowing" shall mean the incurrence of Loans of a single
Type made from all the Banks on a single date and having, in the case of
Eurodollar Loans, a single Interest Period (with any ABR Loan made pursuant to
Section 2.16 being considered a part of the related Borrowing of Eurodollar
Loans).
"Borrowing Base" shall be defined in a manner mutually
satisfactory to the Agent, the Co-Collateral Monitors and the Borrower and
reflected in the Borrowing Base Amendment and shall limit Total Commitment Usage
to the lowest of (i) 95% of the Total Commitment, (ii) a percentage to be
determined by the Initial Banks in consultation with the Borrower (as set forth
in the Borrowing Base Amendment) of the net orderly liquidation value of
inventory at cost as determined by the outside inventory consultants/appraisers
retained by the Agent and the Co-Collateral Monitors and (iii) a percentage to
be determined by the Initial Banks in consultation with the Borrower (as set
forth in the Borrowing Base Amendment) of eligible inventory; such Borrowing
Base shall include inventory of the Borrower and the Guarantors meeting certain
eligibility standards determined by the Agent in consultation with the Borrower
and with the consent of the Co-Collateral Monitors and shall reflect (x) a
reserve equal to the sum of $200,000,000 on account of pari passu cash
management claims granted pursuant to Section 2.23(a) and permitted by Section
6.03(vii) plus $25,000,000 and (y) other availability reserves established by
the Co-Collateral Monitors from time to time. Borrowing Base standards
(including availability reserves) may be established and revised from time to
time solely by the Agent in its reasonable discretion acting with the consent of
the Co-Collateral Monitors with any
4
changes in such standards to be effective five (5) Business Days after delivery
of notice thereof to the Borrower.
"Borrowing Base Amendment" shall mean an amendment to this
Agreement satisfactory to the Initial Banks and the Borrower to be executed
within the later to occur of (i) two (2) weeks after the first to occur of the
making of the initial Loans hereunder or under the Interim Order or the issuance
of the initial Letter of Credit hereunder and (ii) one (1) week following the
date upon which the Agent shall have provided a draft of the Borrowing Base
Amendment to the Borrower.
"Borrowing Base Certificate" shall mean a certificate
substantially in the form of an exhibit to the Borrowing Base Amendment (with
such changes therein from time to time as may be required by the Co-Collateral
Monitors to reflect the components of and reserves against the Borrowing Base as
provided for hereunder from time to time), executed and certified by a Financial
Officer of the Borrower, which shall include appropriate exhibits, schedules and
collateral reporting requirements as referred to therein and as provided for in
Section 5.08.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banks in the State of New York are required or
permitted to close (and, for a Letter of Credit, other than a day on which the
Fronting Bank issuing such Letter of Credit is closed); provided, however, that
when used in connection with a Eurodollar Loan, the term "Business Day" shall
also exclude any day on which banks are not open for dealings in dollar deposits
on the London interbank market.
"Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash and not theretofore accrued
subsequent to January 1, 2002 or accrued as liabilities during such period and
including that portion of any post-petition Capitalized Lease which is
capitalized on the consolidated balance sheet of the Borrower and the
Guarantors) net of cash amounts received by the Borrower and the Guarantors from
other Persons during such period in reimbursement of Capital Expenditures made
by the Borrower and the Guarantors, excluding interest capitalized during
construction, made by the Borrower and the Guarantors during such period that,
in conformity with GAAP, are required to be included in or reflected by the
property, plant, equipment or similar fixed asset accounts reflected in the
consolidated balance sheet of the Borrower and the Guarantors (including
equipment which is purchased simultaneously with the trade-in of existing
equipment owned by the Borrower or any of the Guarantors to the extent of the
gross amount of such purchase price less the book value of the equipment being
traded in at such time), but excluding expenditures made in connection with the
replacement or restoration of assets to the extent reimbursed or financed from
(x) insurance proceeds paid on account of the loss of or the damage to the
assets being replaced or restored or (y) awards of compensation arising from the
taking by condemnation or eminent domain of such assets being replaced.
"Capitalized Lease" shall mean, as applied to any Person, any
lease of property by such Person as lessee which would be capitalized on a
balance sheet of such Person prepared in accordance with GAAP.
"Carve-Out" shall have the meaning set forth in Section 2.23.
5
"Cases" shall have the meaning set forth in the Introduction.
"Change of Control" shall mean (i) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
group (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder as in effect on the date
hereof), of shares representing more than 50% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Borrower;
or (ii) the occupation of a majority of the seats (other than vacant seats) on
the Board of Directors of the Borrower by Persons who were neither (A) nominated
by the Board of Directors of the Borrower nor (B) appointed by directors so
nominated.
"Closing Date" shall mean the date on which this Agreement has
been executed and the conditions precedent to the making of the initial Loans
set forth in Section 4.01 have been satisfied or waived, which date shall occur
promptly upon entry of the Interim Order, but not later than 10 days following
the Filing Date.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Co-Collateral Monitors" shall mean JPMorgan Chase, Fleet and
GECC; provided that for the purposes of this Agreement, all determinations,
consents and actions of the Co-Collateral Monitors shall be made or taken by the
Co-Collateral Monitors whose Commitments at the time of any such determination,
consent or action represent at least 66-2/3% of the Commitments of the
Co-Collateral Monitors in the aggregate.
"Collateral" shall mean the "Collateral" as defined in the
Security and Pledge Agreement.
"Commitment" shall mean, with respect to each Bank, the
commitment of each Bank hereunder in the amount set forth opposite its name on
Annex A hereto or as may subsequently be set forth in the Register from time to
time, as the same may be reduced from time to time pursuant to this Agreement.
"Commitment Fee" shall have the meaning set forth in Section
2.20.
"Commitment Percentage" shall mean at any time, with respect
to each Bank, the percentage obtained by dividing its Commitment at such time by
the Total Commitment at such time.
"Consummation Date" shall mean the date of the substantial
consummation (as defined in Section 1101 of the Bankruptcy Code and which for
purposes of this Agreement shall be no later than the effective date) of a
Reorganization Plan that is confirmed pursuant to an order of the Bankruptcy
Court.
"CSFB" shall mean Credit Suisse First Boston, Cayman Islands
Branch.
"Dollars" and "$" shall mean lawful money of the United States
of America.
6
"EBITDA" shall mean, for any period, all as determined in
accordance with GAAP, the consolidated net income (or net loss) of the Borrower
and its Subsidiaries for such period, plus (a) the sum of (i) depreciation
expense, (ii) amortization expense, (iii) other non-cash expenses, (iv)
provision for LIFO adjustment for inventory valuation, (v) net total Federal,
state and local income tax expense, (vi) gross interest expense for such period
less gross interest income for such period, (vii) extraordinary losses, (viii)
any non-recurring charge or restructuring charge which in accordance with GAAP
has been deducted in the calculation of operating income, (ix) the cumulative
effect of any change in accounting principles and (x) "Chapter 11 expenses" (or
"administrative costs reflecting Chapter 11 expenses") as shown on the
Borrower's consolidated statement of income for such period less (b)
extraordinary gains plus or minus (c) the amount of cash received or expended in
such period in respect of any amount which, under clause (viii) above, was taken
into account in determining EBITDA for such or any prior period.
"Eligible Assignee" shall mean (i) a commercial bank having
total assets in excess of $1,000,000,000; (ii) a finance company, insurance
company or other financial institution or fund, in each case reasonably
acceptable to the Agent, which in the ordinary course of business extends credit
of the type contemplated herein and has total assets in excess of $200,000,000
and whose becoming an assignee would not constitute a prohibited transaction
under Section 4975 of ERISA; (iii) a Bank Affiliate of the assignor Bank; and
(iv) any other financial institution reasonably satisfactory to the Agent.
"Environmental Lien" shall mean a Lien in favor of any
Governmental Authority for (i) any liability under federal or state
environmental laws or regulations, or (ii) damages arising from or costs
incurred by such Governmental Authority in response to a release or threatened
release of a hazardous or toxic waste, substance or constituent, or other
substance into the environment.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Borrower or a Subsidiary of the
Borrower would be deemed to be a single employer within the meaning of Section
414(b), (c), (m), or (o) of the Code.
"Eurocurrency Liabilities" shall have the meaning assigned
thereto in Regulation D issued by the Board, as in effect from time to time.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a
rate determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Section 2.
"Event of Default" shall have the meaning given such term in
Section 7.
"Excluded Entities" shall collectively mean Kmart of Indiana,
an Indiana partnership and Kmart of Pennsylvania LP, a Pennsylvania limited
partnership.
7
"Excluded Taxes" means, with respect to the Agent, any Bank,
the Fronting Bank or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Bank, in which its applicable lending office is located, (b) any branch profits
taxes imposed by the United States of America or any similar tax imposed by any
other jurisdiction in which the Borrower is located and (c) in the case of a
Foreign Bank, any withholding tax that is imposed by any jurisdiction other than
the United States of America or any state thereof or is imposed by the United
States of America on amounts payable to such Foreign Bank at the time such
Foreign Bank becomes a party to this Agreement (or designates a new lending
office) or is attributable to such Foreign Bank's failure to comply with Section
2.18(e), except to the extent that such Foreign Bank (or its assignor, if any)
was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.18(a).
"Fees" shall collectively mean the Commitment Fees, Letter of
Credit Fees and other fees referred to in Sections 2.19, 2.20 and 2.21.
"Filing Date" shall mean January 22, 2002.
"Final Order" shall have the meaning given such term in
Section 4.02(d).
"Financial Officer" shall mean the Chief Financial Officer,
Chief Restructuring Officer, Principal Accounting Officer, Controller, a
Treasurer or Assistant Treasurer of the Borrower.
"Fleet" shall mean Fleet Retail Finance Inc.
"Foreign Bank" means any Bank that is organized under the laws
of a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Fronting Bank" shall mean JPMorgan Chase (or any of its
banking affiliates) or such other Bank (which other Bank shall be reasonably
satisfactory to the Borrower) as may agree to act in such capacity.
"GAAP" shall mean generally accepted accounting principles
applied in accordance with Section 1.02.
"GECC" shall mean General Electric Capital Corporation.
"Governmental Authority" shall mean any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"Guarantor" shall have the meaning set forth in the
Introduction.
8
"Indebtedness" shall mean, at any time and with respect to any
Person, (i) all indebtedness of such Person for borrowed money, (ii) all
indebtedness of such Person for the deferred purchase price of property or
services (other than property, including inventory, and services purchased, and
expense accruals and deferred compensation items arising, in the ordinary course
of business), (iii) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments (other than performance, surety and
appeal bonds arising in the ordinary course of business), (iv) all indebtedness
of such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (v)
all obligations of such Person under Capitalized Leases, (vi) all reimbursement,
payment or similar obligations of such Person, contingent or otherwise, under
acceptance, letter of credit or similar facilities and all obligations of such
Person in respect of (x) currency swap agreements, currency future or option
contracts and other similar agreements designed to hedge against fluctuations in
foreign interest rates and (y) interest rate swap, cap or collar agreements and
interest rate future or option contracts; (vii) all Indebtedness referred to in
clauses (i) through (vi) above guaranteed directly or indirectly by such Person,
or in effect guaranteed directly or indirectly by such Person through an
agreement (A) to pay or purchase such Indebtedness or to advance or supply funds
for the payment or purchase of such Indebtedness, (B) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such Indebtedness or to
assure the holder of such Indebtedness against loss in respect of such
Indebtedness, (C) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of whether
such property is received or such services are rendered) or (D) otherwise to
assure a creditor against loss in respect of such Indebtedness, and (viii) all
Indebtedness referred to in clauses (i) through (vii) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Initial Banks" shall mean JPMorgan Chase, Fleet, GECC and
CSFB.
"Insufficiency" shall mean, with respect to any Plan, its
"amount of unfunded benefit liabilities" within the meaning of Section
4001(a)(18) of ERISA, if any.
"Interim Order" shall have the meaning given such term in
Section 4.01(b).
"Interest Payment Date" shall mean (i) as to any Eurodollar
Loan, the last day of each consecutive 30 day period running from the
commencement of the applicable Interest Period, and (ii) as to all ABR Loans,
the last calendar day of each month and the date on which any ABR Loans are
refinanced with Eurodollar Loans pursuant to Section 2.12.
"Interest Period" shall mean, as to any Borrowing of
Eurodollar Loans, the period commencing on the date of such Borrowing (including
as a result of a refinancing of ABR Loans) or on the last day of the preceding
Interest Period applicable to such Borrowing and
9
ending on the numerically corresponding day (or if there is no corresponding
day, the last day) in the calendar month that is one, three or six months
thereafter, as the Borrower may elect in the related notice delivered pursuant
to Sections 2.06(b) or 2.12; provided, however, that (i) if any Interest Period
would end on a day which shall not be a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (ii) no Interest Period
shall end later than the Termination Date.
"Investments" shall have the meaning given such term in
Section 6.10.
"Joint Commitment Letter" shall mean that certain Joint
Commitment Letter dated January 21, 2002 among the Agent, ▇.▇. ▇▇▇▇▇▇ Securities
Inc., Fleet, GECC, CSFB and the Borrower.
"JPMorgan Chase" shall have the meaning set forth in the
Introduction.
"Letter of Credit" shall mean any irrevocable letter of credit
issued pursuant to Section 2.03, which letter of credit shall be (i) a standby
or import documentary letter of credit, (ii) issued for purposes that are
consistent with the ordinary course of business of the Borrower or any
Guarantor, or for such other purposes as are reasonably acceptable to the Agent,
(iii) denominated in Dollars and (iv) otherwise in such form as may be
reasonably approved from time to time by the Agent and the applicable Fronting
Bank.
"Letter of Credit Account" shall mean the account established
by the Borrower under the sole and exclusive control of the Agent maintained at
the office of the Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ designated
as the "Kmart Letter of Credit Account" that shall be used solely for the
purposes set forth in Sections 2.03(b) and 2.13.
"Letter of Credit Fees" shall mean the fees payable in respect
of Letters of Credit pursuant to Section 2.21.
"Letter of Credit Outstandings" shall mean, at any time, the
sum of (i) the aggregate undrawn stated amount of all Letters of Credit then
outstanding plus (ii) all amounts theretofore drawn under Letters of Credit and
not then reimbursed.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind whatsoever (including any conditional
sale or other title retention agreement or any lease in the nature thereof).
"Loan" shall have the meaning given such term in Section 2.01;
it being understood that for all purposes hereunder and under the other Loan
Documents, the term "Loan" shall be deemed to include all "Preliminary
Borrowings" as such term is defined in the Interim Order dated January 22, 2002.
"Loan Documents" shall mean this Agreement, the Letters of
Credit, the Security and Pledge Agreement, and any other instrument or agreement
executed and delivered to the Agent or any Bank in connection herewith, in each
case, as the same may be amended, modified, supplemented, extended or restated
from time to time.
10
"Maturity Date" shall mean April 22, 2004.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of) the Borrower or a
Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the
five-year period immediately following the latest date on which the Borrower, or
a Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed to or
had an obligation to contribute to such plan.
"Multiple Employer Plan" shall mean a Single Employer Plan,
which (i) is maintained for employees of the Borrower or an ERISA Affiliate and
at least one person (as defined in Section 3(9) of ERISA) other than the
Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of
which the Borrower or an ERISA Affiliate could have liability under Section 4064
or 4069 of ERISA in the event such Plan has been or were to be terminated.
"Net Proceeds" shall mean, in respect of any sale of assets,
the cash proceeds of such sale after the payment of or reservation for (x)
expenses that are directly related to (or the need for which arises as a result
of) the transaction of sale, including, but not limited to, related severance
costs, taxes payable, brokerage commissions, professional expenses, other
similar costs that are directly related to the sale (all of which expenses shall
be satisfactory to the Agent in its reasonable judgment), (y) the amount secured
by valid and perfected Liens, if any, that are senior to the Liens on such
assets held by the Agent on behalf of the Banks and (z) the reasonable costs and
expenses of any repairs, alterations or improvements made by the Borrower or any
Guarantor to the assets sold to the extent such repairs, alterations or
improvements were required pursuant to the terms of such sale.
"Obligations" shall mean (a) the due and punctual payment of
principal of and interest on the Loans and the reimbursement of all amounts
drawn under Letters of Credit, and (b) the due and punctual payment of the Fees
and all other present and future, fixed or contingent, monetary obligations of
the Borrower and the Guarantors to the Banks and the Agent under the Loan
Documents.
"Orders" shall mean the Interim Order and the Final Order of
the Bankruptcy Court referred to in Sections 4.01(b) and 4.02(d).
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"PACA" shall mean the Perishable Agricultural Commodities Act
of 1930, as amended, 7 U.S.C. Sections 499a et seq.
"PASA" shall mean the Packers and Stockyards Act of 1921, as
amended, 7 U.S.C. Sections 181 et seq.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any successor agency or entity performing substantially the same functions.
11
"Pension Plan" shall mean a defined benefit plan (as defined
in Section 414(j) of the Code and Section 3(35) of ERISA) which meets and is
subject to the requirements of Section 401(a) of the Code.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within twelve months from the date of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below,
investments in commercial paper maturing within six months from the date of
acquisition thereof and having, at such date of acquisition, a rating of at
least "A-2" or the equivalent thereof from Standard & Poor's Corporation or of
at least "P-2" or the equivalent thereof from ▇▇▇▇▇'▇ Investors Service, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits (including Eurodollar time deposits) maturing
within six months from the date of acquisition thereof issued or guaranteed by
or placed with (i) any domestic office of the Agent or the bank with whom the
Borrower and the Guarantors maintain their cash management system, or (ii) any
domestic office of any other commercial bank of recognized standing organized
under the laws of the United States of America or any State thereof that has a
combined capital and surplus and undivided profits of not less than $250,000,000
and is the principal banking Subsidiary of a bank holding company having a
long-term unsecured debt rating of at least "A-2" or the equivalent thereof from
Standard & Poor's Corporation or at least "P-2" or the equivalent thereof from
▇▇▇▇▇'▇ Investors Service, Inc.;
(d) investments in commercial paper maturing within six months
from the date of acquisition thereof and issued by (i) the holding company of
the Agent or (ii) the holding company of any other commercial bank of recognized
standing organized under the laws of the United States of America or any State
thereof that has (A) a combined capital and surplus in excess of $250,000,000
and (B) commercial paper rated at least "A-2" or the equivalent thereof from
Standard & Poor's Corporation or of at least "P-2" or the equivalent thereof
from ▇▇▇▇▇'▇ Investors Service, Inc.;
(e) investments in repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clause
(a) above entered into with any office of a bank or trust company meeting the
qualifications specified in clause (c) above;
(f) investments in money market funds substantially all the
assets of which are comprised of securities of the types described in clauses
(a) through (e) above; and
(g) to the extent owned on the Filing Date, investments by the
Borrower or any Guarantor in the capital stock of any direct or indirect
Subsidiary.
"Permitted Liens" shall mean (i) Liens imposed by law (other
than Environmental Liens and any Lien imposed under ERISA) for taxes,
assessments or charges of any
12
Governmental Authority for claims not yet due or which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance with
GAAP; (ii) Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other Liens (other than Environmental Liens and any Lien imposed
under ERISA) in existence on the Filing Date or thereafter imposed by law and
created in the ordinary course of business; (iii) Liens (other than any Lien
imposed under ERISA) incurred or deposits (including, without limitation, surety
bonds and appeal bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations or arising as
a result of progress payments under government contracts; (iv) easements
(including, without limitation, reciprocal easement agreements and utility
agreements), rights-of-way, covenants, consents, reservations, encroachments,
variations and zoning and other restrictions, charges or encumbrances (whether
or not recorded) and interest of ground lessors, which do not interfere
materially with the ordinary conduct of the business of the Borrower or any
Guarantor, as the case may be, and which do not materially detract from the
value of the property to which they attach or materially impair the use thereof
to the Borrower or any Guarantor, as the case may be; (v) purchase money Liens
(including Capitalized Leases) upon or in any property acquired or held in the
ordinary course of business to secure the purchase price of such property or to
secure Indebtedness permitted by Section 6.03(v) solely for the purpose of
financing the acquisition of such property; (vi) letters of credit or deposits
in the ordinary course to secure leases; and (vii) extensions, renewals or
replacements of any Lien referred to in paragraphs (i) through (vi) above,
provided that the principal amount of the obligation secured thereby is not
increased and that any such extension, renewal or replacement is limited to the
property originally encumbered thereby.
"Person" shall mean any natural person, corporation, division
of a corporation, partnership, trust, joint venture, association, company,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" shall mean a Single Employer Plan or a Multiemployer
Plan.
"Prepayment Date" shall mean forty-five (45) days after the
entry of the Interim Order by the Bankruptcy Court if the Final Order has not
been entered by the Bankruptcy Court prior to the expiration of such forty-five
(45) day period.
"Pre-Petition Payment" shall mean a payment (by way of
adequate protection or otherwise) of principal or interest or otherwise on
account of any pre-petition Indebtedness or trade payables (including, without
limitation, in respect of reclamation claims) or other pre-petition claims
against the Borrower or any Guarantor.
"Register" shall have the meaning set forth in Section
10.03(d).
"Reorganization Plan" shall mean a plan of reorganization in
any of the Cases.
"Required Banks" shall mean, at any time, Banks holding Loans
representing in excess of 50% of the aggregate principal amount of such Loans
outstanding or, if no Loans are
13
outstanding, Banks having Commitments representing in excess of 50% of the Total
Commitment.
"Security and Pledge Agreement" shall have the meaning set
forth in Section 4.01(c).
"Single Employer Plan" shall mean a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of
the Borrower or an ERISA Affiliate or (ii) was so maintained and in respect of
which the Borrower could have liability under Title IV of ERISA in the event
such Plan has been or were to be terminated.
"Statutory Reserves" shall mean on any date the percentage
(expressed as a decimal) established by the Board and any other banking
authority which is (i) for purposes of the definition of Base CD Rate, the then
stated maximum rate of all reserves (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in New York City, for new three month negotiable
nonpersonal time deposits in dollars of $100,000 or more or (ii) for purposes of
the definition of Adjusted LIBOR Rate, the then stated maximum rate for all
reserves (including but not limited to any emergency, supplemental or other
marginal reserve requirements) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency Liabilities (or any successor category
of liabilities under Regulation D issued by the Board, as in effect from time to
time). Such reserve percentages shall include, without limitation, those imposed
pursuant to said Regulation. The Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in such percentage.
"Subsidiary" shall mean, with respect to any Person (herein
referred to as the "parent"), any corporation, association or other business
entity (whether now existing or hereafter organized) of which at least a
majority of the securities or other ownership interests having ordinary voting
power for the election of directors is, at the time as of which any
determination is being made, owned or controlled by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Super-majority Banks" shall have the meaning given such term
in Section 10.10(b).
"Superpriority Claim" shall mean a claim against the Borrower
and any Guarantor in any of the Cases which is an administrative expense claim
having priority over any or all administrative expenses of the kind specified in
Sections 503(b) or 507(b) of the Bankruptcy Code.
"Syndication Agents" shall mean GECC and CSFB.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Termination Date" shall mean the earliest to occur of (i) the
Prepayment Date, (ii) the Maturity Date, (iii) the Consummation Date and (iv)
the acceleration of the Loans and the termination of the Total Commitment in
accordance with the terms hereof.
14
"Termination Event" shall mean (i) a "reportable event", as
such term is described in Section 4043(c) of ERISA (other than a "reportable
event" as to which the 30-day notice is waived under subsection .22, .23, .25,
..27 or .28 of PBGC Regulation Section 4043) or an event described in Section
4068 of ERISA and excluding events which would not be reasonably likely (as
reasonably determined by the Agent) to have a material adverse effect on the
financial condition, operations, business, properties or assets of the Borrower
and the Guarantors taken as a whole, or (ii) the withdrawal of the Borrower or
any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it
was a "substantial employer," as such term is defined in Section 4001(a)(2) of
ERISA, the incurrence of liability by the Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple Employer Plan, the
imposition of Withdrawal Liability, or (iii) providing notice of intent to
terminate a Plan pursuant to Section 4041(c) of ERISA or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, if such amendment
requires the provision of security, or (iv) the institution of proceedings to
terminate a Plan by the PBGC under Section 4042 of ERISA, or (v) any other event
or condition (other than the commencement of the Cases and the failure to have
made any contribution accrued as of the Filing Date but not paid) which would
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
imposition of any liability under Title IV of ERISA (other than for the payment
of premiums to the PBGC in the ordinary course).
"364 Day Credit Agreement" shall mean Borrower's 364 Day
Credit Agreement, dated November 13, 2001.
"Total Commitment" shall mean, at any time, the sum of the
Commitments at such time.
"Total Commitment Usage" shall mean at any time, the sum of
(i) the aggregate outstanding principal amount of all Loans and (ii) the
aggregate Letter of Credit Outstandings.
"Transferee" shall have the meaning given such term in
Section 2.18.
"Type" when used in respect of any Loan or Borrowing shall
refer to the Rate of interest by reference to which interest on such Loan or on
the Loans comprising such Borrowing is determined. For purposes hereof, "Rate"
shall mean the Adjusted LIBOR Rate and the Alternate Base Rate.
"Unused Total Commitment" shall mean, at any time, (i) the
Total Commitment less (ii) the sum of (x) the aggregate outstanding principal
amount of all Loans and (y) the aggregate Letter of Credit Outstandings.
"Withdrawal Liability" shall have the meaning given such term
under Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Sections,
Exhibits and Schedules shall be deemed references to Sections of,
15
and Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided, however, that for purposes of determining
compliance with any covenant set forth in Section 6, such terms shall be
construed in accordance with GAAP as in effect on the date of this Agreement
applied on a basis consistent with the application used in the Borrower's
audited financial statements referred to in Section 3.04.
SECTION 2. AMOUNT AND TERMS OF CREDIT
SECTION 2.01 COMMITMENT OF THE BANKS; TOTAL COMMITMENT USAGE.
(a) Each Bank severally and not jointly with the other Banks
agrees, upon the terms and subject to the conditions herein set forth, to make
revolving credit loans (each a "Loan" and collectively, the "Loans") to the
Borrower at any time and from time to time during the period commencing on the
date hereof and ending on the Termination Date in an aggregate principal amount
not to exceed, when added to such Bank's Commitment Percentage of the then
aggregate Letter of Credit Outstandings, the Commitment of such Bank, which
Loans may be repaid and reborrowed in accordance with the provisions of this
Agreement. At no time following the date upon which the Final Order shall have
been entered by the Bankruptcy Court shall the sum of the then outstanding
aggregate principal amount of the Loans plus the then aggregate Letter of Credit
Outstandings exceed the lesser of (i) the Total Commitment of $2,000,000,000
(or, if less, the amount shown on Schedule A), as the same may be reduced from
time to time pursuant to Section 2.10 and (ii) the Borrowing Base.
(b) Each Loan shall be made by the Banks pro rata in
accordance with their respective Commitments; provided, however, that the
failure of any Bank to make any Loan shall not in itself relieve the other Banks
of their obligations to lend.
(c) Notwithstanding anything herein to the contrary, at no
time shall Total Commitment Usage exceed, in the aggregate, the lesser of (i) an
amount that is equal to 95% of the lesser of (A) the Total Commitment as at any
time in effect and (B) the Borrowing Base and (ii) until the successful
syndication of the Commitments hereunder shall have occurred, $1,750,000,000 (it
being understood that a successful syndication of the Commitments hereunder
shall have occurred at such time as the Commitments of each of the Initial Banks
hereunder shall have been reduced by assignment to no more than $250,000,000).
SECTION 2.02 BORROWING BASE. Notwithstanding any other provision of
this Agreement to the contrary, the aggregate principal amount of all
outstanding Loans plus the then aggregate Letter of Credit Outstandings (in
excess of the amount of cash then held in the Letter of Credit Account pursuant
to Section 2.03(b)) shall not at any time following the date upon which the
Final Order shall have been entered by the Bankruptcy Court exceed the Borrowing
Base and no Loan shall be made or Letter of Credit issued in violation of the
foregoing.
SECTION 2.03 LETTERS OF CREDIT.
(a) Upon the terms and subject to the conditions herein set
forth, the Borrower may request a Fronting Bank, at any time and from time to
time after the date hereof and prior to
16
the Termination Date, to issue, and, subject to the terms and conditions
contained herein, such Fronting Bank shall issue, for the account of the
Borrower or a Guarantor one or more Letters of Credit, provided that no Letter
of Credit shall be issued if after giving effect to such issuance (i) the
aggregate Letter of Credit Outstandings shall exceed $850,000,000 or (ii) the
aggregate Letter of Credit Outstandings, when added to the aggregate outstanding
principal amount of the Loans, would exceed the amounts provided for in Section
2.01(c) and, provided further that no Letter of Credit shall be issued if the
Fronting Bank shall have received notice from the Agent or the Required Banks
that the conditions to such issuance have not been met.
(b) No Letter of Credit shall expire later than the Maturity
Date, provided that if any Letter of Credit shall be outstanding on the
Termination Date, the Borrower shall, at or prior to the Termination Date,
except as the Agent may otherwise agree in writing, (i) cause all Letters of
Credit which expire after the Termination Date to be returned to the Fronting
Bank undrawn and marked "cancelled" or (ii) if the Borrower is unable to do so
in whole or in part, either (x) provide a "back-to-back" letter of credit to one
or more Fronting Banks in a form satisfactory to such Fronting Bank and the
Agent (in their sole discretion), issued by a bank satisfactory to such Fronting
Bank and the Agent (in their sole discretion), and in an amount equal to 105% of
the then undrawn stated amount of all outstanding Letters of Credit issued by
such Fronting Banks (less the amount, if any, then on deposit in the Letter of
Credit Account) and/or (y) deposit cash in the Letter of Credit Account in an
amount equal to 105% of the then undrawn stated amount of all Letter of Credit
Outstandings (less the amount, if any, then on deposit in the Letter of Credit
Account) as collateral security for the Borrower's reimbursement obligations in
connection therewith, such cash to be remitted to the Borrower upon the
expiration, cancellation or other termination or satisfaction of such
reimbursement obligations and the other Obligations hereunder and under the
other Loan Documents.
(c) The Borrower shall pay to each Fronting Bank, in addition
to such other fees and charges as are specifically provided for in Section 2.21
hereof, such fees and charges in connection with the issuance and processing of
the Letters of Credit issued by such Fronting Bank as are customarily imposed by
such Fronting Bank from time to time in connection with letter of credit
transactions.
(d) Drafts drawn under each Letter of Credit shall be
reimbursed by the Borrower in Dollars not later than the first Business Day
following the date of draw and shall bear interest from the date of draw until
the first Business Day following the date of draw at a rate per annum equal to
the Alternate Base Rate plus 2.5% and thereafter on the reimbursed portion until
reimbursed in full at a rate per annum equal to the Alternate Base Rate plus
4.5% (computed on the basis of the actual number of days elapsed over a year of
360 days or when the Alternate Base Rate is based on the Prime Rate, a year with
365 days or 366 days in a leap year). The Borrower shall effect such
reimbursement (x) if such draw occurs prior to the Termination Date, in cash or
through a Borrowing without the satisfaction of the conditions precedent set
forth in Section 4.02 or (y) if such draw occurs on or after the Termination
Date, in cash. Each Bank agrees to make the Loans described in clause (x) of the
preceding sentence notwithstanding a failure to satisfy the applicable lending
conditions thereto.
(e) Immediately upon the issuance of any Letter of Credit by
any Fronting Bank, such Fronting Bank shall be deemed to have sold to each Bank
other than such Fronting
17
Bank and each such other Bank shall be deemed unconditionally and irrevocably to
have purchased from such Fronting Bank, without recourse or warranty, an
undivided interest and participation, to the extent of such Bank's Commitment
Percentage, in such Letter of Credit, each drawing thereunder and the
obligations of the Borrower and the Guarantors under this Agreement with respect
thereto. Upon any change in the Commitments pursuant to Section 10.03, it is
hereby agreed that with respect to all Letter of Credit Outstandings, there
shall be an automatic adjustment to the participations hereby created to reflect
the new Commitment Percentages of the assigning and assignee Banks. Any action
taken or omitted by a Fronting Bank under or in connection with a Letter of
Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for such Fronting Bank any resulting liability to
any other Bank.
(f) In the event that a Fronting Bank makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed such amount in
full to such Fronting Bank pursuant to this Section, the Fronting Bank shall
promptly notify the Agent, which shall promptly notify each Bank of such
failure, and each Bank shall promptly and unconditionally pay to the Agent for
the account of the Fronting Bank the amount of such Bank's Commitment Percentage
of such unreimbursed payment in Dollars and in same day funds. If the Fronting
Bank so notifies the Agent, and the Agent so notifies the Banks prior to 11:00
a.m. (New York City time) on any Business Day, such Banks shall make available
to the Fronting Bank such Bank's Commitment Percentage of the amount of such
payment on such Business Day in same day funds, and if the Agent so notifies the
Banks after 11:00 a.m. (New York City time), on the next Business Day. If and to
the extent such Bank shall not have so made its Commitment Percentage of the
amount of such payment available to the Fronting Bank, such Bank agrees to pay
to such Fronting Bank, forthwith on demand such amount, together with interest
thereon, for each day from such date until the date such amount is paid to the
Agent for the account of such Fronting Bank at the Federal Funds Effective Rate.
The failure of any Bank to make available to the Fronting Bank its Commitment
Percentage of any payment under any Letter of Credit shall not relieve any other
Bank of its obligation hereunder to make available to the Fronting Bank its
Commitment Percentage of any payment under any Letter of Credit on the date
required, as specified above, but no Bank shall be responsible for the failure
of any other Bank to make available to such Fronting Bank such other Bank's
Commitment Percentage of any such payment. Whenever a Fronting Bank receives a
payment of a reimbursement obligation as to which it has received any payments
from the Banks pursuant to this paragraph, such Fronting Bank shall pay to each
Bank which has paid its Commitment Percentage thereof, in Dollars and in same
day funds, an amount equal to such Bank's Commitment Percentage thereof.
SECTION 2.04 ISSUANCE. Whenever the Borrower desires a Fronting Bank to
issue a Letter of Credit, it shall give to such Fronting Bank and the Agent
prior written (including telegraphic, telex, facsimile or cable communication)
notice reasonably in advance of the requested date of issuance specifying the
date on which the proposed Letter of Credit is to be issued (which shall be a
Business Day), the stated amount of the Letter of Credit so requested, the
expiration date of such Letter of Credit and the name and address of the
beneficiary thereof.
SECTION 2.05 NATURE OF LETTER OF CREDIT OBLIGATIONS ABSOLUTE. The
obligations of the Borrower to reimburse the Banks for drawings made under any
Letter of Credit shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this
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Agreement under all circumstances, including, without limitation (it being
understood that any such payment by the Borrower shall be without prejudice to,
and shall not constitute a waiver of, any rights the Borrower might have or
might acquire as a result of the payment by the Fronting Bank of any draft or
the reimbursement by the Borrower thereof): (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim, setoff,
defense or other right which the Borrower or any Guarantor may have at any time
against a beneficiary of any Letter of Credit or against any of the Banks,
whether in connection with this Agreement, the transactions contemplated herein
or any unrelated transaction; (iii) any draft, demand, certificate or other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (iv) payment by a Fronting Bank of any Letter of
Credit against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit; (v) any other
circumstance or happening whatsoever, which is similar to any of the foregoing;
or (vi) the fact that any Event of Default shall have occurred and be
continuing.
SECTION 2.06 MAKING OF LOANS.
(a) Except as contemplated by Section 2.11, Loans shall be
either ABR Loans or Eurodollar Loans as the Borrower may request subject to and
in accordance with this Section, provided, that all Loans made pursuant to the
same Borrowing shall, unless otherwise specifically provided herein, be Loans of
the same Type and, provided, further, that during the period commencing on the
Closing Date and ending on the later to occur of (i) the date upon which the
Final Order shall have been entered by the Bankruptcy Court and (ii) the date
that is 45 days after the date upon which the Interim Order shall have been
entered by the Bankruptcy Court, all Loans shall be ABR Loans. Each Bank may
fulfill its Commitment with respect to any Eurodollar Loan or ABR Loan by
causing any lending office of such Bank to make such Loan; provided that any
such use of a lending office shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement. Each Bank shall,
subject to its overall policy considerations, use reasonable efforts (but shall
not be obligated) to select a lending office which will not result in the
payment of increased costs by the Borrower pursuant to Section 2.15. Subject to
the other provisions of this Section and the provisions of Section 2.12,
Borrowings of Loans of more than one Type may be incurred at the same time,
provided that no more than fifteen (15) Borrowings of Eurodollar Loans may be
outstanding at any time.
(b) The Borrower shall give the Agent prior notice of each
Borrowing hereunder of at least three Business Days for Eurodollar Loans and one
Business Day for ABR Loans (subject, in the case of ABR Loans, to the last
sentence of this Section); such notice shall be irrevocable and shall specify
the amount of the proposed Borrowing (which shall not be less than $5,000,000
(and integral multiples of $1,000,000) in the case of Eurodollar Loans and
$1,000,000 (and integral multiples of $100,000) in the case of ABR Loans) and
the date thereof (which shall be a Business Day) and shall contain disbursement
instructions. Such notice, to be effective, must be received by the Agent not
later than 1:00 p.m., New York City time, on the third Business Day in the case
of Eurodollar Loans and 12:00 noon, New York City time on the first Business Day
in the case of ABR Loans, preceding the date on which such Borrowing is to be
made except as provided in the last sentence of this Section 2.06(b). Such
notice shall specify whether the Borrowing then being requested is to be a
Borrowing of ABR Loans or Eurodollar Loans. If no election is made as to the
Type of Loan, such notice shall be deemed a request for
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Borrowing of ABR Loans. The Agent shall promptly notify each Bank of its
proportionate share of such Borrowing, the date of such Borrowing, the Type of
Borrowing or Loans being requested and the Interest Period or Interest Periods
applicable thereto, as appropriate. On the borrowing date specified in such
notice, each Bank shall make its share of the Borrowing available at the office
of the Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, no later than 12:00
noon, New York City time, in immediately available funds. Upon receipt of the
funds made available by the Banks to fund any borrowing hereunder, the Agent
shall disburse such funds in the manner specified in the notice of borrowing
delivered by the Borrower and shall use reasonable efforts to make the funds so
received from the Banks available to the Borrower no later than 2:00 p.m. New
York City time (other than as provided in the following sentence). With respect
to ABR Loans of $50,000,000 or less, the Banks shall make such Borrowings
available to the Agent and the Agent shall disburse such Borrowings in
accordance with the Borrower's instructions consistent with this Agreement by
3:00 p.m., New York City time, on the same Business Day that the Borrower gives
notice to the Agent of such Borrowing by 1:00 p.m., New York City time.
SECTION 2.07 REPAYMENT OF LOANS; EVIDENCE OF DEBT.
(a) The Borrower hereby unconditionally promises to pay to the
Agent for the account of each Bank the then unpaid principal amount of each Loan
on the Termination Date.
(b) Each Bank shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Bank resulting from each Loan made by such Bank, including the amounts of
principal and interest payable and paid to such Bank from time to time
hereunder.
(c) The Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Type thereof and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Bank hereunder
and (iii) the amount of any sum received by the Agent hereunder for the account
of the Banks and each Bank's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Bank or the Agent to maintain such accounts or any error therein
shall not in any manner affect the obligation of the Borrower to repay the Loans
in accordance with the terms of this Agreement.
(e) Any Bank may request that Loans made by it be evidenced by
a promissory note. In such event, the Borrower shall execute and deliver to such
Bank a promissory note payable to the order of such Bank (or, if requested by
such Bank, to such Bank and its registered assigns) in a form furnished by the
Agent and reasonably acceptable to the Borrower. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.03) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
20
SECTION 2.08 INTEREST ON LOANS.
(a) Subject to the provisions of Section 2.09, each ABR Loan
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days or, when the Alternate Base Rate is based on the Prime
Rate, a year with 365 days or 366 days in a leap year) at a rate per annum equal
to the Alternate Base Rate plus 2.5%.
(b) Subject to the provisions of Section 2.09, each Eurodollar
Loan shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal, during each Interest
Period applicable thereto, to the Adjusted LIBOR Rate for such Interest Period
in effect for such Borrowing plus 3.5%.
(c) Accrued interest on all Loans shall be payable monthly in
arrears on each Interest Payment Date applicable thereto, on the Termination
Date, after the Termination Date on demand and (with respect to Eurodollar
Loans) upon any repayment or prepayment thereof (on the amount prepaid).
SECTION 2.09 DEFAULT INTEREST. If the Borrower or any Guarantor, as the
case may be, shall default in the payment of the principal of or interest on any
Loan or in the payment of any other amount becoming due hereunder (including,
without limitation, the reimbursement pursuant to Section 2.03(d) of any draft
drawn under a Letter of Credit), whether at stated maturity, by acceleration or
otherwise, the Borrower or such Guarantor, as the case may be, shall on demand
from time to time pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days or when the Alternate Base
Rate is applicable and is based on the Prime Rate, a year with 365 days or 366
days in a leap year) equal to (x) in the case of Borrowings consisting of
Eurodollar Loans, the Adjusted LIBOR Rate in effect for such Borrowing plus 5.5%
and (y) in the case of all other amounts, the Alternate Base Rate plus 4.5%.
SECTION 2.10 OPTIONAL TERMINATION OR REDUCTION OF COMMITMENT. Upon at
least two Business Days' prior written notice to the Agent, the Borrower may at
any time in whole permanently terminate, or from time to time in part
permanently reduce, the Unused Total Commitment. Each such reduction of the
Commitments shall be in the principal amount of $5,000,000 or any integral
multiple thereof. Simultaneously with each reduction or termination of the
Commitment, the Borrower shall pay to the Agent for the account of each Bank the
Commitment Fee accrued and unpaid on the amount of the Commitment of such Bank
so terminated or reduced through the date thereof. Any reduction of the Total
Commitment pursuant to this Section shall be applied pro rata to reduce the
Commitment of each Bank.
SECTION 2.11 ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan, the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower absent manifest
error) that reasonable means do not exist for ascertaining the applicable
Adjusted LIBOR Rate, the Agent shall, as soon as practicable thereafter, give
written, facsimile or telegraphic notice of such determination to the Borrower
and the Banks, and any request by the Borrower for a Borrowing of Eurodollar
Loans (including pursuant to a
21
refinancing with Eurodollar Loans) pursuant to Section 2.06 or 2.12 shall be
deemed a request for a Borrowing of ABR Loans. After such notice shall have been
given and until the circumstances giving rise to such notice no longer exist,
each request for a Borrowing of Eurodollar Loans shall be deemed to be a request
for a Borrowing of ABR Loans.
SECTION 2.12 REFINANCING OF LOANS. The Borrower shall have the right,
at any time, on three Business Days' prior irrevocable notice to the Agent
(which notice, to be effective, must be received by the Agent not later than
1:00 p.m., New York City time, on the third Business Day preceding the date of
any refinancing), (x) to refinance (without the satisfaction of the conditions
set forth in Section 4 as a condition to such refinancing) any outstanding
Borrowing or Borrowings of Loans of one Type (or a portion thereof) with a
Borrowing of Loans of the other Type or (y) to continue an outstanding Borrowing
of Eurodollar Loans for an additional Interest Period, subject to the following:
(a) as a condition to the refinancing of ABR Loans with
Eurodollar Loans and to the continuation of Eurodollar Loans for an additional
Interest Period, no Event of Default shall have occurred and be continuing at
the time of such refinancing;
(b) if less than a full Borrowing of Loans shall be
refinanced, such refinancing shall be made pro rata among the Banks in
accordance with the respective principal amounts of the Loans comprising such
Borrowing held by the Banks immediately prior to such refinancing;
(c) the aggregate principal amount of Loans being refinanced
shall be at least $5,000,000, provided that no partial refinancing of a
Borrowing of Eurodollar Loans shall result in the Eurodollar Loans remaining
outstanding pursuant to such Borrowing being less than $5,000,000 in aggregate
principal amount;
(d) each Bank shall effect each refinancing by applying the
proceeds of its new Eurodollar Loan or ABR Loan, as the case may be, to its Loan
being refinanced;
(e) the Interest Period with respect to a Borrowing of
Eurodollar Loans effected by a refinancing or in respect to the Borrowing of
Eurodollar Loans being continued as Eurodollar Loans shall commence on the date
of refinancing or the expiration of the current Interest Period applicable to
such continuing Borrowing, as the case may be;
(f) a Borrowing of Eurodollar Loans may be refinanced only on
the last day of an Interest Period applicable thereto; and
(g) each request for a refinancing with a Borrowing of
Eurodollar Loans which fails to state an applicable Interest Period shall be
deemed to be a request for an Interest Period of one month.
In the event that the Borrower shall not give notice to refinance any Borrowing
of Eurodollar Loans, or to continue such Borrowing as Eurodollar Loans, or shall
not be entitled to refinance or continue such Borrowing as Eurodollar Loans, in
each case as provided above, such Borrowing shall automatically be refinanced
with a Borrowing of ABR Loans at the expiration of the then-current Interest
Period. The Agent shall, after it receives notice from the Borrower, promptly
give each Bank notice of any refinancing, in whole or part, of any Loan made by
such Bank.
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SECTION 2.13 MANDATORY PREPAYMENT; COMMITMENT TERMINATION; CASH
COLLATERAL.
(a) If at any time the aggregate principal amount of the
outstanding Loans plus the Letter of Credit Outstandings exceeds the lesser of
(x) 95% of the Total Commitment and (y) on or after the first date as of which a
Borrowing Base Certificate is required to be delivered to the Agent, 95% of the
Borrowing Base, the Borrower will immediately (i) prepay the Loans in an amount
necessary to cause the aggregate principal amount of the outstanding Loans plus
the aggregate Letter of Credit Outstandings to be equal to or less than the 95%
of Total Commitment and/or 95% of the Borrowing Base, as the case may be, and
(ii) if, after giving effect to the prepayment in full of the Loans, the undrawn
amount of outstanding Letter of Credit Outstandings in excess of the amount of
cash held in the Letter of Credit Account exceeds 95% of the Total Commitment
and/or 95% of the Borrowing Base, as the case may be, deposit into the Letter of
Credit Account an amount equal to 105% of the amount by which the aggregate
Letter of Credit Outstandings in excess of the amount of cash held in the Letter
of Credit Account so exceeds 95% of the Total Commitment or 95% of the Borrowing
Base, as the case may be.
(b) Upon the sale or other disposition (including as a result
of casualty loss or condemnation occurring after the occurrence and continuation
of an Event of Default) of any leasehold interests or fixed assets (other than
in the case of ordinary course sales of fixtures and equipment (that are not in
connection with any going-out-of-business sales) or transfers permitted pursuant
to Section 6.11(iii)) of the Borrower or the Guarantors (including, without
limitation, the termination or assignment of leases), at such times as the
cumulative Net Proceeds thereof exceed an amount in the aggregate to be agreed
upon by the Initial Banks on or prior to the date of the entry of the Final
Order, the Borrower shall apply a percentage to be agreed upon by the Initial
Banks on or prior to the date of the entry of the Final Order of the Net
Proceeds thereof received thereafter to the prepayment of the Loans, it being
understood and agreed that with respect to any such sale or disposition
occurring prior to the entry of the Final Order, the Borrower shall apply 100%
of the Net Proceeds thereof to the prepayment of the Loan. Upon any such
prepayment, the Total Commitment shall be automatically and permanently reduced
in an amount equal to the amount so prepaid.
(c) Upon the Termination Date, the Total Commitment shall be
terminated in full and the Borrower shall pay the Loans in full (plus any
accrued but unpaid interest and Fees thereon) and, except as the Agent may
otherwise agree in writing, if any Letter of Credit remains outstanding, deposit
into the Letter of Credit Account an amount equal to 105% of the amount by which
the Letter of Credit Outstandings exceeds the amount of cash held in the Letter
of Credit Account, such cash to be remitted to the Borrower upon the expiration,
cancellation, satisfaction or other termination of such reimbursement
obligations, or otherwise comply with Section 2.03(b).
SECTION 2.14 OPTIONAL PREPAYMENT OF LOANS; REIMBURSEMENT OF BANKS.
(a) The Borrower shall have the right at any time and from
time to time to prepay any Loans, in whole or in part, (x) with respect to
Eurodollar Loans, upon at least three Business Days' prior written or facsimile
notice to the Agent and (y) with respect to ABR Loans
23
on the same Business Day if written or facsimile notice is received by the Agent
prior to 12:00 noon, New York City time, and thereafter upon at least one
Business Day's prior written or facsimile notice to the Agent; provided,
however, that (i) each such partial prepayment shall be in multiples of
$1,000,000, (ii) no prepayment of Eurodollar Loans shall be permitted pursuant
to this Section 2.14(a) other than on the last day of an Interest Period
applicable thereto unless such prepayment is accompanied by the payment of the
amounts described in clause (i) of the first sentence of Section 2.14(b), and
(iii) no partial prepayment of a Borrowing of Eurodollar Loans shall result in
the aggregate principal amount of the Eurodollar Loans remaining outstanding
pursuant to such Borrowing being less than $5,000,000. Each notice of prepayment
shall specify the prepayment date, the principal amount of the Loans to be
prepaid and in the case of Eurodollar Loans, the Borrowing or Borrowings
pursuant to which made, shall be irrevocable and shall commit the Borrower to
prepay such Loan by the amount and on the date stated therein. The Agent shall,
promptly after receiving notice from the Borrower hereunder, notify each Bank of
the principal amount of the Loans held by such Bank which are to be prepaid, the
prepayment date and the manner of application of the prepayment.
(b) The Borrower shall reimburse each Bank on demand for any
loss incurred or to be incurred by it in the reemployment of the funds released
(i) resulting from any prepayment (for any reason whatsoever, including, without
limitation, by acceleration, or by refinancing with ABR Loans) of any Eurodollar
Loan required or permitted under this Agreement, if such Loan is prepaid other
than on the last day of the Interest Period for such Loan (including, without
limitation, any such prepayment in connection with the syndication of the credit
facility evidenced by this Agreement) or (ii) in the event that after the
Borrower delivers a notice of borrowing under Section 2.06 in respect of
Eurodollar Loans, such Loans are not made on the first day of the Interest
Period specified in such notice of borrowing for any reason other than a breach
by such Bank of its obligations hereunder. Such loss shall be the amount as
reasonably determined by such Bank as the excess, if any, of (A) the amount of
interest which would have accrued to such Bank on the amount so paid or not
borrowed at a rate of interest equal to the Adjusted LIBOR Rate for such Loan,
for the period from the date of such payment or failure to borrow to the last
day (x) in the case of a payment or refinancing with ABR Loans other than on the
last day of the Interest Period for such Loan, of the then current Interest
Period for such Loan, or (y) in the case of such failure to borrow, of the
Interest Period for such Loan which would have commenced on the date of such
failure to borrow, over (B) the amount of interest which would have accrued to
such Bank on such amount by placing such amount on deposit for a comparable
period with leading banks in the London interbank market. Each Bank shall
deliver to the Borrower from time to time one or more certificates setting forth
the amount of such loss as determined by such Bank.
(c) In the event the Borrower fails to prepay any Loan on the
date specified in any prepayment notice delivered pursuant to Section 2.14(a),
the Borrower on demand by any Bank shall pay to the Agent for the account of
such Bank any amounts required to compensate such Bank for any loss incurred by
such Bank as a result of such failure to prepay, including, without limitation,
any loss, cost or expenses incurred by reason of the acquisition of deposits or
other funds by such Bank to fulfill deposit obligations incurred in anticipation
of such prepayment, but without duplication of any amounts paid under Section
2.14(b). Each Bank shall deliver to the Borrower from time to time one or more
certificates setting forth the amount of such loss as determined by such Bank.
24
(d) Any partial prepayment of the Loans by the Borrower
pursuant to Sections 2.13 or 2.14 shall be applied as specified by the Borrower
or, in the absence of such specification, as provided for in Section 8.02(b),
provided that in the latter case no Eurodollar Loans shall be prepaid pursuant
to Section 2.13 to the extent that such Loan has an Interest Period ending after
the required date of prepayment unless and until all outstanding ABR Loans and
Eurodollar Loans with Interest Periods ending on such date have been repaid in
full.
(e) The obligations of the Borrower and the Guarantors under
this Section shall survive the termination of this Agreement and/or the payment
of the Loans.
SECTION 2.15 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) Notwithstanding any other provision herein, if after the
date of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Bank of the
principal of or interest on any Eurodollar Loan made by such Bank or any fees or
other amounts payable hereunder (other than changes in respect of Taxes, Other
Taxes and taxes imposed on, or measured by, the net income or overall gross
receipts or franchise taxes of such Bank by the national jurisdiction in which
such Bank has its principal office or in which the applicable lending office for
such Eurodollar Loan is located or by any political subdivision or taxing
authority therein, or by any other jurisdiction or by any political subdivision
or taxing authority therein other than a jurisdiction in which such Bank would
not be subject to tax but for the execution and performance of this Agreement),
or shall impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of or
credit extended by such Bank (except any such reserve requirement which is
reflected in the Adjusted LIBOR Rate) or shall impose on such Bank or the London
interbank market any other condition affecting this Agreement or the Eurodollar
Loans made by such Bank, and the result of any of the foregoing shall be to
increase the cost to such Bank of making or maintaining any Eurodollar Loan or
to reduce the amount of any sum received or receivable by such Bank hereunder
(whether of principal, interest or otherwise) by an amount deemed by such Bank
to be material, then the Borrower will pay to such Bank in accordance with
paragraph (c) below such additional amount or amounts as will compensate such
Bank for such additional costs incurred or reduction suffered.
(b) If any Bank shall have determined that the adoption or
effectiveness after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or any lending office of such
Bank) or any Bank's holding company with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Bank's capital or on the capital of such Bank's holding
company, if any, as a consequence of this Agreement, the Loans made by such Bank
pursuant hereto, such Bank's Commitment hereunder or the issuance of, or
participation in, any Letter of Credit by such Bank to a level below that which
such Bank or such Bank's holding company could have achieved but for such
adoption,
25
change or compliance (taking into account Bank's policies and the policies of
such Bank's holding company with respect to capital adequacy) by an amount
deemed by such Bank to be material (except to the extent that such amount is
reflected in the Adjusted LIBOR Rate), then from time to time the Borrower shall
pay to such Bank such additional amount or amounts as will compensate such Bank
or such Bank's holding company for any such reduction suffered.
(c) A certificate of each Bank setting forth such amount or
amounts as shall be necessary to compensate such Bank or its holding company as
specified in paragraph (a) or (b) above, as the case may be, shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay each Bank the amount shown as due on any such certificate delivered to
it within 10 days after its receipt of the same. Any Bank receiving any such
payment shall promptly make a refund thereof to the Borrower if the law,
regulation, guideline or change in circumstances giving rise to such payment is
subsequently deemed or held to be invalid or inapplicable.
(d) Failure on the part of any Bank to demand compensation for
any increased costs or reduction in amounts received or receivable or reduction
in return on capital with respect to any period shall not constitute a waiver of
such Bank's right to demand compensation with respect to such period or any
other period, provided that the Borrower shall not be required to compensate a
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Bank notifies the Borrower of the
circumstance giving rise to such increased costs or reductions and of such
Bank's intention to claim compensation therefor. The protection of this Section
shall be available to each Bank regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, guideline or other
change or condition which shall have occurred or been imposed.
(e) The obligations of the Borrower and the Guarantors under
this Section shall survive the termination of this Agreement and/or the payment
of the Loans.
SECTION 2.16 CHANGE IN LEGALITY.
(a) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (x) any change after the date of this Agreement
in any law or regulation or in the interpretation thereof by any Governmental
Authority charged with the administration thereof shall make it unlawful for a
Bank to make or maintain a Eurodollar Loan or to give effect to its obligations
as contemplated hereby with respect to a Eurodollar Loan or (y) at any time any
Bank determines that the making or continuance of any of its Eurodollar Loans
has become impracticable as a result of a contingency occurring after the date
hereof which adversely affects the London interbank market or the position of
such Bank in such market, then, by written notice to the Borrower, such Bank may
(i) declare that Eurodollar Loans will not thereafter be made by such Bank
hereunder, whereupon any request by the Borrower for a Eurodollar Borrowing
shall, as to such Bank only, be deemed a request for an ABR Loan unless such
declaration shall be subsequently withdrawn; and (ii) require that all
outstanding Eurodollar Loans made by it be converted to ABR Loans, in which
event all such Eurodollar Loans shall be automatically converted to ABR Loans as
of the effective date of such notice as provided in paragraph (b) below. In the
event any Bank shall exercise its rights under clause (i) or (ii) of this
paragraph (a), all payments and prepayments of principal which would otherwise
have been applied to
26
repay the Eurodollar Loans that would have been made by such Bank or the
converted Eurodollar Loans of such Bank shall instead be applied to repay the
ABR Loans made by such Bank in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.16, a notice to the
Borrower by any Bank pursuant to paragraph (a) above shall be effective, if
lawful, and if any Eurodollar Loans shall then be outstanding, on the last day
of the then-current Interest Period, otherwise, such notice shall be effective
on the date of receipt by the Borrower.
SECTION 2.17 PRO RATA TREATMENT, ETC. All payments and repayments of
principal and interest in respect of the Loans (except as provided in Sections
2.15 and 2.16) shall be made pro rata among the Banks in accordance with the
then outstanding principal amount of the Loans and/or participations in Letter
of Credit Outstandings hereunder and all payments of Commitment Fees and Letter
of Credit Fees (other than those payable to a Fronting Bank) shall be made pro
rata among the Banks in accordance with their Commitments. All payments by the
Borrower hereunder shall be (i) net of any tax applicable to the Borrower or
Guarantor and (ii) made in Dollars in immediately available funds at the office
of the Agent by 12:00 noon, New York City time, on the date on which such
payment shall be due. Interest in respect of any Loan hereunder shall accrue
from and including the date of such Loan to but excluding the date on which such
Loan is paid in full or converted to a Loan of a different Type.
SECTION 2.18 TAXES. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of, and
without deduction for, any Indemnified Taxes or Other Taxes; provided that if
the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Agent, Bank or Fronting Bank (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower will indemnify the Agent, each Bank and the
Fronting Bank, within 10 days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Agent, such Bank or the
Fronting Bank, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to any amount payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Bank or the Fronting Bank, or by the
Agent on its own behalf or on behalf of a Bank or the Fronting Bank, shall be
conclusive absent manifest error.
27
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the borrower to a Governmental Authority, the Borrower
shall deliver to the Agent the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Agent.
(e) Any Foreign Bank that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
(f) The obligations of the Borrower and the Guarantors under
this Section shall survive the termination of this Agreement and/or the payment
of the Loans.
SECTION 2.19 CERTAIN FEES. The Borrower shall pay to the Agent, for the
respective accounts of JPMorgan Chase, Fleet, GECC and CSFB (and each of their
respective Bank Affiliates), the respective fees set forth in that certain Joint
Fee Letter dated January 21, 2002 and that certain JPMorgan Chase Fee Letter
dated January 21, 2002.
SECTION 2.20 COMMITMENT FEE. The Borrower shall pay to the Banks a
commitment fee (the "Commitment Fee") for the period commencing on the Closing
Date to the Termination Date or the earlier date of termination of the
Commitment, computed (on the basis of the actual number of days elapsed over a
year of 360 days) at the rate of (i) one percent (1%) per annum on the average
daily Unused Total Commitment at all times during which the average Total
Commitment Usage is less than or equal to 33 1/3% of the average Total
Commitment, (ii) three-quarters of one percent (3/4%) per annum on the average
daily Unused Total Commitment at all times during which the average Total
Commitment Usage is more than 33 1/3% but less than or equal to 66 2/3% of the
Total Commitment and (iii) one-half of one percent (1/2%) per annum on the
average daily Unused Total Commitment at all times during which the Total
Commitment Usage is more than 66 2/3% of the Total Commitment. Such Commitment
Fee, to the extent then accrued, shall be payable (x) monthly, in arrears, on
the last calendar day of each month, (y) on the Termination Date and (z) as
provided in Section 2.10 hereof, upon any reduction or termination in whole or
in part of the Total Commitment.
SECTION 2.21 LETTER OF CREDIT FEES. The Borrower shall pay with respect
to each Letter of Credit (i) to the Agent on behalf of the Banks a fee
calculated (on the basis of the actual number of days elapsed over a year of 360
days) at the rate of (x) 3 1/2% per annum on the daily average Letter of Credit
Outstandings and (ii) to the Fronting Bank such Fronting Bank's customary fees
for issuance, amendments and processing referred to in Section 2.03. In
addition, the Borrower agrees to pay each Fronting Bank for its account a
fronting fee of one quarter of one percent (1/4%) per annum in respect of each
Letter of Credit issued by such Fronting Bank, for the period from and including
the date of issuance of such Letter of Credit to and including the date of
termination of such Letter of Credit, and payable at times to be determined by
such Fronting Bank, the Borrower and the Agent. Accrued fees described in clause
(i) of the first
28
sentence of this paragraph in respect of each Letter of Credit shall be due and
payable monthly in arrears on the last calendar day of each month and on the
Termination Date. Accrued fees described in clause (ii) of the first sentence of
this paragraph in respect of each Letter of Credit shall be payable at times to
be determined by the Fronting Bank, the Borrower and the Agent.
SECTION 2.22 NATURE OF FEES. All Fees shall be paid on the dates due,
in immediately available funds, to the Agent for the respective accounts of the
Agent and the Banks, as provided herein and in the fee letter described in
Section 2.19. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.23 PRIORITY AND LIENS.
(a) The Borrower and each of the Guarantors hereby covenants,
represents and warrants that, upon entry of the Interim Order, the Obligations
of the Borrower and the Guarantors hereunder and under the Loan Documents and in
respect of Indebtedness arising after the Filing Date owed to any Bank (or any
of their respective Bank Affiliates) permitted by Section 6.03(vii): (i)
pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all times
constitute allowed administrative expense claims in the Cases having priority
over all administrative expenses of the kind specified in Sections 503(b) or
507(b) of the Bankruptcy Code; (ii) pursuant to Section 364(c)(2) of the
Bankruptcy Code, shall at all times be secured by a perfected first priority
Lien on all property of the Borrower and the Guarantors (limited, in the case of
leasehold interests, to the proceeds received upon any sale, disposition or
termination thereof) that is not subject to valid, perfected and non-avoidable
liens as of the Filing Date, including, without limitation, substantially all
Inventory of the Borrower and the Guarantors (excluding the Borrower's and the
Guarantors' rights in respect of avoidance actions under the Bankruptcy Code, it
being understood that, notwithstanding such exclusion of avoidance actions, the
proceeds of such actions shall be available to repay the Obligations), and on
all cash maintained in the Letter of Credit Account and any direct investments
of the funds contained therein; (iii) pursuant to Section 364(c)(3) of the
Bankruptcy Code, shall be secured by a perfected Lien upon all property of the
Borrower and the Guarantors (limited, in the case of leasehold interests, to the
proceeds received upon any sale, disposition or termination thereof) that is
subject to valid, perfected and non-avoidable Liens in existence on the Filing
Date or to valid Liens in existence on the Filing Date that are perfected
subsequent to the Filing Date as permitted by Section 546(b) of the Bankruptcy
Code or to Permitted Liens, junior to such valid and perfected Liens, subject
only to (x) in the event of the occurrence and during the continuance of an
Event of Default, the payment of allowed and unpaid professional fees and
disbursements incurred or accrued by the Borrower, the Guarantors and any
statutory committees appointed in the Cases in an aggregate amount not in excess
of $5,000,000 (plus all unpaid professional fees and disbursements accrued or
incurred prior to the occurrence of an Event of Default to the extent allowed by
the Bankruptcy Court at any time) and (y) the payment of unpaid fees pursuant to
28 U.S.C. Section 1930 and to the Clerk of the Bankruptcy Court (collectively,
the "Carve-Out"), provided, that, no portion of the Carve-Out shall be utilized
to fund litigation against the Agent or the Banks. The Banks agree that so long
as no Event of Default shall have occurred and be continuing, the Borrower and
the Guarantors shall be permitted to pay compensation and reimbursement of
expenses allowed and payable under 11 U.S.C. Section 330 and 11 U.S.C. Section
331, as the same may be due and payable, and the same shall not reduce the
Carve-Out. Notwithstanding anything to the contrary set forth herein, but
subject to the "provided" clause of this sentence
29
during the period described in such clause, the claims and Liens referred to
above in favor of the Banks (or their respective Bank Affiliates) in respect of
the obligations of the Borrower permitted by Section 6.03(vii) arising after the
Filing Date shall be (A) pari passu with the Superpriority Claims and Liens in
respect of the other Obligations hereunder and under the other Loan Documents to
the extent of $200,000,000 and (B) junior to the Superpriority Claims and Liens
in respect of the other Obligations hereunder and under the other Loan Documents
to the extent the obligations of the Borrower owed to Banks (or their respective
Bank Affiliates) that are permitted by Section 6.03(vii) arising after the
Filing Date exceed $200,000,000, provided that during the period ending upon the
entry of the Final Order, Bank One and its banking Affiliates (or another cash
management institution satisfactory to the Borrower and the Banks) shall be
entitled to the benefit of the pari passu claims and Liens to the extent of
$190,000,000 and Banks (and their respective Bank Affiliates) shall be entitled
to the benefit of the pari passu claims and Liens to the extent of $10,000,000,
in each case as referred to in clause (A) of this sentence in respect of
overdrafts and related liabilities arising from treasury, depository and cash
management services or in connection with any automated clearing house transfers
of funds permitted by Section 6.03(vii), in each case to the extent arising
after the Filing Date.
(b) Subject to the priorities set forth in subsection (a)
above and to the Carve-Out, as to all real property the title to which is held
by the Borrower or any of the Guarantors, or the possession of which is held by
the Borrower or any of the Guarantors pursuant to leasehold interest, the
Borrower and each Guarantor hereby assigns and conveys as security, grants a
security interest in, hypothecates, mortgages, pledges and sets over unto the
Agent on behalf of the Banks all of the right, title and interest of the
Borrower and such Guarantor in all of such owned real property and in all such
leasehold interests (limited, in the case of leasehold interests, to the
proceeds received upon any sale, disposition or termination thereof), together
in each case with all of the right, title and interest of the Borrower and such
Guarantor in and to all buildings, improvements, and fixtures related thereto,
any lease or sublease thereof, all general intangibles relating thereto and all
proceeds thereof. The Borrower and each Guarantor acknowledges that, pursuant to
the Orders, the Liens in favor of the Agent on behalf of the Banks in all of
such real property and leasehold instruments (limited, in the case of leasehold
interests, to the proceeds received upon any sale, disposition or termination
thereof) shall be perfected without the recordation of any instruments of
mortgage or assignment. The Borrower and each Guarantor further agrees that,
upon the request of the Agent, the Borrower and such Guarantor shall enter into
separate fee mortgages in recordable form with respect to such properties on
terms reasonably satisfactory to the Agent.
SECTION 2.24 RIGHT OF SET-OFF. Subject to the provisions of Section
7.01, upon the occurrence and during the continuance of any Event of Default,
the Agent and each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law and without further order of or
application to the Bankruptcy Court, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Agent and each such Bank to or for
the credit or the account of the Borrower or any Guarantor against any and all
of the obligations of such Borrower or Guarantor now or hereafter existing under
the Loan Documents, irrespective of whether or not such Bank shall have made any
demand under any Loan Document and although such obligations may not have been
accelerated. Each Bank and the Agent agrees promptly to notify the Borrower and
Guarantors after any such set-off and application made by such Bank or
30
by the Agent, as the case may be, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Bank and the Agent under this Section are in addition to other rights and
remedies which such Bank and the Agent may have upon the occurrence and during
the continuance of any Event of Default.
SECTION 2.25 SECURITY INTEREST IN LETTER OF CREDIT ACCOUNT. Pursuant to
Section 364(c)(2) of the Bankruptcy Code, the Borrower and the Guarantors hereby
assign and pledge to the Agent, for its benefit and for the ratable benefit of
the Banks, and hereby grant to the Agent, for its benefit and for the ratable
benefit of the Banks, a first priority security interest, senior to all other
Liens, if any, in all of the Borrower's and the Guarantors' right, title and
interest in and to the Letter of Credit Account and any direct investment of the
funds contained therein. Cash held in the Letter of Credit Account shall not be
available for use by the Borrower, whether pursuant to Section 363 of the
Bankruptcy Code or otherwise and shall be released to the Borrower as described
in clause (ii)(y) of Section 2.03(b).
SECTION 2.26 PAYMENT OF OBLIGATIONS. Subject to the provisions of
Section 7.01, upon the Termination Date, the Banks shall be entitled to
immediate payment of such Obligations without further application to or order of
the Bankruptcy Court.
SECTION 2.27 NO DISCHARGE; SURVIVAL OF CLAIMS. Each of the Borrower and
the Guarantors agrees that (i) its obligations hereunder shall not be discharged
by the entry of an order confirming a Reorganization Plan (and each of the
Borrower and the Guarantors, pursuant to Section 1141(d)(4) of the Bankruptcy
Code, hereby waives any such discharge) and (ii) the Superpriority Claim granted
to the Agent and the Banks pursuant to the Orders and described in Section 2.23
and the Liens granted to the Agent pursuant to the Orders and described in
Sections 2.23 and 2.25 shall not be affected in any manner by the entry of an
order confirming a Reorganization Plan.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to make Loans and issue and/or
participate in Letters of Credit hereunder, the Borrower and each of the
Guarantors jointly and severally represent and warrant as follows:
SECTION 3.01 ORGANIZATION AND AUTHORITY. Each of the Borrower and the
Guarantors, other than the Excluded Entities (i) is duly organized and validly
existing under the laws of the State of its organization and is duly qualified
as a foreign organization and is in good standing in each jurisdiction in which
the failure to so qualify would have a material adverse effect on the financial
condition, operations, business, properties, assets or prospects of the Borrower
and the Guarantors taken as a whole; (ii) subject to the entry by the Bankruptcy
Court of the Interim Order (or the Final Order, when applicable) has the
requisite corporate power and authority to effect the transactions contemplated
hereby, and by the other Loan Documents to which it is a party, and (iii)
subject to the entry by the Bankruptcy Court of the Interim Order (or the Final
Order, when applicable) has all requisite organizational power and authority
and, upon the entry of the Interim Order (or the Final Order, when applicable)
the legal right to own, pledge, mortgage and operate its properties, and to
conduct its business as now or currently proposed to be conducted. Each of the
Excluded Entities (i) based solely on the Interim Order (or
31
the Final Order, when applicable) has the requisite corporate power and
authority to effect the transactions contemplated hereby, and by the other Loan
Documents to which it is a party, and (ii) based solely on the Interim Order (or
the Final Order, when applicable) has all requisite organizational power and
authority and, upon the entry of the Interim Order (or the Final Order, when
applicable), the legal right to own, pledge, mortgage and operate its
properties, and to conduct its business as now or currently proposed to be
conducted.
SECTION 3.02 DUE EXECUTION. Upon the entry by the Bankruptcy Court of
the Interim Order (or the Final Order, when applicable), the execution, delivery
and performance by each of the Borrower and the Guarantors other than the
Excluded Entities of each of the Loan Documents to which it is a party and based
solely on the Interim Order (or the Final Order, when applicable), the
execution, delivery and performance by each of the Excluded Entities of each of
the Loan Documents to which it is a party (i) are within the respective
organizational powers of each of the Borrower and the Guarantors, have been duly
authorized by all necessary organizational action including the consent of
equity holders where required, and do not (A) contravene the charter or by-laws
or other constituent documents of any of the Borrower or the Guarantors, (B)
violate any law (including, without limitation, the Securities Exchange Act of
1934) or regulation (including, without limitation, Regulations T, U or X of the
Board of Governors of the Federal Reserve System), or any order or decree of any
court or Governmental Authority, (C) conflict with or result in a breach of, or
constitute a default under, any material indenture, mortgage or deed of trust
entered into after the Filing Date or any material lease, agreement or other
instrument entered into after the Filing Date binding on the Borrower or the
Guarantors or any of their properties, or (D) result in or require the creation
or imposition of any Lien upon any of the property of any of the Borrower or the
Guarantors other than the Liens granted pursuant to this Agreement, the other
Loan Documents or the Orders; and (ii) do not require the consent, authorization
by or approval of or notice to or filing or registration with any Governmental
Authority other than the entry of the Orders. Upon the entry by the Bankruptcy
Court of the Interim Order (or the Final Order, when applicable), this Agreement
has been duly executed and delivered by each of the Borrower and the Guarantors.
Subject to the entry of the Interim Order (or Final Order, if applicable), this
Agreement is, and each of the other Loan Documents to which the Borrower and
each of the Guarantors, other than the Excluded Entities, is or will be a party,
when delivered hereunder or thereunder, will be, a legal, valid and binding
obligation of the Borrower and each Guarantor, as the case may be, enforceable
against the Borrower and the Guarantors, as the case may be, in accordance with
its terms and the Orders. Based solely on the Interim Order (or the Final Order,
when applicable), this Agreement and each of the other Loan Documents to which
each of the Excluded Entities is or will be a party, when delivered hereunder or
thereunder, will be, a legal, valid and binding obligation of each Excluded
Entity and enforceable against each Excluded Entity, in accordance with its
terms and the Orders.
SECTION 3.03 STATEMENTS MADE. The information that has been delivered
in writing by the Borrower or any of the Guarantors to the Agent, the Banks or
to the Bankruptcy Court in connection with any Loan Document, and any financial
statement delivered pursuant hereto or thereto (other than to the extent that
any such statements constitute projections), taken as a whole and in light of
the circumstances in which made, contains no untrue statement of a material fact
and does not omit to state a material fact necessary to make such statements not
misleading; and, to the extent that any such information constitutes
projections, such projections were prepared in
32
good faith on the basis of assumptions, methods, data, tests and information
believed by the Borrower or such Guarantor to be reasonable at the time such
projections were furnished.
SECTION 3.04 FINANCIAL STATEMENTS. The Borrower has furnished the Banks
with copies of the audited consolidated financial statement and schedules of the
Borrower for the fiscal year ended January 31, 2001 and the unaudited
consolidated financial statements for the Borrower for the fiscal quarter ended
October 31, 2001. Such financial statements present fairly the financial
condition and results of operations of the Borrower and its Subsidiaries on a
consolidated basis as of such dates and for such periods; such balance sheets
and the notes thereto disclose all liabilities, direct or contingent, of the
Borrower and its Subsidiaries as of the dates thereof required to be disclosed
by GAAP and such financial statements were prepared in a manner consistent with
GAAP (subject in the case of quarterly financial statements to normal year-end
adjustments). No material adverse change in the operations, business,
properties, assets, prospects or condition (financial or otherwise) of the
Borrower and the Guarantors, taken as a whole, has occurred from the date of the
Joint Commitment Letter other than those which customarily occur as a result of
events leading up to and following the commencement of a proceeding under
Chapter 11 of the Bankruptcy Code and the commencement of the Cases (including,
without limitation, those reflected in the financial projections heretofore made
available to the Agent and the Banks).
SECTION 3.05 OWNERSHIP. Other than as set forth on Schedule 3.05 (i)
each of the Persons listed on Schedule 3.05 is a wholly-owned, direct or
indirect Subsidiary of the Borrower, and (ii) the Borrower owns no other
Subsidiaries, whether directly or indirectly.
SECTION 3.06 LIENS. There are no Liens of any nature whatsoever on any
assets of the Borrower or any of the Guarantors other than: (i) Permitted Liens;
(ii) other Liens permitted pursuant to Section 6.01; and (iii) Liens in favor of
the Agent and the Banks, and (iv) obligations incurred prior to the Filing Date
secured by Liens on the Borrower's or any Guarantor's inventory (excluding
inventory that has been consigned or that is subject to PACA or PASA claims)
that do not exceed $50,000,000 in the aggregate. Neither the Borrower nor the
Guarantors are parties to any contract, agreement, lease or instrument the
performance of which, either unconditionally or upon the happening of an event,
will result in or require the creation of a Lien on any assets of the Borrower
or any Guarantor or otherwise result in a violation of this Agreement other than
the Liens granted to the Agent and the Banks as provided for in this Agreement.
SECTION 3.07 COMPLIANCE WITH LAW.
(a) (i) The operations of the Borrower and the Guarantors
comply in all material respects with all applicable environmental, health and
safety statutes and regulations, including, without limitation, regulations
promulgated under the Resource Conservation and Recovery Act (42 U.S.C. Sections
6901 et seq.); (ii) to the Borrower's and each of the Guarantor's knowledge,
none of the operations of the Borrower or the Guarantors is the subject of any
Federal or state investigation evaluating whether any remedial action involving
a material expenditure by the Borrower or any Guarantor is needed to respond to
a release of any Hazardous Waste or Hazardous Substance (as such terms are
defined in any applicable state or Federal environmental law or regulations)
into the environment; and (iii) to the Borrower's and
33
each of the Guarantor's knowledge, the Borrower and the Guarantors do not have
any material contingent liability in connection with any release of any
Hazardous Waste or Hazardous Substance into the environment.
(b) Neither the Borrower nor any Guarantor is, to the best of
its knowledge, in violation of any law, rule or regulation, or in default with
respect to any judgment, writ, injunction or decree of any Governmental
Authority the violation of which, or a default with respect to which, would have
a material adverse effect on the financial condition, operations, business,
properties, assets or prospects of the Borrower and the Guarantors taken as a
whole.
SECTION 3.08 INSURANCE. All policies of insurance of any kind or nature
owned by or issued to the Borrower and the Guarantors, including, without
limitation, policies of life, fire, theft, product liability, public liability,
property damage, other casualty, employee fidelity, workers' compensation,
employee health and welfare, title, property and liability insurance, are in
full force and effect and are of a nature and provide such coverage as is
customarily carried by companies of the size and character of the Borrower and
the Guarantors.
SECTION 3.09 USE OF PROCEEDS. The proceeds of the Loans shall be used
for working capital and for other general corporate purposes of the Borrower and
the Guarantors (including for the payment of fees and transaction costs
contemplated hereby and by the letters referred to in Section 2.19).
SECTION 3.10 LITIGATION. Other than as set forth on Schedule 3.10,
there are no unstayed actions, suits or proceedings pending or, to the knowledge
of the Borrower or the Guarantors, threatened against or affecting the Borrower
or the Guarantors or any of their respective properties, before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which is reasonably likely to be determined adversely to
the Borrower or the Guarantors and, if so determined adversely to the Borrower
or the Guarantors would have a material adverse effect on the financial
condition, business, properties, prospects, operations or assets of the Borrower
and the Guarantors, taken as a whole.
SECTION 3.11 INVENTORY VALUE. The value of the inventory of the
Borrower and the Guarantors as of December 31, 2001 was no less than
$5,000,000,000.
SECTION 3.12 LABOR RELATIONS.
(a) Except as disclosed on Schedule 3.12 hereto, the Borrower
is not presently a party to any collective bargaining or other similar
contracts.
(b) Except for matters which, in the aggregate, if determined
adversely to the Borrower would not have a material adverse effect on the
Borrower, there is not presently pending and, to the Borrower's knowledge, there
is not threatened any of the following:
(i) Any strike, slowdown, picketing, work stoppage,
or employee grievance process;
(ii) Any proceeding against or affecting the
Borrower relating to the alleged violation of any applicable law pertaining to
labor relations or before the National Labor
34
Relations Board, the Equal Employment Opportunity Commission, or any comparable
governmental body, organizational activity, or other labor or employment dispute
against or affecting the Borrower;
(iii) Any lockout of any employees by the Borrower;
(iv) Any application for the certification of a
collective bargaining agreement;
(v) Any work stoppage or other labor dispute; or
(vi) Any failure by the Borrower to comply with all
applicable law relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing.
SECTION 4. CONDITIONS OF LENDING
SECTION 4.01 CONDITIONS PRECEDENT TO INITIAL LOANS AND INITIAL LETTERS
OF CREDIT. The obligation of the Banks to make the initial Loans or the Fronting
Bank to issue the initial Letter of Credit, whichever may occur first, is
subject to the following conditions precedent:
(a) Supporting Documents. The Agent shall have received for
each of the Borrower and the Guarantors:
(i) a copy of such entity's certificate of
incorporation, as amended, certified as of a recent date by the Secretary of
State of the state of its incorporation;
(ii) a certificate of such Secretary of State, dated
as of a recent date, as to the good standing of and payment of taxes by that
entity and as to the charter documents on file in the office of such Secretary
of State; and
(iii) a certificate of the Secretary or an Assistant
Secretary of that entity dated the date of the initial Loans or the initial
Letter of Credit hereunder, whichever first occurs, and certifying (A) that
attached thereto is a true and complete copy of the by-laws of that entity as in
effect on the date of such certification, (B) that attached thereto is a true
and complete copy of resolutions adopted by the Board of Directors of that
entity authorizing the Borrowings and Letter of Credit extensions hereunder, the
execution, delivery and performance in accordance with their respective terms of
this Agreement, the Loan Documents and any other documents required or
contemplated hereunder or thereunder and the granting of the security interest
in the Letter of Credit Account and other Liens contemplated hereby, (C) that
the certificate of incorporation of that entity has not been amended since the
date of the last amendment thereto indicated on the certificate of the Secretary
of State furnished pursuant to clause (i) above and (D) as to the incumbency and
specimen signature of each officer of that entity executing this Agreement and
the Loan Documents or any other document delivered by it in connection herewith
or therewith (such certificate to contain a certification by another officer of
that entity as to the incumbency and signature of the officer signing the
certificate referred to in this clause (iii)).
35
(b) Interim Order. At the time of the making of the initial
Loans or at the time of the issuance of the initial Letters of Credit, whichever
first occurs, but in any event no later than ten (10) days after the Filing
Date, the Agent and the Banks shall have received a certified copy of an order
of the Bankruptcy Court in substantially the form of Exhibit A-1 (the "Interim
Order") approving the Loan Documents and granting the Superpriority Claim status
and senior and other Liens described in Section 2.23 which Interim Order (i)
shall have been entered, upon an application or motion of the Borrower
reasonably satisfactory in form and substance to the Initial Banks, on such
prior notice to such parties as may in each case be reasonably satisfactory to
the Initial Banks, (ii) shall authorize extensions of credit in amounts not in
excess of $1,150,000,000 (which amount may not be increased without the consent
of the Initial Banks), (iii) shall approve the payment by the Borrower of all of
the Fees set forth in Section 2.19, (iv) shall be in full force and effect, and
(v) shall not have been stayed, reversed, modified or amended in any respect;
and, if the Interim Order is the subject of a pending appeal in any respect,
neither the making of such Loans nor the issuance of such Letter of Credit nor
the performance by the Borrower or any of the Guarantors of any of their
respective obligations hereunder or under the Loan Documents or under any other
instrument or agreement referred to herein shall be the subject of a presently
effective stay pending appeal.
(c) Security and Pledge Agreement. The Borrower and each of
the Guarantors shall have duly executed and delivered to the Agent a Security
and Pledge Agreement in substantially the form of Exhibit B (the "Security and
Pledge Agreement").
(d) First Day Orders. All of the "first day orders" entered by
the Bankruptcy Court at the time of the commencement of the Cases shall be
reasonably satisfactory in form and substance to the Initial Banks.
(e) Opinion of Counsel. The Agent and the Banks shall have
received the favorable written opinion of in-house and outside counsel to the
Borrower and the Guarantors who shall be reasonably acceptable to the Agent,
dated the date of the initial Loans or the issuance of the initial Letter of
Credit, whichever first occurs, substantially in the form of Exhibit C.
(f) Payment of Fees. The Borrower shall have paid to the Agent
the then unpaid balance of all accrued and unpaid Fees due under and pursuant to
this Agreement and the letters referred to in Section 2.19.
(g) Corporate and Judicial Proceedings. All corporate and
judicial proceedings and all instruments and agreements in connection with the
transactions among the Borrower, the Guarantors, the Agent and the Banks
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to the Initial Banks, and the Agent and the Initial Banks shall have
received all information and copies of all documents and papers, including
records of corporate and judicial proceedings, which the Agent may have
reasonably requested in connection therewith, such documents and papers where
appropriate to be certified by proper corporate, governmental or judicial
authorities.
(h) Information. The Initial Banks shall have received such
information (financial or otherwise) as may be reasonably requested by the
Initial Banks and shall have
36
discussed the Borrower's business plan heretofore delivered to the Agent with
the Borrower's management and shall be satisfied with the nature and substance
of such discussions.
(i) Operating Plan. No later than 24 hours prior to the making
of the initial Loans or issuance of the initial Letter of Credit hereunder, the
Agent and the Banks shall have received from the Borrower drafts of the
Borrower's projected operating plan (which shall include income statements,
balance sheets and cash flow statements, each integrated with relevant
assumptions) for its fiscal years ending on or about January 31, 2003 (on a
monthly basis) and January 31, 2004 (on a monthly or quarterly basis) and such
drafts shall be satisfactory in form and substance to the Agent and the Banks.
(j) Compliance with Laws. The Borrower and the Guarantors
shall have granted the Initial Banks access to and the right to inspect all
reports, audits and other internal information of the Borrower and the
Guarantors relating to environmental matters, and the Agent and the Initial
Banks shall be reasonably satisfied (x) that the Borrower and the Guarantors are
in compliance in all material respects with all applicable environmental laws
and regulations (except to the extent that such non-compliance could not
reasonably be expected to have a material adverse effect on the Borrower and the
Guarantors taken as a whole and (y) that the Borrower has made adequate
provision for the costs of maintaining such compliance.
(k) UCC Searches. The Agent shall have received UCC searches
(including tax liens and judgments) conducted in such jurisdictions in which the
Borrower and the Guarantors conduct business as may be satisfactory to the
Initial Banks (dated as of a date reasonably satisfactory to them), reflecting
the absence of Liens and encumbrances on the assets of the Borrower and the
Guarantors other than such Liens permitted hereunder and as may be satisfactory
to the Initial Banks.
(l) Closing Documents. The Agent shall have received all
documents required by Section 4.01 reasonably satisfactory in form and substance
to the Initial Banks.
SECTION 4.02 CONDITIONS PRECEDENT TO EACH LOAN AND EACH LETTER OF
CREDIT. The obligation of the Banks to make each Loan and of the Fronting Bank
to issue each Letter of Credit, including the initial Loan and the initial
Letter of Credit, is subject to the following conditions precedent:
(a) Notice. The Agent shall have received a notice with
respect to such borrowing or issuance, as the case may be, as required by
Section 2.
(b) Representations and Warranties. All representations and
warranties contained in this Agreement and the other Loan Documents shall be
true and correct in all material respects on and as of the date of each
Borrowing or the issuance of each Letter of Credit hereunder with the same
effect as if made on and as of such date except to the extent such
representations and warranties expressly relate to an earlier date.
(c) No Default. On the date of each Borrowing hereunder or the
issuance of each Letter of Credit, no Event of Default or event which upon
notice or lapse of time or both would constitute an Event of Default shall have
occurred and be continuing.
37
(d) Orders. The Interim Order shall be in full force and
effect and shall not have been stayed, reversed, modified or amended in any
respect without the prior written consent of the Initial Banks, provided, that
at the time of the making of any Loan or the issuance of any Letter of Credit
the aggregate amount of either of which, when added to the sum of the principal
amount of all Loans then outstanding and the Letter of Credit Outstandings,
would exceed the amount authorized by the Interim Order (collectively, the
"Additional Credit"), the Agent and each of the Banks shall have received a
certified copy of an order of the Bankruptcy Court in substantially the form of
Exhibit A-2 (the "Final Order"), which, in any event, shall have been entered by
the Bankruptcy Court no later than 45 days after the entry of the Interim Order
and at the time of the extension of any Additional Credit the Final Order shall
be in full force and effect, and shall not have been stayed, reversed, modified
or amended in any respect (or as may reasonably be required by (including with
respect to claims under Section 506(c) of the Bankruptcy Code), the
Super-majority Banks) without the prior written consent of the Super-majority
Banks; and if either the Interim Order or the Final Order is the subject of a
pending appeal in any respect, neither the making of the Loans nor the issuance
of any Letter of Credit nor the performance by the Borrower or any Guarantor of
any of their respective obligations under any of the Loan Documents shall be the
subject of a presently effective stay pending appeal.
(e) Payment of Fees. The Borrower shall have paid to the Agent
the then unpaid balance of all accrued and unpaid Fees then payable under and
pursuant to this Agreement and the letters referred to in Section 2.19.
(f) Borrowing Base Certificate. From and after the execution
and delivery of the Borrowing Base Amendment, the Agent shall have received the
timely delivery of the most recent Borrowing Base Certificate (dated no more
than seven (7) days prior to the making of a Loan or the issuance of a Letter of
Credit) required to be delivered hereunder.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrower that the conditions specified in this Section have been
satisfied or waived at that time.
SECTION 5. AFFIRMATIVE COVENANTS
From the date hereof and for so long as any Commitment shall
be in effect or any Letter of Credit shall remain outstanding (in a face amount
in excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
case pursuant to Section 2.03(b)), or any amount shall remain outstanding or
unpaid under this Agreement, the Borrower and each of the Guarantors agree that,
unless the Required Banks shall otherwise consent in writing, the Borrower and
each of the Guarantors will:
SECTION 5.01 FINANCIAL STATEMENTS, REPORTS, ETC. In the case of the
Borrower and the Guarantors, deliver to the Agent and each of the Banks:
(a) as soon as possible, and in any event (x) within 120 days
of the end of the fiscal year of the Borrower ended January 31, 2002, and (y)
within 90 days after the end of each
38
fiscal year thereafter, the Borrower's consolidated balance sheet and related
statement of income and cash flows, showing the financial condition of the
Borrower and its Subsidiaries on a consolidated basis as of the close of such
fiscal year and the results of their respective operations during such year, the
consolidated statement of the Borrower to be audited for the Borrower and its
Subsidiaries by PricewaterhouseCoopers LLP or other independent public
accountants of recognized national standing and accompanied by an opinion of
such accountants (which shall not be qualified in any material respect other
than with respect to the Cases or a going concern qualification) and to be
certified by a Financial Officer of the Borrower to the effect that such
consolidated financial statements fairly present the financial condition and
results of operations of the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP;
(b) within 45 days after the end of each of the first three
fiscal quarters, the Borrower's consolidated balance sheets and related
statements of income and cash flows, showing the financial condition of the
Borrower and its Subsidiaries on a consolidated basis as of the close of such
fiscal quarter and the results of their operations during such fiscal quarter
and the then elapsed portion of the fiscal year, each certified by a Financial
Officer as fairly presenting the financial condition and results of operations
of the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP, subject to normal year-end audit adjustments;
(c) (i) concurrently with any delivery of financial statements
under (a) and (b) above, a certificate of a Financial Officer certifying such
statements (A) certifying that no Event of Default or event which upon notice or
lapse of time or both would constitute an Event of Default has occurred, or, if
such an Event of Default or event has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with respect
thereto and (B) setting forth computations in reasonable detail satisfactory to
the Agent demonstrating compliance with the provisions of Sections 6.03, 6.04,
6.05 and 6.10 and (ii) concurrently with any delivery of financial statements
under (a) above, a certificate (which certificate may be limited to accounting
matters and disclaim responsibility for legal interpretations) of the
accountants auditing the consolidated financial statements delivered under (a)
above certifying that, in the course of the regular audit of the business of the
Borrower and its Subsidiaries, such accountants have obtained no knowledge that
an Event of Default has occurred and is continuing, or if, in the opinion of
such accountants, an Event of Default has occurred and is continuing, specifying
the nature thereof and all relevant facts with respect thereto;
(d) as soon as available, but no more than 30 days after the
end of each fiscal month (i) the unaudited monthly cash flow reports,
consolidated balance sheets and related statements of income of the Borrower and
its Subsidiaries on a consolidated basis and as of the close of such fiscal
month and the results of their operations during such month and the then elapsed
portion of the fiscal quarter and (ii) a monthly report detailing professional
fees and expenses that have been billed and paid or billed but unpaid to date,
the accumulated "hold-back" of professional fees and expenses to date, material
adverse events or changes (if any) and material litigation (if any) and (iii) an
updated 13-week rolling cash flow projection together with a reconciliation of
such cash flows to actual results;
(e) as soon as possible, and in any event within 50 days of
the Closing Date, a consolidated pro forma balance sheet of the Borrower's and
its Subsidiaries' financial condition as of the Filing Date;
39
(f) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials filed by
it with the Securities and Exchange Commission, or any governmental authority
succeeding to any of or all the functions of said commission, or with any
national securities exchange, as the case may be;
(g) as soon as available and in any event (A) within 30 days
after the Borrower or any of its ERISA Affiliates knows or has reason to know
that any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Single Employer Plan of the Borrower or
such ERISA Affiliate has occurred and (B) within 10 days after the Borrower or
any of its ERISA Affiliates knows or has reason to know that any other
Termination Event with respect to any such Plan has occurred, a statement of a
Financial Officer of the Borrower describing the full details of such
Termination Event and the action, if any, which the Borrower or such ERISA
Affiliate is required or proposes to take with respect thereto, together with
any notices required or proposed to be given to or filed with or by the
Borrower, the ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto;
(h) promptly and in any event within 10 days after receipt
thereof by the Borrower or any of its ERISA Affiliates from the PBGC copies of
each notice received by the Borrower or any such ERISA Affiliate of the PBGC's
intention to terminate any Single Employer Plan of the Borrower or such ERISA
Affiliate or to have a trustee appointed to administer any such Plan;
(i) if requested by the Agent, promptly and in any event
within 30 days after the filing thereof with the Internal Revenue Service,
copies of each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) with respect to each Single Employer Plan of the Borrower or any of
its ERISA Affiliates;
(j) within 10 days after notice is given or required to be
given to the PBGC under Section 302(f)(4)(A) of ERISA of the failure of the
Borrower or any of its ERISA Affiliates to make timely payments to a Plan, a
copy of any such notice filed and a statement of a Financial Officer of the
Borrower setting forth (A) sufficient information necessary to determine the
amount of the lien under Section 302(f)(3), (B) the reason for the failure to
make the required payments and (C) the action, if any, which the Borrower or any
of its ERISA Affiliates proposed to take with respect thereto;
(k) promptly and in any event within 10 days after receipt
thereof by the Borrower or any ERISA Affiliate from a Multiemployer Plan
sponsor, a copy of each notice received by the Borrower or any ERISA Affiliate
concerning (A) the imposition of Withdrawal Liability by a Multiemployer Plan,
(B) the determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the termination of a
Multiemployer Plan within the meaning of Title IV of ERISA, or (D) the amount of
liability incurred, or which may be incurred, by the Borrower or any ERISA
Affiliate in connection with any event described in clause (A), (B) or (C)
above;
(l) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Guarantor, or
40
compliance with the terms of any material loan or financing agreements as the
Agent, at the request of any Bank, may reasonably request; and
(m) furnish to the Agent and its counsel promptly after the
same is available, copies of all pleadings, motions, applications, judicial
information, financial information and other documents filed by or on behalf of
the Borrower or any of the Guarantors with the Bankruptcy Court in the Cases, or
distributed by or on behalf of the Borrower or any of the Guarantors to any
official committee appointed in the Cases.
SECTION 5.02 CORPORATE EXISTENCE. Preserve and maintain in full force
and effect all governmental rights, privileges, qualifications, permits,
licenses and franchises necessary or desirable in the normal conduct of its
business except (i)if such failure to preserve the same could not, in the
aggregate, reasonably be expected to have a material adverse effect on the
operations, business, properties, assets, prospects or condition (financial or
otherwise) of the Borrower and the Guarantors, taken as a whole, and (ii) as
otherwise permitted in connection with sales of assets permitted by Section
6.11.
SECTION 5.03 INSURANCE. (a) Keep its insurable properties insured at
all times, against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies of the same or similar size in
the same or similar businesses; and maintain in full force and effect public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by the Borrower or any Guarantor, as the case may
be, in such amounts (giving effect to self-insurance) and with such deductibles
as are customary with companies of the same or similar size in the same or
similar businesses and in the same geographic area; (b) maintain such other
insurance or self insurance as may be required by law; and (c) as soon as
possible, but in any event not later than the entry of the Final Order, name the
Agent as loss payee and additional insured (as its' interest may appear) on such
policies of the Borrower and the Guarantors as the Co-Collateral Monitors shall
reasonably request.
SECTION 5.04 OBLIGATIONS AND TAXES. With respect to the Borrower and
each Guarantor, pay all its material obligations arising after the Filing Date
promptly and in accordance with their terms and pay and discharge promptly all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property arising after the
Filing Date, before the same shall become in default, as well as all material
lawful claims for labor, materials and supplies or otherwise arising after the
Filing Date which, if unpaid, would become a Lien or charge upon such properties
or any part thereof; provided, however, that the Borrower and each Guarantor
shall not be required to pay and discharge or to cause to be paid and discharged
any such obligation, tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings (if the Borrower and the Guarantors shall have set aside on their
books adequate reserves therefor).
SECTION 5.05 NOTICE OF EVENT OF DEFAULT, ETC. Promptly give to the
Agent notice in writing of any Event of Default or the occurrence of any event
or circumstance which with the passage of time or giving of notice or both would
constitute an Event of Default.
41
SECTION 5.06 ACCESS TO BOOKS AND RECORDS. Maintain or cause to be
maintained at all times true and complete books and records in accordance with
GAAP of the financial operations of the Borrower and the Guarantors; and provide
the Agent and the Co-Collateral Monitors and their respective representatives
access to all such books and records during regular business hours, in order
that the Agent may upon reasonable prior notice examine and make abstracts from
such books, accounts, records and other papers for the purpose of verifying the
accuracy of the various reports delivered by the Borrower or the Guarantors to
the Agent or the Banks pursuant to this Agreement or for otherwise ascertaining
compliance with this Agreement; and at any reasonable time and from time to time
during regular business hours, upon reasonable notice, permit the Agent and the
Co-Collateral Monitors and any agents or representatives (including, without
limitation, appraisers) thereof to visit the properties of the Borrower and the
Guarantors and to conduct examinations of and to monitor the Collateral held by
the Agent.
SECTION 5.07 BLOCKED ACCOUNT ARRANGEMENTS. Within forty-five (45) days
of the Closing Date, establish blocked account arrangements between the Agent
and the Borrower's principal concentration banks on terms satisfactory to the
Agent, such arrangements to be implemented upon the occurrence and continuation
of an Event of Default.
SECTION 5.08 BORROWING BASE CERTIFICATE. Following the execution and
delivery of the Borrowing Base Amendment, furnish to the Agent and the
Co-Collateral Monitors as soon as available and in any event (i) on or before
the day of each week set forth in the Borrowing Base Amendment, a weekly
Borrowing Base Certificate as of the last day of the immediately preceding week,
(ii) if requested by the Co-Collateral Monitors at any other time when the
Co-Collateral Monitors reasonably believe that the then existing Borrowing Base
Certificate is materially inaccurate, or at any time following the occurrence
and continuation of an Event of Default, as soon as reasonably available but in
no event later than two (2) Business Days after such request, a Borrowing Base
Certificate showing the Borrowing Base as of the date so requested, in each case
with supporting documentation (including, without limitation, the documentation
described on Schedule 1 to Exhibit E) and (iii) such other supporting
documentation and additional reports with respect to the Borrowing Base as the
Co-Collateral Monitors shall reasonably request.
SECTION 5.09 COLLATERAL MONITORING AND REVIEW. At any time upon the
request of the Agent or the Co-Collateral Monitors through the Agent, permit the
Agent, the Co-Collateral Monitors or professionals (including consultants,
accountants and appraisers) retained by the Agent, the Co-Collateral Monitors or
their professionals to conduct evaluations and appraisals of (i) the Borrower's
and/or the Guarantors' practices in the computation of the Borrowing Base and
(ii) the assets included in the Borrowing Base, and pay the reasonable fees and
expenses in connection therewith (including, without limitation, the reasonable
and customary fees and expenses associated with the Agent's Collateral Agent
Services Group). In connection with any collateral monitoring or review and
appraisal relating to the computation of the Borrowing Base, the Borrower shall
make such adjustments to the Borrowing Base as the Agent and the Co-Collateral
Monitors shall reasonably require based upon the terms of this Agreement and
results of such collateral monitoring, review or appraisal.
SECTION 5.10 OPERATING PLAN. By no later than 12:00 noon (New York City
time) on February 5, 2002 (with a view to holding a general syndication meeting
no later than
42
February 7, 2002), deliver to the Initial Banks the Borrower's final projected
operating plan through the Maturity Date, and make its senior officers available
to discuss such operating plan with the Agent and/or the Initial Banks upon the
their reasonable request; it being understood that it shall be an Event of
Default if such projected operating plan reflects that during the following 12
months Total Commitment Usage will exceed $1,700,000,000 or the Borrower will
not be in compliance with the Capital Expenditures covenant set forth in Section
6.04.
SECTION 5.11 ADDITIONAL UCC SEARCHES. By not later than the date upon
which the Final Order shall have been entered by the Bankruptcy Court, deliver
to the Agent such additional UCC searches as may have been requested and such
searches shall be satisfactory to the Initial Banks.
SECTION 5.12 DELIVERY OF SCHEDULES; SUPPLEMENTAL SCHEDULES.
(a) The Schedules referred to herein that are permitted to be
delivered by the Borrower on or before the entry of the Final Order or the date
upon which the Borrowing Base Amendment has been executed and delivered, shall,
upon their delivery, become part of this Agreement, provided, such Schedules are
in form and substance satisfactory to the Initial Banks. Pending such delivery,
any representation or warranty referred to any such Schedules (the "Affected
Representations") shall have no force or effect. The Borrowers and the
Guarantors shall be deemed to have made each Affected Representation on the date
that the Schedules hereto are delivered to the Agent.
(b) From time to time, the Borrower shall be permitted to
deliver one or more supplemental Schedules updating the disclosures set forth on
the Schedules hereto and upon such delivery, such supplemental Schedules shall
replace in their entirety such prior Schedules, as the case may be, provided,
such supplemental Schedules are in form and substance satisfactory to the
Required Banks.
SECTION 6. NEGATIVE COVENANTS
From the date hereof and for so long as any Commitment shall
be in effect or any Letter of Credit shall remain outstanding (in a face amount
in excess of the amount of cash then held in the Letter of Credit Account, or in
excess of the face amount of back-to-back letters of credit delivered, in each
case pursuant to Section 2.03(b)) or any amount shall remain outstanding or
unpaid under this Agreement, unless the Required Banks shall otherwise consent
in writing, the Borrower and each of the Guarantors will not (and will not apply
to the Bankruptcy Court for authority to):
SECTION 6.01 LIENS. Incur, create, assume or suffer to exist any Lien
on any asset of the Borrower or the Guarantors, now owned or hereafter acquired
by the Borrower or any of such Guarantors, other than (i) Liens which were
existing on the Filing Date that were permitted pursuant to the terms of the 364
Day Credit Agreement; (ii) Permitted Liens; (iii) Liens in favor of the Agent
and the Banks; (iv) Liens securing purchase money Indebtedness or Capitalized
Leases permitted by Section 6.03(iv); (v) Liens incurred in connection with (x)
obligations under sale/leasebacks or other financings of new stores (such
obligations not to exceed $75,000,000 in the aggregate) and (y) obligations
under sale/leasebacks or other financings of existing owned
43
stores (such obligations not to exceed $125,000,000 in the aggregate); (vi) a
junior Lien (subject and subordinate to the Liens granted to the Agent on behalf
of the Banks hereunder and under the Orders) on inventory in favor of vendors
who extend credit to the Borrower following the Filing Date in amounts and
bearing payment terms that are satisfactory to the Borrower, provided, that (A)
the holders of such Lien shall not be permitted to exercise any remedies with
respect thereto unless all of the Obligations (or under any refinancing thereof)
have been paid in full and the Banks (or the lenders providing such refinancing)
have no further Commitment hereunder (or commitment thereunder) and (B) the
instruments and agreements pursuant to which such Lien is created are
satisfactory in form and substance to the Agent and the Initial Banks and (vii)
other Liens securing Indebtedness permitted pursuant to Section 6.03(viii); and
(viii) consignments and claims under PACA and PASA.
SECTION 6.02 MERGER, ETC. Consolidate or merge with or into another
Person (other than mergers and consolidations among the Borrower and the
Guarantors provided, that if the Borrower is party to such merger, the Borrower
is the surviving entity).
SECTION 6.03 INDEBTEDNESS. Contract, create, incur, assume or suffer to
exist any Indebtedness, except for (i) Indebtedness under the Loan Documents;
(ii) Indebtedness incurred prior to the Filing Date (including existing
Capitalized Leases); (iii) intercompany Indebtedness between the Borrower and
the Guarantors, (iv) Indebtedness incurred subsequent to the Filing Date which
arose in connection with sale/leaseback transactions and other financings
permitted pursuant to Section 6.01(v) hereof; (v) Indebtedness incurred
subsequent to the Filing Date secured by purchase money Liens or Capitalized
Leases in an aggregate amount not to exceed an amount to be agreed upon between
the Borrower and the Initial Banks prior to the entry of the Final Order; (vi)
Indebtedness arising from Investments among the Borrower and the Guarantors that
are permitted pursuant to Section 6.10 hereof; (vii) Indebtedness owed to banks
or other financial institutions in respect of any overdrafts and related
liabilities arising from treasury, depository and cash management services or in
connection with any automated clearing house transfers of funds (including,
without limitation, the Borrower's "purchasing card agreement" arrangements with
JPMorgan Chase); and (viii) other Indebtedness incurred subsequent to the Filing
Date in an aggregate amount not to exceed $10,000,000 in the aggregate.
SECTION 6.04 CAPITAL EXPENDITURES. Make Capital Expenditures in an
aggregate amount in excess of $650,000,000 during the fiscal year of the
Borrower ending on or about January 31, 2003, (y) $800,000,000 during the fiscal
year of the Borrower ending on or about January 31, 2004 or (z) $212,000,000
during the period commencing on or about February 1, 2004 and ending on the
Maturity Date, provided that (i) no more than 55% of the Capital Expenditures
permitted in any fiscal year of the Borrower may be made in the first two fiscal
quarters thereof and (ii) 20% of the unused portion of permitted Capital
Expenditures in any fiscal year of the Borrower may be carried forward to and
used in the following fiscal year of the Borrower.
SECTION 6.05 EBITDA.
Permit cumulative EBITDA for each such periods beginning on May 31, 2002 to be
less than such amounts as may be mutually agreed to by the Borrower and the
Initial Banks on or prior to the entry of the Final Order.
44
SECTION 6.06 GUARANTEES AND OTHER LIABILITIES. Purchase or repurchase
(or agree, contingently or otherwise, so to do) the Indebtedness of, or assume,
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance of any obligation or capability of so
doing, or otherwise), endorse or otherwise become liable, directly or
indirectly, in connection with the obligations, stock or dividends of any
Person, except (i) for any guaranty of Indebtedness or other obligations of any
Borrower or Guarantor if the Guarantor could have incurred such Indebtedness or
obligations under this Agreement, (ii) by endorsement of negotiable instruments
for deposit or collection in the ordinary course of business, (iii) for
liabilities under leasehold interests that are assigned by the Borrower or any
Guarantor to the extent permitted by this Agreement and (iv) to the extent
existing on the Filing Date.
SECTION 6.07 CHAPTER 11 CLAIMS. Incur, create, assume, suffer to exist
or permit any other Super-Priority Claim which is pari passu with or senior to
the claims of the Agent and the Banks against the Borrower and the Guarantors
hereunder, except for the Carve-Out.
SECTION 6.08 DIVIDENDS; CAPITAL STOCK. Declare or pay, directly or
indirectly, any dividends or make any other distribution or payment, whether in
cash, property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of capital stock (or any options,
warrants, rights or other equity securities or agreements relating to any
capital stock), or set apart any sum for the aforesaid purposes, provided that
any Guarantor may pay dividends to the Borrower and to any other Guarantor that
is its direct parent.
SECTION 6.09 TRANSACTIONS WITH AFFILIATES. Sell or transfer any
property or assets to, or otherwise engage in any other material transactions
with, any of its Affiliates (other than the Borrower and the Guarantors), other
than in the ordinary course of business at prices and on terms and conditions
not less favorable to the Borrower or such Guarantor than could be obtained on
an arm's-length basis from unrelated third parties and investments in
non-Guarantor Subsidiaries of the Borrower that are permitted hereunder.
SECTION 6.10 INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or acquire
any capital stock, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment in, any other Person (all of the foregoing, "Investments"), except
for (i) ownership by the Borrower and the Guarantors of the capital stock of
each of the Subsidiaries listed on Schedule 3.05; (ii) Permitted Investments;
(iii) advances and loans among the Borrower and the Guarantors in the ordinary
course of business; (iv) loans, advances and other investments not in excess of
$25,000,000 at any one time outstanding (net of dividends, returns of capital
and repayments of loans and advances received after the Filing Date) to or in
Subsidiaries of the Borrower that are not Guarantors; and (v) Investments
existing on the Filing Date and described on Schedule 6.10 hereto (it being
understood that Schedule 6.10 shall be permitted to be delivered prior to the
entry of the Final Order).
SECTION 6.11 DISPOSITION OF ASSETS. Sell or otherwise dispose of any
assets (including, without limitation, the capital stock of any subsidiary)
except for (i) sales of assets in the ordinary course of business (including the
sale or other disposition of surplus inventory);
45
(ii) dispositions of surplus, obsolete or damaged equipment and assets no longer
used in the business of the Borrower and the Guarantors; (iii) dispositions of
assets among the Borrower and the Guarantors; (iv) sales of real property in
conjunction with permitted sale/leaseback transactions; (v) the rejection of
unexpired leases and other executory contracts; and (vi) sales of assets set
forth on Schedule 6.11 hereto.
SECTION 6.12 NATURE OF BUSINESS. Enter into any business that is
materially different from those conducted by the Borrower and the Guarantors on
the Filing Date.
SECTION 7. EVENTS OF DEFAULT
SECTION 7.01 EVENTS OF DEFAULT. In the case of the happening of any of
the following events and the continuance thereof beyond the applicable period of
grace if any (each, an "Event of Default"):
(a) any representation or warranty made by the Borrower or any
Guarantor in this Agreement or in any Loan Document or in connection with this
Agreement or the credit extensions hereunder or any statement or representation
made in any report, financial statement, certificate or other document furnished
by the Borrower or any Guarantors to the Banks under or in connection with this
Agreement, shall prove to have been false or misleading in any material respect
when made or delivered; or
(b) default shall be made in the payment of any (i) Fees or
interest on the Loans when due, and such default shall continue unremedied for
more than two (2) Business Days or (ii) principal of the Loans or other amounts
payable by the Borrower hereunder (including, without limitation, reimbursement
obligations or cash collateralization in respect of Letters of Credit), when and
as the same shall become due and payable, whether at the due date thereof
(including the Prepayment Date) or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise; or
(c) default shall be made by the Borrower or any Guarantor in
the due observance or performance of any covenant, condition or agreement
contained in Section 6 or Section 2.23 hereof; or
(d) default shall be made by the Borrower or any Guarantor in
the due observance or performance of any other covenant, condition or agreement
to be observed or performed pursuant to the terms of this Agreement, any of the
Orders or any of the other Loan Documents and such default shall continue
unremedied for more than ten (10) days; or
(e) any of the Cases shall be dismissed or converted to a case
under Chapter 7 of the Bankruptcy Code or the Borrower or any Guarantor shall
file a motion or other pleading seeking the dismissal of any of the Cases under
Section 1112 of the Bankruptcy Code or otherwise; a trustee under Chapter 7 or
Chapter 11 of the Bankruptcy Code, a responsible officer or an examiner with
enlarged powers relating to the operation of the business (powers beyond those
set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section
1106(b) of the Bankruptcy Code shall be appointed in any of the Cases; the
Borrower's Board of Directors shall authorize a liquidation of the Borrower's
business; or an application shall be filed by the Borrower or any Guarantor for
the approval of any other Superpriority Claim (other than the
46
Carve-Out) in any of the Cases which is pari passu with or senior to the claims
of the Agent and the Banks against the Borrower or any Guarantor hereunder, or
there shall arise or be granted any such pari passu or senior Superpriority
Claim; or
(f) the Bankruptcy Court shall enter an order or orders
granting relief from the automatic stay applicable under Section 362 of the
Bankruptcy Code to the holder or holders of any security interest to permit
foreclosure (or the granting of a deed in lieu of foreclosure or the like) on
any assets of the Borrower or any of the Guarantors which have a value in excess
of $5,000,000 in the aggregate; or
(g) a Change of Control shall occur; or
(h) the Borrower shall fail to deliver a certified Borrowing
Base Certificate when due and such default shall continue unremedied for more
than three (3) Business Days; or
(i) any material provision of any Loan Document shall, for any
reason, cease to be valid and binding on the Borrower or any of the Guarantors,
or the Borrower or any of the Guarantors shall so assert in any pleading filed
in any court or any Lien intended to be created by the Loan Documents or the
Orders shall cease to be or shall not be a valid and perfected Lien having the
priorities contemplated hereby or thereby; or
(j) an order of the Bankruptcy Court shall be entered
reversing, staying for a period in excess of 10 days, vacating or (without the
written consent of the Required Banks) otherwise amending, supplementing or
modifying any of the Orders or any Loan Document; or
(k) any judgment or order as to a post-petition liability or
debt for the payment of money in excess of $5,000,000 not covered by insurance
shall be rendered against the Borrower or any of the Guarantors and the
enforcement thereof shall not have been stayed, vacated or discharged within 30
days; or
(l) any judgment or order with respect to a post-petition
event shall be rendered against the Borrower or any of the Guarantors which does
or would reasonably be expected to (i) cause a material adverse change in the
financial condition, business, prospects, operations or assets of the Borrower
and the Guarantors taken as a whole on a consolidated basis, (ii) have a
material adverse effect on the ability of the Borrower or any of the Guarantors
to perform their respective obligations under any Loan Document, or (iii) have a
material adverse effect on the rights and remedies of the Agent or any Bank
under any Loan Document, and there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(m) other than payments authorized by the Bankruptcy Court
pursuant to "first-day" orders in amounts not in excess of any applicable
amounts set forth on Schedule 7.01(m) hereto (it being understood that Schedule
7.01(m) shall be permitted to be delivered on or prior to the execution and
delivery of the Borrowing Base Amendment) or amounts approved by the Bankruptcy
Court and paid prior to the delivery of such Schedule 7.01(m), the Borrower or
any Guarantor shall make any Pre-Petition Payment (excluding reclamation claims
up to an amount to be agreed upon by the Agent and the Initial Banks, claims in
respect of consigned inventory, cure payments in respect of the assumption of
leases and other contracts, per fiscal
47
quarter amounts to be agreed upon Agent and the Initial Banks, for other secured
pre-petition claims, payments made pursuant to an order of the Bankruptcy Court
approved by the Initial Banks and other Pre-Petition Payments up to an amount to
be agreed upon); or
(n) any Termination Event described in clauses (iii) or (iv)
of the definition of such term shall have occurred and shall continue unremedied
for more than 10 days and the sum (determined as of the date of occurrence of
such Termination Event) of the Insufficiency of the Plan in respect of which
such Termination Event shall have occurred and be continuing and the
Insufficiency of any and all other Plans with respect to which such a
Termination Event (described in such clauses (iii) or (iv)) shall have occurred
and then exist is equal to or greater than $5,000,000; or
(o) (i) the Borrower or any ERISA Affiliate thereof shall have
been notified by the sponsor or trustee of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan, (ii) the Borrower or
such ERISA Affiliate does not have reasonable grounds, in the opinion of the
Agent, to contest such Withdrawal Liability and is not in fact contesting such
Withdrawal Liability in a timely and appropriate manner, and (iii) the amount of
such Withdrawal Liability specified in such notice, when aggregated with all
other amounts required to be paid to Multiemployer Plans in connection with
Withdrawal Liabilities (determined as of the date of such notification), exceeds
$5,000,000 allocable to post-petition obligations or requires payments exceeding
$500,000 per annum in excess of the annual payments made with respect to such
Multiemployer Plans by the Borrower or such ERISA Affiliate for the plan year
immediately preceding the plan year in which such notification is received; or
(p) the Borrower or any ERISA Affiliate thereof shall have
been notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of Title IV
of ERISA, if as a result of such reorganization or termination the aggregate
annual contributions of the Borrower and its ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such Multiemployer
Plans for the plan years that include the date hereof by an amount exceeding
$5,000,000; or
(q) the Borrower or any ERISA Affiliate shall have committed a
failure described in Section 302(f)(1) of ERISA (other than the failure to make
any contribution accrued and unpaid as of the Filing Date) and the amount
determined under Section 302(f)(3) of ERISA is equal to or greater than
$5,000,000; or
(r) it shall be determined (whether by the Bankruptcy Court or
by any other judicial or administrative forum) that the Borrower or any
Guarantor is liable for the payment of claims arising out of any failure to
comply (or to have complied) with applicable environmental laws or regulations
the payment of which will have a material adverse effect on the financial
condition, business, properties, operations, assets or prospects of the Borrower
or the Guarantors, taken as a whole, and the enforcement thereof shall not have
been stayed, vacated or discharged within 30 days;
48
then, and in every such event and at any time thereafter during the continuance
of such event, and without further order of or application to the Bankruptcy
Court, the Agent may, and at the request of the Required Banks, shall, by notice
to the Borrower (with a copy to counsel for the Official Creditors' Committee
appointed in the Cases, and to the United States Trustee for the District in
which the Cases are pending), take one or more of the following actions, at the
same or different times (provided, that with respect to clause (iv) below and
the enforcement of Liens or other remedies with respect to the Collateral under
clause (v) below, the Agent shall provide the Borrower and its counsel (with a
copy to counsel for the Official Creditors' Committee in the Cases, and to the
United States Trustee for the District in which the Cases are pending), with
five (5) Business Days' written notice prior to taking the action contemplated
thereby and provided, further, that upon receipt of notice referred to in the
immediately preceding clause with respect to the accounts referred to in clause
(iv) below, the Borrower may continue to make ordinary course disbursements from
such accounts (other than the Letter of Credit Account) but may not withdraw or
disburse any other amounts from such accounts; in any hearing after the giving
of the aforementioned notice, the only issue that may be raised by any party in
opposition thereto being whether, in fact, an Event of Default has occurred and
is continuing): (i) terminate forthwith the Total Commitment; (ii) declare the
Loans then outstanding to be forthwith due and payable, whereupon the principal
of the Loans together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder and under any other
Loan Document, shall become forthwith due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower and the Guarantors, anything contained herein
or in any other Loan Document to the contrary notwithstanding; (iii) require the
Borrower and the Guarantors upon demand to forthwith deposit in the Letter of
Credit Account cash in an amount which, together with any amounts then held in
the Letter of Credit Account, is equal to the sum of 105% of the then Letter of
Credit Outstandings (and to the extent the Borrower and the Guarantors shall
fail to furnish such funds as demanded by the Agent, the Agent shall be
authorized to debit the accounts of the Borrower and the Guarantors maintained
with the Agent in such amount five (5) Business Days after the giving of the
notice referred to above); (iv) set-off amounts in the Letter of Credit Account
or any other accounts maintained with the Agent and apply such amounts to the
obligations of the Borrower and the Guarantors hereunder and in the other Loan
Documents; and (v) exercise any and all remedies under the Loan Documents and
under applicable law available to the Agent and the Banks.
SECTION 8. THE AGENT
SECTION 8.01 ADMINISTRATION BY AGENT. The general
administration of the Loan Documents shall be by the Agent. Each Bank hereby
irrevocably authorizes the Agent, at its discretion, to take or refrain from
taking such actions as agent on its behalf and to exercise or refrain from
exercising such powers under the Loan Documents as are delegated by the terms
hereof or thereof, as appropriate, together with all powers reasonably
incidental thereto (including the release of Collateral in connection with any
transaction that is expressly permitted by the Loan Documents). The Agent shall
have no duties or responsibilities except as set forth in this Agreement and the
remaining Loan Documents.
49
SECTION 8.02 ADVANCES AND PAYMENTS.
(a) On the date of each Loan to be made in accordance with the
terms hereof, the Agent shall be authorized (but not obligated) to advance, for
the account of each of the Banks, the amount of the Loan to be made by it in
accordance with its Commitment hereunder. Should the Agent do so, each of the
Banks agrees forthwith to reimburse the Agent in immediately available funds for
the amount so advanced on its behalf by the Agent, together with interest at the
Federal Funds Effective Rate if not so reimbursed on the date due from and
including such date but not including the date of reimbursement.
(b) Any amounts received by the Agent in connection with this
Agreement (other than amounts to which the Agent is entitled pursuant to
Sections 2.19, 8.06, 10.05 and 10.06), the application of which is not otherwise
provided for in this Agreement shall be applied, first, in accordance with each
Bank's Commitment Percentage to pay accrued but unpaid expenses, Commitment Fees
or Letter of Credit Fees, and second, in accordance with each Bank's Commitment
Percentage to pay accrued but unpaid interest and the principal balance
outstanding and all unreimbursed Letter of Credit drawings and to cash
collateralization of Letters of Credit. All amounts to be paid to a Bank by the
Agent shall be credited to that Bank, after collection by the Agent, in
immediately available funds either by wire transfer or deposit in that Bank's
correspondent account with the Agent, as such Bank and the Agent shall from time
to time agree.
SECTION 8.03 SHARING OF SETOFFS. Each Bank agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, including, but not limited to, a secured claim under Section 506
of the Bankruptcy Code or other security or interest arising from, or in lieu
of, such secured claim and received by such Bank under any applicable
bankruptcy, insolvency or other similar law, or otherwise, obtain payment in
respect of its Loans as a result of which the unpaid portion of its Loans is
proportionately less than the unpaid portion of the Loans of any other Bank (a)
it shall promptly purchase at par (and shall be deemed to have thereupon
purchased) from such other Bank a participation in the Loans of such other Bank,
so that the aggregate unpaid principal amount of each Bank's Loans and its
participation in Loans of the other Banks shall be in the same proportion to the
aggregate unpaid principal amount of all Loans then outstanding as the principal
amount of its Loans prior to the obtaining of such payment was to the principal
amount of all Loans outstanding prior to the obtaining of such payment and (b)
such other adjustments shall be made from time to time as shall be equitable to
ensure that the Banks share such payment pro-rata, provided that if any such
non-pro-rata payment is thereafter recovered or otherwise set aside such
purchase of participations shall be rescinded (without interest). The Borrower
expressly consents to the foregoing arrangements and agrees that any Bank
holding (or deemed to be holding) a participation in a Loan may exercise any and
all rights of banker's lien, setoff (in each case, subject to the same notice
requirements as pertain to clause (iv) of the remedial provisions of Section
7.01) or counterclaim with respect to any and all moneys owing by the Borrower
to such Bank as fully as if such Bank was the original obligee thereon, in the
amount of such participation.
SECTION 8.04 AGREEMENT OF REQUIRED BANKS AND SUPER-MAJORITY BANKS. Upon
any occasion requiring or permitting an approval, consent, waiver, election or
other action on the
50
part of the Required Banks or the Super-majority Banks (as the case may be),
action shall be taken by the Agent for and on behalf or for the benefit of all
Banks upon the direction of the Required Banks or the Super-majority Banks (as
the case may be), and any such action shall be binding on all Banks. No
amendment, modification, consent, or waiver shall be effective except in
accordance with the provisions of Section 10.10.
SECTION 8.05 LIABILITY OF AGENT.
(a) The Agent when acting on behalf of the Banks, may execute
any of its respective duties under this Agreement by or through any of its
respective officers, agents, and employees, and neither the Agent nor its
directors, officers, agents, employees or Affiliates shall be liable to the
Banks or any of them for any action taken or omitted to be taken in good faith,
or be responsible to the Banks or to any of them for the consequences of any
oversight or error of judgment, or for any loss, unless the same shall happen
through its gross negligence or willful misconduct. The Agent and its respective
directors, officers, agents, employees and Affiliates shall in no event be
liable to the Banks or to any of them for any action taken or omitted to be
taken by them pursuant to instructions received by them from the Required Banks
or in reliance upon the advice of counsel selected by it. Without limiting the
foregoing, neither the Agent, nor any of its respective directors, officers,
employees, agents or Affiliates shall be responsible to any Bank for the due
execution, validity, genuineness, effectiveness, sufficiency, or enforceability
of, or for any statement, warranty, or representation in, this Agreement, any
Loan Document or any related agreement, document or order, or shall be required
to ascertain or to make any inquiry concerning the performance or observance by
the Borrower of any of the terms, conditions, covenants, or agreements of this
Agreement or any of the Loan Documents.
(b) Neither the Agent nor any of its respective directors,
officers, employees, agents or Affiliates shall have any responsibility to the
Borrower or the Guarantors on account of the failure or delay in performance or
breach by any Bank or by the Borrower or the Guarantors of any of their
respective obligations under this Agreement or any of the Loan Documents or in
connection herewith or therewith.
(c) The Agent, in its capacity as Agent hereunder, shall be
entitled to rely on any communication, instrument, or document reasonably
believed by such person to be genuine or correct and to have been signed or sent
by a person or persons believed by such person to be the proper person or
persons, and such person shall be entitled to rely on advice of legal counsel,
independent public accountants, and other professional advisers and experts
selected by such person.
SECTION 8.06 REIMBURSEMENT AND INDEMNIFICATION. Each Bank agrees (i) to
reimburse (x) the Agent (and the Co-Collateral Monitors) for such Bank's
Commitment Percentage of any expenses and fees incurred for the benefit of the
Banks under this Agreement and any of the Loan Documents, including, without
limitation, counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Banks, and any other expense incurred in
connection with the operations or enforcement thereof not reimbursed by the
Borrower or the Guarantors and (y) the Agent (and the Co-Collateral Monitors)
for such Bank's Commitment Percentage of any expenses of the Agent (or the
Co-Collateral Monitors, if any) incurred for the benefit of the Banks that the
Borrower has agreed to reimburse pursuant to
51
Section 10.05 and has failed to so reimburse and (ii) to indemnify and hold
harmless the Agent and any of its directors, officers, employees, agents or
Affiliates, on demand, in the amount of its proportionate share, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against it
or any of them in any way relating to or arising out of this Agreement or any of
the Loan Documents or any action taken or omitted by it or any of them under
this Agreement or any of the Loan Documents to the extent not reimbursed by the
Borrower or the Guarantors (except such as shall result from their respective
gross negligence or willful misconduct).
SECTION 8.07 RIGHTS OF AGENT. For so long as JPMorgan Chase is a Bank,
it is understood and agreed that JPMorgan Chase shall have the same rights and
powers hereunder (including the right to give such instructions) as the other
Banks and may exercise such rights and powers, as well as its rights and powers
under other agreements and instruments to which it is or may be party, and
engage in other transactions with the Borrower or any Guarantor, as though it
were not the Agent of the Banks under this Agreement.
SECTION 8.08 INDEPENDENT BANKS. Each Bank acknowledges that it has
decided to enter into this Agreement and to make the Loans hereunder based on
its own analysis of the transactions contemplated hereby and of the
creditworthiness of the Borrower and the Guarantors and agrees that the Agent
shall bear no responsibility therefor.
SECTION 8.09 NOTICE OF TRANSFER. The Agent may deem and treat a Bank
party to this Agreement as the owner of such Bank's portion of the Loans for all
purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Bank shall have been received by the Agent.
SECTION 8.10 SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent, which shall be reasonably satisfactory to the Borrower. If no successor
Agent shall have been so appointed by the Required Banks and shall have accepted
such appointment, within 30 days after the retiring Agent's giving of notice of
resignation, the retiring Agent may, on behalf of the Banks, appoint a successor
Agent, which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of a least $100,000,000, which shall be reasonably satisfactory to the
Borrower. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
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SECTION 9. GUARANTY
SECTION 9.01 GUARANTY.
(a) Each of the Guarantors unconditionally and irrevocably
guarantees the due and punctual payment by the Borrower of the Obligations. Each
of the Guarantors further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
it will remain bound upon this guaranty notwithstanding any extension or renewal
of any of the Obligations. The Obligations of the Guarantors shall be joint and
several.
(b) Each of the Guarantors waives presentation to, demand for
payment from and protest to the Borrower or any other Guarantor, and also waives
notice of protest for nonpayment. The Obligations of the Guarantors hereunder
shall not be affected by (i) the failure of the Agent or a Bank to assert any
claim or demand or to enforce any right or remedy against the Borrower or any
other Guarantor under the provisions of this Agreement or any other Loan
Document or otherwise; (ii) any extension or renewal of any provision hereof or
thereof; (iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Loan Documents;
(iv) the release, exchange, waiver or foreclosure of any security held by the
Agent for the Obligations or any of them; (v) the failure of the Agent or a Bank
to exercise any right or remedy against any other Guarantor; or (vi) the release
or substitution of any Guarantor or any other Guarantor.
(c) Each of the Guarantors further agrees that this guaranty
constitutes a guaranty of payment when due and not just of collection, and
waives any right to require that any resort be had by the Agent or a Bank to any
security held for payment of the Obligations or to any balance of any deposit,
account or credit on the books of the Agent or a Bank in favor of the Borrower
or any other Guarantor, or to any other Person.
(d) Each of the Guarantors hereby waives any defense that it
might have based on a failure to remain informed of the financial condition of
the Borrower and of any other Guarantor and any circumstances affecting the
ability of the Borrower to perform under this Agreement.
(e) Each Guarantor's guaranty shall not be affected by the
genuineness, validity, regularity or enforceability of the Obligations or any
other instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations which might otherwise constitute a
defense to this Guaranty. Neither the Agent, nor any of the Banks makes any
representation or warranty in respect to any such circumstances or shall have
any duty or responsibility whatsoever to any Guarantor in respect of the
management and maintenance of the Obligations.
(f) Subject to the provisions of Section 7.01, upon the
Obligations becoming due and payable (by acceleration or otherwise), the Banks
shall be entitled to immediate payment of such Obligations by the Guarantors
upon written demand by the Agent, without further application to or order of the
Bankruptcy Court.
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SECTION 9.02 NO IMPAIRMENT OF GUARANTY. The obligations of the
Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations. Without limiting the generality of the foregoing, the obligations
of the Guarantors hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Agent or a Bank to assert any claim or demand or
to enforce any remedy under this Agreement or any other agreement, by any waiver
or modification of any provision hereof or thereof, by any default, failure or
delay, willful or otherwise, in the performance of the Obligations, or by any
other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of the Guarantors or would
otherwise operate as a discharge of the Guarantors as a matter of law, unless
and until the Obligations are paid in full.
SECTION 9.03 SUBROGATION. Upon payment by any Guarantor of any
sums to the Agent or a Bank hereunder, all rights of such Guarantor against the
Borrower arising as a result thereof by way of right of subrogation or
otherwise, shall in all respects be subordinate and junior in right of payment
to the prior final and indefeasible payment in full of all the Obligations. If
any amount shall be paid to such Guarantor for the account of the Borrower, such
amount shall be held in trust for the benefit of the Agent and the Banks and
shall forthwith be paid to the Agent and the Banks to be credited and applied to
the Obligations, whether matured or unmatured.
SECTION 10. MISCELLANEOUS
SECTION 10.01 NOTICES. Notices and other communications provided for
herein shall be in writing (including facsimile communication) and shall be
mailed, transmitted by facsimile or delivered to the Borrower or any Guarantor
at
c/o
Kmart Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(a) For all notices:
Attention: Treasurer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) For notices other than pursuant to Section 2:
(1) Attention: Chief Restructuring Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
And
(2) Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
54
And
(3) Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and to a Bank or the Agent to it at its address set forth on Annex A, or such
other address as such party may from time to time designate by giving written
notice to the other parties hereunder. All notices and other communications
given to any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the fifth Business Day after the date when
sent by registered or certified mail, postage prepaid, return receipt requested,
if by mail; or when receipt is acknowledged, if by any facsimile equipment of
the sender; or the Business Day following the day on which the same has been
delivered to a reputable national overnight air courier service; in each case
addressed to such party as provided in this Section 10.01 or in accordance with
the latest unrevoked written direction from such party; provided, however, that
in the case of notices to the Agent notices pursuant to the preceding sentence
with respect to change of address and pursuant to Section 2 shall be effective
only when received by the Agent.
SECTION 10.02 SURVIVAL OF AGREEMENT, REPRESENTATIONS AND WARRANTIES,
ETC. All warranties, representations and covenants made by the Borrower or any
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf in connection with this Agreement shall be considered to have been
relied upon by the Banks and shall survive the making of the Loans herein
contemplated regardless of any investigation made by any Bank or on its behalf
and shall continue in full force and effect so long as any amount due or to
become due hereunder is outstanding and unpaid and so long as the Commitments
have not been terminated. All statements in any such certificate or other
instrument shall constitute representations and warranties by the Borrower and
the Guarantors hereunder with respect to the Borrower.
SECTION 10.03 SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Agent and the Banks and their respective successors
and assigns. Neither the Borrower nor any of the Guarantors may assign or
transfer any of their rights or obligations hereunder without the prior written
consent of all of the Banks. Each Bank may sell participations to any Person in
all or part of any Loan, or all or part of its Commitment, in which event,
without limiting the foregoing, the provisions of Section 2.15 shall inure to
the benefit of each purchaser of a participation (provided that such participant
shall look solely to the seller of such participation for such benefits and the
Borrower's and the Guarantors' liability, if any, under Sections 2.15 and 2.18
shall not be increased as a result of the sale of any such participation) and
the pro rata treatment of payments, as described in Section 2.17, shall be
determined as if such Bank had not sold such participation. In the event any
Bank shall sell any participation, such Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrower and each of the
Guarantors relating to the Loans, including, without limitation, the right to
approve any amendment, modification or waiver of any provision of this Agreement
(provided that such Bank may grant its participant the right to consent to such
Bank's execution
55
of amendments, modifications or waivers which (i) reduce any Fees payable
hereunder to the Banks, (ii) reduce the amount of any scheduled principal
payment on any Loan or reduce the principal amount of any Loan or the rate of
interest payable hereunder or (iii) extend the maturity of the Borrower's
obligations hereunder). The sale of any such participation shall not alter the
rights and obligations of the Bank selling such participation hereunder with
respect to the Borrower.
(b) Each Bank may assign to one or more Banks or Eligible
Assignees all or a portion of its interests, rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the same portion of the related Loans at the time owing to it), provided,
however, that (i) other than in the case of an assignment to a Person at least
50% owned by the assignor Bank, or to a Bank Affiliate of such assignor Bank, or
by a common parent of both, or to another Bank, the Agent and the Fronting Bank
must give their respective prior written consent to such assignment, which
consent will not be unreasonably withheld, (ii) the aggregate amount of the
Commitment and/or Loans of the assigning Bank subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Agent) shall, unless otherwise agreed to in
writing by the Borrower and the Agent, in no event be less than $1,000,000 or
the remaining portion of such Bank's Commitment and/or Loans, if less and (iii)
the parties to each such assignment shall execute and deliver to the Agent, for
its acceptance and recording in the Register (as defined below), an Assignment
and Acceptance with blanks appropriately completed, together with a processing
and recordation fee of $3,500 (for which the Borrower shall have no liability).
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be within ten Business Days after the execution thereof (unless otherwise
agreed to in writing by the Agent), (A) 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 Bank hereunder and (B) the Bank thereunder shall, to
the extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Bank's rights
and obligations under this Agreement, such Bank shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance,
the Bank assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Bank
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any of the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any of the other Loan Documents; (ii) such Bank assignor
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any Guarantor or the performance
or observance by the Borrower or any Guarantor of any of its obligations under
this Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Loan Documents, together with
copies of the financial statements referred to in Section 3.04 and such other
documents and information as it has deemed appropriate to make its own
56
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such Bank
assignor or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
thereto, together with such powers as are reasonably incidental hereof; and (vi)
such assignee agrees that it will perform in accordance with their terms all
obligations that by the terms of this Agreement are required to be performed by
it as a Bank.
(d) The Agent shall maintain at its office a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Banks and the Commitments of, and principal
amount of the Loans owing to, each Bank from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Guarantors, the Agent and the Banks shall treat each
Person the name of which is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Bank 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 Bank and the assignee thereunder together with the fee payable
in respect thereto, the Agent shall, if such Assignment and Acceptance has been
completed with blanks appropriately filled and consented to by the Agent and the
Fronting Bank (to the extent such consent is required hereunder), (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt written notice thereof to the Borrower
(together with a copy thereof). No assignment shall be effective for purposes of
this Agreement unless it has been recorded in the Register as provided in this
paragraph.
(f) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.03, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower or any of the Guarantors
furnished to such Bank by or on behalf of the Borrower or any of the Guarantors;
provided that prior to any such disclosure, each such assignee or participant or
proposed assignee or participant shall agree in writing to be bound by the
provisions of Section 10.04.
(g) The Borrower hereby agrees, to the extent set forth in the
Joint Commitment Letter, to actively assist and cooperate with the Agent in the
Agent's efforts to sell participations herein (as described in Section 10.03(a))
and assign to one or more Banks or Eligible Assignees a portion of its
interests, rights and obligations under this Agreement (as set forth in Section
10.03(b)).
SECTION 10.04 CONFIDENTIALITY. Each Bank agrees to keep any information
delivered or made available by the Borrower or any of the Guarantors to it
confidential from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided that nothing herein shall prevent any Bank
from disclosing such information (i) to any of its Affiliates or to any other
57
Bank, provided such Affiliate agrees to keep such information confidential to
the same extent required by the Banks hereunder, (ii) upon the order of any
court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority, (iv) which has been publicly disclosed other
than as a result of a disclosure by the Agent or any Bank which is not permitted
by this Agreement, (v) in connection with any litigation to which the Agent, any
Bank, or their respective Affiliates may be a party to the extent reasonably
required, (vi) to the extent reasonably required in connection with the exercise
of any remedy hereunder, (vii) to such Bank's legal counsel and independent
auditors, and (viii) to any actual or proposed participant or assignee of all or
part of its rights hereunder subject to the proviso in Section 10.03(f). Each
Bank shall use commercially reasonable efforts to notify the Borrower of any
required disclosure under clause (ii) of this Section.
SECTION 10.05 EXPENSES. Whether or not the transactions hereby
contemplated shall be consummated, the Borrower and the Guarantors agree to pay
all reasonable out-of-pocket expenses incurred by the Agent (including but not
limited to the reasonable fees and disbursements of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
special counsel for the Agent, any other counsel that the Agent shall retain and
any internal or third-party appraisers, consultants and auditors advising the
Agent and ▇.▇. ▇▇▇▇▇▇ Securities Inc.) in connection with the preparation,
execution, delivery and administration of this Agreement and the other Loan
Documents, the making of the Loans and the issuance of the Letters of Credit,
the perfection of the Liens contemplated hereby, the syndication of the
transactions contemplated hereby, the reasonable and customary costs, fees and
expenses internally allocated charges and expenses relating to the Agent's
initial and ongoing Borrowing Base examinations, of the Agent in connection with
its monthly and other periodic field audits, monitoring of assets (including
reasonable and customary internal collateral monitoring fees) and publicity
expenses, the reasonable fees and disbursements of respective counsel for, and
other reasonable expenses of, the Co-Collateral Monitors, Fleet, Fleet
Securities, Inc. GECC, CSFB and any Fronting Bank (and their respective Bank
Affiliates), and, following the occurrence of an Event of Default, all
reasonable out-of-pocket expenses incurred by the Banks and the Agent in the
enforcement or protection of the rights of any one or more of the Banks or the
Agent in connection with this Agreement or the other Loan Documents, including
but not limited to the reasonable fees and disbursements of any counsel for the
Banks or the Agent. Such payments shall be made on the date of the Interim Order
and thereafter on demand upon delivery of a statement setting forth such costs
and expenses. Whether or not the transactions hereby contemplated shall be
consummated, the Borrower and the Guarantors agree to reimburse the Agent, ▇.▇.
▇▇▇▇▇▇ Securities Inc., Fleet, GECC and CSFB (and their respective Bank
Affiliates) for the expenses set forth in the Joint Commitment Letter and the
reimbursement provisions thereof are hereby incorporated herein by reference.
The obligations of the Borrower and the Guarantors under this Section shall
survive the termination of this Agreement and/or the payment of the Loans.
SECTION 10.06 INDEMNITY. The Borrower and each of the Guarantors agree
to indemnify and hold harmless the Agent, ▇.▇. ▇▇▇▇▇▇ Securities Inc., Fleet
Securities, Inc., the Co-Collateral Monitors, the Banks and any Fronting Bank
and their directors, officers, employees, agents and Affiliates (each an
"Indemnified Party") from and against any and all expenses, losses, claims,
damages and liabilities incurred by such Indemnified Party arising out of claims
made by any Person in any way relating to the transactions contemplated hereby,
but excluding therefrom all expenses, losses, claims, damages, and liabilities
to the extent that they
58
are determined by the final judgment of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of such
Indemnified Party. The obligations of the Borrower and the Guarantors under this
Section shall survive the termination of this Agreement and/or the payment of
the Loans.
SECTION 10.07 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK AND (TO THE EXTENT APPLICABLE) THE BANKRUPTCY
CODE.
SECTION 10.08 NO WAIVER. No failure on the part of the Agent or any of
the Banks to exercise, and no delay in exercising, any right, power or remedy
hereunder or any of the other Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 10.09 EXTENSION OF MATURITY. Should any payment of principal of
or interest or any other amount due hereunder become due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, in the case of principal, interest shall be payable
thereon at the rate herein specified during such extension.
SECTION 10.10 AMENDMENTS, ETC.
(a) No modification, amendment or waiver of any provision of
this Agreement (including, without limitation, the provisions of Section
2.01(c)) or the Security and Pledge Agreement, and no consent to any departure
by the Borrower or any Guarantor therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Banks, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given; provided, however, that no such modification or
amendment shall without the written consent of the Bank affected thereby (x)
increase the Commitment of a Bank (it being understood that a waiver of an Event
of Default shall not constitute an increase in the Commitment of a Bank), or (y)
reduce the principal amount of any Loan or the rate of interest payable thereon,
or extend any date for the payment of interest hereunder or reduce any Fees
payable hereunder or extend the final maturity of the Borrower's obligations
hereunder; and, provided, further, that no such modification or amendment shall
without the written consent of all of the Banks (i) amend or modify any
provision of this Agreement which provides for the unanimous consent or approval
of the Banks, (ii) amend this Section 10.10 or the definition of Required Banks,
(iii) amend or modify the Super-Priority Claim status of the Banks contemplated
by Section 2.23, (iv) except in connection with a disposition permitted by this
Agreement, release all or any substantial portion of the Liens granted to the
Agent hereunder, under the Orders or under any other Loan Document, or release
all or substantially all of the Guarantors or (v) increase the advance rates set
forth in the definition of the term "Borrowing Base" or the addition of new
asset categories other than inventory to the Borrowing Base. No such amendment
or modification may adversely affect the rights and obligations of the Agent,
the Co-Collateral Monitors or any Fronting Bank hereunder or any Bank in the
capacity referred
59
to in Section 6.03(vi) without its prior written consent. No notice to or demand
on the Borrower or any Guarantor shall entitle the Borrower or any Guarantor to
any other or further notice or demand in the same, similar or other
circumstances. Each assignee under Section 10.03(b) shall be bound by any
amendment, modification, waiver, or consent authorized as provided herein, and
any consent by a Bank shall bind any Person subsequently acquiring an interest
on the Loans held by such Bank. No amendment to this Agreement shall be
effective against the Borrower or any Guarantor unless signed by the Borrower or
such Guarantor, as the case may be.
(b) Notwithstanding anything to the contrary contained in
Section 10.10(a), in the event that the Borrower requests that this Agreement be
modified or amended in a manner which would require the unanimous consent of all
of the Banks and such modification or amendment is agreed to by the
Super-majority Banks (as hereinafter defined), then with the consent of the
Borrower and the Super-majority Banks, the Borrower and the Super-majority Banks
shall be permitted to amend the Agreement without the consent of the Bank or
Banks which did not agree to the modification or amendment requested by the
Borrower (such Bank or Banks, collectively the "Minority Banks") to provide for
(w) the termination of the Commitment of each of the Minority Banks, (x) the
addition to this Agreement of one or more other financial institutions (each of
which shall be an Eligible Assignee), or an increase in the Commitment of one or
more of the Super-majority Banks, so that the Total Commitment after giving
effect to such amendment shall be in the same amount as the Total Commitment
immediately before giving effect to such amendment, (y) if any Loans are
outstanding at the time of such amendment, the making of such additional Loans
by such new financial institutions or Super-majority Bank or Banks, as the case
may be, as may be necessary to repay in full the outstanding Loans (together
with any accrued but unpaid interests, Fees or expenses) of the Minority Banks
immediately before giving effect to such amendment and (z) such other
modifications to this Agreement as may be appropriate. As used herein, the term
"Super-majority Banks" shall mean, at any time, Banks holding Loans representing
at least 66 2/3% of the aggregate principal amount of the Loans outstanding, or
if no Loans are outstanding, Banks having Commitments representing at least
66 2/3% of the Total Commitment.
(c) Nothing contained in this Agreement shall prevent or limit
any Bank from pledging all or any portion of that Bank's interest and rights
under this Agreement and the other Loan Documents to any of the twelve Federal
Reserve Banks organized under Section 4 of the Federal Reserve Act (12 U.S.C.
Section 341) , provided, however, neither such pledge nor the enforcement
thereof shall release the pledging Bank from any of its obligations hereunder or
under any of the Loan Documents.
SECTION 10.11 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.12 HEADINGS. Section headings used herein are for
convenience only and are not to affect the construction of or be taken into
consideration in interpreting this Agreement.
60
SECTION 10.13 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall constitute an original, but
all of which taken together shall constitute one and the same instrument.
SECTION 10.14 PRIOR AGREEMENTS. This Agreement represents the entire
agreement of the parties with regard to the subject matter hereof and the terms
of any letters and other documentation entered into between the Borrower or a
Guarantor and any Bank or the Agent prior to the execution of this Agreement
which relate to Loans to be made hereunder shall be replaced by the terms of
this Agreement (except as otherwise expressly provided herein with respect to
the Joint Commitment Letter and the fee letters referred to herein and therein,
including without limitation, the Borrower's agreement to actively assist the
Agent and the Initial Banks in the syndication of the transactions contemplated
hereby referred to in Section 10.03(g) and including also the provisions of
Section 2.19).
SECTION 10.15 FURTHER ASSURANCES. Whenever and so often as reasonably
requested by the Agent, the Borrower and the Guarantors will promptly execute
and deliver or cause to be executed and delivered all such other and further
instruments, documents or assurances, and promptly do or cause to be done all
such other and further things as may be necessary and reasonably required in
order to further and more fully vest in the Agent all rights, interests, powers,
benefits, privileges and advantages conferred or intended to be conferred by
this Agreement and the other Loan Documents.
SECTION 10.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
GUARANTORS, THE AGENT AND EACH BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
61
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and the year first written.
BORROWER:
KMART CORPORATION
By:
----------------------------------------
Title:
GUARANTORS:
BIG BEAVER DEVELOPMENT CORPORATION
By:
---------------------------------------
Title:
BIG BEAVER OF CAGUAS
DEVELOPMENT CORPORATION
By:
---------------------------------------
Title:
BIG BEAVER OF FLORIDA DEVELOPMENT, LLC
By:
---------------------------------------
Title:
BIG BEAVER OF GUAYNABO
DEVELOPMENT CORPORATION
By:
---------------------------------------
Title:
▇▇▇▇▇▇▇▇▇.▇▇▇ LLC
By:
---------------------------------------
Title:
Signature Page to Credit and Guaranty Agreement
KMART HOLDINGS, INC.
By:
---------------------------------------
Title:
KMART MICHIGAN PROPERTY SERVICES, L.L.C.
By:
---------------------------------------
Title:
KMART OF AMSTERDAM, NY DISTRIBUTION
CENTER, INC.
By:
---------------------------------------
Title:
KMART OF MICHIGAN, INC.
By:
---------------------------------------
Title:
KMART OF NORTH CAROLINA LLC
By:
---------------------------------------
Title:
S.F.P.R., INC.
By:
---------------------------------------
Title:
KMART CORPORATION OF ILLINOIS, INC.
By:
---------------------------------------
Title:
Signature Page to Credit and Guaranty Agreement
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:
---------------------------------------
Title:
KMART STORES OF INDIANA, INC.
By:
---------------------------------------
Title:
KMART STORES OF TNCP, INC.
By:
---------------------------------------
Title:
TC GROUP I LLC
By:
---------------------------------------
Title:
▇▇▇▇ CMBS PROPERTY, L.L.C.
By:
---------------------------------------
Title:
KMART OVERSEAS CORPORATION
By:
---------------------------------------
Title:
Signature Page to Credit and Guaranty Agreement
JAF, INC.
By:
---------------------------------------
Title:
VTA, INC.
By:
---------------------------------------
Title:
BIG BEAVER OF CAGUAS DEVELOPMENT
CORPORATION II
By:
---------------------------------------
Title:
BIG BEAVER OF CAROLINA DEVELOPMENT
CORPORATION
By:
---------------------------------------
Title:
KMART PHARMACIES, INC.
By:
---------------------------------------
Title:
KMART PHARMACIES OF MINNESOTA, INC.
By:
---------------------------------------
Title:
BUILDERS SQUARE, INC.
By:
---------------------------------------
Title:
Signature Page to Credit and Guaranty Agreement
KMART CMBS FINANCING, INC.
By:
---------------------------------------
Title:
KMART INTERNATIONAL SERVICES, INC.
By:
---------------------------------------
Title:
PMB, INC.
By:
---------------------------------------
Title:
SOURCING & TECHNICAL SERVICES, INC.
By:
---------------------------------------
Title:
ILJ, INC.
By:
---------------------------------------
Title:
STI MERCHANDISING, INC.
By:
---------------------------------------
Title:
KBL HOLDING INC.
By:
---------------------------------------
Title:
Signature Page to Credit and Guaranty Agreement
KMART OF INDIANA
By:
---------------------------------------
Title:
KMART OF PENNSYLVANIA LP
By:
---------------------------------------
KMART OF TEXAS L.P.
By:
---------------------------------------
Title:
KMART OF MICHIGAN, INC.
By:
---------------------------------------
Title:
Signature Page to Credit and Guaranty Agreement
JPMORGAN CHASE BANK,
INDIVIDUALLY AND AS AGENT
By:
---------------------------------------
Title:
Signature Page to Credit and Guaranty Agreement
FLEET RETAIL FINANCE INC.
By:
---------------------------------------
Title:
Signature Page to Credit and Guaranty Agreement
GENERAL ELECTRIC CAPITAL CORPORATION
By:
---------------------------------------
Title:
Signature Page to Credit and Guaranty Agreement
CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS
BRANCH
By:
---------------------------------------
Title:
By:
---------------------------------------
Title:
Signature Page to Credit and Guaranty Agreement