EXHIBIT 10.112
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$150,000,000
CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1998
AMONG
SMART & FINAL INC.,
AS BORROWER
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AND
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
AS INITIAL LENDERS
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AND
CREDIT LYONNAIS LOS ANGELES BRANCH,
AS ADMINISTRATIVE AGENT
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CO-LEAD ARRANGERS:
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CREDIT LYONNAIS LOS ANGELES BRANCH
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
SYNDICATION AGENT:
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NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
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TABLE OF CONTENTS
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PAGE
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ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS......................................... 1
Section 1.01. Certain Defined Terms............................................. 1
Section 1.02. Computation of Time Periods....................................... 21
Section 1.03. Accounting Terms.................................................. 21
Section 1.04. Other Definitional Provisions..................................... 21
ARTICLE II. AMOUNTS AND TERMS OF THE ADVANCES........................................ 21
Section 2.01. The Advances...................................................... 21
Section 2.02. Making the Advances............................................... 23
Section 2.03. Repayment......................................................... 27
Section 2.04. Reduction of the Revolving Commitments and Swing Line
Commitments....................................................... 28
Section 2.05. Prepayments....................................................... 29
Section 2.06. Interest.......................................................... 30
Section 2.07. Fees.............................................................. 34
Section 2.08. Increased Costs, Etc.............................................. 34
Section 2.09. Payments and Computations......................................... 35
Section 2.10. Taxes............................................................. 38
Section 2.11. Sharing of Payments, Etc.......................................... 40
Section 2.12. Use of Proceeds................................................... 41
Section 2.13. Evidence of Debt.................................................. 41
ARTICLE III. AMOUNTS AND TERMS OF LETTERS OF CREDIT................................... 42
Section 3.01. The Letter of Credit Subfacility.................................. 42
Section 3.02. Issuance of Letters of Credit..................................... 42
Section 3.03. Drawing and Reimbursement......................................... 43
Section 3.04. Obligations Absolute.............................................. 44
Section 3.05. Letter of Credit Compensation..................................... 45
Section 3.06. Use of Letters of Credit.......................................... 46
ARTICLE IV. CONDITIONS OF LENDING.................................................... 46
Section 4.01. Conditions Precedent to Initial Borrowing......................... 46
Section 4.02. Conditions Precedent to Each Borrowing and Issuance............... 50
Section 4.03. Determinations Under Section 4.01................................. 51
ARTICLE V. REPRESENTATIONS AND WARRANTIES........................................... 51
Section 5.01. Representations and Warranties of the Borrower.................... 51
ARTICLE VI. COVENANTS OF THE BORROWER................................................ 59
Section 6.01. Affirmative Covenants............................................. 59
Section 6.02. Negative Covenants................................................ 64
Section 6.03. Reporting Requirements............................................ 69
Section 6.04. Financial Covenants............................................... 72
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ARTICLE VII. EVENTS OF DEFAULT....................................................... 73
Section 7.01. Events of Default................................................ 73
Section 7.02. Actions in Respect of the Letters of Credit Upon Default......... 76
ARTICLE VIII. THE ADMINISTRATIVE AGENT................................................ 77
Section 8.01. Authorization and Action......................................... 77
Section 8.02. Agent's Reliance, Etc............................................ 77
Section 8.03. Credit Lyonnais Los Angeles Branch and Affiliates................ 78
Section 8.04. Lender Party Credit Decision..................................... 78
Section 8.05. Indemnification.................................................. 78
Section 8.06. Successor Agents................................................. 79
ARTICLE IX. MISCELLANEOUS........................................................... 79
Section 9.01. Amendments, Etc.; Release of Collateral.......................... 79
Section 9.02. Notices, Etc..................................................... 80
Section 9.03. No Waiver; Remedies.............................................. 81
Section 9.04. Costs and Expenses............................................... 81
Section 9.05. Right of Set-off................................................. 83
Section 9.06. Binding Effect................................................... 83
Section 9.07. Assignments and Participations................................... 83
Section 9.08. Governing Law.................................................... 86
Section 9.09. Execution in Counterparts........................................ 86
Section 9.10. No Liability of the Issuing Bank................................. 86
Section 9.11. Confidentiality.................................................. 87
Section 9.12. Waiver of Jury Trial............................................. 87
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SCHEDULES AND EXHIBITS
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SCHEDULES
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Schedule I Commitments, Etc.
Schedule 1.01(a) Existing Letters of Credit
Schedule 1.01(b) Florida Stores
Schedule 4.01(b) Surviving Debt
Schedule 4.01(j)(v) Jurisdictions
Schedule 4.01(j)(ix) Mortgages
Schedule 5.01(b) Capital Stock of Loan Parties
Schedule 5.01(h) Litigation
Schedule 5.01(j) Pension Plans
Schedule 5.01(n) Open Years
Schedule 5.01(q)(i) Existing Debt
Schedule 5.01(r)(i) Real Property
Schedule 5.01(r)(ii) Leases
Schedule 5.01(s) Existing Investments
Schedule 5.01(t) Intellectual Property
Schedule 5.01(u) Certain Agreements, Etc.
Schedule 6.01(l)(ii) Certain Real Property
Schedule 6.01(m) Appraisals
Schedule 6.02(a) Existing Liens
EXHIBITS
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Exhibit A Form of Assignment and Acceptance
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Swing Line
Borrowing
Exhibit C Form of Notice of Issuance
Exhibit D-1 Form of Revolving Note
Exhibit D-2 Form of Swing Line Note
Exhibit E Form of Security Agreement
Exhibit F Form of Deed of Trust
Exhibit G Form of Guaranty
Exhibit H Form of Intercompany Note
Exhibit I Form of Solvency Certificate
Exhibit J-1 Form of Opinion of Borrower's
Counsel
Exhibit J-2 Form of Opinion of Borrower's In-
House Counsel
Exhibit K Form of Borrowing Base Certificate
Exhibit L Form of Amendment to Guaranty
Exhibit M Form of Amendment to Security
Agreement
iii
CREDIT AGREEMENT, dated as of November 13, 1998 among SMART & FINAL
INC., a Delaware corporation (the "BORROWER"), the financial institutions and
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other entities listed on the signature pages hereof as Lenders (the "INITIAL
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LENDERS"), CREDIT LYONNAIS LOS ANGELES BRANCH, as Administrative Agent (in such
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capacity, together with any successor in such capacity appointed pursuant to
Article VIII, the "ADMINISTRATIVE AGENT") and as Co-Lead Arranger, NATIONSBANC
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▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC, as Syndication Agent (the "SYNDICATION AGENT" and,
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together with the Administrative Agent, the "AGENTS") and as Co-Lead Arranger,
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and CREDIT LYONNAIS NEW YORK BRANCH, as L/C Bank (as hereinafter defined).
PRELIMINARY STATEMENTS
(1) The Borrower has requested, on the terms and conditions set forth
herein, (a) that the Lenders make Revolving Advances (as hereinafter defined) to
the Borrower from time to time in an aggregate principal amount not to exceed at
any time outstanding the aggregate Revolving Commitments (as hereinafter
defined) of the Lenders less the sum of (i) the aggregate amount of Letter of
Credit Obligations (as hereinafter defined) outstanding at such time, and (ii)
Swing Line Advances (as hereinafter defined) outstanding from time to time, (b)
that the Swing Line Lender (as hereinafter defined) make Swing Line Advances to
the Borrower from time to time in an aggregate principal amount not to exceed at
any time outstanding Fifteen Million Dollars ($15,000,000) and (c) that the L/C
Bank and the other Issuing Banks (as hereinafter defined) issue Letters of
Credit (as hereinafter defined) for the account of the Borrower from time to
time in an aggregate Available Amount (as hereinafter defined) not to exceed at
any time outstanding the L/C Sublimit (as hereinafter defined).
(2) Subject to the terms and conditions set forth in this Agreement,
(a) the Lenders have agreed severally to make such Revolving Advances to the
Borrower, (b) the Swing Line Lender has agreed to make such Swing Line Advances
to the Borrower, and (c) the L/C Bank has agreed to issue such Letters of Credit
for the account of the Borrower.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
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following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACCOUNTS RECEIVABLE" means all Accounts Receivable referred to in
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Section 2(a)(iii) of the Security Agreement.
"ADDITIONAL DIVIDEND AMOUNT" means, at any time of determination, the
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lesser of (i) $3,000,000, and (ii) an amount equal to the product of $0.20
multiplied by the number of Qualifying Shares duly issued after the Closing Date
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and prior to such time of determination as certified in a certificate of the
Chief Financial Officer delivered to the Administrative Agent. For purposes of
this definition, the term "QUALIFYING SHARES" means shares of common stock of
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the Borrower, par value $.01, issued after the Closing Date (A) to Casino upon
the conversion of the aggregate principal amount of the Casino Note into such
common stock of the Borrower (but only to the extent such debt is converted on a
dollar for dollar basis at the market price for such common stock at the time of
such conversion), (B) for cash at market price on the date of issuance (but only
to the extent such cash has been applied to the mandatory prepayment of the
Revolving Advances pursuant to Section 2.05(b)(iii) and the permanent reduction
of the Revolving Commitments pursuant to Section 2.04(b)), or (C) upon the
exercise of options issued under the Borrower's management stock option plan (as
such plan is in effect on October 15, 1998); provided that the number of
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Qualifying Shares shall be reduced by the number of shares, if any, issued after
the Closing Date as a dividend or distribution on or in respect of outstanding
common stock of the Borrower.
"ADDITIONAL MORTGAGES" has the meaning set forth in Section 6.01(l).
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"ADJUSTED LEVERAGE RATIO" means, as of any date of determination, the
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ratio of (i) the sum of (A) Consolidated Total Debt as of the end of the most
recently ended fiscal quarter of the Borrower plus (B) the product of (1) rent
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expense for the Borrower and its Subsidiaries on a Consolidated basis for the
period of four fiscal quarters ending as of the end of the most recently ended
fiscal quarter of the Borrower multiplied by (2) 8 to (ii) the sum of (A) EBITDA
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for the Borrower and its Subsidiaries on a Consolidated basis for the period of
four fiscal quarters ending as of the end of the most recently ended fiscal
quarter of the Borrower (it being understood and agreed that for the period of
four fiscal quarters ending January 3, 1999, there shall be added to such
Consolidated EBITDA the sum of $2,500,000 and for the period of four fiscal
quarters ending March 28, 1999, there shall be added to such Consolidated EBITDA
the sum of $900,000, in each case to the extent such sums represent EBITDA of
Cash & Carry Inc. (prior to its acquisition by the Borrower) not otherwise
reflected in the Consolidated EBITDA of the Borrower and its Subsidiaries) plus
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(B) rent expense for the Borrower and its Subsidiaries on a Consolidated basis
for the period of four fiscal quarters ending as of the end of the most recently
ended fiscal quarter of the Borrower.
"ADVANCE" means a Revolving Advance, a Swing Line Advance or an L/C
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Advance.
"AFFILIATE" means, as to any Person, any other Person that, directly
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or indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Voting Stock, by contract or otherwise.
2
"AGENT'S ACCOUNT" means the account of the Administrative Agent
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maintained by the Administrative Agent with the Federal Reserve Bank of New
York, for account of Credit Lyonnais New York, ABA No. ▇▇▇▇▇▇▇▇▇, in favor of
Credit Lyonnais New York, Attention: Loan Servicing Syndications, Reference:
Smart & Final.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
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Lender's Domestic Lending Office in the case of a Base Rate Advance and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
"APPLICABLE MARGIN" means, for any fiscal quarter for each Interest
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Type of Advance set forth below, the applicable rate per annum set forth in the
table below opposite the Adjusted Leverage Ratio determined as of the last day
of the immediately preceding fiscal quarter and beneath such Interest Type of
Loan:
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Applicable Applicable
Margin for Margin for
Adjusted Leverage Eurodollar Rate Base Rate
Tier Ratio Advances Advances
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I Greater than or equal to 4.75 2.50% 1.50%
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II Greater than or equal to 4.25 but
less than 4.75 2.25% 1.25%
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III Greater than or equal to 3.75 but
less than 4.25 2.00% 1.00%
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IV Greater than or equal to 3.25 but
less than 3.75 1.75% 0.50%
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V Less than 3.25 1.50% 0.00%
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provided, however, that, notwithstanding the foregoing, for purposes of
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determining the Applicable Margin, the Adjusted Leverage Ratio shall be deemed
to be greater than or equal to 4.75 to 1.0 at all times (i) prior to receipt by
the Administrative Agent of the financial statements, compliance certificate and
Borrowing Base Certificate required by Section 6.03(d) with respect to the
fiscal year of the Borrower ending January 3, 1999, and (ii) when a Default has
occurred and is continuing based on the Borrower's failure to deliver any
financial statement, compliance certificate or Borrowing Base Certificate as and
when required pursuant to Sections 6.03(a), 6.03(c) or 6.03(d), as applicable.
For purposes of this Agreement, any change in the Applicable Margin based on a
change in the Adjusted Leverage Ratio shall be effective three Business Days
after the date of receipt by the Administrative Agent of the financial
statements, compliance certificate and Borrowing Base Certificate required by
Sections 6.03(a), 6.03(c) and 6.03(d), as applicable, reflecting such change.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
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into by a Lender Party and an Eligible Assignee, and accepted by the Borrower
and the Administrative Agent, in accordance with Section 9.07 and in
substantially the form of Exhibit A hereto.
"AVAILABLE AMOUNT" of any Letter of Credit means, at any time, the
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maximum amount available to be drawn under such Letter of Credit at such time
(assuming compliance at such time with all conditions to drawing).
3
"BANK HEDGE AGREEMENT" means a Hedge Agreement between the Borrower
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and any Lender.
"BASE RATE" means a fluctuating interest rate per annum in effect from
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time to time, which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest established by Credit Lyonnais New York Branch as its
"base rate", with each change in such rate to be effective for purposes of this
Agreement and the transactions contemplated hereby without necessity of any
action on the part of any Person, on the day on which such change is effective,
it being understood that such rate does not and shall not necessarily reflect
the best or lowest rate of interest available to Credit Lyonnais New York
Branch's best or preferred commercial customers and (b) 1/2 of one percent per
annum above the Federal Funds Rate.
"BASE RATE ADVANCE" means an Advance that bears interest as provided
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in Section 2.06(a)(i).
"BORROWER" has the meaning set forth in the recital of parties to this
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Agreement.
"BORROWER'S ACCOUNT" means the account of the Borrower maintained by
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the Borrower with the Administrative Agent.
"BORROWING BASE AMOUNT" means, at any time of determination, the
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lesser of (i) the aggregate Revolving Commitments in effect at such time, and
(ii) the sum of the following amounts for each category of Eligible Collateral
(as reflected in the then most recently delivered Borrowing Base Certificate):
(a) from and after the Eligible Real Property Inclusion Date, 35% of
the net book value of Eligible Real Property;
(b) with respect to Eligible Inventory, 60% of the value thereof, and
(c) with respect to Eligible Accounts Receivable, 80% of the value
thereof;
provided, however, that in the event a Default has occurred and is continuing
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based on the Borrower's failure to deliver any financial statement, compliance
certificate or Borrowing Base Certificate as and when required pursuant to
Sections 6.03(a), 6.03(c), or 6.03(d), as applicable, the Borrowing Base Amount
shall be such amount as may be determined from time to time by the
Administrative Agent and the Required Lenders in their sole discretion.
"BORROWING BASE CERTIFICATE" means a certificate of the Borrower
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concerning the Borrowing Base of the Borrower substantially in the form of
Exhibit K.
"BORROWING" means a Revolving Borrowing or a Swing Line Borrowing.
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"BORROWING BASE DEFICIENCY" means, at any time, the failure of the
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Borrowing Base Amount at such time to equal or exceed the sum of (i) the then
outstanding aggregate principal amount of the Revolving Advances and the Swing
Line Advances plus (ii) the aggregate Letters of Credit Obligations then
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outstanding.
4
"BUSINESS DAY" means a day of the year on which banks are not required
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or authorized by law to close in Los Angeles, California or New York, New York
and, if the applicable Business Day relates to any Eurodollar Rate Advances, on
which dealings are carried on in the London interbank market.
"CAPITAL EXPENDITURES" means, for any period, the sum of (a) all
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expenditures during such period for equipment, fixed assets, real property or
improvements, or for replacements or substitutions therefor or additions
thereto, that have a useful life of more than one year plus (b) the aggregate
principal amount of all Debt (including obligations under Capitalized Leases)
assumed or incurred in connection with any such expenditures.
"CAPITALIZED LEASES" has the meaning specified in clause (e) of the
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definition of Debt.
"CASH EQUIVALENTS" means any of the following, to the extent owned by
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the Borrower free and clear of all Liens and having a maturity of not greater
than 180 days from the date of acquisition thereof: (a) readily marketable
direct obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b) insured
certificates of deposit of or time deposits with any commercial bank that (i) is
a Lender or a member of the Federal Reserve System, (ii) issues (or the parent
of which issues) commercial paper rated as described in clause (c), (iii) is
organized under the laws of the United States or any State thereof and (iv) has
combined capital and surplus of at least $1 billion or (c) commercial paper
(other than commercial paper issued by or on behalf of the Borrower or any of
its Affiliates) in an aggregate amount of no more than $500,000 per issuer
outstanding at any time, issued by any corporation organized under the laws of
any State of the United States and rated at least "Prime-1" (or the then
equivalent grade) by ▇▇▇▇▇'▇ Investors Services or "A-1" (or the then equivalent
grade) by Standard & Poor's Ratings Group.
"CASINO" means Casino USA, Inc. and its Affiliates.
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"CASINO INTERCOMPANY ADVANCES" means unsecured intercompany advances
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made by Casino to the Borrower after the Closing Date pursuant to the Casino
Intercompany Agreement.
"CASINO INTERCOMPANY AGREEMENT" means that certain intercompany
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agreement dated August 6, 1991 by and between Casino and the Borrower.
"CASINO LOAN AGREEMENT" means the loan agreement dated as of November
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13, 1998 by and between Casino and the Borrower.
"CASINO NOTE" means the promissory note dated as of November 13, 1998
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by the Borrower in favor of Casino in the principal amount of $53,000,000.
5
"CERCLA" means the Comprehensive Environmental Response, Compensation
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and Liability Act of 1980, as amended or supplemented from time to time, and the
regulations promulgated pursuant thereto.
"CLOSING DATE" means the date on which each of the conditions in
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Section 4.01 is satisfied or waived.
"CO-LEAD ARRANGERS" means Credit Lyonnais Los Angeles Branch and
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NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC.
"COLLATERAL" means all "Collateral" referred to in the Collateral
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Documents and all other property that is subject to any Lien in favor of the
Administrative Agent, the Lenders or any Issuing Bank.
"COLLATERAL DOCUMENTS" means the Security Agreement and the Mortgages
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and any Additional Mortgages.
"COMMITMENT" means a Revolving Commitment or a Swing Line Commitment.
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"COMMITMENT FEE PERCENTAGE" means a fee per annum on the undrawn
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amount of the Facility as set forth below payable quarterly in arrears following
the Closing:
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Commitment
Adjusted Leverage Fee
Tier Ratio Percentage
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I Greater than or equal to 4.75 0.50%
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II Greater than or equal to 4.25 but
less than 4.75 0.50%
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III Greater than or equal to 3.75 but
less than 4.25 0.40%
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IV Greater than or equal to 3.25 but
less than 3.75 0.35%
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V less than 3.25 0.30%
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provided, however, that, notwithstanding the foregoing, for purposes of
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determining the Commitment Fee Percentage, the Adjusted Leverage Ratio shall be
deemed to be greater than or equal to 4.75 to 1.0 at all times (i) prior to
receipt by the Administrative Agent of the financial statements, compliance
certificate and Borrowing Base Certificate required by Section 6.03(d) with
respect to the fiscal year of the Borrower ending January 3, 1999, and (ii) when
a Default has occurred and is continuing based on the Borrower's failure to
deliver any financial statement, compliance certificate or Borrowing Base
Certificate as and when required pursuant to Sections 6.03(a), 6.03(c) or
6.03(d), as applicable. For purposes of this Agreement, any change in the
Commitment Fee Percentage based on a change in the Adjusted Leverage Ratio shall
be effective three Business Days after the date of receipt by the Administrative
Agent of the financial statements, compliance certificate and Borrowing Base
Certificate required by Sections 6.03(a), 6.03(c) and 6.03(d), as applicable,
reflecting such change.
6
"COMMITMENT TERMINATION DATE" means November 12, 2001, on which date
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the Facilities shall terminate and all amounts outstanding thereunder shall be
due and payable, subject to early termination and acceleration upon the
occurrence of an Event of Default.
"CONFIDENTIAL INFORMATION" means information that the Borrower
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furnishes to the Administrative Agent or any Lender in a writing designated as
confidential but does not include any such information that is or becomes
generally available to the public or that is or becomes available to the
Administrative Agent or such Lender from a source other than the Borrower that
is not, to the best of the Administrative Agent's or such Lender's knowledge,
acting in violation of a confidentiality agreement with the Borrower.
"CONSOLIDATED" refers to the consolidation of accounts in accordance
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with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
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expense (including the interest component of Capitalized Leases) of the Borrower
and its Subsidiaries on a Consolidated basis for such period in conformity with
GAAP, including, without limitation, all commissions, discounts and other fees
and charges owed with respect to any financings or letters of credit, but
excluding charges in such period for the amortization or write-off of
capitalized (i) amounts payable pursuant to Section 2.07, (ii) other non-cash
charges for amortization or write-off of debt issuance expenses incurred prior
to the date hereof, and (iii) other expenses relating to the negotiation and
preparation of, and the initial Advances under, this Agreement.
"CONSOLIDATED NET INCOME" means, for any period, the net earnings (or
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loss) after taxes of the Borrower and its Subsidiaries on a Consolidated basis
determined for such period in conformity with GAAP.
"CONSOLIDATED NET WORTH" means the excess of (i) the total assets of
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the Borrower and its Subsidiaries determined on a Consolidated basis in
accordance with GAAP, over (ii) all liabilities of the Borrower and its
Subsidiaries determined on a Consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL DEBT" means, as of any time of determination,
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determined for the Borrower and its Subsidiaries on a consolidated basis, (i)
indebtedness for borrowed money (including, without limitation, obligations in
respect of Casino Intercompany Advances), (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) non-contingent obligations
to pay the deferred purchase price of property or services other than trade
payables incurred in the ordinary course of business, and (iv) Capitalized
Leases.
"CONTROLLED GROUP MEMBER" means each trade or business (whether or not
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incorporated) which, at any time, together with Borrower or any Subsidiary of
any thereof is treated as a single employer under Sections 4001(a)(14) or
4001(b)(1) of ERISA or Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code.
"CONVERSION", "CONVERT" and "CONVERTED" each refer to a conversion of
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Advances of one Interest Type into Advances of the other Interest Type pursuant
to Section 2.06.
7
"DEBT" of any Person means, without duplication, (a) all indebtedness
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of such Person for borrowed money, (b) all Obligations of such Person for the
deferred purchase price of property or services (other than trade payables not
overdue by more than 60 days incurred in the ordinary course of such Person's
business), (c) all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all Obligations 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), (e) all Obligations of
such Person as lessee under leases that have been or should be, in accordance
with GAAP, recorded as capital leases ("CAPITALIZED LEASES"), (f) all
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Obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities, (g) all Obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any capital
stock of or other ownership or profit interest in such Person or any other
Person or any warrants, rights or options to acquire such capital stock, valued,
in the case of Redeemable Preferred Stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends, (h) all
Obligations of such Person in respect of Hedge Agreements, (i) all Debt of
others referred to in clauses (a) through (h) above guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or purchase such Debt
or to advance or supply funds for the payment or purchase of such Debt, (ii) 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 Debt or to assure the holder of such Debt against loss, (iii) 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 (iv) otherwise to assure a creditor against
loss, and (j) all Debt referred to in clauses (a) through (h) above secured by
(or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on 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 Debt.
"DEFAULT" means any Event of Default or any event that would
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constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
"DEFAULT RATE" has the meaning specified in Section 2.06(d).
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"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
-----------------------
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.
"DOMESTIC SUBSIDIARY" means a direct or indirect Subsidiary of the
-------------------
Borrower that is not a Foreign Subsidiary.
8
"EBITDA" means, for any period, net income (or net loss) plus, to the
------ ----
extent deducted in determining such net income (or net loss), the sum of (a)
interest expense, (b) income tax expense, (c) depreciation expense and (d)
amortization expense, in each case determined in accordance with GAAP for such
period. In the event the Borrower takes a charge associated with the closing of
the Florida Stores permitted under clause (i) of Section 7.01(r), up to
$18,000,000 of such charge may be added back to EBITDA for financial covenant
calculations for such fiscal quarter and, without duplication, the next three
fiscal quarters (but such amount may only be added back to EBITDA for any period
to the extent such amount is deducted in determining EBITDA for the applicable
period).
"ELIGIBLE ACCOUNTS RECEIVABLE" means Accounts Receivable of the
----------------------------
Borrower and its Domestic Subsidiaries. The value of such Accounts Receivable
shall be their book value determined in accordance with GAAP, as reflected on
the most recent Borrowing Base Certificate received by the Administrative Agent
pursuant to Section 4.02(a)(iii) or Section 6.03(a). Notwithstanding the
foregoing, Accounts Receivable owing from any Person that is an Affiliate of the
Borrower or any of its Subsidiaries shall not be Eligible Accounts Receivable.
"ELIGIBLE ASSIGNEE" means (a) any Lender Party and any Affiliate of
-----------------
any Lender Party, and (b) any commercial bank, savings and loan association,
savings bank, finance company, insurance company, mutual fund or other financial
institution, fund or investor which has been approved in writing (or, in the
case of the Borrower, deemed approved as provided below) by the Borrower and the
Administrative Agent as an Eligible Assignee for purposes of this Agreement,
provided that in each such case such approval shall not be unreasonably
--------
withheld, or, in the case of Affiliates of such Lender Party, written notice to
the Administrative Agent shall have been provided, and provided, further, that
-------- -------
if the Borrower is requested at any time to approve any Person as an Eligible
Assignee hereunder and the Administrative Agent has not received written notice
from the Borrower, within three Business Days of such request, that the Borrower
does not approve such Person as an Eligible Assignee, the Borrower shall be
deemed to have approved such Person as an Eligible Assignee. Such approval of
the Borrower shall not be required if an Event of Default has occurred and is
continuing.
"ELIGIBLE COLLATERAL" means, collectively, Eligible Inventory,
-------------------
Eligible Accounts Receivable and Eligible Real Property.
"ELIGIBLE INVENTORY" means Inventory of the Borrower and its Domestic
------------------
Subsidiaries. The value of such Inventory shall be the book value of such
Inventory determined in accordance with GAAP as reflected on the most recent
Borrowing Base Certificate received by the Administrative Agent pursuant to
Section 4.02(a)(iii) or Section 6.03(a).
"ELIGIBLE REAL PROPERTY" means only such real property of the Borrower
----------------------
and its Domestic Subsidiaries as is subject to a valid and perfected first
priority Lien in favor of the Administrative Agent pursuant to the Mortgages;
provided, however, that any such real property may be excluded to the extent
--------- -------
that the Borrower has not complied with the provisions of Section 6.01(m) with
respect to such real property. The value of such real property shall be its
book value determined in accordance with GAAP, as reflected on the Borrower's
most recent
9
Borrowing Base Certificate received by the Administrative Agent pursuant to
Section 4.02(a)(iii) or Section 6.03(a); provided, however, that the
-------- -------
Administrative Agent may, from time to time, exclude from Eligible Real Property
such real property as the Administrative Agent determines must be so excluded in
order to maintain compliance with the Federal Financial Institution Reform,
Recovery and Enforcement Act of 1989, as amended.
"ELIGIBLE REAL PROPERTY INCLUSION DATE" means the first date after the
-------------------------------------
Closing Date as of which all appraisals required by the provisions of Section
6.01(m)(i) have been delivered to the Administrative Agent.
"ENVIRONMENTAL ACTION" means any administrative, regulatory or
--------------------
judicial action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law or any Environmental Permit
including, without limitation, (a) any claim by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any Environmental Law and (b) any claim by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" means any federal, state or local law, rule,
-----------------
regulation, order, writ, judgment, injunction, decree, determination or award
and any and all common law requirements, rules and bases of liability relating
to the environment, health, safety or Hazardous Materials, including, without
limitation, CERCLA, the Resource Conservation and Recovery Act, the Hazardous
Materials Transportation Act, the Clean Water Act, the Toxic Substances Control
Act, the Clean Air Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide and Rodenticide Act and the Occupational Safety
and Health Act.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification
--------------------
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" of any Person means any other Person that for
---------------
purposes of Title IV of ERISA is a member of such Person's controlled group, or
under common control with such Person, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA EVENT" with respect to any Person means (a) the occurrence of a
-----------
reportable event, within the meaning of Section 4043 of ERISA, with respect to
any Plan of such Person or any of its ERISA Affiliates unless the 30-day notice
requirement with respect to such event has been waived by the PBGC; (b) the
provision by the administrator of any Plan of such Person or any of its ERISA
Affiliates of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA); (c) the cessation of operations at a
facility of such Person or any of its ERISA Affiliates in the circumstances
described in Section 4062(e) of
10
ERISA; (d) the withdrawal by such Person or any of its ERISA Affiliates from a
Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (e) the failure by such
Person or any of its ERISA Affiliates to make a payment to a Plan required under
Section 302(f)(1) of ERISA; (f) the adoption of an amendment to a Plan of such
Person or any of its ERISA Affiliates requiring the provision of security to
such Plan, pursuant to Section 307 of ERISA; or (g) the institution by the PBGC
of proceedings to terminate a Plan of such Person or any of its ERISA
Affiliates, pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that could constitute grounds for
the termination of, or the appointment of a trustee to administer, such Plan.
"EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D
------------------------
of the Board of Governors of the Federal Reserve System, as in effect from time
to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the
-------------------------
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Administrative Agent.
"EURODOLLAR RATE" means, for any Eurodollar Rate Advance for any
---------------
Interest Period therefor, an interest rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the rate per annum obtained by
dividing (a) the rate per annum appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in U.S.
dollars at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period
by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
for such Interest Period. If for any reason the rate described in the foregoing
clause (a) is not available at the time of determination of the Eurodollar Rate
for any Eurodollar Rate Advances for any Interest Period, the term "Eurodollar
Rate" shall mean, for any such Eurodollar Rate Advances for any such Interest
Period therefor, an interest rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) equal to the rate per annum obtained by dividing (i)
the rate per annum appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in U.S. dollars at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period (provided, however, if more than one
-------- -------
rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates) by (ii) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
"EURODOLLAR RATE ADVANCE" means an Advance that bears interest as
-----------------------
provided in Section 2.06(b).
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for any Interest Period
----------------------------------
for any Eurodollar Rate Advance, the reserve percentage applicable two Business
Days before the first day of such Interest Period under regulations issued from
time to time by the Board of Governors
11
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.
"EVENTS OF DEFAULT" has the meaning specified in Section 7.01.
-----------------
"EXISTING BRIDGE LOAN" means that certain bridge loan dated as of
--------------------
April 30, 1998 by and among the Borrower and Credit Lyonnais Los Angeles Branch,
as amended, supplemented or modified to the date hereof.
"EXISTING CREDIT AGREEMENT" means that certain Credit Agreement dated
-------------------------
as of November 20, 1995 by and among the Borrower, the Banks listed therein and
Credit Lyonnais Los Angeles Branch, as Agent, as amended, supplemented or
modified to the date hereof.
"EXISTING DEBT" means the Debt identified on Schedule 5.01(q)(i).
-------------
"EXISTING LETTERS OF CREDIT" means the letters of credit described on
--------------------------
Schedule 1.01(a).
"EXISTING LIENS" means the Liens identified on Schedule 6.02(a).
--------------
"FACILITY" means the Revolving Facility or the Swing Line Facility.
--------
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FLORIDA STORES" means the stores and other real properties identified
--------------
on Schedule 1.01(b).
"FOREIGN SUBSIDIARY" means any "controlled foreign corporation" within
------------------
the meaning of Section 957(a) of the Internal Revenue Code as to which the
Borrower or any of its Subsidiaries is a "United States shareholder" as defined
in Section 951(b) of the Internal Revenue Code.
"GAAP" has the meaning specified in Section 1.03.
----
"GUARANTORS" means each present and future direct or indirect
----------
Subsidiary of the Borrower that is a party to the Guaranty.
12
"GUARANTY" has the meaning specified in Section 4.01(j)(x), and
--------
includes any amendment to Guaranty delivered hereunder.
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
-------------------
natural or synthetic gas, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and radon gas, (b) any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar import, under any Environmental Law and (c) any other
substance exposure to which is regulated under any Environmental Law.
"HEDGE AGREEMENTS" means interest rate swap, cap or collar agreements,
----------------
interest rate future or option contracts and other similar agreements.
"INDEMNIFIED PARTY" has the meaning specified in Section 9.04(b).
-----------------
"INITIAL LENDERS" has the meaning specified in the recital of parties
---------------
to this Agreement.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any,
-------------
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"INTERCOMPANY NOTES" has the meaning specified in Section 4.01(j)(xv).
------------------
"INTEREST PERIOD" has the meaning specified in Section 2.06(b).
---------------
"INTEREST TYPE" refers to the distinction between Advances bearing
-------------
interest at the Base Rate and Advances bearing interest at the Eurodollar Rate.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
---------------------
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"INVENTORY" means all Inventory referred to in Section 2(a)(i) of the
---------
Security Agreement.
"INVESTMENT" in any Person means any loan or advance to such Person,
----------
any purchase or other acquisition of any capital stock, warrants, rights,
options, obligations or other securities of such Person, any capital
contribution to such Person or any other investment in such Person, including,
without limitation, any arrangement pursuant to which the investor incurs Debt
of the types referred to in clauses (i) and (j) of the definition of "Debt" in
----
respect of such Person.
"ISSUE" means, with respect to any Letter of Credit, either issue such
-----
Letter of Credit, extend the expiry of such Letter of Credit (other than any
such extension occurring pursuant to the terms of such Letter of Credit), renew
such Letter of Credit (other than any such renewal occurring pursuant to the
terms of such Letter of Credit), or increase the amount of such
13
Letter of Credit, and the terms "Issued", "Issuing", and "Issuance" shall have
------ ------- --------
corresponding meanings.
"ISSUING BANK" means the L/C Bank and any other Lender that is a
------------
commercial bank, acting through a domestic branch, as issuer of a Letter of
Credit.
"LENDER PARTY" means any Lender or any Issuing Bank.
------------
"LENDERS" means the Initial Lenders and each Eligible Assignee that
-------
shall become a party hereto pursuant to Section 9.07.
"L/C ADVANCE" means a payment made by an Issuing Bank under a Letter
-----------
of Credit.
"L/C BANK" means Credit Lyonnais New York Branch in its capacity as an
--------
Issuing Bank or any assignee acting in such capacity.
"L/C CASH COLLATERAL ACCOUNT" has the meaning specified in Section
---------------------------
7.02.
"L/C RELATED DOCUMENTS" has the meaning specified in Section 3.04(a).
---------------------
"L/C SUBLIMIT" means Ten Million Dollars ($10,000,000) as such amount
------------
may be reduced pursuant to Section 2.04.
"LETTER OF CREDIT" means any letter of credit issued hereunder.
----------------
"LETTER OF CREDIT AGREEMENT" has the meaning specified in Section
--------------------------
3.02(a).
"LETTER OF CREDIT OBLIGATIONS" means, as of any date of determination
----------------------------
with respect to any Letter of Credit, the sum of (a) the then outstanding
Available Amount of such Letter of Credit, and (b) the aggregate amount of the
Unreimbursed Letter of Credit Liability thereunder.
"LETTER OF CREDIT SUBFACILITY" has the meaning specified in Section
----------------------------
3.01.
"LIEN" means any lien, security interest or other charge or
----
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Guaranty, the
--------------
Collateral Documents, each Letter of Credit Agreement, each Bank Hedge
Agreement, the Intercompany Notes and any other instrument or agreement executed
by the Borrower and the Administrative Agent that states that it is a Loan
Document.
"LOAN PARTIES" means the Borrower and the Guarantors.
------------
14
"MARGIN STOCK" has the meaning specified in Regulation U.
------------
"MATERIAL ADVERSE CHANGE" means any material adverse change in the
-----------------------
business, assets, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
-----------------------
business, assets, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its Subsidiaries taken as a whole,
(b) the rights and remedies of the Administrative Agent or any Lender Party
under any Loan Document or (c) the ability of any Loan Party to perform its
Obligations under any Loan Document to which it is or is to be a party.
"MORTGAGE" has the meaning specified in Section 4.01(j)(ix).
--------
"MORTGAGE POLICY" has the meaning specified in Section 4.01(j)(ix)(A).
---------------
"MULTIEMPLOYER PLAN" of any Person means a multiemployer plan, as
------------------
defined in Section 4001(a)(3) of ERISA, to which such Person or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding six plan years made or accrued an obligation to make
contributions.
"MULTIPLE EMPLOYER PLAN" of any Person means a single employer plan,
----------------------
as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees
of such Person or any of its ERISA Affiliates and at least one Person other than
such Person and its ERISA Affiliates or (b) was so maintained and in respect of
which such Person or any of its ERISA Affiliates could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"NET CASH PROCEEDS" means, with respect to any sale, lease, transfer
-----------------
or other disposition of any asset or the sale or issuance of any Debt or capital
stock (other than common stock of the Borrower issued to Casino upon conversion
of the Casino Note), any securities convertible into or exchangeable for capital
stock or any warrants, rights or options to acquire capital stock by any Person,
the aggregate amount of cash received from time to time by or on behalf of such
Person in connection with such transaction after deducting therefrom only (a)
reasonable and customary brokerage commissions, underwriting fees and discounts,
legal fees, finder's fees and other similar fees and commissions and (b) the
amount of taxes payable in connection with or as a direct result of such
transaction and (c) the amount of any Debt secured by a Lien on such asset that,
by the terms of such transaction, is required to be repaid upon such
disposition, in each case with respect to the foregoing clauses (a) and (c) to
the extent, but only to the extent, that the amounts so deducted are, at the
time of receipt of such cash, actually paid to a Person that is not an Affiliate
and are properly attributable to such transaction or to the asset that is the
subject thereof.
"NOTE" means a Revolving Note or a Swing Line Note.
----
15
"NOTICE OF BORROWING" means either (a) a notice in substantially the
-------------------
form of Exhibit B-1, or (b) notice by teletransmission or telephonic notice of
the information required by Exhibit B-1.
"NOTICE OF ISSUANCE" means a notice in substantially the form of
------------------
Exhibit C.
"NOTICE OF SWING LINE BORROWING" means either (a) a notice
------------------------------
substantially in the form of Exhibit B-2, or (b) notice by teletransmission or
telephonic notice of the information required by Exhibit B-2.
"OBLIGATION" means, with respect to any Person, any obligation of such
----------
Person of any kind, including, without limitation, any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 7.01(f). Without limiting the generality of
the foregoing, the Obligations of the Loan Parties under the Loan Documents
include (a) the obligation to pay principal, interest, Letter of Credit
commissions, charges, expenses, fees, attorneys' fees and disbursements,
indemnities and other amounts payable by any Loan Party under any Loan Document
and (b) the obligation to reimburse any amount in respect of any of the
foregoing that any Lender Party, in its sole discretion, may elect to pay or
advance on behalf of such Loan Party.
"OFFERING MEMORANDUM" means the offering memorandum emoradated
-------------------
October, 1998 used by the Syndication Agent in connection with the syndication
of the Commitments.
"OPEN YEAR" has the meaning specified in Section 4.01(z).
---------
"OTHER TAXES" has the meaning specified in Section 2.10(b).
-----------
"PARTICIPATION AGREEMENT" means that certain Participation Agreement
-----------------------
dated as of November 13, 1998 among Smart & Final Inc., as the Construction
Agent and as the Lessee, the various parties hereto from time to time, as the
Guarantors, First Security Bank, National Association, not individually, except
as expressly stated herein, but solely as the Owner Trustee under the S&F Trust
1998-1, the various banks and other lending institutions which are parties
hereto from time to time, as the Holders, the various banks and other lending
institutions which are parties hereto from time to time, as the Lenders, and
Credit Lyonnais Los Angeles Branch, as the Administrative Agent for the Lenders
and respecting the Security Documents, as the Administrative Agent for the
Lenders and the Holders, to the extent of their interests.
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"PERMITTED ENCUMBRANCES" means, with respect to any property subject
----------------------
to a Mortgage or an Additional Mortgage, the matters listed on Schedule B to the
policy of title insurance in favor of the Administrative Agent with respect to
such property.
16
"PERMITTED LIENS" means such of the following as to which no
---------------
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Liens for taxes, assessments and governmental charges or
levies not yet due and payable; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar Liens
arising in the ordinary course of business securing obligations that are not
overdue for a period of more than 30 days; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations; and (d) Permitted Encumbrances.
"PERSON" means an individual, partnership, limited liability company,
------
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
----
"PREFERRED STOCK" means, with respect to any corporation, capital
---------------
stock issued by such corporation that is entitled to a preference or priority
over any other capital stock issued by such corporation upon any distribution of
such corporation's assets, whether by dividend or upon liquidation.
"PRO RATA SHARE" of any amount means, with respect to any Lender at
--------------
any time, the product of (a) a fraction the numerator of which is such Lender's
Revolving Commitment (without giving effect to any termination thereof pursuant
to Section 7.01) at such time and the denominator of which is the sum of the
Revolving Facility (in each case without giving effect to any termination of
Commitments pursuant to Section 7.01) at such time times (b) such amount.
-----
"REDEEMABLE" means, with respect to any capital stock, Debt or other
----------
right or Obligation, any such right or Obligation that (a) the issuer has
undertaken to redeem at a fixed or determinable date or dates, whether by
operation of a sinking fund or otherwise, or upon the occurrence of a condition
not solely within the control of the issuer or (b) is redeemable at the option
of the holder.
"REGISTER" has the meaning specified in Section 9.07(c).
--------
"REGULATION U" means Regulation U of the Board of Governors of the
------------
Federal Reserve System, as in effect from time to time.
"REQUIRED LENDERS" means at any time Lender Parties owed or holding
----------------
more than 66-2/3% of the sum of (a) the aggregate principal amount of the
Advances outstanding at such time and (b) the aggregate Available Amount of all
Letters of Credit outstanding at such time, or, if no such principal amount and
no Letters of Credit are outstanding at such time, Lender Parties holding more
than 66-2/3% of the Revolving Commitments at such time. For purposes of this
definition, the Available Amount of each Letter of Credit and the aggregate
principal amount of all outstanding Swing Line Advances shall be considered to
be owed to the Lenders ratably in accordance with their respective Revolving
Commitments.
17
"RESPONSIBLE OFFICER" means the President, Chief Executive Officer,
-------------------
any Vice President, the Chief Financial Officer and the Treasurer of the
Borrower.
"REVOLVING ADVANCE" has the meaning specified in Section 2.01(b).
-----------------
"REVOLVING BORROWING" means a borrowing consisting of simultaneous
-------------------
Revolving Advances of the same Interest Type made by the Lenders.
"REVOLVING COMMITMENT" means, (i) with respect to any Lender listed on
--------------------
Schedule I, the amount set forth opposite such Lender's name on Schedule I under
the caption "Revolving Commitment," (ii) with respect to any Lender not listed
on Schedule I hereto, the amount set forth in the Assignment and Acceptance
pursuant to which such Person became a Lender hereunder, or (iii) if any of
such Lenders has entered into one or more Assignments and Acceptances, the
amount set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 9.07(c) as such Lender's "Revolving
Commitment", in the case of each of the foregoing clauses (i), (ii) and (iii),
as such amount may be reduced at or prior to such time pursuant to Section 2.04.
"REVOLVING FACILITY" means, at any time, the aggregate amount of the
------------------
Lenders' Revolving Commitments at such time.
"REVOLVING NOTE" means a promissory note of the Borrower payable to
--------------
the order of any Lender, in substantially the form of Exhibit D-1 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender resulting
from the Revolving Advances made by such Lender.
"SECURED OBLIGATIONS" has the meaning specified in the Security
-------------------
Agreement.
"SECURITY AGREEMENT" has the meaning specified in Section
------------------
4.01(j)(viii).
"SINGLE EMPLOYER PLAN" of any Person means a single employer plan, as
--------------------
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA Affiliates and no Person other than such Person
and its ERISA Affiliates or (b) was so maintained and in respect of which such
Person or any of its ERISA Affiliates could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
------- --------
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts
18
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"STANDBY LETTER OF CREDIT" means any Letter of Credit issued under the
------------------------
Letter of Credit Subfacility, other than a Trade Letter of Credit.
"SUBSIDIARY" of any Person means any corporation partnership, limited
----------
liability company, joint venture, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) (b) the interest in the capital or profits of such partnership,
limited liability company or joint venture or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"SURVIVING DEBT" has the meaning specified in Section 4.01(b).
--------------
"SURVIVING DEBT AGREEMENT" means any agreement or instrument setting
------------------------
forth the terms and conditions of any Surviving Debt.
"SWING LINE ADVANCE" means an advance by the Swing Line Lender to the
------------------
Borrower pursuant to Section 2.01(b).
"SWING LINE BORROWING" means a borrowing consisting of a Swing Line
--------------------
Advance made by the Swing Line Lender.
"SWING LINE COMMITMENT" means, with respect to the Swing Line Lender,
---------------------
the amount, not to exceed 15,000,000, agreed to by the Swing Line Lender and the
Borrower and consented to by the Administrative Agent and set forth in the
Register maintained by the Agent pursuant to Section 9.07(c),or, if such Lender
has entered into one or more Assignments and Acceptances with respect to the
Swing Line Commitment, the amount set forth for the Swing Line Lender in the
Register maintained by the Administrative Agent pursuant to Section 9.07(c) as
such Lender's "Swing Line Commitment", in each case as such amount may be
reduced at or prior to such time pursuant to Section 2.04.
"SWING LINE COMMITMENT COMMENCEMENT DATE" means such date as of which
---------------------------------------
a Lender shall have agreed in writing with the Borrower (with the consent of the
Administrative Agent) to act as the Swing Line Lender hereunder.
"SWING LINE FACILITY" means, at any time, the aggregate amount of the
-------------------
Swing Line Lender's Swing Line Commitments at such time.
"SWING LINE LENDER" means such Lender as shall agree in writing with
-----------------
the Borrower and with the consent of the Administrative Agent to act as the
Swing Line Lender
19
hereunder and any assignee of the Swing Line Commitment which assumes such Swing
Line Commitment in accordance with the terms of Section 9.07.
"SWING LINE NOTE" means a promissory note of the Borrower payable to
---------------
the order of the Swing Line Lender, in substantially the form of Exhibit D-2
hereto, evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Swing Line Advances made by such Lender.
"SWING LINE RESERVE AMOUNT" means, (i) at all times prior to the Swing
-------------------------
Line Commitment Commencement Date, zero, and (ii) at any time of determination
thereafter, the greater of (A) the aggregate Swing Line Commitment in effect at
such time, and (B) the aggregate principal amount of all outstanding Swing Line
Advances at such time.
"SYNTHETIC LEASE DOCUMENTS" means the Operative Documents as defined
-------------------------
in the Participation Agreement.
"SYNTHETIC LEASES" means the Lease as defined in the Participation
----------------
Agreement.
"TAXES" has the meaning specified in Section 2.10(a).
-----
"TOTAL COMMITMENT" means, with respect to each Lender Party at any
----------------
time, the aggregate of such Lender Party's Revolving Commitment at such time.
"TRADE LETTER OF CREDIT" means any Letter of Credit that is issued
----------------------
under the Letter of Credit Subfacility for the benefit of a supplier of
Inventory to the Borrower or any of its Subsidiaries to effect payment for such
Inventory the conditions to drawing under which include the presentation to the
Issuing Bank of negotiable bills of lading, invoices and related documents
sufficient, in the judgment of the Issuing Bank, to create a valid and perfected
Lien on such Inventory.
"UNREIMBURSED LETTER OF CREDIT LIABILITY" means, as of any date of
---------------------------------------
determination with respect to any Letter of Credit, the aggregate amount of all
L/C Advances which have been made by, and not reimbursed to, the Issuing Bank
under such Letter of Credit.
"UNUSED REVOLVING COMMITMENT" means, with respect to any Lender at any
---------------------------
time, (a) such Lender's Revolving Commitment at such time, minus (b) the sum of
-----
(i) the aggregate principal amount of all Revolving Advances of such Lender
outstanding at such time, plus (ii) such Lender's Pro Rata Share of the
----
aggregate Letter of Credit Obligations outstanding at such time, plus (iii) such
----
Lender's Pro Rata Share of the Swing Line Advances then outstanding.
"UNUSED SWING LINE COMMITMENT" means, with respect to the Swing Line
----------------------------
Lender at any time, the remainder of (a) such Lender's Swing Line Commitment at
such time, minus (b) the aggregate principal amount of all Swing Line Advances
-----
made by such Lender and outstanding at such time.
20
"VOTING STOCK" means capital stock issued by a corporation, or
------------
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
"WELFARE PLAN" means a welfare plan, as defined in Section 3(1) of
------------
ERISA.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle
--------------------
E of Title IV of ERISA.
"YEAR 2000 PROBLEM" has the meaning set forth in Section 5.01(v).
-----------------
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(f) ("GAAP").
----
SECTION 1.04. OTHER DEFINITIONAL PROVISIONS. References to Sections
-----------------------------
and subsections shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specified. The term "including" means including
without limitation.
ARTICLE II.
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. THE ADVANCES
------------
(A) REVOLVING ADVANCES. Each Lender severally agrees, on the terms
------------------
and conditions hereinafter set forth, to make advances (each a "REVOLVING
---------
ADVANCE") to the Borrower from time to time on any Business Day during the
-------
period from the Closing Date until the Commitment Termination Date in an amount
for each such Advance not to exceed the lesser of (i) such Lender's Unused
Revolving Commitment on such Business Day (after giving effect to any repayment
of Swing Line Advances made or to be made with the proceeds thereof pursuant to
a designation therefor set forth by the Borrower in a Notice of Borrowing for
such Borrowing or pursuant to a Notice of Borrowing given by the Administrative
Agent in accordance with Section 2.02(f)) and (ii) such Lender's Pro Rata Share
of the remainder of the Borrowing Base Amount as of such date minus the sum of
-----
(A) the then outstanding Letter of Credit Obligations and (B) the then
outstanding Swing Line Advances; provided, however, that (1) the foregoing
-------- -------
clause (ii) shall not limit any Lender's obligations under Section 2.02(f), and
(2) except with respect to a Borrowing the proceeds of which will be applied to
repay outstanding Swing Line Advances pursuant to a designation therefor set
forth by the Borrower in a Notice of Borrowing for such Borrowing or pursuant to
a Notice of Borrowing given by the Administrative Agent
21
pursuant to Section 2.02(f), the Borrower shall not request, and no Lender shall
be required to make Revolving Advances in respect of, any Borrowing if after
giving effect thereto the aggregate principal amount of all outstanding
Revolving Advances would exceed the remainder of the Borrowing Base Amount at
such time minus the sum of (A) the then outstanding Letter of Credit Obligations
-----
and (B) the Swing Line Reserve Amount. Each Revolving Borrowing shall be in an
aggregate amount of Five Million Dollars ($5,000,000) or (except in the case of
the initial Advances) an integral multiple of One Million Dollars ($1,000,000)
in excess thereof and shall consist of Revolving Advances made by the Lenders
ratably according to their respective Revolving Commitments. Within the
foregoing limits, the Borrower may borrow under this Section 2.01(a), prepay
pursuant to Section 2.05 and reborrow under this Section 2.01(a).
(B) SWING LINE ADVANCES. The Swing Line Lender agrees, on the terms
-------------------
and conditions hereinafter set forth, to make advances (each a "SWING LINE
----------
ADVANCE") to the Borrower from time to time on any Business Day during the
-------
period from the Swing Line Commitment Commencement Date until the Commitment
Termination Date in an amount not to exceed the Swing Line Lender's Unused Swing
Line Commitment on such Business Day; provided, however, that the Swing Line
-------- -------
Lender shall not make any Swing Line Advance if, after giving effect to such
Swing Line Advance, the aggregate principal amount of all outstanding Swing Line
Advances would exceed the remainder of the Borrowing Base Amount then in effect
minus the sum of (A) the aggregate amount of the Letter of Credit Obligations
-----
then outstanding, and (B) the aggregate principal amount of the Revolving
Advances then outstanding. Each Swing Line Borrowing shall consist of Swing Line
Advances made by the Swing Line Lender and shall be in an amount equal to
$1,000,000 or an integral multiple of $100,000 in excess thereof. Immediately
upon the making of each Swing Line Advance by the Swing Line Lender, the Swing
Line Lender shall be deemed to have sold and transferred to each Lender, and
each Lender shall be deemed to have purchased and received from the Swing Line
Lender, in each case irrevocably and without any further action by any party, an
undivided interest and participation in such Swing Line Advance and the
Obligations of the Borrower under this Agreement in respect thereof in an amount
equal to such Lender's Pro Rata Share of such Swing Line Advance, provided,
--------
however, that (i) no Lender shall be required to fund its participation in any
-------
such Swing Line Advance until demand therefor is made by the Administrative
Agent pursuant to Section 2.02(f)(ii) hereof, and (ii) no Lender shall be
entitled to share in any payments of principal or interest in respect of its
participation in any such Swing Line Advance except to the extent set forth in
Section 2.02(f)(ii) hereof with respect to any such participation which has been
funded by such Lender as provided therein. Within the limits of the Swing Line
Lender's Unused Swing Line Commitment in effect from time to time, the Borrower
may borrow under this Section 2.01(b), prepay pursuant to Section 2.05 and
reborrow under this Section 2.01(b).
SECTION 2.02. MAKING THE ADVANCES
-------------------
(A) INITIAL BORROWINGS. The initial Borrowings hereunder shall be
------------------
made on the Closing Date and shall be made on notice received by the
Administrative Agent from the Borrower (pursuant to a Notice of Borrowing) not
later than 9:00 a.m. (Los Angeles, California time) (or such later time as the
Administrative Agent may agree) on the Business Day
22
immediately preceding the Closing Date. Such Notice of Borrowing shall be
irrevocable upon receipt by the Administrative Agent. Upon receipt of such
notice, the Administrative Agent shall promptly give notice to each Lender (but
in no event later than 10:30 a.m. on the Closing Date). Each Lender shall,
before 11:30 a.m. (Los Angeles, California time) on the Closing Date, make
available for the account of its Applicable Lending Office to the Administrative
Agent such Lender's ratable share of such Borrowings by depositing same day
funds in the Administrative Agent's Account. Notwithstanding any contrary
provision hereof, the initial Borrowings may consist only of Base Rate Advances.
(B) SUBSEQUENT REVOLVING BORROWINGS. Each Revolving Borrowing occuring
-------------------------------
after the Closing Date shall be made on notice received by the Administrative
Agent from the Borrower (pursuant to a Notice of Borrowing) not later than 9:00
a.m. (Los Angeles, California time) (a) on the Business Day prior to the date of
such Borrowing if such Borrowing consists of Base Rate Advances, and (b) on the
third Business Day prior to the date of such Borrowing if such Borrowing
consists of Eurodollar Rate Advances. Each such Notice of Borrowing shall be
irrevocable upon receipt by the Administrative Agent and, in the case of any
Notice of Borrowing for Eurodollar Rate Advances, the Borrower shall indemnify
each Lender against any loss, cost or expense incurred by such Lender as a
result of any failure to fulfill on or before the date specified by such Notice
of Borrowing the applicable conditions set forth in this Section 2.02 or Article
IV, including, without limitation, any loss, cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as a part of such Borrowing
when such Advance, as a result of such failure, is not made on such date.
(C) REVOLVING ADVANCES BY LENDERS. If the Administrative Agent
-----------------------------
receives a Notice of Borrowing, (or if the Administrative Agent gives a Notice
of Borrowing pursuant to Section 2.02(f)) the Administrative Agent shall
promptly (and, in any event not later than 4:00 p.m. (Los Angeles, California
time) on the Business Day prior to the date of such Borrowing or, if such
Borrowing consists of Eurodollar Rate Advances, the third Business Day prior to
the date of such Borrowing) give each Lender notice of such Notice of Borrowing.
Each Lender shall, before 11:30 a.m. (Los Angeles, California time) on the date
of such Borrowing in the case of any Revolving Borrowing to be made on such
date, make available for the account of its Applicable Lending Office to the
Administrative Agent such Lender's ratable portion of such Borrowing by
depositing same day funds in the Administrative Agent's Account. Unless the
Administrative Agent shall have received written notice from a Lender prior to
the date of any Revolving Borrowing hereunder that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
ratable portion available to the Administrative Agent on the date of such
Borrowing in accordance with the terms hereof and the Administrative Agent may,
in reliance upon such assumption, but shall not be required to, make available
to or for the account of the Borrower on such date a corresponding amount. If
and to the extent that such Lender shall not have so made such ratable portion
available to the Administrative Agent and the Administrative Agent makes such
ratable portion available to the Borrower, such Lender and the Borrower, without
prejudice to any rights or remedies that the Borrower may have against such
Lender, severally agree to repay to the Administrative Agent forthwith on demand
such
23
corresponding amount together with interest thereon, for each day from the date
such amount is made available to or for the account of the Borrower until the
date such amount is repaid to the Administrative Agent, at (A) in the case of
the Borrower, the interest rate applicable at the time to the Advances
comprising such Borrowing, and (B) in the case of such Lender, the Federal Funds
Rate. If such Lender shall pay to the Administrative Agent such amount, such
amount so paid shall constitute such Lender's Advance as part of the relevant
Borrowing for purposes of this Agreement and, to the extent that the Borrower
previously paid such amount to the Administrative Agent, the Administrative
Agent will refund to the Borrower such amount so paid, but without interest.
(D) DISBURSEMENT OF REVOLVING ADVANCES. Upon fulfillment of the
----------------------------------
applicable conditions set forth in Article IV (which fulfillment the
Administrative Agent may assume in the absence of actual knowledge, or notice
received from the Borrower or the Required Lenders, to the contrary), the
Administrative Agent will make funds for any Borrowing available to the Borrower
by crediting the Borrower's Account, subject to the Administrative Agent's
-------
receipt of funds from the Lenders, and provided that the Administrative Agent
--------
shall first make a portion of such funds equal to any outstanding L/C Advance
under any Letter of Credit, and any interest accrued and unpaid thereon to and
as of such date, available to the applicable Issuing Bank for reimbursement of
such L/C Advance and payment of such interest.
(E) SWING LINE BORROWINGS. Each Swing Line Borrowing shall be made on
---------------------
notice received by the Administrative Agent and the Swing Line Lender from the
Borrower (pursuant to a Notice of Swing Line Borrowing) not later than 9:00 A.M.
(Los Angeles, California time) on the date of such Borrowing. Each such Notice
of Swing Line Borrowing shall be irrevocable upon receipt by the Administrative
Agent and the Swing Line Lender. If (i) the Administrative Agent and the Swing
Line Lender receive a Notice of Swing Line Borrowing and (ii) the applicable
conditions set forth in Article IV have been fulfilled (which fulfillment the
Administrative Agent and the Swing Line Lender may assume in the absence of
actual knowledge, or notice received from the Borrower, the Administrative Agent
or the Required Lenders, to the contrary), then the Swing Line Lender will make
funds for any Swing Line Borrowing available to the Borrower by wire transfer to
the Borrower on or before 4:00 p.m. (Los Angeles, California time) on the date
of such Swing Line Borrowing.
(F) SETTLEMENT OF SWING LINE ADVANCES. (i) The Administrative Agent
---------------------------------
may, and upon request by the Swing Line Lender in the Swing Line Lender's sole
and absolute discretion, the Administrative Agent shall, at any time and from
time to time, give to the Lenders and the Borrower a Notice of Borrowing for a
Borrowing of Revolving Advances which are Base Rate Advances on behalf of the
Borrower, in each case in an amount equal to the aggregate amount of Swing Line
Advances then owing by the Borrower (or such lesser amount as the Administrative
Agent or the Swing Line Lender shall specify), and the proceeds of which are to
be used to prepay such Swing Line Advances on the date of such Borrowing. Upon
receipt of any such Notice of Borrowing, each Lender (other than the Swing Line
Lender) shall (subject to Section 2.02(f)(iv)), before 11:30 a.m. (Los Angeles,
California time) on the Business Day following the date on which such Notice of
Borrowing is given), make available for the account of its Applicable Lending
Office to the Administrative Agent such Lender's Pro Rata Share of
24
such Borrowing by depositing same day funds in the Administrative Agent's
Account. Notwithstanding any contrary provision of this Agreement, (A) the
proceeds of any such Borrowing shall be distributed by the Administrative Agent
to the Swing Line Lender (subject to Section 2.02(f)(iv)) as a prepayment of all
or a portion of the then outstanding Swing Line Advances, and (B) the
outstanding Swing Line Advances of the Swing Line Lender, in an amount equal to
the aggregate amount of the Swing Line Advances to be prepaid on such date,
shall be deemed to be prepaid with the proceeds of a Revolving Advance made by
the Swing Line Lender and such portion of the Swing Line Advances deemed to be
so prepaid shall no longer be outstanding as Swing Line Advances but shall be
outstanding as Revolving Advances made by the Swing Line Lender.
(ii) In addition to the right of the Swing Line Lender to require a
Borrowing under Section 2.02(f)(i), the Swing Line Lender may at any time and
from time to time and in its sole and absolute discretion request (by notice to
the Administrative Agent and the Borrower) the Administrative Agent to, and upon
receipt of such request the Administrative Agent shall, make demand on each
Lender for payment of its participation in each Swing Line Advance then
outstanding, and upon receipt of any such demand each Lender shall (subject to
Section 2.02(f)(iv)) promptly fund such participation by paying to the
Administrative Agent, for the account of the Swing Line Lender (subject to
Section 2.02(f)(iv)), the amount of such participation in same day funds on the
date such request is given by the Administrative Agent to the Lenders. With
respect to each such participation in any Swing Line Advance which is funded by
any Lender, the Swing Line Lender shall promptly pay to the Administrative
Agent, and the Administrative Agent shall promptly pay to such Lender, in lawful
money of the United States and in the kind of funds so received, an amount equal
to such Lender's ratable share of all payments received by the Swing Line Lender
in respect of (A) the principal of such Swing Line Advance, and (B) interest on
such Swing Line Advance for the period from and after the date on which such
participation was funded. If any payment received by the Swing Line Lender on
account of any Swing Line Advance and distributed to any Lender as a participant
under the preceding sentence is thereafter recovered from the Swing Line Lender
in connection with any bankruptcy or insolvency proceeding relating to the
Borrower or otherwise, each Lender which received such distribution shall, upon
demand by the Swing Line Lender through the Administrative Agent, repay to the
Swing Line Lender such Lender's ratable share of the amount so recovered
together with such Lender's ratable share (according to the proportion of (1)
the amount of such Lender's required prepayment to (2) the total amount so
recovered) of any interest or other amount paid or payable by the Swing Line
Lender in respect of the total amount so recovered. The Borrower agrees that
any Lender purchasing a participation in any Swing Line Advance from the Swing
Line Lender hereunder may, to the fullest extent permitted by law, exercise all
its rights of payment with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation.
(iii) Anything contained herein to the contrary notwithstanding (but
subject to Section 2.02(f)(iv) below), the obligation of each Lender to make any
Revolving Advance pursuant to Section 2.02(f)(i) or to fund its participation in
any Swing Line Advances pursuant to Section 2.02(f)(ii) shall be absolute and
unconditional and shall not be subject to any conditions set forth in Article IV
hereof or otherwise affected by any circumstance including, without
25
limitation, (A) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender or any Loan Party; (B)
the occurrence or continuance of a Default or Event of Default; (C) any adverse
change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of any Loan Party; (D) any breach of any
Loan Document by the Borrower, any other Loan Party or any other Lender Party;
or (E) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
(iv) Notwithstanding Section 2.02(f)(iii) above, if at the time that
any Lender is required to make any Revolving Advance or fund any participation
pursuant to Section 2.02(f)(i) or (ii) above, the Borrower would not otherwise
be entitled to obtain a Borrowing as a result of the failure of any of the
conditions set forth in Article IV hereof, the obligation of each Lender to make
any such Revolving Advance or to fund any such participation with respect to any
Swing Line Advance owing to the Swing Line Lender shall be subject to the
condition that at least one of the following is true: (A) the Swing Line Lender
shall have believed in good faith that all conditions under Article IV to the
making of such Swing Line Advance were satisfied at the time such Swing Line
Advance was made, or (B) such Lender shall have had actual knowledge, by receipt
of the statements required pursuant to Section 6.03 or otherwise, that any such
condition had not been satisfied and failed to notify the Swing Line Lender and
the Administrative Agent in writing that it had no obligation to make Revolving
Advances until such condition was satisfied (which notice shall be effective as
of the date of receipt by the Swing Line Lender and the Administrative Agent),
or (C) the satisfaction of any such condition not satisfied shall have been
waived by the Required Lenders prior to or at the time such Swing Line Advance
was made. Anything contained in this Section 2.02(f) to the contrary
notwithstanding, the amount to be distributed by the Administrative Agent to the
Swing Line Lender under this Section 2.02(f) shall be reduced to the extent that
any Lender shall refuse to fund its portion of any Revolving Advance or
participation with respect to the Swing Line Lender as a result of the failure
of the conditions set forth above.
(v) The Borrower irrevocably authorizes (A) the Administrative Agent
to give any Notice of Borrowing pursuant to Section 2.02(f)(i) (with a copy to
the Borrower), (B) the Lenders to make the Revolving Advances pursuant to such
Notice of Borrowing, and (C) the Administrative Agent to distribute the proceeds
thereof as provided herein.
(G) NATURE OF LENDERS' OBLIGATIONS. The failure of any Lender to make
------------------------------
the Advance to be made by it as part of any Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Advance on the
date of such Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender on the date
of any Borrowing.
(H) REPORTS BY SWING LINE LENDER. If requested by the Administrative
----------------------------
Agent, the Swing Line Lender shall furnish to the Administrative Agent prior to
the fifth Business Day of each month (and at such other times as the
Administrative Agent may request) a written report summarizing all Swing Line
Borrowings and payments in respect thereof during the preceding month and the
aggregate outstanding principal amount of all Swing Line Advances
26
as of the last day of such month (or as of such other date as the Administrative
Agent may request).
SECTION 2.03. REPAYMENT.
---------
(A) REVOLVING ADVANCES. The Borrower shall repay to each Lender (in
------------------
accordance with the provisions of Section 2.09(a)) on the Commitment Termination
Date the aggregate principal amount of all Revolving Advances owing to such
Lender outstanding on the Commitment Termination Date.
(B) L/C ADVANCES. The Borrower shall repay each L/C Advance as
------------
provided in Section 3.03.
(C) SWING LINE ADVANCES. The Borrower shall repay to the Swing Line
-------------------
Lender the aggregate principal amount of all Swing Line Advances then
outstanding on the Commitment Termination Date.
SECTION 2.04. REDUCTION OF THE REVOLVING COMMITMENTS AND SWING LINE
-----------------------------------------------------
COMMITMENTS.
-----------
(A) OPTIONAL REDUCTIONS. The Borrower shall have the right, upon at
-------------------
least three Business Days' notice to the Administrative Agent, to terminate in
whole or reduce ratably in part the unused portions of the respective Revolving
Commitments of the Lenders; provided, however, that (i) each partial reduction
-------- -------
shall be in an amount of Five Million Dollars ($5,000,000) or any multiple of
One Million Dollars ($1,000,000) in excess thereof, and (ii) the aggregate
amount of the Revolving Commitments shall not be reduced pursuant to this
Section 2.04 to an amount less than the sum of (A) the aggregate principal
amount of all Revolving Advances then outstanding, (B) the aggregate amount of
all Letter of Credit Obligations then outstanding, and (C) the aggregate
principal amount of all Swing Line Advances then outstanding.
(B) MANDATORY REDUCTIONS. The Revolving Facility shall be
--------------------
automatically and permanently reduced on a pro rata basis on each date on which
prepayment thereof is required to be made (or would be required to be made if
any Revolving Advances were then outstanding) pursuant to Section 2.05(b)(iii)
in an amount equal to the Net Cash Proceeds received by the Borrower or any of
its Subsidiaries in the transaction giving rise to such required prepayment.
Each such reduction of the Revolving Facility shall be made ratably among the
Lenders in accordance with their Revolving Commitments.
(C) REDUCTION OF SWING LINE COMMITMENT. The Swing Line Commitment of
----------------------------------
the Swing Line Lender shall be (i) terminated automatically and simultaneously
upon any termination in whole of the Revolving Commitments, and (ii) reduced
ratably in an aggregate amount equal to the product of (i) the amount by which,
as a result of any partial reduction of the Revolving Commitments of the
Lenders, the aggregate Revolving Commitments of the Lenders are reduced below
Twenty-Five Million Dollars ($25,000,000) multiplied by (ii) 0.60.
----------
27
(D) REDUCTION OF THE LETTER OF CREDIT SUBFACILITY. The Letter of
---------------------------------------------
Credit Subfacility shall be (i) terminated automatically and simultaneously upon
any termination in whole of the Revolving Commitments, and (ii) reduced by an
amount equal to product of (i) the amount by which, as a result of any partial
reduction of the Revolving Commitments of the Lenders, the aggregate Revolving
Commitments of the Lenders are reduced below Twenty-Five Million Dollars
($25,000,000) multiplied by (ii) 0.40 (any such reduction of the Letter of
----------
Credit Subfacility to be effective automatically and simultaneously with any
such reduction of the Revolving Commitments).
SECTION 2.05. PREPAYMENTS.
-----------
(A) OPTIONAL PREPAYMENTS. The Borrower may, upon (i) prior notice to
--------------------
the Administrative Agent (which shall be given not later than 11:00 a.m. on the
day of prepayment in the case of prepayment of Revolving Advances which consist
of Base Rate Advances and three Business Days in advance in the case of
prepayment of Revolving Advances which are Eurodollar Rate Advances) or (ii)
prior notice to the Swing Line Lender (which may be given on the date of
prepayment in the case of prepayment of Swing Line Advances), in either case
stating the proposed date and aggregate principal amount of the prepayment and,
in the case of Revolving Advances, the Interest Type of Advances to be prepaid
(and if such notice is given the Borrower shall), prepay in whole or in part the
outstanding principal of Advances of such Interest Type, together with, in the
case of any prepayment of Eurodollar Rate Advances, interest thereon to the date
of such prepayment on the principal amounts prepaid (plus, in the case of
prepayment of Eurodollar Rate Advances prior to the end of the applicable
Interest Period, any additional amount for which the Borrower shall be obligated
pursuant to Section 9.04(c)); provided, however, that each partial prepayment of
-------- -------
Revolving Advances shall be in an aggregate principal amount of Five Million
Dollars ($5,000,000) or an integral multiple of One Million Dollars ($1,000,000)
in excess thereof and each partial prepayment of Swing Line Advances shall be in
an aggregate principal amount of One Million Dollars ($1,000,000) or an integral
multiple of One Hundred Thousand Dollars ($100,000) in excess thereof.
(B) MANDATORY PREPAYMENTS.
---------------------
(I) EXCESS ADVANCES. If, at any time, the then outstanding
---------------
aggregate principal amount of all Revolving Advances shall exceed either the
aggregate amount of the Revolving Commitments of the Lenders at such time or the
Borrowing Base Amount at such time, in each case minus the sum of (i) the
aggregate amount of the Letter of Credit Obligations then outstanding and (ii)
the aggregate principal amount of the Swing Line Advances then outstanding, the
Borrower shall immediately prepay, for the ratable account of the Lenders, the
outstanding principal amount of Revolving Advances in an aggregate amount equal
to such excess. If, at any time, the then outstanding aggregate amount of all
Swing Line Advances shall exceed either (i) the Swing Line Commitment of the
Swing Line Lender, or (ii) the Borrowing Base Amount then in effect minus the
-----
sum of (A) the aggregate amount of the Letter of Credit Obligations then
outstanding, and (B) the aggregate principal amount of the Revolving Advances
then outstanding, the Borrower shall thereupon prepay, for the account of the
Swing Line
28
Lender, the outstanding principal amount of Swing Line Advances in an aggregate
amount equal to such excess.
(II) INCOMPLETE SETTLEMENT. If any Lender shall for any reason
---------------------
fail to pay any amount payable by it (including the funding of any participation
in any Swing Line Advances), or fail to make any Revolving Advance to be made by
it, pursuant to Section 2.02(f), the Borrower shall, on demand by the
Administrative Agent, prepay the Swing Line Advances then outstanding in an
amount equal to such amount.
(III) NET CASH PROCEEDS. The Borrower shall, on the date of
-----------------
receipt by the Borrower or any of its Subsidiaries of the Net Cash Proceeds from
(A) the sale, lease, transfer or other disposition of any assets of the Borrower
or any of its Subsidiaries (including the sale by the Borrower or any of its
Subsidiaries of the capital stock of any of their respective Subsidiaries but
excluding (1) sales of inventory in the ordinary course of business, (2) sales
of damaged, worn or obsolete equipment to the extent the proceeds thereof are
intended to be (and are) used to purchase replacements for such equipment within
180 days or sales of damaged, worn or obsolete equipment made after the purchase
of replacements for such equipment, and (3) sales, leases, transfers and other
dispositions of assets, or a series of sales, leases, transfers and other
dispositions of related assets, which are sold, leased, transferred or otherwise
disposed of for an amount, or an aggregate amount, less than $500,000, except to
------
the extent that the aggregate of all such sales, leases, transfers, and other
dispositions in any fiscal year exceeds $5,000,000), (B) the incurrence or
issuance by the Borrower or any of its Subsidiaries of any Debt not permitted
under Section 6.02(b) (it being understood that the provisions of this Section
2.05(b)(iii) shall not be construed to permit the incurrence of Debt otherwise
prohibited by Section 6.02(b)) and (C) the sale or issuance by the Borrower or
any of its Subsidiaries of any capital stock (other than common stock of the
Borrower issued to Casino upon conversion of the Casino Note), any securities
convertible into or exchangeable for capital stock or any warrants, rights or
options to acquire capital stock, prepay an aggregate principal amount of the
outstanding Revolving Advances equal to the amount of such Net Cash Proceeds in
accordance with the provisions of Section 2.09(a).
(IV) L/C CASH COLLATERAL. If, at any time, the aggregate
-------------------
Available Amount of all Letters of Credit then outstanding exceeds the L/C
Sublimit in effect at such time, the Borrower shall immediately pay to the
Administrative Agent for deposit in the L/C Cash Collateral Account an amount
sufficient to cause the aggregate amount on deposit in such account to equal the
amount of such excess.
(V) INTEREST PAYABLE ON AMOUNTS PREPAID. All prepayments of
-----------------------------------
Eurodollar Rate Advances under this Section 2.05 shall be made together with
accrued interest to the date of such prepayment on the principal amount prepaid.
SECTION 2.06. INTEREST. The Borrower shall pay interest on the unpaid
--------
principal amount of each Advance from the date of such Advance until such
principal is paid in full at the applicable rate set forth below.
29
(A) INTEREST ON BASE RATE AND SWING LINE ADVANCES. Except to the
---------------------------------------------
extent that the Borrower shall elect to pay interest on all or any part of any
Advance made or to be made to the Borrower under Section 2.01 for any Interest
Period pursuant to subsections (b) and (c) of this Section 2.06, the Borrower
shall pay interest on the unpaid principal amount of each Advance, from the date
of such Advance until such principal amount is paid in full, payable quarterly
in arrears on the last Business Day of each March, June, September and December,
commencing December 31, 1998 and on the Commitment Termination Date, at a
fluctuating interest rate per annum equal, subject to Section 2.06(d), to the
sum of the Base Rate in effect from time to time plus the Applicable Margin for
----
Base Rate Advances in effect from time to time.
(B) INTEREST PERIODS FOR EURODOLLAR RATE ADVANCES. The Borrower may,
---------------------------------------------
pursuant to Section 2.06(c), elect to have the interest on the principal amount
of all or any portion of any Advances made or to be made to the Borrower under
Section 2.01, in each case ratably according to the respective outstanding
principal amounts of Advances owing to each Lender (each such principal amount
owing to a Lender as to which such election has been made being a "EURODOLLAR
----------
RATE ADVANCE" owing to such Lender) determined and payable for a specified
------------
period (an "INTEREST PERIOD" for such Eurodollar Rate Advance) in accordance
---------------
with subsection (c) below, provided, however, that the Borrower may not (i) make
-------- -------
any such election with respect to any Swing Line Advances, or (ii) have more
than four (4) Eurodollar Rate Advances owing to any Lender outstanding at any
one time. Each Interest Period shall be one, two, three, or six months, at the
Borrower's election pursuant to subsection (c) below, provided, however, that:
-------- -------
(i) the first day of an Interest Period for any Eurodollar Rate
Advance shall be either the last day of any then current Interest Period
for such Advance or, if there shall be no then current Interest Period for
such Advance, any Business Day;
(ii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding Business
Day; provided, however, that if such extension would cause the last day of
-------- -------
such Interest Period to occur in the next following month, the last day of
such Interest Period shall occur on the next preceding Business Day; and
(iii) whenever the first day of any Interest Period occurs on a
day of the month for which there is no numerically corresponding day in the
calendar month that succeeds such initial calendar month by the number of
months equal to the number of months of such Interest Period, such Interest
Period shall end on the last Business Day of such succeeding calendar
month.
(C) INTEREST ON EURODOLLAR RATE ADVANCES. The Borrower may from time
------------------------------------
to time, on the condition that no Event of Default has occurred and is
continuing, and subject to the provisions of Sections 2.06(b) and 2.06(e), elect
to pay interest on all or any portion of any Advances during any Interest Period
therefor at a rate per annum equal to the sum of the Eurodollar Rate for such
Interest Period for such Advances plus the Applicable Margin for
30
Eurodollar Rate Advances in effect from time to time, by notice, specifying the
amount of the Advances as to which such election is made (which amount shall
aggregate at least Five Million Dollars ($5,000,000) or any multiple of One
Million Dollars ($1,000,000) in excess thereof) and the first day and duration
of such Interest Period, received by the Administrative Agent before 9:00 a.m.
(Los Angeles, California time) three Business Days prior to the first day of
such Interest Period. If the Borrower has made such election for Eurodollar Rate
Advances for any Interest Period, the Borrower shall pay interest on the unpaid
principal amount of such Eurodollar Rate Advances during such Interest Period,
payable in arrears on the last day of such Interest Period and, in the case of
any Interest Period which is longer than three months, on each three month
anniversary of the first day of such Interest Period, in each case at a rate
equal, subject to Section 2.06(d), to the sum of the Eurodollar Rate for such
Interest Period for such Eurodollar Rate Advances plus the Applicable Margin for
Eurodollar Rate Advances in effect from time to time during such Interest
Period. On the last day of each Interest Period for any Eurodollar Rate Advance,
the unpaid principal balance thereof shall automatically become and bear
interest as a Base Rate Advance, except to the extent that the Borrower has
elected to pay interest on all or any portion of such amount for a new Interest
Period commencing on such day in accordance with this Section 2.06(c). Each
notice by the Borrower under this Section 2.06(c) shall be irrevocable upon
receipt by the Administrative Agent, and the Borrower shall indemnify each
Lender against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified by such notice the
applicable conditions set forth in this Section 2.06(c) or Article IV,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund any such Eurodollar Rate Advance when such Eurodollar Rate
Advance, as a result of such failure, is not made or does not become effective.
(D) DEFAULT INTEREST. Upon the occurrence and during the continuance
----------------
of an Event of Default, the Borrower shall, at the dates set forth herein for
the payment of interest and upon demand, (i) pay interest on all Base Rate
Advances and Swing Line Advances and any other amounts owing hereunder not paid
when due (other than then outstanding Eurodollar Rate Advances) at a rate per
annum (the "DEFAULT RATE") equal at all times to the rate otherwise applicable
------------
to Base Rate Advances plus 2.00% per annum, and (ii) pay interest on each then
----
outstanding Eurodollar Rate Advance at a rate per annum equal at all times to
the rate otherwise applicable to such Eurodollar Rate Advance plus 2.00% per
----
annum.
(E) SUSPENSION OF EURODOLLAR RATE ADVANCES.
--------------------------------------
(I) ILLEGALITY. Notwithstanding any other provision of this
----------
Agreement, if the introduction of or any change in or in the interpretation
of any law or regulation shall make it unlawful, or any central bank or
other governmental authority shall assert that it is unlawful, for any
Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to continue to fund or
maintain Eurodollar Rate Advances hereunder, then, on notice thereof and
demand therefor by such Lender to the Borrower through the Administrative
Agent, (i) each Eurodollar Rate Advance will automatically, upon such
demand, Convert into a Base Rate Advance and (ii) the obligation of the
Lenders to make, or to Convert Advances
31
into, Eurodollar Rate Advances shall be suspended until the Administrative
Agent shall notify the Borrower that such Lender has determined that the
circumstances causing such suspension no longer exist; provided, however,
-------- -------
that, before making any such demand, such Lender agrees to use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Eurodollar Lending Office if the
making of such a designation would allow such Lender or its Eurodollar
Lending Office to continue to perform its obligations to make Eurodollar
Rate Advances or to continue to fund or maintain Eurodollar Rate Advances
and would not, in the judgment of such Lender, be otherwise disadvantageous
to such Lender.
(II) OTHER CIRCUMSTANCES. If, with respect to any Eurodollar
-------------------
Rate Advances, (A) the Administrative Agent shall determine in good faith
(which determination shall be conclusive) that the Eurodollar Rate cannot
be determined in accordance with the definition thereof, or (B) Lenders
owed at least 50% of the then aggregate unpaid principal amount thereof
notify the Administrative Agent that the Eurodollar Rate for any Interest
Period for such Advances will not adequately reflect the cost to such
Lenders of making, funding or maintaining their Eurodollar Rate Advances
for such Interest Period, the Administrative Agent shall forthwith so
notify the Borrower and the Lenders, whereupon (i) each such Eurodollar
Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance and (ii) the
obligation of the Lenders to make, or to Convert Advances into, Eurodollar
Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower that such Lenders have determined that the
circumstances causing such suspension no longer exist.
(III) SUSPENSION ON EVENT OF DEFAULT. Upon the occurrence and
------------------------------
during the continuance of any Event of Default, (i) each Eurodollar Rate
Advance will automatically, on the last day of the then existing Interest
Period therefor, convert into a Base Rate Advance and (ii) the obligation
of the Lenders to make, or to convert Advances into, Eurodollar Rate
Advances shall be suspended.
SECTION 2.07. FEES.
----
(A) COMMITMENT FEES. The Borrower agrees to pay to the Administrative
---------------
Agent a commitment fee on the average daily amount of each Lender's Revolving
Commitment less the sum of (i) Revolving Advances made by such Lender and
----
outstanding from time to time, (ii) such Lender's Pro Rata Share of the
aggregate Letter of Credit Obligations outstanding from time to time, and (iii)
in the case of the Swing Line Lender only, the outstanding amount of any Swing
Line Advances, for the account of such Lender, from the Closing Date in the case
of each Initial Lender and from the effective date specified in the Assignment
and Acceptance pursuant to which it became a Lender in the case of each other
Lender until the Commitment Termination Date, at the rate per annum equal to the
Commitment Fee Percentage in effect from time to time, payable in arrears on the
last Business Day of each March, June, September and December, commencing
December 31, 1998 and, and on the Commitment Termination Date.
32
(B) AGENT'S FEES. The Borrower agrees to pay to each Agent, for their
------------
own respective account, (i) the fees in the amounts and at the times set forth
in the letter dated September 18, 1998 from the Agents to the Borrower, and
agreed to and accepted by the Borrower on September 18, 1998, and (ii) such
other fees as may from time to time be agreed between the Borrower and such
Agent.
(C) ABSOLUTE OBLIGATION. The Borrower's obligation hereunder to pay
-------------------
the fees referred to in this Section 2.07 shall be absolute and unconditional
and shall survive the making and repayment of Advances, the termination of all
Letter of Credit Obligations and the termination of this Agreement. All fees
which are due or become due pursuant to this Section 2.07 are nonrefundable.
SECTION 2.08. INCREASED COSTS, ETC.
--------------------
(A) INCREASED COSTS. If, due to either (i) the introduction of or any
---------------
change in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender Party of agreeing to make or of making,
funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of
issuing or maintaining Letters of Credit (or of agreeing to purchase or
purchasing participations therein) or of agreeing to make or of making or
maintaining L/C Advances (or of agreeing to purchase or purchasing
participations therein), then the Borrower shall from time to time, upon demand
by such Lender Party (with a copy of such demand to the Administrative Agent),
pay to the Administrative Agent for the account of such Lender Party additional
amounts sufficient to compensate such Lender Party for such increased cost;
provided, however, that, before making any such demand, each Lender Party agrees
-------- -------
to use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, such increased cost and would not, in the reasonable judgment of such Lender
Party, be otherwise disadvantageous to such Lender Party. A certificate as to
the amount of such increased cost, submitted to the Borrower by such Lender
Party, shall be conclusive and binding for all purposes, absent manifest error.
(B) CAPITAL REQUIREMENTS. If, due to either (i) the introduction of
--------------------
or any change in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the amount of capital required or expected to be maintained by
such Lender Party or any corporation controlling such Lender Party as a result
of or based upon the existence of such Lender Party's commitment to lend or to
issue or purchase participations in Letters of Credit hereunder and other
commitments of such type or the issuance or maintenance of the Letters of Credit
(or similar contingent obligations), then, upon demand by such Lender Party
(with a copy of such demand to the Administrative Agent), the Borrower shall pay
to the Administrative Agent for the account of such Lender Party, from time to
time as specified by such Lender Party, additional amounts sufficient to
compensate such Lender Party in the light of such circumstances, to the extent
that such Lender Party reasonably
33
determines such increase in capital to be allocable to the existence of such
Lender Party's commitment to lend or to issue Letters of Credit hereunder or to
the issuance or maintenance of any Letters of Credit. A certificate as to such
amounts submitted to the Borrower by such Lender Party, shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 2.09. PAYMENTS AND COMPUTATIONS.
-------------------------
(A) PAYMENTS BY BORROWER. The Borrower shall make each payment
--------------------
hereunder and under any other Loan Document to which it is a party, irrespective
of and without condition or deduction for any counterclaim, defense, recoupment
or setoff, in lawful money of the United States and in same day funds delivered
to the Administrative Agent not later than 10:00 a.m. (Los Angeles, California
time) on the day when due by deposit of such funds to the Administrative Agent's
Account. Any payment so delivered to the Administrative Agent after 10:00 a.m.
(Los Angeles, California time) on any Business Day, or on any day which is not a
Business Day, shall be deemed received by the Administrative Agent on the next
succeeding Business Day. The Administrative Agent will promptly after receipt of
each payment cause to be distributed like funds relating to the payment of
principal, interest, commitment fees or letter of credit fees ratably to each
Lender for the account of its Applicable Lending Office, and like funds relating
to the payment of any other amount payable to any Lender or any Issuing Bank
(including payments with respect to Letters of Credit and payments for the
account of any Lender under Sections 2.08, 2.10 or 9.04(c)) to such Lender for
the account of its Applicable Lending Office or to such Issuing Bank, in each
case to be applied in accordance with, and subject to, the terms of this
Agreement, including Section 2.09(e) below. Upon its acceptance of an Assignment
and Acceptance and recording of the information contained therein in the
Register pursuant to Section 9.07(c), from and after the effective date
specified in such Assignment and Acceptance, the Administrative Agent shall make
all payments hereunder and under any other Loan Document in respect of the
interest assigned thereby to the Lender assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(B) COMPUTATIONS. All computations of interest in respect of Base
------------
Rate Advances (and in respect of any other amount payable hereunder other than
interest in respect of Eurodollar Rate Advances and Letter of Credit fees and
commissions and all computations in respect of commitment fees) shall be made by
the Administrative Agent on the basis of a year of 365 days and all computations
of interest in respect of Eurodollar Rate Advances and all computations in
respect of Letter of Credit fees and commissions and all computations in respect
of commitment fees shall be made by the Administrative Agent on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable; provided that if any Advance is repaid on the same
--------
day on which it is made, one day's interest shall be paid on such Advance. Each
determination by the Administrative Agent of an interest rate, fee, commission
or discount rate hereunder shall be conclusive and binding for all purposes,
absent manifest error.
34
(C) PAYMENTS ASSUMED. Unless the Administrative Agent shall have
----------------
received notice from the Borrower prior to the date on which any payment is due
to the Lenders or any Issuing Bank hereunder that the Borrower will not make
such payment in full, the Administrative Agent may assume that the Borrower has
made such payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance upon such assumption, but shall not be
required to, cause to be distributed to each Lender or such Issuing Bank on such
due date an amount equal to the amount then due to such Lender or such Issuing
Bank. If and to the extent that the Borrower shall not have so made such payment
in full to the Administrative Agent, each Lender and Issuing Bank shall repay to
the Administrative Agent forthwith on demand such amount distributed to such
Lender or Issuing Bank together with interest thereon, for each day from the
date such amount is distributed to such Lender or Issuing Bank until the date
such Lender or Issuing Bank repays such amount to the Administrative Agent, at
the Federal Funds Rate.
(D) APPLICATION OF PAYMENTS SPECIFIED BY THE BORROWER. Except as
-------------------------------------------------
otherwise specified herein, so long as no Event of Default has occurred and is
continuing, all payments shall be applied as instructed by the Borrower if such
instructions are received by the Administrative Agent prior to or
contemporaneously with receipt of funds therefor.
(E) APPLICATION OF PAYMENTS NOT OTHERWISE SPECIFIED. If the
-----------------------------------------------
Administrative Agent receives funds for application to the Advances or any
Letter of Credit Obligations or other Obligations of the Borrower under the Loan
Documents under circumstances for which the Loan Documents do not specify the
Advances or the Facility or the Obligations to which, or the manner in which,
such funds are to be applied, the Administrative Agent may elect to distribute
such funds first, to the Issuing Banks ratably in payment of the principal of
-----
and interest on any outstanding L/C Advances, second, to the payment of the
------
outstanding Swing Line Advances and interest thereon, third, to each Lender
-----
ratably in accordance with such Lender's proportionate share of all Advances
(other than Swing Line Advances) then outstanding, in repayment or prepayment of
such of the outstanding Advances (other than Swing Line Advances), and for
application to such principal installments, as the Administrative Agent may
direct, and thereafter ratably to the Lenders in repayment or prepayment of any
other Obligations of the Borrower then outstanding under the Loan Documents as
the Administrative Agent shall direct, provided that if an Event of Default has
--------
occurred and is continuing and the Revolving Commitments of the Lenders and the
Swing Line Commitments of the Swing Line Lender have been terminated in full,
the Administrative Agent shall distribute any payments and any proceeds of any
collection, sale or other realization or liquidation of any Collateral first, to
-----
the payment of all costs and expenses of the Administrative Agent under the Loan
Documents, second, to the Issuing Banks ratably in payment of the principal of
------
and interest on any outstanding L/C Advances, third, to the payment of the
-----
outstanding Swing Line Advances and interest thereon, and fourth, to each Lender
------
ratably in accordance with such Lender's proportionate share of the principal
amount of all Advances (other than Swing Line Advances) and Letter of Credit
Obligations then outstanding, in payment or prepayment of such Obligations owed
to such Lender under the Loan Documents, and for application to such principal
installments (if applicable) as the Administrative Agent shall direct.
35
(F) PAYMENTS ON BUSINESS DAYS. Whenever any payment hereunder or
-------------------------
under any other Loan Document shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest and commitment and other fees; provided, however, if such
-------- -------
extension would cause payment of interest on or principal of any Eurodollar Rate
Advance to be made in the next following month, such payment shall be made on
the immediately preceding Business Day.
(G) PAYMENTS FROM BORROWER'S ACCOUNTS. The Borrower hereby authorizes
---------------------------------
each Lender, if and to the extent payment owed to such Lender is not made when
due hereunder or under the Note(s) held by such Lender, to charge from time to
time against any or all of the Borrower's accounts with such Lender any amount
so due.
(H) CERTAIN TERMS. The terms "pay", "paid" or "payment" under this
-------------
Agreement shall include prepay, prepaid or prepayment, respectively, under this
Agreement, and the term "due" under this Agreement shall include due by reason
of a mandatory prepayment (including upon an actual or deemed entry of an order
for relief with respect to the Borrower or any Guarantor under the Federal
Bankruptcy Code or upon acceleration).
SECTION 2.10. TAXES
-----
(A) WITHHOLDING TAXES. Any and all payments by the Borrower hereunder
-----------------
or under the Notes shall be made, in accordance with Section 2.09, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender Party and the Administrative
---------
Agent, net income taxes that are imposed by the United States and franchise
taxes and net income taxes that are imposed on such Lender Party or the
Administrative Agent by the state or foreign jurisdiction under the laws of
which such Lender Party or the Administrative Agent (as the case may be) is
organized or any political subdivision thereof and, in the case of each Lender
Party, franchise taxes and net income taxes that are imposed on such Lender
Party by the state or foreign jurisdiction of such Lender Party's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "TAXES"). If the Borrower shall be required by law to
-----
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender Party or the Administrative Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.10) such Lender Party or the Administrative Agent (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 taxation authority
or other authority in accordance with applicable law.
(B) OTHER TAXES. In addition, the Borrower shall pay any present or
-----------
future stamp, documentary, excise, property or similar taxes, charges or levies
that arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, or
36
otherwise with respect to, this Agreement or the Notes (hereinafter referred
to as "OTHER TAXES").
-----------
(C) INDEMNIFICATION. The Borrower shall indemnify each Lender Party
---------------
and the Administrative Agent for the full amount of Taxes and Other Taxes, and
for the full amount of taxes imposed by any jurisdiction on amounts payable
under this Section 2.10, paid by such Lender Party or the Administrative Agent
(as the case may be) and any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender Party or
the Administrative Agent (as the case may be) makes written demand therefor.
(D) EVIDENCE OF PAYMENT. Within 30 days after the date of any payment
-------------------
of Taxes, the Borrower shall furnish to the Administrative Agent, at its address
referred to in Section 9.02, the original receipt of payment thereof or a
certified copy of such receipt. In the case of any payment hereunder or under
the Notes by the Borrower through an account or branch outside the United States
or on behalf of the Borrower by a payor that is not a United States person, if
the Borrower determines that no Taxes are payable in respect thereof, the
Borrower shall furnish, or shall cause such payor to furnish, to the
Administrative Agent, at such address, an opinion of counsel acceptable to the
Administrative Agent stating that such payment is exempt from Taxes. For
purposes of this subsection (d) and subsection (e), the terms "UNITED STATES"
-------------
and "UNITED STATES PERSON" shall have the meanings specified in Section 7701 of
--------------------
the Internal Revenue Code.
(E) FOREIGN LENDERS AND ISSUING BANKS. Each Lender Party organized
---------------------------------
under the laws of a jurisdiction outside the United States shall, on or prior to
the date of its execution and delivery of this Agreement in the case of each
Initial Lender, and on the date of the Assignment and Acceptance pursuant to
which it became a Lender Party in the case of each other Lender Party, and from
time to time thereafter upon the reasonable request in writing by the Borrower
or the Administrative Agent (but only so long thereafter as such Lender Party
remains lawfully able to do so), provide the Administrative Agent and the
Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Lender Party is exempt from or is entitled to a reduced rate of United States
withholding tax on payments under this Agreement or the Notes. If the form
provided by a Lender Party at the time such Lender Party first becomes a party
to this Agreement indicates a United States interest withholding tax rate in
excess of zero, withholding tax at such rate shall be considered excluded from
Taxes unless and until such Lender Party provides the appropriate form
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment and Acceptance
-------- -------
pursuant to which a Lender Party assignee becomes a party to this Agreement, the
Lender Party assignor was entitled to payments under subsection (a) in respect
of United States withholding tax with respect to interest paid at such date,
then, to such extent, the term Taxes shall include (in addition to withholding
taxes that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Lender Party assignee on such date. If any form or document referred to in this
Section 2.10(e) requires the disclosure of
37
of information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224, that the Lender Party reasonably considers to be confidential, the Lender
Party shall give notice thereof to the Borrower and shall not be obligated to
include in such form or document such confidential information.
(F) FAILURE TO PROVIDE FORMS. For any period with respect to which a
------------------------
Lender Party has failed to provide the Borrower with the appropriate form
described in Section 2.10(e) (other than if such failure is due to a change in
------ ----
law occurring after the date on which a form originally was required to be
provided or if such form otherwise is not required under Section 2.10(e)), such
Lender Party shall not be entitled to indemnification under Section 2.10(a) or
Section 2.10(c) with respect to Taxes imposed by the United States; provided,
--------
however, that should a Lender Party become subject to Taxes because of its
-------
failure to deliver a form required hereunder, the Borrower shall take such steps
as such Lender Party shall reasonably request to assist such Lender Party to
recover such Taxes.
(G) CHANGE OF APPLICABLE LENDING OFFICE. Any Lender Party claiming
-----------------------------------
any additional amounts payable pursuant to this Section 2.10 shall use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Eurodollar Lending Office if the
making of such a change would avoid the need for, or reduce the amount of, any
such additional amounts that may thereafter accrue and would not, in the
reasonable judgment of such Lender Party, be otherwise disadvantageous to such
Lender Party.
(H) SURVIVAL. Without prejudice to the survival of any other
--------
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.10 shall survive the payment in full of
principal and interest hereunder and under the Notes.
SECTION 2.11. SHARING OF PAYMENTS, ETC. If any Lender Party shall
------------------------
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) (a) on account of Obligations
due and payable to such Lender Party hereunder and under the Notes at such time
in excess of its ratable share (according to the proportion of (i) the amount of
such Obligations due and payable to such Lender Party at such time to (ii) the
aggregate amount of the Obligations due and payable to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations due and payable to all Lender Parties hereunder and under the Notes
at such time obtained by all the Lender Parties at such time or (b) on account
of Obligations owing (but not due and payable) to such Lender Party hereunder
and under the Notes at such time in excess of its ratable share (according to
the proportion of (i) the amount of such Obligations owing to such Lender Party
at such time to (ii) the aggregate amount of the Obligations owing (but not due
and payable) to all Lender Parties hereunder and under the Notes at such time)
of payments on account of the Obligations owing (but not due and payable) to all
Lender Parties hereunder and under the Notes at such time obtained by all the
Lender Parties at such time, such Lender Party shall forthwith purchase from the
other Lender Parties such participations in the Obligations due and payable or
owing to them, as the case may be, as shall be necessary to cause such
purchasing Lender Party to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such
-------- -------
38
excess payment is thereafter recovered from such purchasing Lender Party, such
purchase from each other Lender Party shall be rescinded and such other Lender
Party shall repay to the purchasing Lender Party the purchase price to the
extent of such other Lender Party's ratable share (according to the proportion
of (i) the purchase price paid to such Lender Party to (ii) the aggregate
purchase price paid to all Lender Parties) of such recovery together with an
amount equal to such Lender Party's ratable share (according to the proportion
of (i) the amount of such other Lender Party's required repayment to (ii) the
total amount so recovered from the purchasing Lender Party) of any interest or
other amount paid or payable by the purchasing Lender Party in respect of the
total amount so recovered. The Borrower agrees that any Lender Party so
purchasing a participation from another Lender Party pursuant to this Section
2.11 may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender Party were the direct creditor of the Borrower in the
amount of such participation.
SECTION 2.12. USE OF PROCEEDS. The proceeds of the Advances shall be
---------------
available (and the Borrower agrees that it shall use such proceeds) to repay in
full all amounts outstanding under the Existing Credit Agreement and the
Existing Bridge Loan, to pay transaction fees and expenses, to provide working
capital for the Borrower and its Subsidiaries and, subject to the provisions of
this Agreement and the other Loan Documents, for other general corporate
purposes of the Borrower and its Subsidiaries.
SECTION 2.13. EVIDENCE OF DEBT.
----------------
(A) MAINTENANCE OF ACCOUNTS BY LENDERS. Each Lender shall maintain in
----------------------------------
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(B) MAINTENANCE OF ACCOUNTS BY AGENT. The Register maintained by the
--------------------------------
Administrative Agent pursuant to Section 9.07(c) shall include a control
account, and a subsidiary account for each Lender Party, in which accounts
(taken together) shall be recorded (i) the date and amount of each Borrowing
made hereunder, the Interest Type of the Advances comprising such Borrowing and
any Interest Period applicable thereto, (ii) the terms of each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender Party hereunder, and (iv) the amount of any sum received by the
Administrative Agent from the Borrower hereunder and each Lender Party's share
thereof. The entries made in the Register shall be conclusive and binding for
all purposes, absent manifest error.
ARTICLE III.
AMOUNTS AND TERMS OF LETTERS OF CREDIT
SECTION 3.01. THE LETTER OF CREDIT SUBFACILITY. The Borrower may
--------------------------------
request any Lender, on the terms and conditions hereinafter set forth, to Issue,
and any such Lender may, if in its sole discretion it elects to do so, and the
L/C Bank shall, if no other Lender elects to do so,
39
Issue Letters of Credit for the account of the Borrower from time to time on any
Business Day during the period after the Closing Date until the Commitment
Termination Date (a) in an aggregate Available Amount for all Letters of Credit
(including the Existing Letters of Credit) not to exceed at any time Ten Million
Dollars ($10,000,000) (the "LETTER OF CREDIT SUBFACILITY"), and (b) in an
----------------------------
Available Amount for each such Letter of Credit not to exceed the Unused
Revolving Commitments of the Lenders on such Business Day. The L/C Bank and the
Issuing Banks shall not be obligated to issue a Letter of Credit if such
Issuance would cause the sum of the Revolving Advances, the Swing Line Reserve
Amount and the Letter of Credit Obligations then outstanding to exceed the
Borrowing Base Amount. No Letter of Credit shall (i) have a face amount of less
than $20,000, or (ii) have an expiration date (including all rights of the
Borrower or the beneficiary to require renewal) later than the earlier of 60
days before the Commitment Termination Date, one year after the date of issuance
thereof and, in the case of a Trade Letter of Credit, 60 days after the date of
issuance thereof. As of the Closing Date, each Existing Letter of Credit shall
constitute, for all purposes of this Agreement and the other Loan Documents, a
Letter of Credit issued and outstanding hereunder and shall, for purposes of
Section 3.05, be deemed to be Issued hereunder on the Closing Date. Within the
limits of the Letter of Credit Subfacility, and subject to the limits referred
to above, the Borrower may request the Issuance of one or more Letters of Credit
under this Section 3.01, repay amounts due resulting from L/C Advances
thereunder pursuant to Section 3.03, and request the Issuance of one or more
additional Letters of Credit under this Section 3.01.
SECTION 3.02. ISSUANCE OF LETTERS OF CREDIT.
-----------------------------
(A) NOTICE OF ISSUANCE. Each Letter of Credit shall be Issued
------------------
pursuant to a Notice of Issuance, which must be received by the Administrative
Agent and the Issuing Bank not later than 9:00 a.m. (Los Angeles, California
time) on the third Business Day prior to the date of the proposed Issuance of
such Letter of Credit (or such shorter period as may be acceptable to the
applicable Issuing Bank). Each such Notice of Issuance shall specify the
requested (i) date of such Issuance (which shall be a Business Day), (ii)
Available Amount of such Letter of Credit, (iii) expiration date of such Letter
of Credit, (iv) name and address of the beneficiary of such Letter of Credit,
and (v) form of such Letter of Credit, and shall be accompanied by such
customary application and agreement for letter of credit of the Issuing Bank (a
"LETTER OF CREDIT AGREEMENT") as the Issuing Bank may specify to the Borrower
--------------------------
for use in connection with such requested Letter of Credit.
(B) CONDITIONS TO ISSUANCE. If (i) the requested form of such Letter
----------------------
of Credit is acceptable to the Administrative Agent and the Issuing Bank in the
reasonable discretion of each, (ii) in the case of any Issuing Bank other than
the L/C Bank, such Issuing Bank elects in its sole discretion to Issue the
requested Letter of Credit, and (iii) such Issuing Bank has not received notice
from the Administrative Agent or the Required Lenders that the Issuance of such
Letter of Credit is not authorized because such Issuance would not comply with
the requirements of clause (a) or (b) of Section 3.01 or one or more of the
conditions set forth in Section 4.02 has not been satisfied, then such Issuing
Bank will, upon fulfillment of the applicable conditions set forth in Section
4.02 (which fulfillment such Issuing Bank may assume in the absence of actual
knowledge, or notice received from the Borrower, the Administrative Agent or the
Required
40
Lenders, to the contrary) and subject to the provisions of this Article III,
make such Letter of Credit available to the Borrower at its office referred to
in Section 9.02 or as otherwise agreed upon with the Borrower in connection with
such Issuance. In the event and to the extent that the provisions of any Letter
of Credit Agreement shall conflict with this Agreement, the provisions of this
Agreement shall govern.
(C) REPORTS BY ISSUING BANKS. Each Issuing Bank shall furnish to the
------------------------
Administrative Agent (i) prior to the issuance of any Letter of Credit, notice
of the Issuance, amount and expiration date thereof, (ii) concurrently with the
making of any L/C Advance, notice of the amount thereof, (iii) prior to the
fifth Business Day of each month a written report summarizing Issuance and
expiration dates of Letters of Credit Issued by such Issuing Bank during the
preceding month and L/C Advances during such month under all Letters of Credit
Issued by such Issuing Bank, and (iv) two Business Days prior to the last
Business Day of each March, June, September and December, a written report
setting forth the average daily aggregate Available Amount during the preceding
calendar quarter of all Letters of Credit Issued by such Issuing Bank.
SECTION 3.03. DRAWING AND REIMBURSEMENT. The Borrower agrees to
-------------------------
reimburse the Issuing Bank under each Letter of Credit, within one Business Day
after it has notice of any L/C Advance by such Issuing Bank thereunder, for the
principal amount of such L/C Advance, and shall pay to such Issuing Bank, on
demand, interest on the unreimbursed principal of such L/C Advance at a rate per
annum equal to (a) from the date of such L/C Advance to the first Business Day
after notice thereof has been given to the Borrower, the rate applicable to Base
Rate Advances in effect from time to time, and (b) from and after such first
Business Day, the Default Rate. If the Borrower shall fail to so reimburse the
Issuing Bank within one Business Day after the Borrower receives notice that any
such L/C Advance has been made, then upon demand by the Issuing Bank, and
whether or not a Default has occurred and is continuing or any conditions set
forth in Section 4.02 are satisfied, each Lender shall purchase from such
Issuing Bank, and such Issuing Bank shall sell and assign to each Lender, such
Lender's Pro Rata Share of such outstanding L/C Advance as of the date of such
purchase, by making available for the account of such Issuing Bank, by deposit
to the Administrative Agent's Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such L/C Advance to be purchased
by such Lender. Each Lender agrees to purchase its Pro Rata Share of an
outstanding L/C Advance on (A) the Business Day on which demand therefor is made
by the Issuing Bank which made such L/C Advance, provided notice of such demand
is given not later than 12:00 noon (Los Angeles, California time) on such
Business Day, or (B) the first Business Day next succeeding such demand if
notice of such demand is given after such time. Upon any such assignment by an
Issuing Bank to any Lender of a portion of an L/C Advance, such Issuing Bank
represents and warrants to such Lender that such Issuing Bank is the legal and
beneficial owner of such interest being assigned by it, but makes no other
representation or warranty and assumes no responsibility with respect to such
L/C Advance, the Loan Documents or any Loan Party.
SECTION 3.04. OBLIGATIONS ABSOLUTE. The Obligations of the Borrower
--------------------
under this Agreement, any Letter of Credit Agreement and any other agreement or
instrument relating
41
to any Letter of Credit shall be unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement, such Letter of
Credit Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances (it being understood
that any such payment by the Borrower is without prejudice to, and does not
constitute a waiver of, any rights the Borrower might have or might acquire as a
result of the payment by any Issuing Bank of any draft or the reimbursement by
the Borrower thereof):
(a) any lack of validity or enforceability of this Agreement, any
Letter of Credit Agreement, any Letter of Credit or any other agreement or
instrument relating thereto (this Agreement and all of the other foregoing
being collectively referred to herein as the "L/C RELATED DOCUMENTS");
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower in respect of
any L/C Related Document or any other amendment or waiver of or any consent
to departure from all or any of the L/C Related Documents;
(c) the existence of any claim, set-off, defense or other right that
the Borrower or any of its Subsidiaries may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any Persons for
whom any such beneficiary or any such transferee may be acting), any
Issuing Bank or any other Person, whether in connection with the
transactions contemplated by the L/C Related Documents or any unrelated
transaction;
(d) any statement or any other document presented under a 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;
(e) payment by any Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit, or payment by the Issuing Bank under a
Letter of Credit in any other circumstances in which conditions to payment
are not met;
(f) any exchange, release or non-perfection of any Collateral or other
collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Obligations of the
Borrower in respect of the L/C Related Documents; or
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a Guarantor.
SECTION 3.05. LETTER OF CREDIT COMPENSATION.
-----------------------------
42
(a) The Borrower shall pay to the Administrative Agent:
(i) for the account of the Issuing Bank which Issues a Letter of
Credit, an issuance fee in an amount equal to 0.25% per annum of the
average daily Available Amount of such Letter of Credit outstanding from
time to time: and
(ii) for the account of each Lender, a letter of credit fee with
respect to each Letter of Credit, in each case in an amount equal to
(A) with respect to each Standby Letter of Credit, a rate
per annum equal to the Applicable Margin for Eurodollar Rate Advances
in effect from time to time on such Lender's Pro Rata Share of the
average daily Available Amount of such Letter of Credit outstanding
from time to time;
(B) with respect to each Trade Letter of Credit, 0.25% of
the amount of such Lender's Pro Rata Share of the Available Amount of
such Letter of Credit as of the date of Issuance thereof.
The letter of credit and issuance fees payable under this Section 3.05(a) shall
be payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing December 31, 1998, and on the Commitment
Termination Date except that the letter of credit fee payable under Section
3.05(a)(ii)(B) shall be payable upon issuance of the applicable Letter of
Credit. For purposes of computing any fees under this Section 3.05(a), the
determination of the maximum amount available to be drawn under a Letter of
Credit at any time shall assume strict compliance with all conditions for
drawing. Any fees paid pursuant to this Section 3.05(a) are nonrefundable.
(b) The Borrower shall pay to each Issuing Bank, for its own account
and on demand, such other commissions, issuance fees, transfer fees and
other fees, charges and expenses in connection with the Issuance,
amendment, transfer, cancellation or administration of each Letter of
Credit as the Borrower and such Issuing Bank shall agree; provided that in
no event shall any Issuing Bank require, after giving effect to the amounts
payable to it pursuant to Section 3.05(a) above (in the case of the
Issuance of any Letter of Credit), more than the standard fees, charges and
expenses which it normally charges in connection with such matters.
SECTION 3.06. USE OF LETTERS OF CREDIT. Any Letters of Credit Issued
------------------------
hereunder shall be used solely to support Obligations of the Borrower and its
Subsidiaries not prohibited hereunder.
ARTICLE IV.
CONDITIONS OF LENDING
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL BORROWING. The
-----------------------------------------
obligation of each Lender Party to make an Advance on the occasion of the
initial Borrowing is subject to the following conditions precedent:
43
(a) The Lender Parties shall be satisfied with the corporate and legal
structure and capitalization of each Loan Party and each of its
Subsidiaries, including the terms and conditions of the charter, bylaws and
each class of capital stock of each Loan Party and each such Subsidiary and
of each agreement or instrument relating to such structure or
capitalization.
(b) The Lender Parties shall (i) be satisfied that the Existing Credit
Agreement, the Existing Bridge Loan and all other Existing Debt, other than
the Debt identified on Schedule 4.01(b) (the "SURVIVING DEBT"), has been
--------------
prepaid, redeemed or defeased in full or otherwise satisfied and
extinguished (ii) shall have received satisfactory evidence (including,
without limitation, a duly executed payoff letter, UCC termination
statements and real property reconveyances) that any liens and security
interests granted pursuant to, or in connection with, the Existing Credit
Agreement shall be terminated or released contemporaneously with the
initial Borrowing.
(c) There shall have occurred no Material Adverse Change since January
4, 1998.
(d) There shall exist no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of their Subsidiaries pending or
threatened before any court, governmental agency or arbitrator that (i)
could have a Material Adverse Effect or (ii) purports to affect the
legality, validity or enforceability of this Agreement, any Note, any other
Loan Document, or the consummation of the transactions contemplated hereby.
(e) The Borrower shall have paid all accrued fees and expenses of the
Agents and the Lender Parties (including the accrued fees and expenses of
counsel to the Agents).
(f) The Borrower shall have entered into the Casino Loan Agreement and
the Casino Note on terms and conditions satisfactory to the Agents and the
Required Lenders.
(g) The Borrower shall have entered into the Synthetic Leases with
respect to the Properties (as defined in the Participation Agreement), and
shall have terminated and satisfied all obligations with respect to any
existing synthetic leases, in each case on terms and conditions
satisfactory to the Agents and the Lenders.
(h) The Consolidated EBITDA of the Borrower and its Subsidiaries for
the third quarterly period of fiscal year 1998 shall be not less than
Twenty Two Million Five Hundred Thousand Dollars ($22,500,000).
(i) The Agents and the Lenders shall have received (i) the
Consolidated financial statements of the Borrower and its Subsidiaries for
the fiscal years ended December 29, 1996 and January 4, 1998, including
balance sheets and income and cash flow statements audited by independent
public accountants of recognized national
44
standing and prepared in conformity with GAAP and (ii) the most recent
interim quarterly financial statements.
(j) The Agents shall have received on or before the day of the
initial Borrowing the following, each dated such day (unless otherwise
specified), in form and substance satisfactory to the Agents (unless
otherwise specified) and (except for the Notes) in sufficient copies for
each Lender Party:
(i) Fully executed counterparts of this Agreement.
(ii) The Notes to the order of each Lender, as appropriate.
(iii) Certified copies of the resolutions of the Board of
Directors of the Borrower and each other Loan Party approving this
Agreement, the Notes, and each other Loan Document to which it is or is to
be a party, and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to the Agreement,
the Notes, and each other Loan Document.
(iv) With respect to each Loan Party, a copy of a certificate of
the Secretary of State of the State of such Loan Party's organization,
dated reasonably near the date of the initial Borrowing, listing the
charter of such Loan Party and each amendment thereto on file in such
office and certifying that (A) such amendments are the only amendments to
such Loan Party's charter on file in such office, (B) such Loan Party has
paid all franchise taxes to the date of such certificate and (C) such Loan
Party is duly incorporated and in good standing under the laws of the State
of such Loan Party's organization.
(v) With respect to each Loan Party, a copy of a certificate of
the Secretary of State of each jurisdiction listed with respect to such
Loan Party on Schedule 4.01(j)(v), dated reasonably near the date of the
initial Borrowing, stating that such Loan Party is duly qualified and in
good standing as a foreign corporation in such State and have filed all
annual reports required to be filed to the date of such certificate.
(vi) A certificate of each Loan Party, signed on behalf of such
Loan Party by its President or a Vice President and its Secretary or any
Assistant Secretary, dated the date of the initial Borrowing (the
statements made in which certificate shall be true on and as of the date of
the initial Borrowing), certifying as to (A) the absence of any amendments
to the charter of such Loan Party since the date of the Secretary of
State's certificate referred to in Section 4.01(j)(iv), (B) a true and
correct copy of the bylaws of such Loan Party as in effect on the date of
the initial Borrowing, (C) the due incorporation and good standing of such
Loan Party as a corporation organized under the laws of the State of its
jurisdiction of incorporation, and the absence of any proceeding for the
dissolution or liquidation of such Loan Party, (D) the truth of the
representations and warranties contained in the Loan Documents as though
made on and as of the date of the initial Borrowing and (E) the absence of
any event occurring and continuing, or resulting from the initial
Borrowing, that constitutes a Default.
45
(vii) A certificate of the Secretary or an Assistant Secretary
of each Loan Party certifying the names and true signatures of the officers
of such Loan Party authorized to sign this Agreement, the Notes, and each
other Loan Document to which they are or are to be parties and the other
documents to be delivered hereunder and thereunder.
(viii) A security agreement in substantially the form of Exhibit
E (as amended from time to time in accordance with its terms, the "SECURITY
--------
AGREEMENT"), duly executed by the Borrower and each other Loan Party,
---------
together with:
(A) certificates representing the Pledged Shares referred
to therein accompanied by undated stock powers executed in blank and
instruments evidencing the Pledged Debt referred to therein endorsed
in blank,
(B) duly executed financing statements in appropriate
form for filing under the Uniform Commercial Code in all jurisdictions
that the Agents or the Required Lenders may deem necessary or
desirable in order to perfect and protect the Liens created by the
Security Agreement, covering the Collateral described in the Security
Agreement,
(C) evidence of the insurance required by the terms of
the Security Agreement (subject to such exceptions as may be
acceptable to the Administrative Agent,
(D) evidence that all other action that the Agents or the
Required Lenders may deem necessary or desirable in order to perfect
and protect the Liens created by the Security Agreement has been
taken.
(ix) Deeds of trust, trust deeds and mortgages in substantially
the form of Exhibit F and covering the properties listed on Schedule
4.01(j)(ix) (as amended from time to time in accordance with their terms,
the "MORTGAGES"), duly executed by the Borrower in appropriate form for
---------
filing in all filing or recording offices that the Agents or the Required
Lenders may deem necessary or desirable in order to create a valid and
subsisting lien subject only to Permitted Liens on the property described
therein in favor of the Administrative Agent for the benefit of the Lender
Parties, together with:
(A) a commitment or commitments from First American Title
Insurance Company to issue American Land Title Association Lender's
Extended Coverage title insurance policies (the "MORTGAGE POLICIES")
-----------------
in form and substance, with endorsements and in amount acceptable to
the Agents, insuring the Mortgages to be valid first and subsisting
Liens on the property described therein, free and clear of all defects
(including, but not limited to, mechanics' and materialmen's Liens)
and encumbrances, excepting only Permitted Encumbrances, and providing
for such other affirmative insurance (including endorsements for
future advances under the Loan Documents and for mechanics' and
materialmen's Liens) as the Agents may deem necessary or desirable,
46
(B) to the extent required by the Agents, an appraisal of
each of the properties described in the Mortgages complying with the
requirements of the Federal Financial Institutions Reform, Recovery
and Enforcement Act of 1989,
(C) such consents and agreements of lessors and other
third parties, and such estoppel letters and other confirmations, as
the Agents may deem necessary or desirable,
(D) evidence that all other action that the Agents or the
Required Lenders may deem necessary or desirable in order to create
valid first and subsisting Liens on the property described in the
Mortgages has been taken.
(x) A guaranty in substantially the form of Exhibit G (as
amended from time to time in accordance with its terms, the "GUARANTY"),
--------
duly executed by each of the Borrower's direct and indirect Subsidiaries
(other than any Foreign Subsidiary).
(xi) Such financial, business and other information regarding
each Loan Party and their Subsidiaries as the Lender Parties shall have
requested, including, without limitation, information as to possible
contingent liabilities, tax matters, environmental matters, obligations
under ERISA and Welfare Plans, collective bargaining agreements and other
arrangements with employees, interim financial statements dated the end of
the most recent fiscal quarter for which financial statements are available
(or, in the event the Lender Parties' due diligence review reveals material
changes since such financial statements, as of a later date within 45 days
of the day of the initial Borrowing), pro forma financial statements as to
the Borrower and forecasts prepared by management of the Borrower, in form
and substance satisfactory to the Lender Parties, of balance sheets, income
statements and cash flow statements on a monthly basis for the first year
following the day of the initial Borrowing and on an annual basis for each
year thereafter until the Commitment Termination Date.
(xii) A certificate, in the form of Exhibit I hereto, attesting
to the Solvency of each Loan Party after giving effect to the other
transactions contemplated hereby, from its chief financial officer.
(xiii) Evidence of insurance naming the Administrative Agent as
insured and loss payee with such responsible and reputable insurance
companies or associations, and in such amounts and covering such risks, as
is satisfactory to the Lender Parties.
(xiv) Favorable opinions of (i) Crosby, Heafey, ▇▇▇▇▇ & May,
special counsel for the Borrower and the other Loan Parties, in
substantially the form of Exhibit J-1 hereto and (ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
general counsel of the Borrower, in substantially the form of Exhibit J-2
hereto and, in each case, as to such other matters as any Lender Party
through the Agents may reasonably request.
47
(xv) Intercompany Notes in substantially the form of Exhibit H
(as amended from time to time, the "INTERCOMPANY NOTE", duly executed by
-----------------
each of the Borrower's Domestic Subsidiaries in favor of the Borrower).
SECTION 4.02. CONDITIONS PRECEDENT TO EACH BORROWING AND ISSUANCE.
---------------------------------------------------
The obligation of each Lender to make an Advance (other than an L/C Advance and
other than a Revolving Advance made by a Lender pursuant to Section 2.02(f)) on
the occasion of each Borrowing (including the initial Borrowing), and the right
of the Borrower to request a Swing Line Borrowing or the issuance of Letters of
Credit, shall be subject to the further conditions precedent that on the date of
such Borrowing or issuance (a) the following statements shall be true (and each
of the giving of the applicable Notice of Borrowing, Notice of Swing Line
Borrowing or Notice of Issuance and the acceptance by the Borrower of the
proceeds of such Borrowing or of such Letter of Credit shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
or issuance such statements are true):
(i) the representations and warranties contained in each Loan
Document are correct on and as of the date of such Borrowing or issuance,
before and after giving effect to such Borrowing or issuance and to the
application of the proceeds therefrom, as though made on and as of such
date other than any such representations or warranties that, by their
terms, are specifically made as of a date other than the date of such
Borrowing or issuance;
(ii) no Event of Default or event which, with the giving of
notice or passage of time or both, would be an Event of Default, has
occurred and is continuing, or would result from such Borrowing; and
(iii) for each Revolving Advance or issuance of any Letter of
Credit, the sum of the Borrowing Base Amounts exceeds the aggregate
principal amount of the Revolving Advances plus the Swing Line Reserve
Amount plus the aggregate Letter of Credit Obligations then outstanding
after giving effect to such Advance or issuance, respectively and the
Borrower shall have delivered a Borrowing Base Certificate evidencing the
same;
and (b) the Agents shall have received such other approvals, opinions or
documents as any Lender or such Issuing Bank through the Agents may reasonably
request.
SECTION 4.03. DETERMINATIONS UNDER SECTION 4.01. For purposes of
---------------------------------
determining compliance with the conditions specified in Section 4.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the initial Borrowing specifying its objection thereto and such
Lender Party shall not have made available to the Administrative Agent such
Lender Party's ratable portion of such Borrowing.
48
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
----------------------------------------------
Borrower represents ans warrants as follows:
(A) INCORPORATION, QUALIFICATION, CORPORATE POWER AND AUTHORITY. Each
-----------------------------------------------------------
Loan Party (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so
qualify or be licensed would not have a Material Adverse Effect and (iii) has
all requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted.
(B) CAPITAL STOCK. Set forth on Schedule 5.01(b) hereto is a
-------------
complete and accurate list, as of the date hereof, of all Subsidiaries of each
Loan Party, showing as of the date hereof (as to each such Subsidiary), the
jurisdiction of its incorporation, the number of shares of each class of capital
stock authorized and outstanding, the percentage of the outstanding shares of
each such class owned (directly or indirectly) by such Loan Party and the number
of shares covered by all outstanding options, warrants, rights of conversion or
purchase and similar rights. All of the outstanding capital stock of all of such
Subsidiaries has been validly issued, is fully paid and non-assessable and is
owned by such Loan Party or one or more of its Subsidiaries free and clear of
all Liens, except those created by the Collateral Documents. Each such
Subsidiary (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so
qualify or be licensed would not have a Material Adverse Effect and (iii) has
all requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted.
(C) AUTHORIZATION; NO CONFLICT OR VIOLATION; COMPLIANCE WITH LAWS. The
-------------------------------------------------------------
execution, delivery and performance by each Loan Party of this Agreement, the
Notes, and each other Loan Document to which it is or is to be a party, and the
consummation of the other transactions contemplated hereby and thereby, are
within such Loan Party's corporate powers, have been duly authorized by all
necessary corporate action, and do not (i) contravene such Loan Party's charter
or by-laws, (ii) violate any law, rule, regulation (including, without
limitation, Regulation X of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination or award,
(iii) conflict with or result in the breach of, or constitute a default under,
any contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument binding on or affecting any Loan Party, any of its Subsidiaries or
any of their properties or (iv) except for the Liens created by the Collateral
Documents, result in or require the creation or imposition of any Lien upon or
with respect to any of the properties of any Loan Party or any of its
Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of any
49
such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or in breach of any such contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument, the violation or
breach of which could have a Material Adverse Effect.
(D) APPROVALS AND CONSENTS. No authorization or approval or other
----------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by any Loan Party of this
Agreement, the Notes, or any other Loan Document to which it is or is to be a
party, or for the consummation of the other transactions contemplated hereby and
thereby, (ii) the grant by any Loan Party of the Liens granted by it pursuant to
the Collateral Documents, (iii) the perfection or maintenance of the Liens
created by the Collateral Documents (including the first priority nature
thereof) or (iv) the exercise by the Administrative Agent or any Lender of its
rights under the Loan Documents or the remedies in respect of the Collateral
pursuant to the Collateral Documents, approvals, actions, all of which have been
duly obtained, taken, given or made and are in full force and effect.
(E) ENFORCEABILITY. This Agreement has been, and each of the Notes,
--------------
and each other Loan Document when delivered hereunder will have been, duly
executed and delivered by each Loan Party thereto. This Agreement is, and each
of the Notes, and each other Loan Document when delivered hereunder will be, the
legal, valid and binding obligation of each Loan Party thereto, enforceable
against such Loan Party in accordance with its terms.
(F) FINANCIAL STATEMENTS.
--------------------
(i) The Consolidated balance sheets of the Borrower and its
Subsidiaries as at January 4, 1998, and the related Consolidated statements
of income and cash flows of the Borrower and its Subsidiaries for the
fiscal year then ended, accompanied by an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
independent public accountants, and the Consolidated balance sheets of the
Borrower and its Subsidiaries as at October 11, 1998, and the related
Consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for the three quarters then ended, duly certified by the chief
financial officer of the Borrower, copies of which have been furnished to
each Lender, fairly present, subject, in the case of said balance sheets as
at October 11, 1998, and said statements of income and cash flows for the
nine months then ended, to year-end audit adjustments, the Consolidated
financial condition of the Borrower and its Subsidiaries as at such dates
and the Consolidated results of the operations of the Borrower and its
Subsidiaries for the periods ended on such dates, all in accordance with
GAAP applied on a consistent basis, and since January 4, 1998, there has
been no Material Adverse Change.
(ii) The Consolidated forecasted balance sheets, income
statements and cash flows statements of the Borrower and its Subsidiaries
delivered to the Lenders pursuant to Section 4.01(i), 6.03(c) or 6.03(d)
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were fair in the light of conditions
50
existing at the time of delivery of such forecasts, and represented, at the
time of delivery, the Borrower's best estimate of its future financial
performance.
(G) DISCLOSURE. Neither the Offering Memorandum nor any other
----------
information, exhibit or report furnished by any Loan Party to the Administrative
Agent or any Lender Party in connection with the negotiation of the Loan
Documents or pursuant to the terms of the Loan Documents contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements made therein not misleading.
(H) LITIGATION. There is no action, suit, investigation, litigation
----------
or proceeding affecting any Loan Party or any of their Subsidiaries, including
any Environmental Action, pending or threatened before any court, governmental
agency or arbitrator that (i) could reasonably be expected to have a Material
Adverse Effect (other than the Disclosed Litigation) (ii) purports to affect the
legality, validity or enforceability of this Agreement, any Note, or any other
Loan Document or the consummation of the transactions contemplated hereby or
thereby, and there has been no adverse change in the status, or financial effect
on any Loan Party or any of their Subsidiaries, of the Disclosed Litigation from
that described on Schedule 5.01(h).
(I) USE OF PROCEEDS.
---------------
(i) No proceeds of any Advance will be used to acquire any
equity security of a class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(ii) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Advance will be used to purchase or carry any Margin Stock
or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock.
(iii) Following application of the proceeds of each Advance, not
more than 25 percent of the value of the assets (either of the Borrower
only or of the Borrower and its Subsidiaries on a Consolidated basis)
subject to the provisions of Section 6.02(a) or 6.02(e) or subject to any
restriction contained in any agreement or instrument between the Borrower
and any Lender Party or any Affiliate of any Lender Party relating to Debt
and within the scope of Section 6.01(e) will be Margin Stock.
(J) PENSION PLANS.
-------------
(i) Set forth on Schedule 5.01(j) hereto is a complete and
accurate list of all Plans, Multiemployer Plans and Welfare Plans with
respect to any employees of any Loan Party, or any of their Subsidiaries.
(ii) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan of any Loan Party or any of its ERISA
Affiliates that has resulted in or could reasonably be expected to result
in a material liability of any Loan Party or any of its ERISA Affiliates.
51
(iii) Schedule B (Actuarial Information) to the 1997 annual
report (Form 5500 Series) for each Plan of any Loan Party or any of its
ERISA Affiliates, copies of which have been filed with the Internal Revenue
Service and furnished to the Lender Parties, is complete and accurate and
fairly presents the funding status of such Plan, and since the date of such
Schedule B there has been no material adverse change in such funding
status.
(iv) Neither any Loan Party nor any of its ERISA Affiliates has
incurred or is reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan.
(v) Neither any Loan Party nor any of its ERISA Affiliates has
been notified by the sponsor of a Multiemployer Plan of any Loan Party or
any of its ERISA Affiliates that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA.
(vi) The aggregate annualized cost (including, without
limitation, the cost of insurance premiums) with respect to post-retirement
benefits under Welfare Plans for which the Loan Parties and their
Subsidiaries are liable does not exceed $100,000.
(K) NO ADVERSE CONDITIONS. Neither the business nor the properties
---------------------
of any Loan Party or any of its Subsidiaries are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that could have a Material Adverse Effect
and there has been no Material Adverse Change affecting the value of the
collateral or the ability of the Borrower or any other Loan Party to perform its
obligations under the Loan Documents.
(L) COMPLIANCE WITH ENVIRONMENTAL LAWS.
----------------------------------
(i) The operations and properties of each Loan Party and each of
its Subsidiaries comply in all material respects with all Environmental
Laws, all necessary Environmental Permits have been obtained and are in
effect for the operations and properties of each Loan Party and its
Subsidiaries, each Loan Party and its Subsidiaries are in compliance in all
material respects with all such Environmental Permits, and no circumstances
exist that could (i) form the basis of an Environmental Action against any
Loan Party or any of its Subsidiaries or any of their properties that could
have a Material Adverse Effect or (ii) cause any such property to be
subject to any restrictions on ownership, occupancy, use or transferability
under any Environmental Law.
(ii) None of the properties of any Loan Party or any of its
Subsidiaries is listed or proposed for listing on the National Priorities
List under CERCLA or on the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the
Environmental Protection Agency or any analogous state list of
52
sites requiring investigation or cleanup or is adjacent to any such
property, and no underground storage tanks, as such term is defined in 42
U.S.C. (S) 6991, are located on any property of any Loan Party or any of
its Subsidiaries or, to the best of its knowledge, on any adjoining
property.
(iii) Neither any Loan Party nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Materials
to any location that is listed or proposed for listing on the National
Priorities List under CERCLA or on the Comprehensive Environmental
Response, Compensation and Liability Information System maintained by the
Environmental Protection Agency or any analogous state list, Hazardous
Materials have not been generated, used, treated, handled, stored or
disposed of on, or released or transported to or from, any property of any
Loan Party or any of its Subsidiaries or, to the best of its knowledge, any
adjoining property, except in compliance with all Environmental Laws and
Environmental Permits, and all other wastes generated at any such
properties have been disposed of in compliance with all Environmental Laws
and Environmental Permits.
(M) NO BURDENSOME AGREEMENTS. Neither any Loan Party nor any of its
------------------------
Subsidiaries is a party to any indenture, loan or credit agreement or any lease
or other agreement or instrument or subject to any charter or corporate
restriction that could have a Material Adverse Effect.
(N) TAX INFORMATION.
---------------
(i) Each Loan Party and each of its Subsidiaries has filed,
has caused to be filed or has been included in all tax returns (Federal,
state, local and foreign) required to be filed and has paid all taxes shown
thereon to be due, together with applicable interest and penalties.
(ii) Set forth on Schedule 5.01(n) hereto is a complete and
accurate list, as of the date hereof, of each taxable year of the Borrower
for which Federal income tax returns have been filed and for which the
expiration of the applicable statute of limitations for assessment or
collection has not occurred by reason of extension or otherwise (an "OPEN
----
YEAR").
----
(iii) The aggregate unpaid amount, as of the date hereof, of
adjustments to the Federal income tax liability of the Borrower proposed by
the Internal Revenue Service with respect to Open Years does not exceed
$5,000,000. No issues have been raised by the Internal Revenue Service in
respect of Open Years that, in the aggregate, could have a Material Adverse
Effect.
(iv) The aggregate unpaid amount, as of the date hereof, of
adjustments to the state, local and foreign tax liability of the Borrower
and its Subsidiaries proposed by all state, local and foreign taxing
authorities (other than amounts arising from adjustments to Federal income
tax returns) does not exceed $2,000,000. No issues have
53
been raised by such taxing authorities that, in the aggregate, could have a
Material Adverse Effect.
(O) NO INVESTMENT COMPANY. Neither any Loan Party nor any of its
---------------------
Subsidiaries is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor the issuance of any Letters of Credit, nor the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the other transactions contemplated hereby, will violate any
provision of such Act or any rule, regulation or order of the Securities and
Exchange Commission thereunder.
(P) SOLVENCY. Each Loan Party is, individually and together with its
--------
Subsidiaries, Solvent.
(Q) DEBT OF THE BORROWER AND ITS SUBSIDIARIES.
-----------------------------------------
(i) Set forth on Schedule 5.01(q)(i) hereto is a complete and
accurate list of all Existing Debt (other than Surviving Debt), showing as
of the date hereof the principal amount outstanding thereunder.
(ii) Set forth on Schedule 4.01(b) hereto is a complete and
accurate list of all Surviving Debt, showing as of the date hereof the
principal amount outstanding thereunder.
(iii) Set forth on Schedule 6.02(a) hereto is a complete and
accurate list of all Existing Liens, showing as of the date hereof the
principal amount outstanding thereunder.
(R) REAL PROPERTY.
-------------
(i) Set forth on Schedule 5.01(r)(i) hereto is a complete and
accurate list, as of the date hereof, of all real property owned by any
Loan Party or any of their Subsidiaries, showing as of the date hereof the
street address, county or other relevant jurisdiction, state, record owner
and book value thereof. Each Loan Party or such Subsidiary has good,
marketable and insurable fee simple title to such real property, free and
clear of all Liens, other than Liens created or permitted by the Loan
Documents.
(ii) Set forth on Schedule 5.01(r)(ii) hereto is a complete and
accurate list, as of the date hereof, of all leases of real property under
which any Loan Party or any of their Subsidiaries is the lessee, showing as
of the date hereof the street address, county or other relevant
jurisdiction, state, lessor and execution date thereof. Each such lease is
the legal, valid and binding obligation of the lessor thereof, enforceable
in accordance with its terms.
54
(S) INVESTMENTS. Set forth on Schedule 5.01(s) hereto is a complete
-----------
and accurate list of all Investments held by any Loan Party or any of their
Subsidiaries, showing as of the date hereof the amount, obligor or issuer and
maturity, if any, thereof.
(T) INTELLECTUAL PROPERTY. Set forth on Schedule 5.01(t) hereto is a
---------------------
complete and accurate list of all patents, trademarks, trade names, service
marks and copyrights, and all applications therefor and licenses thereof, of
each Loan Party or any of their Subsidiaries, showing as of the date hereof the
jurisdiction in which registered, the registration number, the date of
registration and the expiration date.
(U) OTHER AGREEMENTS. Schedule 5.01(u) sets forth a complete and
----------------
accurate list as of the date hereof of (i) all joint venture and partnership
agreements to which the Borrower or any of its Subsidiaries is a party, and (ii)
all covenants not to compete restricting the Borrower or any of its Subsidiaries
to which the Borrower or any of its Subsidiaries is a part or by which the
Borrower or any of its Subsidiaries is bound.
(V) YEAR 2000 PREPAREDNESS. Borrower has reviewed its operations and
----------------------
those of its Subsidiaries with a view to assessing whether its businesses, or
the businesses of any of its Subsidiaries, will be vulnerable to a Year 2000
Problem (as defined below) and has a reasonable basis to believe that no Year
2000 Problem will exist on or after December 31, 1999. Borrower shall take all
actions necessary and commit adequate resources to assure that its computer-
based and other systems (and those of all Subsidiaries) are able to effectively
process data, including dates before, on or after January 1, 2000, without
experiencing any Year 2000 Problem that could cause a Material Adverse Effect.
At the request of Agent, Borrower will, at Borrower's expense, provide Agent
with assurances and substantiations (including, but not limited to, the results
of internal or external audit reports) reasonably acceptable to Agent as to the
capability of Borrower and its Subsidiaries to conduct its and their businesses
and operations before, on and after January 1, 2000 without experiencing a Year
2000 Problem. "YEAR 2000 PROBLEM" means any significant risk that computer
-----------------
hardware, software or equipment containing embedded microchips essential to the
business or operations of Borrower or any of its Subsidiaries will not, in the
case of dates or time periods occurring after December 31, 1999, function at
least as effectively and reliably as in the case of times or time periods
occurring before January 1, 2000, including the making of accurate leap year
calculations. The Borrower has no knowledge of the existence of a Year 2000
Problem with respect to any of its vendors or suppliers that could have a
Material Adverse Effect.
ARTICLE VI.
COVENANTS OF THE BORROWER
SECTION 6.01. AFFIRMATIVE COVENANTS. So long as any Advance shall
---------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will, unless the Required Lenders
shall otherwise consent in writing:
(A) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
-------------------------
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, including, without limitation, compliance with
ERISA.
55
(B) PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of its
---------------------
Subsidiaries to pay and discharge, before the same shall become delinquent, (i)
all material taxes, assessments and governmental charges or levies imposed upon
it or upon its property and (ii) all material lawful claims that, if unpaid,
might by law become a Lien upon its property; provided, however, that neither
-------- -------
the Borrower nor any of its Subsidiaries shall be required to pay or discharge
any such tax, assessment, charge or claim that is being contested in good faith
and by proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.
(C) COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause each of its
----------------------------------
Subsidiaries and all lessees and other Persons occupying its properties to
comply, in all material respects, with all Environmental Laws and Environmental
Permits applicable to its operations and properties; obtain and renew all
Environmental Permits necessary for its operations and properties; and conduct,
and cause each of its Subsidiaries to conduct, any investigation, study,
sampling and testing, and undertake any cleanup, removal, remedial or other
action necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws;
provided, however, that neither the Borrower nor any of its Subsidiaries shall
-------- -------
be required to undertake any such cleanup, removal, remedial or other action to
the extent that its obligation to do so is being contested in good faith and by
proper proceedings and appropriate reserves are being maintained with respect to
such circumstances.
(D) MAINTENANCE OF INSURANCE. Maintain, and cause each of its
------------------------
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is
commercially reasonable and prudent with respect to the business and properties
of the Borrower and its Subsidiaries. The Insurance maintained by the Borrower
and its Subsidiaries, as of the date hereof shall be deemed to satisfy the
requirements of this Section 6.01(d) as of the date hereof.
(E) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and maintain,
----------------------------------------
and cause each of its Subsidiaries to preserve and maintain, its corporate
existence, rights (charter and statutory) and franchises; provided, however,
-------- -------
that the Borrower and its Subsidiaries may consummate any other merger or
consolidation permitted under Section 6.02(c) and provided further, neither the
-------- -------
Borrower nor any of its Subsidiaries shall be required to preserve any right or
franchise if the Board of Directors of the Borrower or such Subsidiary shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Borrower or such Subsidiary, as the case may be, and that
the loss thereof is not disadvantageous in any material respect to the Borrower,
such Subsidiary or the Lender Parties.
(F) VISITATION RIGHTS. At any reasonable time and from time to time
-----------------
and upon reasonable notice, permit the Administrative Agent or any of the Lender
Parties or any agents or representatives thereof, to examine and make copies of
and abstracts from the records and books of account of, and visit the properties
of, the Borrower and any of its Subsidiaries, and to discuss the affairs,
finances and accounts of the Borrower and any of its Subsidiaries with any of
their officers or directors and with their independent certified public
accountants.
56
(G) PREPARATION OF ENVIRONMENTAL REPORTS. At the request of the
------------------------------------
Administrative Agent from time to time, provide to the Lender Parties within 60
days after such request, at the expense of the Borrower, an environmental site
assessment report for all of its and its Subsidiaries' properties described in
such request, prepared by an environmental consulting firm acceptable to the
Administrative Agent, indicating the presence or absence of Hazardous Materials
and the estimated cost of any compliance, removal or remedial action in
connection with any Hazardous Materials on such properties; without limiting the
generality of the foregoing, if the Administrative Agent determines at any time
that a material risk exists that any such report will not be provided within the
time referred to above, the Administrative Agent may retain an environmental
consulting firm to prepare such report at the expense of the Borrower, and the
Borrower hereby grants and agrees to cause any Subsidiary which owns any
property described in such request to grant at the time of such request, to the
Administrative Agent, the Lender Parties, such firm and any agents or
representatives thereof an irrevocable non-exclusive license, subject to the
rights of tenants, to enter onto their respective properties to undertake such
an assessment.
(H) KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries to
----------------
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Borrower and each such Subsidiary in accordance with generally accepted
accounting principles in effect from time to time.
(I) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause
------------------------------
each of its Subsidiaries to maintain and preserve, all of its properties that
are used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
(J) COMPLIANCE WITH TERMS OF LEASEHOLDS. Make all payments and
-----------------------------------
otherwise perform all obligations in respect of the Synthetic Leases and all
other leases of real property, keep such Synthetic Leases and all other leases
in full force and effect and not allow such Synthetic Leases or other leases to
lapse or be terminated or any rights to renew such leases to be forfeited or
canceled except, with respect to the Synthetic Leases, pursuant to the terms
thereof, notify the Administrative Agent of any default by any party with
respect to such Synthetic Leases and other leases and cooperate with the
Administrative Agent in all respects to cure any such default, and cause each of
its Subsidiaries to do so.
(K) TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of its
----------------------------
Subsidiaries to conduct, all transactions otherwise permitted under the Loan
Documents with any of their Affiliates on terms that are fair and reasonable and
no less favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
(L) ADDITIONAL LOAN PARTIES; ADDITIONAL COLLATERAL. (i)
----------------------------------------------
Substantially concurrently with the formation or acquisition of any Subsidiary
of the Borrower, (A) cause such Subsidiary (other than a Foreign Subsidiary) to
guarantee all Obligations of the Borrower hereunder and under the Notes by
executing and delivering to the Administrative Agent an amendment to Guaranty in
substantially the form of Exhibit L, (B) cause such Subsidiary (other
57
than a Foreign Subsidiary) to execute and deliver to the Administrative Agent,
an amendment to the Security Agreement, in substantially the form of Exhibit M
(whereby such Subsidiary shall ▇▇▇▇▇ ▇ ▇▇▇▇ on those of its assets described in
the Security Agreement), (C) promptly pledge to the Administrative Agent or
cause to be pledged to the Administrative Agent all of the outstanding capital
stock of such Subsidiary (or, if such Subsidiary is a Foreign Subsidiary, 65% of
such capital stock) owned by any Loan Party to secure such Loan Party's
Obligations under the Loan Documents, (D) with respect to any real property in
which such Subsidiary has an interest, cause such Subsidiary to execute and
deliver such deeds of trust, trust deeds and mortgages ("ADDITIONAL MORTGAGES")
--------------------
in appropriate form for filing in all filing or recording offices that the
Administrative Agent may deem necessary or desirable to create a valid first and
subsisting Lien on the property described therein in favor of the Administrative
Agent for the benefit of the Lender Parties, (E) promptly take, and cause such
Subsidiary and each other Loan Party to take all action necessary or (in the
opinion of the Administrative Agent or the Required Lenders) desirable to
perfect and protect the Liens intended to be created by the Collateral
Documents, as amended pursuant to this Section 6.01(l), and (F) promptly deliver
to the Administrative Agent such opinions of counsel, if any, as the
Administrative Agent or the Required Lenders may reasonably require with respect
to the foregoing (including opinions as to enforceability and perfection of
security interests).
(ii) In addition to the foregoing, (1) within 90 days following the
Closing Date with respect to each property identified on Schedule 6.01(l)(ii)
with a fair market value of $500,000 or more, and (2) promptly upon the
acquisition by any Loan Party on or after the date hereof of any interest in any
real property with a fair market value in excess of $750,000 (A) the applicable
Loan Party shall execute and deliver such Additional Mortgages in appropriate
form for filing in all filing or recording offices that the Administrative Agent
may deem necessary or desirable to create a valid first and subsisting Lien on
such real property in favor of the Administrative Agent for the benefit of the
Lender Parties, (B) the Borrower shall take, and cause each Loan Party to take,
all action necessary or (in the opinion of the Administrative Agent or the
Required Lenders) desirable to perfect and protect the Liens intended to be
created by the Additional Mortgages, (C) the Borrower shall take, and cause each
Loan Party to take, all action necessary or (in the opinion of the
Administrative Agent or the Required Lenders) desirable to provide such Mortgage
Policies, American Land Title Association form surveys, appraisals,
environmental reports, engineering, soils and other reports, assignments of
leases and rents, consents and agreements of lessors and other third parties,
estoppel letters and other confirmations, and evidence of insurance with respect
to any real property that becomes the subject of an Additional Mortgage, as the
Administrative Agent may deem necessary or desirable, in each case in form and
substance acceptable to the Administrative Agent, and (D) deliver to the
Administrative Agent such opinions of counsel, if any, as the Administrative
Agent or the Required Lenders may reasonably require with respect to the
foregoing (including opinions as to enforceability and perfection of security
interests).
(M) APPRAISALS. (i) As soon as reasonably practicable after the
----------
Closing Date (and in any event within 90 days after the Closing Date), provide
to the Administrative Agent, at the expense of the Borrower, appraisals of the
properties of the Borrower and its Subsidiaries identified on Schedule 6.01(m)
(or such portion of such properties as shall be otherwise
58
acceptable to the Administrative Agent and each Lender), which appraisals comply
with all applicable requirements of the Federal Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, and (ii) at the request of the
Administrative Agent or any Lender from time to time after the Closing Date,
provide to the Administrative Agent within 60 days after such request, at the
expense of the Borrower, appraisals of the properties of the Borrower and its
Subsidiaries described in such request as the Administrative Agent or such
Lender may determine are necessary or desirable to ensure compliance with, and
which appraisals comply with all applicable requirements of, the Federal
Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
(N) YEAR 2000. The Borrower shall review and monitor, and shall
---------
cause each of its Subsidiaries to review and monitor, its operations and those
of its Subsidiaries with a view to assessing whether its businesses, or the
businesses of any of its Subsidiaries, will be vulnerable to a Year 2000 Problem
or will be vulnerable to the effect of a Year 2000 Problem suffered by the
Borrower or any of its Subsidiaries or any of its material suppliers or vendors.
The Borrower shall take, and shall cause each of its Subsidiaries to take, all
actions necessary and commit adequate resources to assure that its computer-
based and other systems are able to effectively process data, including dates
before, on and after January 1, 2000, without experiencing any Year 2000 Problem
that results in, or could reasonably be expected to result in, a Material
Adverse Effect. At the request of the Administrative Agent, the Borrower will
provide the Administrative Agent with reasonable assurances and substantiations
(including without limitation the results of internal or external audit reports)
reasonably acceptable to the Administrative Agent as to the capability of the
Borrower and its Subsidiaries to conduct its and their businesses and operations
before, on and after January 1, 2000, without experiencing a Year 2000 Problem
that results in, or could reasonably be expected to result in, a Material
Adverse Effect.
(O) CONSENTS AND AGREEMENTS OF LESSOR; CERTAIN POST-CLOSING MATTERS.
---------------------------------------------------------------
(i) The Borrower shall use its best efforts to provide to the
Administrative Agent within 60 days after the Closing Date such consents and
agreements of lessors and other third parties and such estoppel letters and
other confirmations as the Administrative Agent or the Required Lenders may
require, all in form and substance satisfactory to the Administrative Agent and
the Required Lenders.
(ii) Within 90 days after the Closing Date, and from time to time
thereafter as reasonably requested by the Administrative Agent or the Required
Lenders, deliver such flood hazard certification as the Administrative Agent or
the Required Lenders may require with respect to the properties subject to the
Mortgages.
(iii) Within 90 days after the Closing Date, cause to be effective,
at the Borrower's expense, such increases in the amounts of title insurance
applicable to the properties subject to the Mortgages as the Administrative
Agent or the Required Lenders may reasonably request after consideration of the
appraisals referred to in Section 6.01(m). It is understood and
59
agreed that such increases may be required with respect to properties subject
to, and with respect to properties not subject to, such appraisals.
(iv) Within 30 days after the Closing Date, provide to the
Administrative Agent evidence of the insurance required by the Security
Agreement.
SECTION 6.02. NEGATIVE COVENANTS. So long as any Advance shall
------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will not, at any time, without the
written consent of the Required Lenders or, if required under Section 9.01, of
all of the Lenders:
(A) LIENS, ETC. Create, incur, assume or suffer to exist, or permit
----------
any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on
or with respect to any of its properties of any character (including, without
limitation, accounts) whether now owned or hereafter acquired, or sign or file,
or permit any of its Subsidiaries to sign or file, under the Uniform Commercial
Code of any jurisdiction, a financing statement that names the Borrower or any
of its Subsidiaries as debtor, or sign, or permit any of its Subsidiaries to
sign, any security agreement authorizing any secured party thereunder to file
such financing statement, or assign, or permit any of its Subsidiaries to
assign, any accounts or other right to receive income, excluding, however, from
--------- -------
the operation of the foregoing restrictions the following:
(i) Liens created by the Loan Documents and the Synthetic Lease
Documents;
(ii) Permitted Liens;
(iii) the Liens described on Schedule 6.02(a); and
(iv) purchase money Liens upon or in property acquired or held
by the Borrower or any of its Subsidiaries in the ordinary course of
business to secure the purchase price of such property or to secure Debt
incurred solely for the purpose of financing the acquisition, construction
or improvement of any such property to be subject to such Liens, or Liens
existing on any such property at the time of acquisition, or extensions,
renewals or replacements of any of the foregoing for the same or a lesser
amount; provided, however, that no such Lien shall extend to or cover any
-------- -------
property other than the property being acquired, constructed or improved,
and no such extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the Lien being extended, renewed or
replaced; and provided further that the aggregate principal amount of the
-------- -------
Debt secured by Liens permitted by this clause (iv) shall not exceed
$7,500,000 at any time outstanding.
(v) Liens arising in connection with Capitalized Leases in an
aggregate principal amount not to exceed $7,500,000 at any time
outstanding, provided that no such Lien shall extend to or cover any
Collateral;
60
(vi) other Liens securing Debt outstanding in an aggregate
principal amount not to exceed $2,500,000, provided that no such Lien shall
extend to or cover any Collateral; and
(vii) the replacement, extension or renewal of any Lien
permitted by clause (iii) above upon or in the same property theretofore
subject thereto or the replacement, extension or renewal (without increase
in the amount or change in any direct or contingent obligor) of the Debt
secured thereby.
(B) DEBT. Create, incur, assume or suffer to exist, or permit any of
----
its Subsidiaries to create, incur, assume or suffer to exist, any Debt other
than:
(i) in the case of the Borrower,
(A) Debt under the Loan Documents and the Synthetic Lease
Documents,
(B) Debt in respect of Hedge Agreements in an aggregate
notional amount not to exceed $100,000,000 at any time outstanding not
entered into for speculative purposes; and
(C) unsecured Debt in respect of the Casino Intercompany
Advances in an aggregate principal amount not to exceed $10,000,000 at
any time outstanding.
(ii) in the case of any of its wholly-owned Domestic
Subsidiaries that is a Loan Party, Debt owed to the Borrower or to another
wholly-owned Domestic Subsidiary of the Borrower that is Loan Party so long
as such Debt is evidenced by a promissory note that has been pledged to the
Administrative Agent pursuant to the Security Agreement; and
(iii) in the case of the Borrower and any of its Subsidiaries,
(A) Debt secured by Liens permitted by Section 6.02(a)(iv)
and (v) not to exceed in the aggregate the amount set forth in such
Sections,
(B) the Surviving Debt,
(C) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
(C) MERGERS, CORPORATE CHANGES, ETC. Merge into or consolidate with
--------------------------------
any Person or permit any Person to merge into it or liquidate or dissolve itself
(or suffer any liquidation or dissolution), or permit any of its Subsidiaries to
do so, except that (i) any wholly-owned Solvent Domestic Subsidiary of the
Borrower may merge into or consolidate with any other wholly-owned
61
Solvent Domestic Subsidiary of the Borrower provided that, in the case of any
such consolidation, the Person formed by such consolidation shall be a wholly-
owned Solvent Domestic Subsidiary of the Borrower and (ii) any of the Borrower's
wholly-owned Solvent Domestic Subsidiaries may merge into the Borrower;
provided, however, that in each case, immediately after giving effect thereto,
-------- -------
no event shall occur and be continuing that constitutes a Default.
(D) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise
---------------------
dispose of, or permit any of its Subsidiaries to sell, lease, transfer or
otherwise dispose of, any assets, or grant any option or other right to
purchase, lease or otherwise acquire any Collateral other than Inventory to be
sold in the ordinary course of its business, except (i) sales of Inventory in
the ordinary course of its business, (ii) in a transaction authorized by
subsection (d) of this Section, (iii) the sale of any asset by the Borrower or
any Subsidiary (other than a bulk sale of Inventory and a sale of Accounts
Receivable other than delinquent accounts for collection purposes only) so long
as (A) the purchase price paid to the Borrower or such Subsidiary for such asset
shall be no less than the fair market value of such asset at the time of such
sale, (B) the purchase price for such asset shall be paid to the Borrower or
such Subsidiary solely in cash and (C) the aggregate purchase price paid to the
Borrower and all of its Subsidiaries for such asset and all other assets sold by
the Borrower and its Subsidiaries during the same Fiscal Year pursuant to this
clause (iii) shall not exceed $5,000,000 and (D) the Borrower shall, on the date
of such sale, prepay the Advances pursuant to, and in the order of priority set
forth in, Section 2.05(b)(ii) in an aggregate principal amount equal to the Net
Cash Proceeds received by the Borrower or such Subsidiary from the sale of such
asset and (iv) so long as no Default shall occur and be continuing, the grant of
any option or other right to purchase any asset in a transaction which would be
permitted under the provisions of the next preceding clause (iii).
(E) INVESTMENTS IN OTHER PERSONS. Make or hold, or permit any of its
----------------------------
Subsidiaries to make or hold, any Investment in any Person other than
(i) Investments by the Borrower and its Subsidiaries in wholly-
owned Domestic Subsidiaries that are Loan Parties;
(ii) loans and advances to officers and employees in the
ordinary course of the business of the Borrower and its Subsidiaries as
presently conducted in an aggregate principal amount not to exceed
$1,500,000 at any time outstanding;
(iii) Investments by the Borrower and its Subsidiaries in Cash
Equivalents; and
(iv) other Investments in an aggregate amount invested not to
exceed $2,000,000.
(F) DIVIDENDS, ETC. Declare or pay any dividends, purchase, redeem,
--------------
retire, defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such or issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, or permit any of its
Subsidiaries to purchase, redeem, retire,
62
defease or otherwise acquire for value any capital stock of the Borrower or any
warrants, rights or options to acquire such capital stock or to issue or sell
any capital stock or any warrants, rights or options to acquire such capital
stock, except that, so long as no Default shall have occurred and be continuing,
the Borrower may (i) declare and deliver dividends and distributions payable
only in (and to the holders of) common stock of the Borrower, (ii) except to the
extent the Net Cash Proceeds thereof are required to be applied to the
prepayment of the Advances pursuant to Section 2.05(b), purchase, redeem,
retire, defease or otherwise acquire shares of its capital stock with the
proceeds received from the issue of new shares of its capital stock with equal
or inferior voting powers, designations, preferences and rights, (iii) declare
and pay cash dividends to its stockholders in an aggregate amount not to exceed
in any fiscal year of the Borrower the sum of (A) $4,700,000 plus (B) the
----
Additional Dividend Amount but only if the Fixed Charge Coverage Ratio of the
Borrower determined pursuant to Section 6.04(c) hereto equals 2.0 or greater as
of the then most recently ended period of four consecutive fiscal quarters of
the Borrower, and (iv) issue equity securities upon the exercise of rights to
acquire such equity securities but only if (A) the exercise of such rights
requires either the payment of cash or the conversion of the Casino Note (or any
portion thereof ) and (B) the Net Cash Proceeds of the exercise of such rights
are applied to the prepayment of Advances to the extent required pursuant to
Section 2.05(b).
(G) CHANGE IN NATURE OF BUSINESS. Make, or permit any of its
----------------------------
Subsidiaries to make, any material change in the nature of its business as
carried on at the date hereof.
(H) CHARTER AMENDMENTS; NEW SUBSIDIARIES. Amend, or permit any of
------------------------------------
its Subsidiaries to amend, its certificate or articles of incorporation, bylaws
or other organizational or charter documents (including, without limitation, by
filing any certificate of designation with respect to any preferred stock or
otherwise creating any new preferred stock) or create or acquire, or permit its
Subsidiaries to directly or indirectly create or acquire, a Subsidiary not in
existence on the date hereof.
(I) ACCOUNTING CHANGES. Make or permit, or permit any of its
------------------
Subsidiaries to make or permit, any change in accounting policies or reporting
practices, except as required by generally accepted accounting principles.
(J) PREPAYMENTS, ETC. OF DEBT. (i) Prepay, redeem, purchase, defease
-------------------------
or otherwise satisfy prior to the scheduled maturity thereof in any manner any
Debt other than (A) the prepayment of the Advances in accordance with the terms
of this Agreement, (B) regularly scheduled or required repayments or redemptions
of Surviving Debt, and (C) redemption of all or any portion of the Casino Note
for equity securities of the Borrower, (ii) make any payment in violation of any
subordination terms of any Debt, or (iii) amend, modify or change in any manner
any term or condition of the Casino Intercompany Agreement, the Casino Loan
Agreement or any other Surviving Debt or permit any of its Subsidiaries to do
any of the foregoing other than to prepay any Debt payable to the Borrower.
(K) NEGATIVE PLEDGE. Enter into or suffer to exist, or permit any of
---------------
its Subsidiaries to enter into or suffer to exist, any agreement prohibiting or
conditioning the creation or assumption of any Lien upon any of its property or
assets other than (i) in favor of the
63
Administrative Agent and the Lender Parties or (ii) in connection with (A) any
Surviving Debt and any Debt outstanding on the date such Subsidiary first
becomes a Subsidiary or (B) any Debt permitted by Section 6.02(b)(iii)(a) hereof
so long as such prohibition extends only to the property subject to the Lien
securing such Debt.
(L) PARTNERSHIPS. Become a general partner in any general or limited
------------
partnership, or permit any of its Subsidiaries to do so, other than any
Subsidiary the sole assets of which consist of its interest in such partnership.
(M) AFFILIATE TRANSACTIONS. Enter into, or permit any of its
----------------------
Subsidiaries to, directly or indirectly, enter into any transaction with,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service to, any Subsidiary or Affiliate of any Borrower, except
pursuant to the reasonable requirements of such Borrower's or such Subsidiary's
business, as the case may be, and upon fair and reasonable terms no less
favorable to such Borrower or such Subsidiary than could be obtained in a
comparable arm's-length transaction with an unaffiliated Person.
SECTION 6.03. REPORTING REQUIREMENTS. So long as any Advance shall
----------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will, unless the Required Lenders
shall otherwise consent in writing, furnish to the Lenders:
(A) BORROWING BASE CERTIFICATE. Quarterly, within 10 Business Days
--------------------------
after the last Business day of each quarter and prior to the making of any
Revolving Advance and any Issuance of a Letter of Credit and at any other time
reasonably requested by the Administrative Agent, a Borrowing Base Certificate,
which shall: (i) be completed substantially in the form of Exhibit K, detailing
the Borrower's Eligible Accounts Receivable, Eligible Inventory and Eligible
Real Property as of the last day of such quarter (except that, in the case of a
Borrowing Base Certificate delivered more than 40 days after the end of the then
most recently ended fiscal quarter of the Borrower, such Borrowing Base
Certificate shall set forth the Borrower's Eligible Accounts Receivable,
Eligible Inventory and Eligible Real Property as of the last day of the most
recently ended fiscal month of the Borrower) or as of such other date as the
Administrative Agent may request; (ii) be prepared by or under the supervision
of the Borrower's chief financial officer and certified by such officer subject
only to adjustment upon completion of the normal year-end audit of physical
inventory; and (iii) include such additional schedules and other information as
the Administrative Agent may reasonably request.
(B) DEFAULT NOTICE. (i) As soon as possible after the Borrower has
--------------
reason to believe a Default will occur and (ii) as soon as possible and in any
event within two days after the occurrence of each Default continuing on the
date of such statement, a statement of the chief financial officer of the
Borrower setting forth details of such Default and the action that the Borrower
has taken and proposes to take with respect thereto.
(C) QUARTERLY FINANCIALS. As soon as available and in any event
--------------------
within 45 days after the end of each of the first three quarters of each fiscal
year of the Borrower, Consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end
64
of such quarter and Consolidated and consolidating statements of income and cash
flows of the Borrower and its Subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all in reasonable detail and
duly certified (subject to year-end audit adjustments) by the chief financial
officer of the Borrower as having been prepared in accordance with GAAP,
together with (i) a certificate of said officer stating that the representations
and warranties in Section 5.01 are true and correct in all material respects as
of the date of such certificate and that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement as to
the nature thereof and the action that the Borrower has taken and proposes to
take with respect thereto and (ii) a schedule in form satisfactory to the
Administrative Agent of the computations used by the Borrower in determining
compliance with the covenants contained in Sections 6.02(a), (b), (c), (e), (f),
(g) and 6.04.
(D) ANNUAL FINANCIALS. As soon as available and in any event within
-----------------
90 days after the end of each fiscal year of the Borrower, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries, including
therein audited Consolidated and unaudited consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of such fiscal year and audited
Consolidated and unaudited consolidating statements of income and cash flows of
the Borrower and its Subsidiaries for such fiscal year, in each case with
respect to such audited balance sheets and statements of income and cash flow
accompanied by an opinion acceptable to the Required Lenders of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP or other independent public accountants of recognized standing acceptable to
the Required Lenders, together with (i) a certificate of such accounting firm to
the Lenders stating that in the course of the regular audit of the business of
the Borrower and its Subsidiaries, which audit was conducted by such accounting
firm in accordance with generally accepted auditing standards, such accounting
firm has obtained no knowledge that a Default has occurred and is continuing, or
if, in the opinion of such accounting firm, a Default has occurred and is
continuing, a statement as to the nature thereof, (ii) a schedule in form
satisfactory to the Administrative Agent of the computations used by such
accountants in determining, as of the end of such fiscal year, compliance with
the covenants contained in Sections 6.02(a), (b), (c), (e), (f), (g) and 6.04
and (iii) a certificate of the chief financial officer of the Borrower stating
that the representations and warranties in Section 5.01 are true and correct in
all material respects as of the date of such certificate and that no Default has
occurred and is continuing or, if a default has occurred and is continuing, a
statement as to the nature thereof and the action that the Borrower has taken
and proposes to take with respect thereto.
(E) ERISA EVENTS. Promptly and in any event within ten days after
------------
any Loan Party or any of its ERISA Affiliates knows or has reason to know that
any material ERISA Event with respect to any Loan Party or any of its ERISA
Affiliates has occurred, a statement of the chief financial officer of the
Borrower describing such ERISA Event and the action, if any, that such Loan
Party or such ERISA Affiliate has taken and proposes to take with respect
thereto.
(F) PLAN TERMINATIONS. Promptly and in any event within 10 Business
-----------------
Days after receipt thereof by any Loan Party or any of its ERISA Affiliates,
copies of each notice from
65
the PBGC stating its intention to terminate any Plan of any Loan Party or any of
its ERISA Affiliates or to have a trustee appointed to administer any such Plan.
(G) PLAN ANNUAL REPORTS. 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 Plan of each Loan Party or any of its ERISA Affiliates.
(H) MULTIEMPLOYER PLAN NOTICES. Promptly and in any event within 10
--------------------------
Business Days after receipt thereof by any Loan Party or any of its ERISA
Affiliates from the sponsor of a Multiemployer Plan of any Loan Party or any of
its ERISA Affiliates, copies of each notice concerning (i) the imposition of
Withdrawal Liability by any such Multiemployer Plan, (ii) the reorganization or
termination, within the meaning of Title IV of ERISA, of any such Multiemployer
Plan or (iii) the amount of liability incurred, or that may be incurred, by such
Loan Party or any of its ERISA Affiliates in connection with any event described
in clause (i) or (ii).
(I) LITIGATION. Promptly after the commencement thereof, notice of
----------
all material actions, suits, investigations, litigation and proceedings before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting any Loan Party or any of its
Subsidiaries of the type described in Section 4.01(d), and promptly after the
occurrence thereof, notice of any adverse change in the status or the financial
effect on any Loan Party or any of their Subsidiaries of the Disclosed
Litigation from that described on Schedule 5.01(h).
(J) PRESS RELEASES; SECURITIES REPORTS. Promptly after the sending
----------------------------------
or filing thereof, copies of all (i) press releases, (ii) proxy statements,
financial statements and reports that any Loan Party or any of its Subsidiaries
sends to its stockholders, and (iii) regular, periodic and special reports, and
all registration statements, that any Loan Party or any of its Subsidiaries
files with the Securities and Exchange Commission or any governmental authority
that may be substituted therefor, or with any national securities exchange.
(K) CREDITOR REPORTS. Promptly after the furnishing thereof, copies
----------------
of any statement or report furnished to (i) any other party to a Synthetic
Lease, or (ii) any other holder of the securities of any Loan Party or of any of
its Subsidiaries pursuant to the terms of any indenture, loan or credit or
similar agreement and not otherwise required to be furnished to the Lender
Parties pursuant to any other clause of this Section 6.03.
(L) ENVIRONMENTAL CONDITIONS. Promptly after the occurrence thereof,
------------------------
notice of any condition or occurrence on any property of any Loan Party or any
of its Subsidiaries that results in a material noncompliance by any Loan Party
or any of its Subsidiaries with any Environmental Law or Environmental Permit or
could (i) form the basis of an Environmental Action against any Loan Party or
any of its Subsidiaries or such property that could have a Material Adverse
Effect or (ii) cause any such property to be subject to any material
restrictions on ownership, occupancy, use or transferability under any
Environmental Law.
66
(M) OTHER INFORMATION. Such other information respecting the
-----------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any of its Subsidiaries as any
Lender Party may from time to time reasonably request.
SECTION 6.04. FINANCIAL COVENANTS. So long as any Advance shall
-------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will, unless the Required Lenders
otherwise consent in writing:
(A) NET WORTH. Maintain at all times a Consolidated Net Worth of the
---------
Borrower and its Subsidiaries of not less than the sum of (i) $173,346,450, plus
----
(ii) 50% of positive cumulative Consolidated Net Income of the Borrower and its
Subsidiaries for all fiscal quarters ending after October 9, 1998 (but without
any deduction for any period in which Consolidated Net Income is a negative
number), plus (iii) 100% of the amount of all cash proceeds of any equity
----
issuances by the Borrower or any of its Subsidiaries after the date hereof, plus
----
(iv) the aggregate principal amount of Debt under the Casino Notes converted to
equity.
(B) ADJUSTED LEVERAGE RATIO. Maintain an Adjusted Leverage Ratio not
-----------------------
greater than (i) 5.25 to 1 from and including January 3, 1999 to, but not
including, ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) 4.75 from and including March 28, 1999 to, but
not including, March 26, 2000, and (iii) 4.50 thereafter.
(C) FIXED CHARGE COVERAGE RATIO. Maintain at all times a ratio of
---------------------------
the sum of (i) Consolidated EBITDA of the Borrower and its Subsidiaries plus
(ii) Consolidated rent expense of the Borrower and its Subsidiaries to the sum
of (iii) Consolidated Interest Expense of the Borrower and its Subsidiaries plus
(iv) Consolidated rent expense of the Borrower and its Subsidiaries (in each
case determined for the period of four consecutive fiscal quarters ending as of
the last day of each fiscal quarter of the Borrower) of not less than 1.75 to 1.
(D) CAPITAL EXPENDITURES. Not make, or permit any of its
--------------------
Subsidiaries to make, any Capital Expenditures that would cause the aggregate of
all such Capital Expenditures made by the Borrower and its Subsidiaries in any
period set forth below to exceed the amount set forth below for such period:
Fiscal Year
Ending Amount
------ ------
January 3, 1999 $50,000,000
January 2, 2000 $45,000,000
December 31, 2000 $45,000,000
ARTICLE VII.
EVENTS OF DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. If any of the following events
-----------------
("EVENTS OF DEFAULT") shall occur and be continuing:
-----------------
67
(a) the Borrower shall fail to pay any principal of any Advance when
the same becomes due and payable; or any Loan Party shall fail to make any
interest or any other payment under any Loan Document within three days
after such interest or other amount becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or any of
its officers) under or in connection with any Loan Document shall prove to
have been incorrect in any material respect when made or deemed made; or
(c) the Borrower shall fail to perform or observe any term, covenant
or agreement contained in Sections 6.01(e), (f), (k), (l) or (m), 6.02,
6.03 or 6.04; or
(d) any Loan Party shall fail to perform any other term, covenant or
agreement contained in any Loan Document on its part to be performed or
observed if such failure shall remain unremedied for 30 days after written
notice thereof shall have been given to the Borrower by the Administrative
Agent or any Lender Party; or
(e) any "Event of Default" (under and as defined in the Participation
Agreement) shall have occurred and be continuing or any Loan Party or any
of its Subsidiaries shall fail to pay any principal of, premium or interest
on or any other amount payable in respect of any Debt that is outstanding
in a principal amount of at least $5,000,000 in the aggregate (but
excluding Debt outstanding hereunder) of such Loan Party or such Subsidiary
(as the case may be), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise)
or any other event shall occur or condition shall exist under any agreement
or instrument relating to any such Debt, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity
of such Debt or otherwise to cause, or to permit the holder thereof to
cause, such Debt to mature; or any such Debt shall be declared to be due
and payable or required to be prepaid or redeemed (other than by a
regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Debt
shall be required to be made, in each case prior to the stated maturity
thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
any Loan Party or any of its Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or for
any substantial part of its property; or any Loan Party or any of its
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (f); or
68
(g) any judgment or order for the payment of money in excess of
$5,000,000 shall be rendered against any Loan Party or any of its
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall
be any period of 60 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
(h) any non-monetary judgment or order shall be rendered against any
Loan Party or any of its Subsidiaries that could have a Material Adverse
Effect, 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
(i) any provision of any Loan Document after delivery thereof
pursuant to Section 4.01 shall for any reason cease to be valid and binding
on or enforceable against any Loan Party party to it, or any such Loan
Party shall so state in writing; or
(j) any Collateral Document after delivery thereof pursuant to
Section 4.01 shall for any reason (other than pursuant to the terms
thereof) cease to create a valid and perfected first priority Lien on the
Collateral purported to be covered thereby; or
(k) (i) any Person or two or more Persons acting in concert other
than Casino shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934), directly or indirectly, of Voting Stock of the
Borrower (or other securities convertible into such Voting Stock)
representing 50% or more of the combined voting power of all Voting Stock
of the Borrower; or (ii) during any period of up to 24 consecutive months,
commencing before or after the date of this Agreement, individuals who at
the beginning of such 24-month period were directors of the Borrower shall
cease for any reason to constitute a majority of the board of directors of
the Borrower; or (iii) any Person or two or more Persons acting in concert
other than Casino shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of, the power to exercise, directly or
indirectly, a controlling influence over the management or policies of the
Borrower, or control over Voting Stock of the Borrower (or other securities
convertible into such securities) representing 50% or more of the combined
voting power of all Voting Stock of the Borrower; or
(l) any ERISA Event shall have occurred with respect to a Plan of any
Loan Party or any of its ERISA Affiliates and the liability of the Loan
Parties and their ERISA Affiliates related to such ERISA Event and any and
all other ERISA Events which shall have occurred and then exist with
respect to any Plans of the Loan Parties and their ERISA Affiliates exceeds
$5,000,000; or
(m) (i) there occurs any failure to meet the minimum funding standard
under Section 302 of ERISA or Section 412 of the Internal Revenue Code with
respect to a Plan, or any tax return is filed showing any tax payable under
Section 4971(a) of the
69
Internal Revenue Code with respect to any such failure, or Borrower or any
Subsidiary thereof or any other Controlled Group Member receives a notice
of deficiency from the Internal Revenue Service with respect to any alleged
or asserted such failure, or (ii) any request is made by any Person for a
variance from the minimum funding standard, or an extension of the period
for amortizing unfunded liabilities, with respect to a Plan; or
(n) any Loan Party or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan of any Loan Party or any of
its ERISA Affiliates that it has incurred Withdrawal Liability to such
Multiemployer Plan in an amount that, when aggregated with all other
amounts required to be paid to Multiemployer Plans by the Loan Parties and
their ERISA Affiliates as Withdrawal Liability (determined as of the date
of such notification), exceeds $5,000,000 or requires payments exceeding
$1,000,000 per annum; or
(o) any Loan Party or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan of any Loan Party or any of
its ERISA Affiliates that such Multiemployer Plan is in reorganization or
is being terminated, within the meaning of Title IV of ERISA, and as a
result of such reorganization or termination the aggregate annual
contributions of the Loan Parties and their 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 of such Multiemployer Plans
immediately preceding the plan year in which such reorganization or
termination occurs by an amount exceeding $1,000,000; or
(p) there shall occur any Material Adverse Change; or
(q) any Borrowing Base Deficiency shall occur and no prepayment of
such Borrowing Base Deficiency has been made when and as required pursuant
to Section 2.05(b)(i) hereof; or
(r) the Borrower shall report on its Consolidated financial
statements in or with respect to the third or fourth quarter of fiscal year
1998 of the Borrower, (i) any charge (other than non-material charges
consistent with past practices in the ordinary course of business) except a
one time charge associated with the closing of the Florida Stores in an
aggregate amount not to exceed $18,000,000 (except that (A) not more than
$9,000,000 may represent items requiring cash payments and (B) such amounts
may not include any charges of the type referred to in the following clause
(ii)) or (ii) any charge associated with operating losses relating to the
Florida Stores in an amount in excess of $9,000,000.
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Lender to make Advances and of any Issuing Bank
to issue Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrower, declare the Notes, all interest
thereon and all other amounts payable under this Agreement and the other Loan
Documents to be
70
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that in the event of an actual or
-------- -------
deemed entry of an order for relief with respect to any Loan Party or any of its
Subsidiaries under the Federal Bankruptcy Code, (x) the obligation of each
Lender Party to make Advances and of each Issuing Bank to issue Letters of
Credit shall automatically be terminated and (y) the Notes, all such interest
and all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
SECTION 7.02. ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON
------------------------------------------------
DEFAULT. If any Event of Default shall have occurred and be continuing, the
-------
Administrative Agent may, irrespective of whether it is taking any of the
actions described in Section 7.01 or otherwise, make demand upon the Borrower
to, and forthwith upon such demand the Borrower will, pay to the Administrative
Agent on behalf of the Lender Parties in same day funds at the Administrative
Agent's office designated in such demand, for deposit to a non-interest bearing
account established by the Administrative Agent for such purposes or for
purposes of Section 2.05(b)(iv) (the "L/C CASH COLLATERAL ACCOUNT"), an amount
---------------------------
equal to the aggregate Available Amount of all Letters of Credit then
outstanding (and the Borrower hereby grants to the Administrative Agent, for the
ratable benefit of the Administrative Agent and each Lender Party, a continuing
security interest in all amounts at any time on deposit in the L/C Cash
Collateral Account to secure all Letter of Credit Obligations from time to time
outstanding and all other Obligations hereunder). If at any time the
Administrative Agent determines that any funds held in the L/C Cash Collateral
Account are subject to any right or claim of any Person other than the
Administrative Agent and the Lender Parties or that the total amount of such
funds is less than the aggregate Available Amount of all Letters of Credit, the
Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
L/C Cash Collateral Account that the Administrative Agent determines to be free
and clear of any such right and claim.
ARTICLE VIII.
THE ADMINISTRATIVE AGENT
SECTION 8.01. AUTHORIZATION AND ACTION. Each Lender Party hereby
------------------------
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement and
the other Loan Documents as are delegated to the Administrative Agent by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
the Notes, the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all Lender Parties and all holders of Notes; provided, however,
-------- -------
that the
71
Administrative Agent shall not be required to take any action that exposes the
Administrative Agent to personal liability or that is contrary to this Agreement
or applicable law. The Administrative Agent agrees to give to each Lender Party
prompt notice of each notice given to it by the Borrower pursuant to the terms
of this Agreement.
SECTION 8.02. AGENT'S RELIANCE, ETC. Neither the Administrative
---------------------
Agent nor any of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent: (i) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives and accepts an Assignment and Acceptance
entered into by the Lender that is the payee of such Note, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 9.07; (ii) may consult
with legal counsel (including counsel for any Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender Party and shall not be responsible to any Lender
Party for any statements, warranties or representations made in or in connection
with the Loan Documents; (iv) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
of any Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (v) shall not be
responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (vi) shall
incur no liability under or in respect of any Loan Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopy, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties; and (vii) shall incur no liability as a
result of any determination whether the transactions contemplated by the Loan
Documents constitute a "highly leveraged transaction" within the meaning of the
interpretations issued by the Comptroller of the Currency, the Federal Deposit
Insurance Corporation and the Board of Governors of the Federal Reserve System.
SECTION 8.03. CREDIT LYONNAIS LOS ANGELES BRANCH AND AFFILIATES.
-------------------------------------------------
With respect to its Commitments and the Advances made by it and the Notes issued
to it, Credit Lyonnais Los Angeles Branch shall have the same rights and powers
under the Loan Documents as any other Lender Party and may exercise the same as
though it were not the Administrative Agent; and the terms "Lender", "Lenders",
"Lender Party" or "Lender Parties" shall, unless otherwise expressly indicated,
include Credit Lyonnais Los Angeles Branch in its individual capacity. Credit
Lyonnais Los Angeles Branch and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any Loan
Party, any of its Subsidiaries and any Person who may do business with or own
securities of any Loan Party or any such Subsidiary, all as if Credit Lyonnais
Los Angeles Branch were not the Administrative Agent and without any duty to
account therefor to the Lender Parties.
72
SECTION 8.04. LENDER PARTY CREDIT DECISION. Each Lender Party
----------------------------
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender Party and based on the financial
statements referred to in Section 5.01 and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender Party also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender Party 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.
SECTION 8.05. INDEMNIFICATION. Each Lender Party severally agrees to
---------------
indemnify the Administrative Agent and Syndication Agent and their affiliates,
officers, directors, employees, attorneys, agents and advisors (to the extent
not promptly reimbursed by the Borrower) from and against such Lender Party's
ratable share of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Administrative Agent or the Syndication Agent in any way relating to
or arising out of the Loan Documents or any action taken or omitted by the
Administrative Agent or the Syndication Agent under the Loan Documents;
provided, however, that no Lender Party shall be liable for any portion of such
-------- -------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender Party
agrees to reimburse the Administrative Agent or the Syndication Agent promptly
upon demand for its ratable share of any costs and expenses payable by the
Borrower under Section 9.04, to the extent that such Agent is not promptly
reimbursed for such costs and expenses by the Borrower. For purposes of this
Section 8.05, the Lender Parties' respective ratable shares of any amount shall
be determined, at any time, according to the sum of (a) the aggregate principal
amount of the Advances (other than L/C Advances) outstanding at such time and
owing to the respective Lender Parties, (b) their respective Pro Rata Shares of
the aggregate Letter of Credit Obligations outstanding at such time, plus (c)
----
their respective Unused Revolving Commitments at such time. The failure of any
Lender Party to reimburse the Administrative Agent or the Syndication Agent
promptly upon demand for its ratable share of any amount required to be paid by
the Lender Parties to such Agent as provided herein shall not relieve any other
Lender Party of its obligation hereunder to reimburse such Agent for its ratable
share of such amount, but no Lender Party shall be responsible for the failure
of any other Lender Party to reimburse such Agent for such other Lender Party's
ratable share of such amount.
SECTION 8.06. SUCCESSOR AGENTS. The Administrative Agent may resign
----------------
at any time by giving written notice thereof to the Lender Parties and the
Borrower and may be removed at any time with or without cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation or the
Required Lenders' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lender Parties, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States or of any State
thereof and having a combined capital and surplus of
73
at least $250,000,000. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent and upon the execution and filing or recording of such
financing statements, or amendments thereto, and such amendments or supplements
to the Mortgages, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Agent shall succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under the
Loan Documents. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article VIII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC.; RELEASE OF COLLATERAL.
---------------------------------------
(A) AMENDMENTS, ETC. No amendment or waiver of any provision of this
----------------
Agreement or the Notes, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Lenders (and, in the case of any such amendment, the Borrower),
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no
-------- -------
amendment, waiver or consent shall, unless in writing and signed by all the
Lender Parties, do any of the following at any time: (i) waive any of the
conditions specified in Section 4.02 or, in the case of the initial Borrowing,
4.01, or waive any Event of Default arising under Section 7.01(k), (ii) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Notes that shall be required for the Lender Parties or any of them to take
any action hereunder, (iii) release all of the Collateral or release any portion
of the Collateral equal to or greater than (at the time of such release) 10% or
more of the total assets of the Borrower and its Subsidiaries on a consolidated
basis or release any Guarantor from its obligations under the Guaranty or
otherwise modify the Guaranty in any way requiring consent of all Lenders
pursuant to Section 8 of the Guaranty, (iv) increase the total Obligations under
this Facility, (v) reduce or alter the principal of, or interest on, the Notes
held by the Lender or any fees or other amounts payable hereunder to any Lender,
(vi) postpone any date fixed for any payment of principal of, or interest on,
the Notes held by any Lender or any fees or other amounts payable hereunder to
any Lender, or (vii) amend this Section 9.01 or amend Section 2.05; provided
--------
further that no amendment, waiver or consent shall, unless in writing and signed
-------
by the Swing Line Lender or the applicable Issuing Bank, as the case may be, in
addition to the Lenders required above to take such action, affect the rights or
obligations of the Swing Line Lender or of any Issuing Bank, as the case may be,
under this Agreement; and provided further that no amendment, waiver or consent
-------- -------
shall, unless in writing and signed by the Administrative Agent in addition to
the Lenders required above to take such action, affect the rights or duties of
the Administrative Agent
74
(B) RELEASE OF COLLATERAL. So long as no Default under Section
----------------------
7.01(a), (e), or (f) and no Event of Default has occurred and is continuing,
upon the request of the Borrower, and without the consent of the Required
Lenders or any other Lender Party, the Administrative Agent is authorized to
and, subject to the provisions of this Section 9.01(b), shall release from the
Lien of any Collateral Document any item or items of Collateral comprising less
than all or substantially all of the Collateral at the time of such release (and
is authorized to, and subject to the provisions of this Section 9.01(b), shall,
at the Borrower's expense, execute any documents or instruments reasonably
requested by the Borrower in connection therewith) if (A) such release is
requested in conjunction with the consummation of any sale or other disposition
of such Collateral by the Borrower or any of its Subsidiaries that is not
prohibited by this Agreement, (B) arrangements satisfactory to the
Administrative Agent for the receipt by the Administrative Agent of any
prepayment required under Section 2.05(b) have been made, and (C) the Borrower
has delivered to the Administrative Agent an officer's certificate, signed by a
Responsible Officer, certifying that no Default under Section 6.01(a), (e), or
(f) and no Event of Default has occurred and is continuing and that such sale or
other disposition is not prohibited by this Agreement.
SECTION 9.02. NOTICES, ETC. All notices and other communications
------------
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered, if to the Borrower, at its address at Smart & Final, Inc.,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇,
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; if to any Initial Lender, at its Domestic Lending
Office specified opposite its name on Schedule I hereto; if to any other Lender,
at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender; and if to the Administrative Agent, at its
address at Credit Lyonnais Los Angeles Branch, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇, or, as to each party, at
such other address as shall be designated by such party in a written notice to
the other parties. All such notices and communications shall, when mailed,
telegraphed, telecopied, telexed or cabled, be effective when deposited in the
mails, delivered to the telegraph company, transmitted by telecopier, confirmed
by telex answerback or delivered to the cable company, respectively, except that
notices and communications to the Administrative Agent pursuant to Article II,
III, IV or VIII shall not be effective until received by the Administrative
Agent.
SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of any
-------------------
Lender Party or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder, under any Note or under any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
SECTION 9.04. COSTS AND EXPENSES. (a) The Borrower agrees to pay on
------------------
demand (i) all costs and expenses of the Co-Lead Arrangers and the Agents in
connection with the negotiation, preparation, execution, delivery, syndication,
administration, modification and amendment of the Loan Documents, whether or not
the Loan Documents are executed or the Facility is closed, (including, without
limitation, (A) all due diligence, transportation, computer,
75
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
for the Co-Lead Arrangers and the Agents with respect thereto, with respect to
advising the Co-Lead Arrangers and the Agents as to their rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under the Loan Documents, with respect to negotiations with any Loan
Party or with other creditors of any Loan Party or any of its Subsidiaries
arising out of any Default or any events or circumstances that may give rise to
a Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors' rights generally and any proceeding ancillary thereto) and (ii) all
costs and expenses of the Co-Lead Arrangers and the Agents, each Lender and each
Issuing Bank in connection with the enforcement of the Loan Documents, whether
in any action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally or otherwise (including,
without limitation, the reasonable fees and expenses of counsel for the Co-Lead
Arrangers and the Agents and each Lender Party with respect thereto).
(b) The Borrower agrees to indemnify and hold harmless the Agents,
each Lender, each Issuing Bank and each of their Affiliates and their officers,
directors, employees, agents and advisors (each, an "INDEMNIFIED PARTY") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of, or in connection with the preparation for
a defense of, any investigation, litigation or proceeding arising out of,
related to or in connection with (i) this Agreement or any other Loan Document,
the actual or proposed use of the proceeds of any Advance or of any Letter of
Credit issued hereunder or any of the transactions contemplated hereby or by the
other Loan Documents, or (ii) the actual or alleged presence of Hazardous
Materials on any property of any Loan Party or any of its Subsidiaries or any
Environmental Action relating in any way to any Loan Party or any of its
Subsidiaries, in each case whether or not such investigation, litigation or
proceeding is brought by any Loan Party, its directors, shareholders or
creditors or an Indemnified Party or any Indemnified Party is otherwise a party
thereto and whether or not the transactions contemplated hereby are consummated,
except to the extent such claim, damage, loss, liability or expense is found in
a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
The Borrower also agrees not to assert any claim against the Administrative
Agent, any Lender Party, any of their affiliates, or any of their respective
directors, officers, employees, attorneys and agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to any of the transactions contemplated herein or in
any other Loan Document or the actual or proposed use of the proceeds of the
Advances.
(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender Party
other than on the last day of the Interest Period for such Advance, as a result
of a payment or conversion pursuant to Section 2.05 or 2.06, acceleration of the
maturity of the Notes pursuant to Section 7.01 or for any other reason, the
Borrower shall, upon demand by such Lender Party (with a copy of such
76
demand to the Administrative Agent), pay to the Administrative Agent for the
account of such Lender Party any amounts required to compensate such Lender
Party for any additional losses, costs or expenses that it may reasonably incur
as a result of such payment, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender Party to fund or maintain such Advance. In
addition to the foregoing, if any losses, costs or expenses are incurred by the
Administrative Agent or any Lender with respect to Eurodollar Rate Advances
during the 180 day period following the Closing Date as a result of or in
connection with the syndication of the Facilities, the Borrower shall, upon
demand by the Administrative Agent or any Lender, pay to the Administrative
Agent or such Lender any amounts required to compensate the Administrative Agent
or such Lender for any such losses, costs or expenses.
(d) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by the Administrative Agent or any Lender
Party, in its sole discretion and the Borrower shall reimburse the
Administrative Agent or such Lender Party on demand for any amounts so paid with
interest thereon at the Default Rate from the date of such payment until so
reimbursed.
SECTION 9.05. RIGHT OF SET-OFF. Upon (a) the occurrence and during
----------------
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 7.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 7.01, each Lender Party is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
otherwise 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 such Lender Party to or for the credit or the account of the Borrower against
any and all of the Obligations of the Borrower now or hereafter existing under
this Agreement and the Note or Notes held by such Lender Party, irrespective of
whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify the Borrower after any such set-off and
application; provided, however, that the failure to give such notice shall not
-------- -------
affect the validity of such set-off and application. The rights of each Lender
Party under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Lender Party
may have.
SECTION 9.06. BINDING EFFECT. This Agreement shall become effective
--------------
when it shall have been executed by the Borrower and the Administrative Agent
and when the Administrative Agent shall have been notified by each Lender Party
that such Lender Party has executed it and thereafter shall be binding upon and
inure to the benefit of the Borrower, the Administrative Agent and each Lender
Party and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Lender Parties.
SECTION 9.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender Party
------------------------------
may assign to one or more banks or other entities all or a portion of its rights
and obligations under
77
this Agreement (including, without limitation, all or a portion of its
Commitment or Commitments, and the Advances owing to it and the Note or Notes
held by it); provided, however, that (i) each such assignment shall be of a
-------- -------
uniform, and not a varying, percentage of all rights and obligations under and
in respect of all of the Facilities and must occur simultaneously with an
assignment of a ratable portion of such Lenders' rights and obligations under
the Synthetic Lease Documents (and any assignment which is not made in
compliance with this clause (i) shall be void and of no force or effect), (ii)
except in the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender Party or an assignment of all of a Lender Party's
rights and obligations under this Agreement, the amount of the Commitment of the
assigning Lender Party being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000 and shall be an integral
multiple of $1,000,000, (iii) each such assignment shall be to an Eligible
Assignee, and (iv) the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $2,500. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in such Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender Party hereunder and (y) the Lender Party assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender Party's rights and obligations under this Agreement, such
Lender Party shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than
as provided in such Assignment and Acceptance, such assigning Lender Party 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 other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 5.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender Party or
any other Lender Party and based on such documents and information as it shall
deem appropriate at the time, continue to make its own
78
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Loan Documents as
are delegated to the Administrative Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender or Issuing Bank, as the case may be.
(c) The Administrative Agent shall maintain at its address referred
to in Section 9.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lender Parties and the Commitment of, and principal amount of the Advances
owing to, each Lender Party from time to time (the "REGISTER"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Administrative Agent and the Lender Parties may
treat each Person whose name is recorded in the Register as a Lender Party
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender Party at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes subject
to such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit A
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrower. Within five Business Days after its receipt of such notice, the
Borrower, at its own expense, shall execute and deliver to the Administrative
Agent in exchange for the surrendered Note or Notes a new Note to the order of
such Eligible Assignee in an amount equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender Party
has retained a Commitment hereunder, a new Note to the order of the assigning
Lender Party in an amount equal to the Commitment retained by it hereunder.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit D-1 or D-2 hereto, as applicable.
(e) Each Lender Party may sell participations in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes held by it); provided, however, that (i) such Lender Party's
obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender Party shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the
other Lender Parties shall continue to deal solely and directly with such Lender
Party in connection with such Lender Party's rights and obligations under this
79
Agreement and (v) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of any Loan Document,
or any consent to any departure by any Loan Party therefrom, except to the
extent that such amendment, waiver or consent would reduce the principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, postpone any date fixed for
any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, or release all or substantially all of the Collateral.
(f) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; provided, however, that, prior to any
-------- -------
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender Party.
(g) Notwithstanding any other provision set forth in this Agreement,
any Lender Party may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
SECTION 9.08. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
-------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.
SECTION 9.09. EXECUTION IN COUNTERPARTS. This Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.10. NO LIABILITY OF THE ISSUING BANK. The Borrower assumes
--------------------------------
all risks of the acts or omissions of any beneficiary or transferee of any
Letter of Credit with respect to its use of such Letter of Credit. Neither any
Issuing Bank nor any of its officers or directors shall be liable or responsible
for: (a) the use that may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
------
Borrower shall have a claim against such
80
Issuing Bank, and such Issuing Bank shall be liable to the Borrower, to the
extent of any direct, but not consequential, damages suffered by the Borrower
that the Borrower proves were caused by (i) such Issuing Bank's willful
misconduct or gross negligence in determining whether documents presented under
any Letter of Credit comply with the terms of the Letter of Credit or (ii) such
Issuing Bank's willful failure to make lawful payment under a Letter of Credit
after the presentation to it of a draft and certificates strictly complying with
the terms and conditions of the Letter of Credit. In furtherance and not in
limitation of the foregoing, such Issuing Bank may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
SECTION 9.11. CONFIDENTIALITY. Neither the Administrative Agent nor
---------------
any Lender Party shall disclose any Confidential Information to any Person
without the consent of the Borrower, other than (a) to the Administrative
Agent's or such Lender Party's Affiliates and their officers, directors,
employees, agents and advisors and to actual or prospective Eligible Assignees
and participants, and then only on a confidential basis, (b) as required by any
law, rule or regulation or judicial process and (c) as requested or required by
any state, federal or foreign authority or examiner regulating banks or banking.
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
--------------------
AGENTS, THE ISSUING BANK AND THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE ADVANCES, ANY LETTER OF CREDIT OR THE ACTIONS OF THE
ADMINISTRATIVE AGENT OR ANY LENDER PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
81
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SMART & FINAL INC.
as Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Title: Secretary
S-1
CREDIT LYONNAIS LOS ANGELES BRANCH,
as Administrative Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Title: First Vice President and
Manager
L/C Bank
--------
CREDIT LYONNAIS NEW YORK BRANCH
By:________________________________
Title: Senior Vice President
S-2
Initial Lenders
---------------
CREDIT LYONNAIS LOS ANGELES BRANCH,
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Title: First Vice President and
Manager
S-3
NATIONSBANK, N.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Title: Vice President
S-4
UNION BANK OF CALIFORNIA, N.A.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Title: Vice President
S-5
▇▇▇▇▇ FARGO BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Title: Vice President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Senior Vice President
S-6
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK N.A
"RABOBANK NEDERLAND", NEW YORK
BRANCH
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Title: Vice President
S-7
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES
Domestic Eurodollar
Name of Revolving Swing Line Lending Lending
Lender Commitment Commitment Office Office
------------ ---------- ----------- ----------- -----------
Total: $150,000,000 $15,000,000