Exhibit 10.6
CONFORMED COPY
RCF FACILITY
dated as of
June 12, 2000
among
Rite Aid Corporation,
The Banks from time to time
parties hereto
and
▇▇▇▇▇▇ Guaranty Trust Company of New York,
as Administrative Agent
------------------------------------
▇▇ ▇▇▇▇▇▇ Securities Inc.,
Lead Arranger and Book Runner
TABLE OF CONTENTS(1)
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions............................................. 2
SECTION 1.02. Accounting Terms and Determinations..................... 17
SECTION 1.03. Classes and Types of Loans.............................. 17
SECTION 1.04. Other Definitional Provisions........................... 17
ARTICLE 2
THE CREDITS
SECTION 2.01. Outstanding Loans....................................... 18
SECTION 2.02. Notes................................................... 18
SECTION 2.03. Maturity of Loans....................................... 19
SECTION 2.04. Interest Rates.......................................... 19
SECTION 2.05. Method of Electing Interest Rates....................... 20
SECTION 2.06. Participation Fees...................................... 22
SECTION 2.07. Reduction Events; Mandatory Prepayments................. 22
SECTION 2.08. Optional Prepayments.................................... 23
SECTION 2.09. General Provisions as to Payments....................... 23
SECTION 2.10. Funding Losses.......................................... 24
SECTION 2.11. Computation of Interest................................. 24
SECTION 2.12. Registry................................................ 24
ARTICLE 3
CONDITIONS
SECTION 3.01. Closing Date............................................ 25
SECTION 3.02. Transition.............................................. 28
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power........................... 29
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention......................................... 29
SECTION 4.03. Binding Effect.......................................... 30
SECTION 4.04. Financial and Other Information......................... 30
SECTION 4.05. Accuracy of Information................................. 31
SECTION 4.06. Litigation.............................................. 31
SECTION 4.07. Compliance with ERISA................................... 32
SECTION 4.08. Taxes................................................... 32
SECTION 4.09. Subsidiaries............................................ 32
SECTION 4.10. Environmental Matters................................... 33
SECTION 4.11. Year 2000 Compliance.................................... 33
SECTION 4.12. Other Loan Documents.................................... 33
SECTION 4.13. Insurance............................................... 33
SECTION 4.14. Solvency................................................ 34
SECTION 4.15. Title to Properties..................................... 34
SECTION 4.16. Investment Company Act; Public Utility Holding
Company Act........................................... 35
SECTION 4.17. Labor Matters........................................... 35
ARTICLE 5
COVENANTS
SECTION 5.01. Information............................................. 35
SECTION 5.02. Payment of Obligations.................................. 39
SECTION 5.03. Maintenance of Property; Insurance...................... 39
SECTION 5.04. Conduct of Business and Maintenance of Existence........ 41
SECTION 5.05. Compliance with Laws.................................... 42
SECTION 5.06. Inspection of Property, Books and Records............... 42
SECTION 5.07. Restriction on Other Agreements, Payment
Limitations, Debt Prepayments......................... 42
SECTION 5.08. Further Assurances...................................... 43
SECTION 5.09. Subsidiaries............................................ 44
SECTION 5.10. Restriction on Sale and Leaseback Transactions.......... 44
SECTION 5.11. Restriction on Liens.................................... 44
SECTION 5.12. Capital Expenditures.................................... 46
SECTION 5.13. Minimum EBITDA.......................................... 47
SECTION 5.14. Minimum Interest Coverage Ratio......................... 48
SECTION 5.15. Minimum Fixed Charge Coverage Ratio..................... 48
SECTION 5.16. Restriction on Debt..................................... 49
SECTION 5.17. Limitation on Investments and Acquisitions.............. 51
SECTION 5.19. Dispositions of Assets.................................. 53
SECTION 5.20. Use of Proceeds......................................... 54
SECTION 5.21. Restrictions on Asset Holdings by the Borrower.......... 54
SECTION 5.22. Restricted Payments..................................... 55
SECTION 5.23. Business of Borrower and Subsidiaries................... 55
SECTION 5.24. Transactions with Affiliates............................ 55
SECTION 5.25. New Synthetic Leases.................................... 56
SECTION 5.26. Corporate Separateness.................................. 57
SECTION 5.27. Limitation on Derivative Obligations.................... 57
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default....................................... 57
SECTION 6.02. Notice of Default....................................... 60
ARTICLE 7
THE ADMINISTRATIVE AGENT
SECTION 7.01. Appointment and Authorization........................... 60
SECTION 7.02. Administrative Agent and Affiliates..................... 60
SECTION 7.03. Action by Administrative Agent.......................... 61
SECTION 7.04. Consultation with Experts............................... 61
SECTION 7.05. Liability of Administrative Agent....................... 61
SECTION 7.06. Indemnification......................................... 61
SECTION 7.07. Credit Decision......................................... 61
SECTION 7.08. Successor Administrative Agent.......................... 62
SECTION 7.09. Administrative Agent's Fees............................. 63
SECTION 7.10. Steering Committee...................................... 63
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair................................................ 63
SECTION 8.02. Illegality.............................................. 64
SECTION 8.03. Increased Cost and Reduced Return....................... 64
SECTION 8.04. Taxes................................................... 65
SECTION 8.05. Base Rate Loans Substituted for Affected
Euro-Dollar Loans..................................... 67
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices................................................. 68
SECTION 9.02. No Waivers.............................................. 68
SECTION 9.03. Expenses; Indemnification............................... 68
SECTION 9.04. Sharing of Set-Offs..................................... 69
SECTION 9.05. Amendments and Waivers.................................. 70
SECTION 9.06. Successors and Assigns.................................. 71
SECTION 9.07. Collateral.............................................. 72
SECTION 9.08. Governing Law; Submission to Jurisdiction............... 73
SECTION 9.09. Counterparts............................................ 73
SECTION 9.10. WAIVER OF JURY TRIAL.................................... 73
SECTION 9.11. Collateral Trust and Intercreditor Agreement............ 73
Schedule I - Outstanding Loans
Schedule 1.01(a) - Existing Litigation
Schedule 1.01(b) - Mortgaged Properties
Schedule 1.10(c) - Subsidiary Guarantors
Schedule 4.13 - Insurance
Schedule 4.15(b)(i) - Leases on Mortgaged Properties
Schedule 4.15(b)(ii) - Permitted Liens on Mortgaged Properties
Schedule 4.15(c) - Leased Warehouses and Distribution Centers
Schedule 5.10 - Permitted Sale and Leaseback Transactions
Schedule 5.11(i) - Permitted Liens
Schedule 5.11(f) - Permitted Debt
Schedule 5.22(b) - Permitted Dividends Payable on Capital Stock
Schedule 5.24 - Permitted Affiliate Transactions
Definitions Annex
Annex 3 - Description of the Transactions
Exhibit A - Note
Exhibit B-1 - Opinion of Special Counsel for the Borrower
Exhibit B-2 - Opinion of General Counsel for the Borrower
Exhibit C - Assignment and Assumption Agreement
Exhibit D - Form of Senior Subsidiary Guarantee Agreement
Exhibit E - Form of Senior Subsidiary Security Agreement
Exhibit F - Form of Senior Indemnity, Subrogation and Contribution
Agreement
Exhibit G - Form of Senior Mortgage
Exhibit H - Form of Second Priority Subsidiary Guarantee Agreement
Exhibit I - Form of Second Priority Subsidiary Security Agreement
Exhibit J - Form of Second Priority Indemnity, Subrogation and
Contribution Agreement
Exhibit K - Form of Second Priority Mortgage
Exhibit L - Form of PCS Pledge Agreement
Exhibit M - Form of ▇▇▇▇▇▇▇▇▇.▇▇▇ Pledge Agreement
RCF FACILITY
AGREEMENT dated as of June 12, 2000 among RITE AID CORPORATION, the
BANKS from time to time parties hereto and ▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent.
RECITALS:
A. The Borrower (as this and other capitalized terms are defined in
Section 1.01 below), the Banks listed on the signature pages hereto and
▇▇▇▇▇▇ Guaranty Trust Company of New York, as agent for such Banks, are
parties to an Amended and Restated Credit Agreement dated as of October 25,
1999 (as heretofore amended, the "EXISTING AGREEMENT"), pursuant to which
the Banks have loans outstanding as set forth in Schedule I hereto.
B. The Borrower proposes to enter into the Senior Credit Facility,
pursuant to which up to an additional $1,000,000,000 of financing will be
available to it and its Subsidiaries. The Senior Credit Facility will be
guaranteed by the Subsidiaries of the Borrower pursuant to the Senior
Subsidiary Guarantee Agreement, and such Senior Subsidiary Guarantee
Agreement will be secured by Liens created pursuant to the Senior
Collateral Documents.
C. The obligations of the Borrower under this Agreement, together
with the other Second Priority Debt Obligations, will be guaranteed by the
Subsidiaries of the Borrower pursuant to the Second Priority Subsidiary
Guarantee Agreement, and such Second Priority Subsidiary Guarantee
Agreement will be secured by a second priority lien on the assets securing
the Senior Subsidiary Guarantee Agreement.
D. Certain outstanding Debt of the Borrower will be exchanged for
common stock of the Borrower, and in connection therewith an equal
principal amount of debt will be exchanged by the holder thereof for
Exchange Debt Obligations (the "Equity Conversion"), which will have the
benefit of a first priority lien on certain Exchange Debt First Priority
Collateral.
E. The parties hereto wish to amend and restate the Existing
Agreement in connection with the foregoing transaction to read in its
entirety as set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the Definitions Annex and
not otherwise defined in this Section 1.01 have the respective meanings
specified therein. The following terms, as used herein, have the following
meanings:
"ADJUSTED LONDON INTERBANK OFFERED RATE" has the meaning set forth in
Section 2.04(b).
"ADMINISTRATIVE AGENT" means ▇▇▇▇▇▇ Guaranty Trust Company of New
York in its capacity as agent for the Banks under the Loan Documents, and
its successors in such capacity.
"ADJUSTED WORKING CAPITAL" means, for any date, current assets (other
than cash and cash equivalents) less current liabilities (other than Debt
permitted hereunder).
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative
Agent and submitted to the Administrative Agent (with a copy to the
Borrower) duly completed by such Bank.
"AFFILIATE TRANSACTION" is defined in Section 5.24.
"AGREEMENT" means the Existing Agreement, as amended and restated by
this Amended Agreement and as the same may be further amended from time to
time.
"AMENDED AGREEMENT" means this RCF Facility dated as of June 12,
2000.
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in
the case of its Base Rate Loans, its Domestic Lending Office and (ii) in
the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"APPLICABLE MARGIN" means the sum of (i) with respect to Base Rate
Loans, 2.75% and, with respect to Euro-Dollar Loans, 3.75%, plus (ii) at
any date on or after November 1, 2000, 0.50% unless the Reduction Condition
has been met on or prior to such date plus (iii) (A) for purposes of all
calculations hereunder for any date on which an Event of Default shall have
occurred and be continuing, but only if the Required Banks shall have so
elected by notice to the Borrower through the Administrative Agent, or (B)
for purposes of calculating interest on overdue amounts hereunder for any
date on which the election contemplated by clause (A) is not in effect,
2.00%.
"ASSIGNEE" has the meaning set forth in Section 9.06(c).
"BANK" means each Person listed on the signature pages hereof under
the heading "BANKS", each Assignee which becomes a Bank pursuant to Section
9.06(c), and their respective successors.
"BASE RATE" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"BASE RATE LOAN" means a Loan that bears interest at a rate per annum
based on the Base Rate pursuant to a Notice of Interest Rate Election, the
first or the last sentence of Section 2.05(a) or Article 8.
"BENEFIT ARRANGEMENT" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by
any member of the ERISA Group.
"BUSINESS ACQUISITION" means (i) an Investment by the Borrower or any
of its Subsidiaries in any other Person (including an Investment by way of
acquisition of securities of any other Person) pursuant to which such
Person shall become a Subsidiary or shall be merged into or consolidated
with the Borrower or any of its Subsidiaries or (ii) an acquisition by the
Borrower or any of its Subsidiaries of the property and assets of any
Person (other than the Borrower or any of its Subsidiaries) that constitute
substantially all the assets of such Person or any division or other
business unit of such Person; provided, that the acquisition of
prescription files, Stores and Persons substantially all of whose assets
consist of fewer than ten Stores, in each case, in the ordinary course of
business and not inconsistent with the Borrower's business plan delivered
pursuant to Section 3.01(e), shall not be a Business Acquisition.
"CAPITAL LEASE" means any lease of property which, in accordance with
generally accepted accounting principles, should be capitalized on the
lessee's balance sheet.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate amount of expenditures by the Borrower and its Consolidated
Subsidiaries for plant, property and equipment during such period
(including any such expenditure by way of acquisition of a Person or by way
of assumption of indebtedness or other obligations of a Person, to the
extent reflected as plant, property and equipment), but excluding any such
expenditures made for the replacement or restoration of assets to the
extent financed by Casualty/Condemnation Proceeds relating to the asset or
assets being replaced or restored.
"CONSOLIDATED DEBT" means at any date the Debt of the Borrower and
its Consolidated Subsidiaries, determined on a consolidated basis as of
such date.
"CONSOLIDATED EBITDA" means, for any period (without duplication),
Consolidated Net Income for such period, plus (a) to the extent deducted in
determining Consolidated Net Income for such period, the aggregate amount
of (i) consolidated interest expenses, whether cash or non-cash, (ii)
provision for income taxes, (iii) depreciation and amortization, (iv) LIFO
Adjustments which reduced such Consolidated Net Income, (v) store closing
expenses and (vi) any other nonrecurring charge to the extent such
nonrecurring charge does not involve any cash expenditure during such
period, (vii) all fees, costs, charges and expenses in connection with the
Transactions, (viii) all fees, costs, charges and expenses in connection
with the restatement of the consolidated financial statements of the
Borrower and its Consolidated Subsidiaries for periods before February 26,
2000 and litigation expenses (exclusive of damages or amounts paid in
settlement of claims) incurred in connection with litigation, investigation
(including internal review) or other proceedings relating to such
restatement, (ix) any advisory or other fees payable by the Borrower
pursuant to the one-year financial services advisory contract described in
the Borrower's quarterly report on Form 10-Q for the fiscal quarter ended
as of August 28, 1999, (x) non-cash compensation expenses related to stock
option and restricted stock employee benefit plans, and (xi) the non-cash
interest component, as adjusted from time to time, in respect of reserves,
less (b), to the extent not deducted in determining Consolidated Net Income
for such period, the aggregate amount of (i) any cash expenditure during
such period in connection with which a nonrecurring charge was taken and
added back to Consolidated Net Income pursuant to clause (a) above in
calculating Consolidated EBITDA in any prior period and (ii) LIFO
Adjustments which increased such Consolidated Net Income.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, for any period, the
ratio of (i) Consolidated EBITDA plus Consolidated Rent to (ii)
Consolidated Interest Charges plus Consolidated Rent, in each case for such
period.
"CONSOLIDATED INTEREST CHARGES" means, for any period, the aggregate
amount of interest charges, whether expensed or capitalized, incurred or
accrued by the Borrower and its Consolidated Subsidiaries, solely to the
extent paid or payable in cash, during such period.
"CONSOLIDATED INTEREST COVERAGE RATIO" means, with respect to any
period, the ratio of Consolidated EBITDA for such period to Consolidated
Interest Charges for such period.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of the Borrower and its Consolidated Subsidiaries (exclusive of (a)
extraordinary items of gain or loss, (b) any gain or loss in connection
with any sale of assets other than sales of inventory in the ordinary
course of business, but in the case of loss only to the extent that such
loss does not involve any cash expenditure during such period and (c) the
Borrower's share of the net income (or loss) of ▇▇▇▇▇▇▇▇▇.▇▇▇), determined
on a consolidated basis for such period.
"CONSOLIDATED NET WORTH" means at any date the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries
determined as of such date. Consolidated Net Worth includes the Borrower's
8% Convertible Pay-In-Kind Preferred Stock.
"CONSOLIDATED RENT" means, for any period, the consolidated rental
expense of the Borrower and its Consolidated Subsidiaries for such period,
and including in any event rental costs of closed stores for such period
whether or not reflected as an expense in the determination of Consolidated
Net Income for such period and including base or basic rent payments under
Synthetic Leases.
"CONSOLIDATED SUBSIDIARY" means, with respect to any Person, at any
date any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial
statements if such statements were prepared as of such date.
"CREDIT EXPOSURE" means, with respect to any Bank, the aggregate
outstanding principal amount of such Bank's Loans.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DEFINITIONS ANNEX" means the Definitions Annex annexed hereto and by
this reference incorporated herein.
"DERIVATIVES OBLIGATIONS" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including
any option with respect to any of the foregoing transactions) or any
combination of the foregoing transactions.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law
to close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located
at its address set forth in its Administrative Questionnaire (or identified
in its Administrative Questionnaire as its Domestic Lending Office) or such
other office as such Bank may hereafter designate as its Domestic Lending
Office by notice to the Borrower and the Administrative Agent.
"▇▇▇▇▇▇▇▇▇.▇▇▇" means ▇▇▇▇▇▇▇▇▇.▇▇▇, inc., a Delaware corporation, and
its successors.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances
or wastes into the environment including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes
or the clean-up or other remediation thereof.
"EQUITY CONVERSION" has the meaning set forth in the recitals hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA GROUP" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or
not incorporated) under common control which, together with the Borrower or
any Subsidiary, are treated as a single employer under Section 414 of the
Internal Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of
such Bank as it may hereafter designate as its Euro-Dollar Lending Office
by notice to the Borrower and the Administrative Agent.
"EURO-DOLLAR LOAN" means a Loan that bears interest at a Euro-Dollar
Rate pursuant to a Notice of Interest Rate Election or the first sentence
of Section 2.05(a).
"EURO-DOLLAR RATE" means a rate of interest determined pursuant to
Section 2.04(b) on the basis of a London Interbank Offered Rate.
"EURO-DOLLAR RESERVE PERCENTAGE" has the meaning set forth in Section
2.04(b).
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"EXCESS CASH FLOW" means, for any period, the sum (without
duplication) of Consolidated EBITDA for such period, plus
(a) to the extent not included in Consolidated Net Income in
calculating Consolidated EBITDA, the sum of (1) any
Casualty/Condemnation Proceeds previously received by the Borrower or
any Subsidiary in respect of which the time for reinvestment thereof
(in accordance with the proviso to the definition of
Casualty/Condemnation in respect of Proceeds) has elapsed during such
period without such reinvestment having been effected, and (2) any
Net Cash Proceeds received during such period by the Borrower or any
Subsidiary in respect of Asset Sales;
plus
(b) decreases in Adjusted Working Capital for such period (other than
any portion of such decrease resulting solely from the
reclassification of assets or liabilities as short-term or
long-term);
plus
(c) refunds of Taxes paid in prior periods; and
minus
(d) Taxes to the extent paid during such period in cash;
minus
(e) Consolidated Interest Charges to the extent paid during such
period in cash;
minus
(f) increases in Adjusted Working Capital for such period (other than
any portion of such increase resulting solely from the
reclassification of assets or liabilities as short-term or
long-term);
minus
(g) to the extent paid in cash during such period, costs and expenses
referred to in clauses (v), (vii), (viii) and (ix) of the definition
of "Consolidated EBITDA" which were added back to Consolidated Net
Income to calculate Consolidated EBITDA for such period;
minus
(h) Consolidated Capital Expenditures for such period (except to the
extent attributable to the incurrence of Debt under Capital Leases,
Attributable Debt under Synthetic Leases or otherwise financed by the
incurrence of Debt and except to the extent made with
Casualty/Condemnation Proceeds or Net Cash Proceeds from Basket Asset
Sales;
minus
(i) cash consideration paid by the Borrower or its Subsidiaries for
permitted Business Acquisitions or other capital acquisitions (except
to the extent financed by the incurrence of Debt and except to the
extent made with Casualty/Condemnation Proceeds or Net Cash Proceeds
from Basket Asset Sales;
minus
(j) cash expenditures made during such period in respect of long-term
liabilities (other than Debt) or long-term assets to the extent such
expenditures were not deducted in determining Consolidated Net Income
for such period;
minus
(k) the aggregate principal amount of Debt (including Attributable
Debt in respect of Synthetic Leases) paid or prepaid in cash by the
Borrower or its Subsidiaries during such period (or immediately after
such period in the case of mandatory prepayment of Debt required to
be made with Net Cash Proceeds from Asset Sales received during such
period), in each case to the extent permitted or required by this
Agreement, but excluding (i) Debt in respect of Revolving Credit
Loans and Letters of Credit (as defined in the Senior Credit
Facility) that can be reborrowed or otherwise incurred again, (ii)
repayments of Debt made with Net Cash Proceeds from Basket Asset
Sales, and (iii) repayments or prepayments of Debt financed by
incurring other Debt.
"EXISTING AGREEMENT" has the meaning set forth in the recitals
hereto.
"EXISTING LITIGATION" means the bondholders' class actions and
shareholders' class actions pending as of April 10, 2000 in the Eastern
District of Pennsylvania, identified in Schedule 1.01(a) and the related
pending investigation by the SEC.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not
a Domestic Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to ▇▇▇▇▇▇
Guaranty Trust Company of New York on such day on such transactions as
determined by the Administrative Agent.
"FINANCIAL OFFICER" of any person means the chief financial officer,
principal accounting officer, treasurer or senior vice president finance of
such person.
"GROUP OF LOANS" means, at any time, a group of Loans consisting of
(i) all Loans which are Base Rate Loans at such time and (ii) all
Euro-Dollar Loans having the same Interest Period at such time; provided
that, if a Loan of any particular Bank is converted to or made as a Base
Rate Loan pursuant to Article 8, such Loan shall be included in the same
Group or Groups of Loans from time to time as it would have been in if it
had not been so converted or made.
"GOVERNMENTAL AUTHORITY" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory
body.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances
or wastes, hazardous or toxic substances or wastes, pollutants, solid,
liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls
("PCBS") or PCB-containing materials or equipment, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INITIAL FINANCIAL STATEMENTS" means the consolidated financial
statements of the Borrower and its Consolidated Subsidiaries for the fiscal
year ended February 26, 2000, and for the fiscal quarter ended May 27,
2000.
"INTEREST PERIOD" means, with respect to each Euro-Dollar Loan, (i)
the period in effect on the Closing Date pursuant to Section 3.02 or (ii)
the period commencing on the date specified in an applicable Notice of
Interest Rate Election and ending one, two, three or six months thereafter,
as the Borrower may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) no Interest Period may end after the Maturity Date.
"INTEREST RATE AGREEMENT" means, for any person, any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement designed to protect against fluctuations in
interest rates.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"INVESTMENT" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise. Any
repurchase by the Borrower of its own capital stock shall not constitute an
Investment for purposes of this Agreement. The amount of any Investment
shall be the original principal or capital amount thereof less all returns
of principal or equity thereon (and without adjustment by reason of the
financial condition of such other Person) and shall, if made by the
transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market
value of such property at the time of such transfer or exchange.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional
sale agreement, Capital Lease or other title retention agreement relating
to such asset.
"LIFO ADJUSTMENTS" means, for any period, the net adjustment to costs
of goods sold for such period required by the Borrower's LIFO inventory
method, determined in accordance with generally accepted accounting
principles.
"LOAN" means a Tranche A Loan or a Tranche B Loan and "LOANS" means
Tranche A Loans or Tranche B Loans or any combination of the foregoing.
"LOAN DOCUMENTS" means this Agreement, the Notes and the RCF
Collateral Documents.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section
2.04(b).
"MATERIAL ADVERSE EFFECT" means (i) any material adverse effect on
the business, financial position, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole, (ii) any
material impairment of the legality, validity and enforceability of the
Loan Documents (including without limitation, the validity, enforceability
or priority of security interests to be granted), or the rights and
remedies of the Second Priority Debt Parties or (iii) any material
impairment of the Borrower's or the Subsidiary Guarantors' ability to
perform its or their obligations under the Loan Documents.
"MATERIAL FINANCIAL OBLIGATIONS" means
(a) the Senior Obligations,
(b) the Second Priority Debt Obligations (other than Debt
hereunder), and
(c) (i) a principal or face amount of Debt (except Debt
outstanding hereunder) and/or (ii) payment or collateralization
obligations in respect of Derivatives Obligations and/or (iii)
payment or collateralization obligations in respect of leases
(other than Capital Leases, which are Debt) of the Borrower
and/or one or more of its Subsidiaries, arising in one or more
related or unrelated transactions, exceeding in the aggregate
$25,000,000.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000,000.
"MATURITY DATE" means August 15, 2002.
"MORTGAGED PROPERTIES" means the owned real properties of the
Subsidiary Guarantors specified on Schedule 1.01(b), together with real
properties that are mortgaged pursuant to Section 5.08. Each Mortgaged
Property shall include any owned fixtures used in connection with the
operation of such Mortgaged Property.
"MULTIEMPLOYER PLAN" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member
of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be a
member of the ERISA Group during such five year period.
"NOTES" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loans, and "NOTE" means any one of such promissory notes issued
hereunder.
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in
Section 2.05.
"PARENT" means, with respect to any Bank, any Person controlling such
Bank.
"PARTICIPANT" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PCS EBITDA" means, for any period, Consolidated EBITDA for such
period less Retail EBITDA for such period.
"PERFECTION CERTIFICATE" means the Perfection Certificate
substantially in the form of Schedule 5 to the Second Priority Subsidiary
Security Agreement.
"PLAN" means at any time an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Internal Revenue
Code and either (i) is maintained, or contributed to, by any member of the
ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed
to, by any Person which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of the ERISA Group.
"PLEDGE AGREEMENTS" means the ▇▇▇▇▇▇▇▇▇.▇▇▇ Pledge Agreement and
the PCS Pledge Agreement.
"PRIME RATE" means the rate of interest publicly announced by ▇▇▇▇▇▇
Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"QUALIFIED PREFERRED STOCK" means preferred stock of the Borrower
that requires no cash payment before the date that is six months after the
Maturity Date.
"RCF COLLATERAL" means collateral subject to the RCF Collateral
Documents.
"RCF COLLATERAL DOCUMENTS" means the Second Priority Collateral
Documents, the Pledge Agreements and any additional pledge agreements
required to be delivered pursuant to the Loan Documents and any other
instruments or agreements executed pursuant to the foregoing.
The "REDUCTION CONDITION" shall be satisfied at such time as the
aggregate amount outstanding under the Existing Facilities is less than or
equal to the sum of (i) the aggregate amount outstanding under the Existing
Facilities on the Closing Date minus (ii) $500,000,000.
"REFERENCE BANKS" means the principal London offices of Citibank,
N.A., Bank of America, N. A. and ▇▇▇▇▇▇ Guaranty Trust Company of New York.
"REGULATION T, U OR X" means Regulation T, U or X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material
in, into, onto or through the environment.
"REMEDIAL ACTION" means (a) "remedial action" as such term is defined
in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required
by any Governmental Authority or voluntarily undertaken to: (i) cleanup,
remove, treat, ▇▇▇▇▇ or in any other way address any Hazardous Material in
the environment; (ii) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not migrate or
endanger or threaten to endanger public health, welfare or the environment;
or (iii) perform studies and investigations in connection with, or as a
precondition to, clause (i) or (ii).
"REQUIRED BANKS" means at any time Banks having more than 50% of the
aggregate amount of the Credit Exposures.
"RESTRICTED PAYMENT" means
(a) any dividend or other distribution on any shares of the
Borrower's or any Subsidiary's capital stock (except dividends payable
solely in shares of the Borrower's capital stock); or
(b) any payment on account of the purchase, redemption, retirement or
acquisition of (i) any shares of the Borrower's or any Subsidiary's capital
stock or (ii) any option, warrant or other right to acquire shares of the
Borrower's or any Subsidiary's capital stock (other than such payment in
connection with employee benefit plans in the ordinary course of business).
"RETAIL CAPITAL EXPENDITURES" means, for any period, Consolidated
Capital Expenditures for such period, but computed as though neither PCS
nor any of PCS's Consolidated Subsidiaries were Consolidated Subsidiaries
of the Borrower.
"RETAIL EBITDA" means, for any period, Consolidated EBITDA for such
period, but computed as though neither PCS nor any of PCS's Consolidated
Subsidiaries were Consolidated Subsidiaries of the Borrower.
"RETAIL FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio
of (i) Retail EBITDA plus Retail Rent to (ii) Retail Interest Charges plus
Retail Rent, in each case for such period.
"RETAIL INTEREST CHARGES" means, for any period, the aggregate amount
of interest charges, whether expensed or capitalized, incurred or accrued
by the Borrower and its Consolidated Subsidiaries, solely to the extent
paid or payable in cash, during such period; provided, however, that for
such period, such interest charges relating to the PCS Facility for such
period will be computed as though the aggregate principal amount on which
such interest charges are calculated at all times during such period were
the lesser of (a) $300,000,000 and (b) the actual principal amount of the
PCS Facility from time to time after giving effect to any repayment of the
PCS Facility after the consummation of a PCS Disposition.
"RETAIL INTEREST COVERAGE RATIO" means, with respect to any period,
the ratio of Retail EBITDA for such period to Retail Interest Charges for
such periods.
"RETAIL RENT" means, for any period, Consolidated Rent for such
period, but computed as though neither PCS nor any of PCS's Consolidated
Subsidiaries were Consolidated Subsidiaries of the Borrower.
"SEC" means the Securities and Exchange Commission, or any Person
succeeding to its functions under the Securities Exchange Act of 1934, as
amended.
"SECURED DEBT" means Debt which is secured by a Lien on property of
the Borrower or any Subsidiary, but shall not include guarantees arising in
connection with the sale, discount, guarantee or pledge of notes, chattel
mortgages, leases, accounts receivable, trade acceptances and other papers
arising, in the ordinary course of business, out of installment or
conditional sales to or by, or transactions involving title retention with,
distributors, dealers or other customers, of merchandise, equipment or
services.
"STORE" means any retail store (which may include any real property,
fixtures, equipment, inventory and script files related thereto) operated,
or to be operated, by any Subsidiary Guarantor.
"SUBSIDIARY" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the
Borrower.
"SUBSIDIARY GUARANTOR" means, initially, each Subsidiary listed on
Schedule 1.01(c), and each other Subsidiary that is or becomes a party to a
Second Priority Subsidiary Guarantee Agreement.
"SYNTHETIC LEASE" means a lease which is treated as an operating
lease under generally accepted accounting principles but as ownership of
the leased asset by the lessee for purposes of the Internal Revenue Code.
"TRANCHE A EXPOSURE" means, with respect to each Bank, the aggregate
outstanding principal amount of its Tranche A Loans.
"TRANCHE A LOAN" means a loan made by a Bank as a Tranche A Loan
pursuant to the Existing Agreement which is outstanding at the Closing
Date.
"TRANCHE B EXPOSURE" means, with respect to each Bank, the aggregate
outstanding principal amount of its Tranche B Loans.
"TRANCHE B LOAN" means a loan made by a Bank as a Tranche B Loan
pursuant to the Existing Agreement which is outstanding at the Closing
Date.
"TRANSACTIONS" is defined in Annex 3.
"TRANSACTION COSTS" is defined in Annex 3.
"TRANSACTION DOCUMENTS" means the documents (other than the Second
Priority Debt Documents) evidencing the Transactions.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under
such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii)
the fair market value of all Plan assets allocable to such liabilities
under Title IV of ERISA (excluding any accrued but unpaid contributions),
all determined as of the then most recent valuation date for such Plan, but
only to the extent that such excess represents a potential liability of a
member of the ERISA Group to the PBGC or any other Person under Title IV of
ERISA.
"UNITED STATES" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests
of which (except directors' qualifying shares) are at the time directly or
indirectly (through Wholly-Owned Consolidated Subsidiaries) owned by the
Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from
time to time, applied (effective after delivery of the Initial Financial
Statements) on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Borrower
notifies the Administrative Agent that the Borrower wishes to amend any
covenant in Article 5 to eliminate the effect of any change in generally
accepted accounting principles on the operation of such covenant (or if the
Administrative Agent notifies the Borrower that the Required Banks wish to
amend Article 5 for such purpose), then the Borrower's compliance with such
covenant shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted accounting principles became effective, until either such notice
is withdrawn or such covenant is amended in a manner satisfactory to the
Borrower and the Required Banks.
SECTION 1.03. Classes and Types of Loans. Loans hereunder are
distinguished by "CLASS" and by "TYPE". The "CLASS" of a Loan refers to the
determination whether such Loan is a Tranche A Loan or a Tranche B Loan,
each of which constitutes a Class. The "TYPE" of a Loan refers to the
determination whether such Loan is a Euro-Dollar Loan or a Base Rate Loan.
Identification of a Loan by both Class and Type (e.g., a "Tranche B
Euro-Dollar Loan") indicates that such Loan is both a Tranche B Loan and a
Euro-Dollar Loan.
SECTION 1.04. Other Definitional Provisions. References in this
Agreement to "Articles", "Sections", "Schedules" or "Exhibits" shall be to
Articles, Sections, Schedules or Exhibits of or to this Agreement unless
otherwise specifically provided. Any of the terms defined in Section 1.01
may, unless the context otherwise requires, be used in the singular or
plural depending on the reference. "Include" or "includes" and "including"
shall be deemed to be followed by "without limitation" whether or not they
are in fact followed by such words or words of like import. "Writing",
"written" and comparable terms refer to printing, typing and other means of
reproducing words in a visible form. References to any agreement or
contract are to such agreement or contract as amended, modified or
supplemented from time to time in accordance with the terms hereof and
thereof; provided that amendments to the other Second Priority Debt
Documents, the Indentures, the Senior Loan Documents and the other
Transaction Documents after the Closing Date shall be effective for
purposes of references thereto in this Agreement and the other Second
Priority Debt Documents only if such amendments are permitted hereunder and
under the Collateral Trust and Intercreditor Agreement or are consented to
in writing for such purpose by the Required Banks (or such other percentage
of the Banks as may be specified hereunder). References to any Person
include the successors and assigns of such Person. References "from" or
"through" any date mean, unless otherwise specified, "from and including"
or "through and including", respectively.
ARTICLE 2
THE CREDITS
SECTION 2.01. Outstanding Loans. On the Closing Date, each Bank has
outstanding to the Borrower Loans as set forth in Schedule I.
SECTION 2.02. Notes. (a) The Loans of each Bank shall be evidenced by
a single Note payable to the order of such Bank for the account of its
Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Administrative
Agent, request that its Loans of a particular Class or Type be evidenced by
a separate Note in an amount equal to the aggregate unpaid principal amount
of such Loans. Each such Note shall be in substantially the form of Exhibit
A hereto with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant Class or Type. Each reference in
this Agreement to the "NOTE" of such Bank shall be deemed to refer to and
include any or all of such Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(b), the
Administrative Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount and type of each Loan made by it and the date and
amount of each payment of principal made by the Borrower with respect
thereto and may, if such Bank so elects in connection with any transfer or
enforcement of its Note, endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to
each such Loan then outstanding; provided that the failure of any Bank to
make any such recordation or endorsement shall not affect the obligations
of the Borrower hereunder or under the Notes. Each Bank is hereby
irrevocably authorized by the Borrower so to endorse its Note and to attach
to and make a part of its Note a continuation of any such schedule as and
when required.
SECTION 2.03. Maturity of Loans. Each Loan shall mature, and the
principal amount thereof shall be due and payable, on the Maturity Date.
SECTION 2.04. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per annum equal to
the sum of the Applicable Margin plus the Base Rate for such day. Such
interest shall be payable monthly in arrears on the last day of each
calendar month and on the Maturity Date and, with respect to the principal
amount of any Base Rate Loan that is prepaid or converted to a Euro-Dollar
Loan, on the date of such prepayment or conversion. Any overdue principal
of or interest on any Base Rate Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of the
Applicable Margin plus the Base Rate for such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each Interest Period applicable thereto, at a
rate per annum equal to the sum of the Applicable Margin plus the
applicable Adjusted London Interbank Offered Rate for such Interest Period.
Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof.
The "ADJUSTED LONDON INTERBANK OFFERED RATE" applicable to any
Interest Period means a rate per annum equal to the quotient obtained
(rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing
(i) the applicable London Interbank Offered Rate by (ii) 1.00 minus the
Euro-Dollar Reserve Percentage.
The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of
1%) of the respective rates per annum at which deposits in dollars are
offered to each of the Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before
the first day of such Interest Period in an amount approximately equal to
the principal amount of the Euro-Dollar Loan of such Reference Bank to
which such Interest Period is to apply and for a period of time comparable
to such Interest Period.
"EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the
Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of "EUROCURRENCY LIABILITIES" (or in respect of
any other category of liabilities which includes deposits by reference to
which the interest rate on Euro-Dollar Loans is determined or any category
of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted automatically on
and as of the effective date of any change in the Euro-Dollar Reserve
Percentage.
(c) All amounts payable by the Borrower hereunder or under any other
Loan Document not paid when due shall bear interest, payable on demand, for
each day from and including the date payment thereof was due to but
excluding the date of actual payment, at a rate per annum equal to the sum
of the Applicable Margin for overdue Base Rate Loans for such day plus the
Base Rate for such day.
(d) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder. The Administrative Agent shall give
prompt notice to the Borrower and the Banks of each rate of interest so
determined, and its determination thereof shall be conclusive in the
absence of manifest error.
(e) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated by this Section. If
any Reference Bank does not furnish a timely quotation, the Administrative
Agent shall determine the relevant interest rate on the basis of the
quotation or quotations furnished by the remaining Reference Bank or Banks
or, if none of such quotations is available on a timely basis, the
provisions of Section 8.01 shall apply.
SECTION 2.05. Method of Electing Interest Rates. (a) The Loans
included in each Group of Loans shall bear interest initially at the type
of rate applicable thereto at the Closing Date in accordance with the
Existing Agreement. Thereafter, the Borrower may from time to time elect to
change or continue the type of interest rate borne by each Group of Loans
(subject to Section 2.05(d) and the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to Euro-Dollar Loans as of any Euro-Dollar
Business Day; and
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
convert such Loans to Base Rate Loans as of any Domestic Business Day
or may elect to continue such Loans as Euro-Dollar Loans, as of the
end of any Interest Period applicable thereto, for an additional
Interest Period, subject to Section 2.10 if any such conversion is
effective on any day other than the last day of an Interest Period
applicable to such Loans.
Each such election shall be made by delivering a notice (a "NOTICE OF
INTEREST RATE ELECTION") to the Administrative Agent not later than 10:30
A.M. (New York City time) on the third Euro-Dollar Business Day before the
conversion or continuation selected in such notice is to be effective. A
Notice of Interest Rate Election may, if it so specifies, apply to only a
portion of the aggregate principal amount of the relevant Group of Loans;
provided that (i) such portion is allocated ratably among the Loans
comprising such Group and (ii) the portion to which such Notice applies,
and the remaining portion to which it does not apply, are each at least
$10,000,000 (unless such portion is comprised of Base Rate Loans). If no
such notice is timely received before the end of an Interest Period for any
Group of Euro-Dollar Loans, the Borrower shall be deemed to have elected
that such Group of Loans be converted to Base Rate Loans at the end of such
Interest Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the
applicable clause of Section 2.05(a);
(iii) if the Loans comprising such Group are to be converted, the new
type of Loans and, if the Loans resulting from such conversion are to
be Euro-Dollar Loans, the duration of the next succeeding Interest
Period applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for an
additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election
shall comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election from
the Borrower pursuant to Section 2.05(a), the Administrative Agent shall
notify each Bank of the contents thereof and such notice shall not
thereafter be revocable by the Borrower.
(d) The Borrower shall not be entitled to elect to convert any Loans
to, or continue any Loans for an additional Interest Period as, Euro-Dollar
Loans if (i) the aggregate principal amount of any Group of Euro-Dollar
Loans created or continued as a result of such election would be less than
$10,000,000 or (ii) a Default shall have occurred and be continuing when
the Borrower delivers notice of such election to the Administrative Agent.
(e) If any Loan is converted to a different type of Loan, the Borrower
shall pay, on the date of such conversion, the interest accrued to such
date on the principal amount being converted.
SECTION 2.06. Participation Fees. On the Closing Date, the Borrower
shall pay to the Administrative Agent for the account of each Bank a
participation fee in an amount equal to 0.50% of the amount of such Bank's
Credit Exposure at such date.
SECTION 2.07. Reduction Events; Mandatory Prepayments. (a) In the
event that the Borrower or any of its Subsidiaries shall at any time, or
from time to time, receive any Net Cash Proceeds of any Reduction Event,
the Borrower shall apply such Net Cash Proceeds in accordance with Section
4.05 of the Collateral Trust and Intercreditor Agreement.
(b) Except as provided in Section 4.05(a)(i) of the Collateral Trust
and Intercreditor Agreement, Net Cash Proceeds applied to the Loans
pursuant to this Section 2.07 and Section 4.05 of the Collateral Trust and
Intercreditor Agreement shall be applied ratably FIRST to the Tranche B
Loans, until the Tranche B Loans shall have been prepaid in full, and then
SECOND to the Tranche A Loans; and
(c) Not later than the earlier of (i) 120 days after the end of each
fiscal year of the Borrower, beginning with the fiscal year ending on or
about March 3, 2001, and (ii) the date on which the financial statements
for such fiscal year are delivered pursuant to Section 5.01(a), the
Borrower shall apply an amount equal to 50% of Excess Cash Flow for (i) in
the case of the fiscal year ending on March 3, 2001, the three fiscal
quarters then most recently ended and (ii) in the case of the fiscal year
ending on March 2, 2002, such fiscal year, ratably to (x) reduce the
aggregate Revolving Credit Commitments and Term Exposure (each as defined
in the Senior Credit Facility) of all the Senior Bank Parties to the extent
of the Required Senior Prepayment Amount and in accordance with the terms
of Section 2.12 thereof and (y) prepay all loans outstanding under the
Existing Facilities.
(d) Upon receipt from the Borrower of a notice pursuant to Section
4.05(a) of the Collateral Trust and Intercreditor Agreement, the
Administrative Agent will promptly notify each Bank of the contents
thereof, and of the date of any related prepayment required hereunder. Any
required prepayment shall be made together with accrued interest on the
amount prepaid, and shall be applied first to the Group of Base Rate Loans
and then to such Group or Groups of outstanding Euro-Dollar Loans as the
Borrower may elect in such notice, or failing such election as the
Administrative Agent may determine in its discretion.
SECTION 2.08. Optional Prepayments. (a) Subject in the case of any
Euro-Dollar Loans to Section 2.10, the Borrower may (i) upon at least one
Domestic Business Day's notice to the Administrative Agent, prepay any Base
Rate Borrowing or (ii) upon at least three Euro-Business Days' notice to
the Administrative Agent, prepay any Euro-Dollar Borrowing, in each case in
whole at any time, or from time to time in part in amounts aggregating
$10,000,000 or any larger multiple of $1,000,000, by paying the principal
amount to be prepaid together with accrued interest thereon to the date of
prepayment. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Banks included in such Borrowing.
(b) Upon receipt of a notice of prepayment pursuant to this Section,
the Administrative Agent shall promptly notify each Bank of the contents
thereof and of such Bank's ratable share of such prepayment and such notice
shall not thereafter be revocable by the Borrower.
SECTION 2.09. General Provisions as to Payments. (a) The Borrower
shall make each payment of principal of, and interest on, the Loans and of
fees hereunder, not later than 12:00 Noon (New York City time) on the date
when due, in Federal or other funds immediately available in New York City,
to the Administrative Agent at its address referred to in Section 9.01. The
Administrative Agent will promptly distribute to each Bank its ratable
share of each such payment received by the Administrative Agent for the
account of the Banks. Whenever any payment of principal of, or interest on,
the Base Rate Loans or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to
the next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the
date for payment thereof shall be the next preceding Euro-Dollar Business
Day. If the date for any payment of principal is extended by operation of
law or otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Banks
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, cause to be distributed to each Bank
on such due date an amount equal to the amount then due such Bank. If and
to the extent that the Borrower shall not have so made such payment, each
Bank shall repay to the Administrative Agent forthwith on demand such
amount distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until the date
such Bank repays such amount to the Administrative Agent, at the Federal
Funds Rate.
SECTION 2.10. Funding Losses. If the Borrower makes any payment of
principal with respect to any Euro-Dollar Loan (pursuant to Article 2, 6 or
8 or otherwise) on any day other than the last day of the Interest Period
applicable thereto, or if the Borrower fails to prepay, continue or convert
any Euro-Dollar Loans after notice has been given to any Bank in accordance
with Section 2.05(c), 2.07(b) or 2.08(b), the Borrower shall reimburse each
Bank within 15 days after demand for any resulting loss or expense incurred
by it (or by an existing or prospective Participant in the related Loan),
including (without limitation) any loss incurred in obtaining, liquidating
or employing deposits from third parties, but excluding loss of margin for
the period after any such payment or failure to prepay, continue or
convert, provided that such Bank shall have delivered to the Borrower a
certificate as to the amount of such loss or expense, which certificate
shall be conclusive in the absence of clearly demonstrable error.
SECTION 2.11. Computation of Interest. Interest based on the Prime
Rate hereunder shall be computed on the basis of a year of 365 days (or 366
days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest
and fees shall be computed on the basis of a year of 360 days and paid for
the actual number of days elapsed (including the first day but excluding
the last day).
SECTION 2.12. Registry. The Administrative Agent shall maintain a
register (the "REGISTER") on which it will record the name of each Bank,
each Loan made by such Bank and each repayment of any Loan made by such
Bank. With respect to any Bank, the assignment or other transfer of the
rights to the principal of, and interest on, any Loan made and Note issued
pursuant to this Agreement shall not be effective until such assignment or
other transfer is recorded on the Register and otherwise complies with
Section 9.06(c). The registration of assignment or other transfer of all or
part of any Loans and Notes for a Bank shall be recorded by the
Administrative Agent on the Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement referred to in Section 9.06(c). The Register shall be
available at the offices where kept by the Administrative Agent for
inspection by the Borrower and any Bank at any reasonable time upon
reasonable prior notice to the Administrative Agent. Each Bank shall record
on its internal records (including computerized systems) the foregoing
information as to its own Loans. Failure to make any such recordation, or
any error in such recordation, shall not affect the obligations of any
Obligor under the Loan Documents.
ARTICLE 3
CONDITIONS
SECTION 3.01. Closing Date. This Amended Agreement shall become
effective on the date that each of the following conditions shall have been
satisfied (or waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of the
Borrower and the Banks (or, in the case of any party as to which an
executed counterpart shall not have been received, receipt by the Agent in
form satisfactory to it of telegraphic, telex or other written confirmation
from such party of execution of a counterpart hereof by such party);
(b) receipt by the Administrative Agent for the account of each Bank
of a duly executed Note dated on or before the Closing Date complying with
the provisions of Section 2.02;
(c) receipt by the Administrative Agent of duly executed counterparts
of (i) amendments to each of the Pledge Agreements and (ii) each of the RCF
Collateral Documents other than the Pledge Agreements;
(d) receipt by the Administrative Agent of opinions of (i) Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special counsel for the Borrower,
substantially in the form of Exhibit B-1 hereto, and (ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
General Counsel of the Borrower, substantially in the form of Exhibit B-2
hereto, and covering in each case such additional matters relating to the
transactions contemplated hereby as the Required Banks may be reasonably
request;
(e) receipt by the Administrative Agent of a copy of the three-year
business plan of the Borrower provided to the Senior Bank Parties pursuant
to Section 3.01(l) of the Senior Credit Facility;
(f) receipt by the Administrative Agent of a Perfection Certificate
with respect to each Subsidiary Guarantor dated the Closing Date and duly
executed by a Financial Officer of the Borrower;
(g) receipt by the Administrative Agent of the results of a search of
the Uniform Commercial Code (or equivalent filings) filings made with
respect to the Borrower and each Subsidiary Guarantor in the states (or
other jurisdictions) in which the chief executive office of each such
Person is located, any offices of such Persons in which records have been
kept relating to accounts and the other jurisdictions in which Uniform
Commercial Code filings (or equivalent filings) are to be made pursuant to
the preceding clause, together with copies of the financing statements (or
similar documents) disclosed by such search, and accompanied by evidence
satisfactory to the Administrative Agent that the Liens indicated in any
such financing statement (or similar document) would be permitted under
Section 5.11 or have been released (or arrangements shall have been made
for the release or discharge thereof reasonably satisfactory to the
Administrative Agent);
(h) the fact that all requisite material governmental authorities and
third parties shall have approved or consented to the transactions
contemplated hereby to the extent required, all applicable appeal periods
shall have expired and there shall be no governmental or judicial action,
actual or threatened, that could reasonably be expected to restrain,
prevent or impose burdensome conditions on the transactions contemplated
hereby;
(i) satisfaction by the Administrative Agent with any proposed changes
in the management of the Borrower;
(j) receipt by the Administrative Agent of a copy of the Borrowing
Base Certificate (as defined in the Senior Credit Facility) delivered
pursuant to Section 3.01(n) of the Senior Credit Facility;
(k) receipt by the Second Priority Collateral Trustee of a copy of, or
a certificate as to coverage under, the insurance policies required by
Section 5.03 and the applicable provisions of the Second Priority
Collateral Documents, each of which shall be endorsed or otherwise amended
to include a "standard" or "New York" lender's loss payable endorsement and
to name the Second Priority Collateral Trustee as additional insured, in
form and substance satisfactory to the Second Priority Collateral Trustee;
(l) receipt by the Administrative Agent of Phase I desk audits
relating to the Mortgaged Properties reasonably satisfactory to the
Administrative Agent, from an environmental consulting firm reasonably
satisfactory to the Administrative Agent, as to any environmental hazards,
liabilities or Remedial Action to which the Borrower or any of the
Subsidiaries may be subject;
(m) the Administrative Agent shall be reasonably satisfied as to the
amount and nature of any environmental and employee health and safety
exposures to which the Borrower and the Subsidiaries may be subject and the
plans of the Borrower with respect thereto;
(n) each of the Senior Mortgages, the Senior Security Agreement and
the Senior Subsidiary Guarantee Agreements shall be in form an substance
satisfactory to the Administrative Agent, shall have been duly executed by
each Subsidiary Guarantor, and by or on behalf of the Senior Bank Parties,
shall have been delivered to the Administrative Agent, and shall be in full
force and effect;
(o) receipt by the Administrative Agent, with a copy for each Bank, of
a copy of each Transaction Document reasonably requested by the
Administrative Agent, certified by a Financial Officer of the Borrower;
(p) there shall have been (i) no development in any Existing
Litigation after April 10, 2000, and (ii) no litigation or administrative
proceeding commenced, that in case of either clause (i) or (ii) could
reasonably be expected to have a Material Adverse Effect. There shall have
been no development in any Existing Litigation after April 10, 2000, and
there shall have been no litigation or administrative proceeding that, in
the Banks' sole judgment, could impair the validity, enforceability or
priority of the security interests to be granted in favor of the Banks
under the Loan Documents;
(q) there shall have been no material adverse change in the revenues,
store operations, inventory, accounts receivable, business or prospects of
the Borrower and its Subsidiaries considered as a whole, or to the
Borrower's knowledge, in any relationship with any vendor or third party
insurance payor of the Borrower or any of its Consolidated Subsidiaries,
considered as a whole, since November 2, 1999, other than, in each case, as
publicly disclosed before April 10, 2000;
(r) receipt by the Administrative Agent of copies of all waivers from
the lessor of each leased distribution center of the Subsidiary Guarantors
of any statutory, common law or contractual landlord's lien with respect to
any inventory of any Subsidiary Guarantor delivered to the Senior
Administrative Agent (as defined under the Senior Credit Facility) pursuant
to Section 3.01(cc) of the Senior Credit Facility;
(s) the Administrative Agent shall have received standard flood hazard
determination certificates in the form required by 12 CFR 22.6 for each
Mortgaged Property;
(t) receipt by the Administrative Agent of all documents it may
reasonably request relating to the existence of the Obligors, the corporate
authority for and the validity of the Loan Documents and any other matters
relevant hereto, all in form and substance satisfactory to the
Administrative Agent;
(u) receipt by the Administrative Agent of evidence satisfactory to it
that the Borrower shall have paid all participation fees payable pursuant
to Section 2.06 and all expenses, to the extent invoiced, payable pursuant
to Section 9.03;
(v) receipt by the Administrative Agent of confirmation that the
retention of E&Y Restructuring LLC as financial advisor to ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇ has been extended to a date not earlier than May 31, 2001;
(w) receipt by the Administrative Agent of a certificate of a duly
authorized officer of the Borrower as to (i) absence of Default, (ii)
accuracy of representations and warranties and (iii) such other matters
relating to the satisfaction of the conditions specified in this Section
3.01 as the Administrative Agent may reasonably request; and
(x) receipt by the Administrative Agent of evidence satisfactory to it
that the Transactions shall have been consummated in accordance with the
Transaction Documents, and the Borrower shall have received not less than
$500,000,000 proceeds of the initial borrowing under the Senior Credit
Facility.
On the Closing Date the Existing Agreement will be automatically amended
and restated in its entirety to read as set forth herein. On and after the
Closing Date the rights and obligations of the parties hereto shall be
governed by this Amended Agreement; provided the rights and obligations of
the parties hereto with respect to the period prior to the Closing Date
shall continue to be governed by the provisions of the Existing Agreement.
The Notes delivered to each Bank under the Existing Agreement shall be
canceled and Notes under this Amended Agreement shall be given in
substitution therefor (but not as a novation thereof). The Agent shall
promptly notify the Borrower and each Bank of the effectiveness of this
Amended Agreement, and such notice shall be conclusive and binding on all
parties hereto.
SECTION 3.02. Transition. Each Loan outstanding under the Existing
Agreement on the Closing Date shall remain outstanding under this Amended
Agreement, with an Interest Period and, in the case of any Euro-Dollar
Loan, a related Adjusted London Interbank Offered Rate as initially
established pursuant to the Existing Agreement, but with a Base Rate Margin
or Euro-Dollar Margin determined pursuant to this Amended Agreement for any
date on or after the Closing Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation and each Subsidiary Guarantor is a corporation (or other
entity) duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, and has all corporate (or
other organizational) powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as
now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. (a) The execution, delivery and performance by the Borrower
and each Subsidiary Guarantor of each Loan Document to which it is a party
are within the Borrower's corporate powers or such Subsidiary Guarantor's
corporate (or other organizational) powers, have been duly authorized by
all necessary corporate or other action, require no action by or in respect
of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law
or regulation or of the certificate of incorporation or by-laws (or other
organizational documents) of the Borrower or such Subsidiary Guarantor or
of any agreement or instrument evidencing or governing Debt of the Borrower
or any Subsidiary or any other material agreement, instrument, judgment,
injunction, order or decree binding upon the Borrower or any Subsidiary or
result in the creation or imposition of any Lien on any asset of the
Borrower or any Subsidiary pursuant to any such agreement, instrument,
judgment, injunction, order or decree (other than the Liens created by the
Collateral Documents). None of the Borrower or any of its Subsidiaries is
in default in any manner under any provision of any Material Financial
Obligation, or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be
bound, where such default could reasonably be expected to have a Material
Adverse Effect.
(b) The execution, delivery and performance by the Borrower and each
Subsidiary Guarantor of each Transaction Document (other than the Loan
Documents) to which it is a party are within the Borrower's corporate
powers or such Subsidiary Guarantor's corporate (or other organizational)
powers, have been duly authorized by all necessary corporate or other
action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or constitute
a default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws (or other organizational documents)
of the Borrower or such Subsidiary Guarantor or of any agreement or
instrument evidencing or governing Debt of the Borrower or any Subsidiary
or any other material agreement, instrument, judgment, injunction, order or
decree binding upon the Borrower or any Subsidiary or result in the
creation or imposition of any Lien on any asset of the Borrower or any
Subsidiary pursuant to any such agreement, instrument, judgment,
injunction, order or decree (other than the Liens permitted by Section
5.11).
SECTION 4.03. Binding Effect. This Agreement and each other Loan
Document constitutes a valid and binding agreement of the Borrower and the
Subsidiary Guarantors, and each Note, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding
obligation of the Borrower, in each case enforceable in accordance with its
terms.
SECTION 4.04. Financial and Other Information. (a) Effective upon and
after delivery by the Borrower of the Initial Financial Statements,
(i) the consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of February 26, 2000 and each following
fiscal year end of the Borrower and its Consolidated Subsidiaries and
the related consolidated statements of income and cash flows for the
fiscal year then ended, reported on by Deloitte & Touche (or other
independent public accountants of nationally recognized standing)
fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Borrower and
its Consolidated Subsidiaries as of such date and their consolidated
results of operations and cash flows for such fiscal year;
(ii) the consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of such fiscal quarter end and each
following fiscal quarter end of the Borrower and its Consolidated
Subsidiaries (other than the fourth fiscal quarter of any fiscal
year) and the related consolidated statements of income and cash
flows for the fiscal quarter then ended, set forth in the Borrower's
quarterly report on Form 10-Q for the fiscal quarter then ended, a
copy of which will be delivered to each of the Banks, fairly present,
in conformity with generally accepted accounting principles applied
on a basis consistent with the Initial Financial Statements, the
consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal period, subject to normal
year-end adjustments; and
(iii) there has been no material adverse change in the business,
financial position, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries, considered as a whole
since May 27, 2000.
(b) Since November 2, 1999, and until delivery by the Borrower of the
Initial Financial Statements, there has been no material adverse effect on
the revenues, store operations, inventory, accounts receivable, business or
prospects of the Borrower and its Subsidiaries considered as a whole, or to
the Borrower's knowledge, in any relationship with any vendor or third
party insurance payor of the Borrower or any of its Consolidated
Subsidiaries, considered as a whole, other than, in each case, as publicly
disclosed before April 10, 2000.
SECTION 4.05. Accuracy of Information. (a) Subject to any disclosure
in the Initial Financial Statements for the period on or before May 27,
2000, all information (other than financial projections) that has been or
will hereafter be made available to the Administrative Agent or any Bank by
or on behalf of the Borrower or any of its representatives in connection
with the transactions contemplated hereby is and will be complete and
correct in all material respects and does not and will not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading
in light of the circumstances under which such statements were or are made.
(b) All financial projections, if any, that have been or will be
prepared by or on behalf of the Borrower or any of its representatives and
made available to the Administrative Agent or any Bank have been or will be
prepared in good faith based upon assumptions that are reasonable at the
time made and at the time the related financial projections are made
available to the Administrative Agent.
(c) Subject to any disclosure in the Initial Financial Statements, for
the period on or before May 27, 2000, the Borrower has disclosed to the
Banks in writing any and all facts which materially and adversely affect
the business, operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries or the Borrower's ability to perform its
obligations under this Agreement.
SECTION 4.06. Litigation. There has been (a) no development in any
Existing Litigation after April 10, 2000, and (b) no litigation or
administrative proceeding that in case of either clause (a) or (b) could
reasonably be expected to have a Material Adverse Effect. There has been no
development in any Existing Litigation after April 10, 2000, and there has
been no litigation or administrative proceeding that could, in the Required
Banks' sole judgment, impair the validity, enforceability or priority of
the security interests to be granted in favor of the Banks under the Loan
Documents.
SECTION 4.07. Compliance with ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards of ERISA
and the Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable
provisions of ERISA and the Internal Revenue Code with respect to each
Plan, except to the extent that the failure to do so could not reasonably
be expected to have a Material Adverse Effect. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412
of the Internal Revenue Code in respect of any Plan, (ii) failed to make
any contribution or payment to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition of a Lien
or the posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any liability under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA, in
each case except to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
SECTION 4.08. Taxes. The Borrower and its Subsidiaries have filed all
United States Federal income tax returns, and the Borrower and its
Subsidiaries have filed all other material tax returns, which are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by the Borrower or any Subsidiary
Guarantor except where the payment of any such taxes is being contested in
good faith by appropriate proceedings. Effective upon delivery by the
Borrower of the Initial Financial Statements, the charges, accruals and
reserves on the books of the Borrower and its Consolidated Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Borrower, adequate.
SECTION 4.09. Subsidiaries. Schedule 1.01(c) sets forth a complete
and correct list of the Borrower's Subsidiaries as of the Closing Date, and
the percentage ownership interest of the Borrower therein. Each of the
Borrower's corporate Subsidiaries is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. Each of the Borrower's Subsidiaries is an
"Unrestricted Subsidiary" as referred to in Section 5.09.
SECTION 4.10. Environmental Matters. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of the
Borrower and its Subsidiaries, in the course of which it identifies and
evaluates associated liabilities and costs (including, without limitation,
any capital or operating expenditures required for clean-up or closure of
properties presently or previously owned, any capital or operating
expenditures required to achieve or maintain compliance with environmental
protection standards imposed by law or as a condition of any license,
permit or contract, any related constraints on operating activities,
including any periodic or permanent shutdown of any facility or reduction
in the level of or change in the nature of operations conducted thereat,
any costs or liabilities in connection with off-site disposal of wastes or
hazardous substances, and any actual or potential liabilities to third
parties, including employees, and any related costs and expenses). On the
basis of this review, the Borrower has reasonably concluded that such
associated liabilities and costs, including the costs of compliance with
Environmental Laws, are unlikely to have a Material Adverse Effect.
SECTION 4.11. Year 2000 Compliance. The Borrower has (i) initiated a
review and assessment of all areas within the business and operations of
the Borrower and its Subsidiaries (including those areas affected by
suppliers and vendors) that could be adversely affected by the "Year 2000
Problem") (that is, the risk that computer applications used by it or any
of its Subsidiaries (or their respective supplier and vendors) may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii)
developed a plan and timeline for addressing the Year 2000 Problem on a
timely basis and (iii) to date, implemented such plan in substantial
accordance with such timetable. The Borrower reasonably believes that all
computer applications that are material to the business or operations of
the Borrower or any of its Subsidiaries will on a timely basis be able to
perform properly date-sensitive functions for all dates before and from and
after January 1, 2000, except to the extent that a failure to do so could
not reasonably be expected to have a Material Adverse Effect.
SECTION 4.12. Other Loan Documents. The representations and
warranties of the Borrower and each Subsidiary Guarantor set forth in each
other Loan Document and Transaction Document are true and correct.
SECTION 4.13. Insurance. Schedule 4.13 sets forth a true, complete
and correct description of all liability, property and casualty insurance
maintained by the Borrower or by the Borrower for its Subsidiaries as of
the Closing Date. Such insurance is in full force and effect and all
premiums have been duly paid. The Borrower and its Subsidiaries have
insurance in such amounts and covering such risks and liabilities as are in
accordance with normal industry practice and as required by the Senior Loan
Documents.
SECTION 4.14. Solvency. Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the
making of each loan made on the Closing Date under the Senior Credit
Facility and after giving effect to the application of the proceeds of such
loans, (i) the fair value of the assets of the Borrower and the other
Obligors, taken as a whole, at a fair valuation, will exceed their debts
and liabilities, subordinated, contingent or otherwise; (ii) the present
fair saleable value of the property of the Borrower and the other Obligors,
taken as a whole will be greater than the amount that will be required to
pay the probable liability of their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (iii) the Borrower and the other Obligors,
taken as a whole will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) the Borrower and the other Obligors will not
have unreasonably small capital with which to conduct the business in which
they are engaged as such business is now conducted and is proposed to be
conducted following the Closing Date.
SECTION 4.15. Title to Properties. (a) Each of the Borrower and the
Subsidiaries has good and marketable title to, or valid leasehold interests
in, all its material real properties (including all Mortgaged Properties)
and valid title to all other assets, except for minor defects in title that
do not interfere with its ability to conduct its business as currently
conducted or to utilize such properties and assets for their intended
purposes. All such material properties and assets are free and clear of
Liens that secure indebtedness for borrowed money, other than Liens
expressly permitted by Section 5.11 and as set forth on Schedule
4.15(b)(ii) (or arrangements reasonably satisfactory to the Administrative
Agent have been made for the release or discharge of such Liens).
(b) Schedule 1.01(b) sets forth the address of each Mortgaged Property
on the Closing Date. As of the Closing Date, none of the Mortgaged
Properties are subject to leases, license agreements or subleases under
which the Borrower or any Subsidiary is the lessor/licensor except as set
forth on Schedule 4.15(b)(i). Each Mortgaged Property is free of Liens
which secure indebtedness for borrowed money except for the Second Priority
Mortgages and as set forth on Schedule 4.15(b)(ii) (or arrangements
reasonably satisfactory to the Administrative Agent have been made for the
release of such Liens).
(c) Schedule 4.15(c) sets forth the address of every leased warehouse
or distribution center in which inventory owned by the Company and or any
Subsidiary is located.
SECTION 4.16. Investment Company Act; Public Utility Holding Company
Act. None of the Borrower or any Subsidiary is (a) an "investment company"
as defined in, or subject to regulation under, the Investment Company Act
of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 4.17. Labor Matters. As of the Closing Date, there are no
strikes, lockouts or slowdowns against the Borrower or any Subsidiary
pending or, to the knowledge of the Borrower, threatened. The hours worked
by and payments made to employees of the Borrower and the Subsidiaries have
not been in violation of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters.
All payments due from the Borrower or any Subsidiary, or for which any
claim may be made against the Borrower or any Subsidiary, on account of
wages and employee health and welfare insurance and other benefits, have
been paid or accrued as a liability on the books of the Borrower or such
Subsidiary. The consummation of the Transactions will not give rise to any
right of termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which the Borrower or any
Subsidiary is bound.
ARTICLE 5
COVENANTS
The Borrower agrees that, so long as any Loan or other amount payable
under any Loan Document remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the
Banks:
(a) (i) with respect to the fiscal year of the Borrower ended February
26, 2000 as soon as available but not later than July 11, 2000, and (ii)
with respect to each following fiscal year of the Borrower as soon as
available and in any event within 90 days (or within such longer period of
time, not greater than 120 days, to which the SEC may extend the filing
deadline for the Borrower's Annual Report on Form 10-K) after the end of
each such fiscal year, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on without material qualification by Deloitte &
Touche (or other independent public accountants of nationally recognized
standing);
(b) with respect to the fiscal quarter of the Borrower ending May 27,
2000 as soon as available but not later then July 11, 2000, and (ii) with
respect to each following fiscal quarter of the Borrower (other than the
last fiscal quarter of a fiscal year) as soon as available and in any event
within 45 days (or within such longer period of time, not greater than 60
days, to which the SEC may extend the filing deadline for the Borrower's
Quarterly Report on Form 10-Q) after the end of each such fiscal quarter, a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statements of income and cash flows for such quarter and for the portion of
the Borrower's fiscal year ended at the end of such quarter, setting forth
in each case in comparative form the figures for the corresponding quarter
and the corresponding portion of the Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by a
Financial Officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of a
Financial Officer of the Borrower (i) setting forth in reasonable detail
the calculations required to establish whether the Borrower (or, in the
case of Section 5.13, PCS) was in compliance with the requirements of
Sections 5.12, 5.13, 5.14 and 5.15 on the date of such financial
statements, (ii) stating whether any Default exists on the date of such
certificate and, if any Default then exists, setting forth the details
thereof and the action which the Borrower is taking or proposes to take
with respect thereto and (iii) in the case of the certificate delivered
together with the financial statements referred to in clause (a) above, a
calculation of Excess Cash Flow for the applicable period specified in
Section 2.07(c) and the amount of the required prepayment of the Loans, if
any, in respect thereof;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
whether anything has come to their attention to cause them to believe that
any Default existed on the date of such statements and (ii) confirming the
calculations set forth in the officer's certificate delivered
simultaneously therewith pursuant to clause (c) above;
(e) within three Business Days after the end of each fiscal month a
certificate of a Financial Officer of the Borrower setting forth in
reasonable detail, a description of each disposition of assets not in the
ordinary course of business for which the book value or fair market value
of the assets of the Borrower or the Subsidiaries disposed or the
consideration received therefor was greater than $5,000,000;
(f) within five Business Days after the end of each calendar month a
report, in form and scope satisfactory to the Administrative Agent,
summarizing determinations of the borrowing base and utilization under the
Senior Credit Facility during such month;
(g) within five days after any officer of the Borrower obtains
knowledge of (i) any Default, if such Default is then continuing, a
certificate of a Financial Officer of the Borrower setting forth the
details thereof and the action which the Borrower is taking or proposes to
take with respect thereto, or (ii) the filing or commencement of any
action, suit or proceeding, whether at law or in equity or by or before any
court, governmental authority or other tribunal, against the Borrower or
any Affiliate thereof that could reasonably be expected to result in a
Material Adverse Effect;
(h) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(i) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower shall have filed with the SEC;
(j) within five days, if and when any member of the ERISA Group (i)
gives or any Financial Officer becomes aware that such member is required
to give notice to the PBGC of any "reportable event" (as defined in Section
4043 of ERISA) with respect to any Plan which might constitute grounds for
a termination of such Plan under Title IV of ERISA, or any Financial
Officer knows that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy of the notice
of such reportable event given or required to be given to the PBGC; (ii)
receives notice of complete or partial withdrawal liability under Title IV
of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) receives
notice from the PBGC under Title IV of ERISA of an intent to terminate,
impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or appoint a trustee to administer, any Plan, a copy of such
notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v)
gives notice of intent to terminate any Plan under Section 4041(c) of
ERISA, a copy of such notice and other information filed with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit Arrangement which
has resulted or could result in the imposition of a Lien or the posting of
a bond or other security, a certificate of a Financial Officer of the
Borrower setting forth details as to such occurrence and action, if any,
which the Borrower or applicable member of the ERISA Group is required or
proposes to take;
(k) on or prior to the dates specified below (or, in the reasonable
discretion of the Administrative Agent, no later than 5 days thereafter):
(i) a monthly forecast of cash receipts and disbursements, commencing
with July 2000, no later than the first day of each month in respect
of such forecast;
(ii) a monthly reconciliation of actual cash receipts and
disbursements to the forecast for such month delivered pursuant to
clause (i) above (or pursuant to the Existing Agreement), no later
than the 25th day of the next succeeding month;
(iii) a weekly sales report for each week, commencing with the week
ending June 17, 2000, no later than the 4th day following the last
day of the week in respect of which such sales report is to be
delivered;
(iv) an operating forecast for each month in the fiscal year ending
on or closest to February 28, 2002, no later than March 31, 2001;
(v) a monthly reconciliation of actual operating results for each
month specified in the operating forecast delivered pursuant to
clause (iv) above (or pursuant to the Existing Agreement) to the
budget for such month, no later than the 30th day of the next
succeeding month; and
(l) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries or the
Collateral as the Administrative Agent, at the request of any Bank, may
reasonably request.
Information required to be delivered pursuant to clauses (a), (b),
(h) and (i) shall be deemed to have been delivered on the date on which the
Borrower provides notice to the Banks that such information has been posted
on the Borrower's website on the Internet at the website address listed on
the signature pages hereof, at ▇▇▇.▇▇▇/▇▇▇▇▇/▇▇▇▇▇▇▇▇.▇▇▇ or at another
website identified in such notice and accessible by the Banks without
charge; provided that (i) such notice may be included in a certificate
delivered pursuant to clause (c), and (ii) the Borrower shall deliver paper
copies of the information referred to in clauses (a), (b), (h) and (i) to
any Bank which requests such delivery.
SECTION 5.02. Payment of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, pay and discharge, as the same shall
become due and payable, (i) all material claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons prior
to the time such claims or demands give rise to a material Lien upon any of
its property or assets or a material risk of forfeiture of a Mortgaged
Property, and (ii) all material taxes, assessments and governmental charges
or levies upon it or its property or assets, except where any of the items
in clause (i) or (ii) above may be contested in good faith by appropriate
proceedings, and the Borrower or such Subsidiary, as the case may be, shall
have set aside on its books, in accordance with generally accepted
accounting principles, appropriate reserves, if any, for the accrual of any
such items.
SECTION 5.03. Maintenance of Property; Insurance. (a) The Borrower
will keep, and will cause each Subsidiary to keep, all property useful in
its business in good working order and condition, ordinary wear and tear
excepted.
(b) The Borrower will, and will cause each of its Subsidiaries to,
maintain (either in the name of the Borrower or in such Subsidiary's own
name) with financially sound and responsible insurance companies, insurance
on all their respective properties in at least such amounts and against at
least such risks (and with such risk retention) as are usually insured
against in the same general area by companies of established repute engaged
in the same or a similar business; and will furnish to the Banks, upon
request from the Administrative Agent, information presented in reasonable
detail as to the insurance so carried. The Borrower will, and will cause
each of its Subsidiaries to, maintain such insurance in a coverage amount
of not less than 90% of the coverage amount as of the Closing Date, with
deductibles, risks covered and other provisions (other than amount of
premiums) not materially less favorable to the Borrower and its
Subsidiaries as of the Closing Date.
(c) The Borrower will, and will cause each of the Subsidiary
Guarantors to, cause all such policies to be endorsed or otherwise amended
to include a "standard" or "New York" lender's loss payable endorsement, in
form and substance satisfactory to the Senior Administrative Agent, the
Senior Collateral Agent, the Administrative Agent, and the Second Priority
Collateral Trustee which endorsement shall provide that, from and after the
Closing Date, if the insurance carrier shall have received written notice
from the Senior Administrative Agent, the Senior Collateral Agent, the
Second Priority Collateral Trustee or the Administrative Agent of the
occurrence of an Event of Default, the insurance carrier shall pay all
proceeds otherwise payable to the Borrower and any other Obligor under such
policies directly to the Senior Collateral Agent and the Second Priority
Collateral Trustee, as their interests may appear, for application pursuant
to the Collateral Trust and Intercreditor Agreement; cause all such
policies to provide that none of the Borrower, the Senior Administrative
Agent, the Senior Collateral Agent, the Second Priority Collateral Trustee,
the Administrative Agent, nor any other party shall be a coinsurer
thereunder and to contain a "Replacement Cost Endorsement", without any
deduction for depreciation, and such other provisions as the Senior
Administrative Agent, the Senior Collateral Agent, the Second Priority
Collateral Trustee or the Administrative Agent may reasonably require from
time to time to protect their interests; deliver broker's certificates to
the Senior Collateral Agent and the Second Priority Collateral Trustee;
cause each such policy to provide that it shall not be canceled or not
renewed by reason of nonpayment of premium upon not less than 10 days prior
written notice thereof by the insurer to the Senior Administrative Agent,
the Senior Collateral Agent, the Second Priority Collateral Trustee and the
Administrative Agent (giving the Senior Administrative Agent, the Senior
Collateral Agent, the Second Priority Collateral Trustee and the
Administrative Agent the right to cure defaults in the payment of premiums)
or for any other reason upon not less than 30 days' prior written notice
thereof by the insurer to the Senior Administrative Agent, the Senior
Collateral Agent, the Second Priority Collateral Trustee and the
Administrative Agent; deliver to the Senior Administrative Agent, the
Senior Collateral Agent, the Second Priority Collateral Trustee and the
Administrative Agent, before the cancellation or nonrenewal of any such
policy of insurance, a copy of a renewal or replacement policy (or other
evidence of renewal of a policy previously delivered to the Senior
Administrative Agent, the Senior Collateral Agent, the Second Priority
Collateral Trustee and the Administrative Agent) together with evidence
reasonably satisfactory to the Senior Administrative Agent, the Senior
Collateral Agent and the Administrative Agent of payment of the premium
therefor.
(d) [Reserved]
(e) The Borrower will, and will cause each of the Subsidiary
Guarantors to, with respect to any Mortgaged Property, carry and maintain
comprehensive general liability insurance including the "broad form CGL
endorsement" and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance against any and all claims, in no event for a
combined single limit of less than $10,000,000, naming the Senior
Collateral Agent (for the benefit of the Senior Bank Parties) and the
Second Priority Collateral Trustee (for the benefit of the Second Priority
Debt Parties) as additional insured parties, on forms satisfactory to the
Senior Collateral Agent and the Second Priority Collateral Trustee.
(f) The Borrower will notify the Senior Administrative Agent, the
Senior Collateral Agent, the Second Priority Collateral Trustee and the
Administrative Agent promptly whenever any separate insurance concurrent in
form or contributing in the event of loss with that required to be
maintained under this Section is taken out by the Borrower or its
Subsidiaries; and promptly deliver to the Senior Administrative Agent, the
Senior Collateral Agent, the Second Priority Collateral Trustee and the
Administrative Agent a duplicate original copy of such policy or policies.
(g) In connection with the covenants set forth in this Section, it is
agreed that:
(i) none of the Administrative Agent, the Banks, or their respective
agents or employees shall be liable for any loss or damage insured by
the insurance policies required to be maintained under this Section,
and (A) the Borrower and each other Obligor shall look solely to
their insurance companies or any other parties other than the
aforesaid parties for the recovery of such loss or damage and (B)
such insurance companies shall have no rights of subrogation against
the Administrative Agent, the Second Priority Collateral Trustee, the
Banks or their agents or employees. If, however, the insurance
policies do not provide waiver of subrogation rights against such
parties, as required above, then the Borrower hereby agrees, to the
extent permitted by law, to waive its right of recovery, if any,
against the Administrative Agent, the Second Priority Collateral
Trustee, the Banks and their agents and employees; and
(ii) the designation of any form, type or amount of insurance coverage
by the Administrative Agent, the Second Priority Collateral Trustee
or the Required Banks under this Section shall in no event be deemed
a representation, warranty or advice by the Administrative Agent, the
Second Priority Collateral Trustee or the Banks that such insurance
is adequate for the purposes of the business of the Borrower and the
Subsidiaries or the protection of their properties.
SECTION 5.04. Conduct of Business and Maintenance of Existence.
Except as otherwise permitted in this Agreement, the Borrower will
continue, and will cause each Subsidiary to continue, to engage in business
of the same general type as now conducted by the Borrower and its
Subsidiaries, and will preserve, renew and keep in full force and effect,
and will cause each Subsidiary (except where such Subsidiary merges into a
Subsidiary Guarantor) to preserve, renew and keep in full force and effect
their respective legal existence and their respective rights, privileges
and franchises necessary or desirable in the normal conduct of business;
provided that the foregoing will not prohibit any merger or liquidation of,
or sale of assets by, a Subsidiary that is permitted by Sections 5.18 and
5.19.
SECTION 5.05. Compliance with Laws. The Borrower will comply, and
cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws
and ERISA and the rules and regulations thereunder) applicable to it or its
property except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings or where the failure to comply would
not have a Material Adverse Effect.
SECTION 5.06. Inspection of Property, Books and Records. The Borrower
will keep, and will cause each Subsidiary to keep, proper books of record
and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and
will permit, and will cause each Subsidiary to permit, representatives of
any Bank (at such Bank's expense, unless a Default has occurred and is
continuing, in which case at the Borrower's expense and after such Bank has
consulted the Administrative Agent with respect thereto) to visit and
inspect any of their properties, to examine and make abstracts from any of
their respective books and records and to discuss their respective affairs,
finances and accounts with their respective officers, employees and
independent public accountants, all at such reasonable times and as often
as may reasonably be desired.
SECTION 5.07. Restriction on Other Agreements, Payment Limitations,
Debt Prepayments. (a) The Borrower will not, and will not permit any
Subsidiary to, enter into any agreement which imposes a limitation on
incurrence by the Borrower and its Subsidiaries of Liens that (i) would
restrict any Subsidiary from granting Liens on any of its assets (including
assets in addition to the then-existing Second Priority Collateral to
secure the Second Priority Obligations or (ii) is more restrictive than the
limitation on Liens set forth in this Agreement or (iii) which imposes
other covenants more restrictive than those set forth in this Agreement
except, in each case, (A) agreements with respect to Debt secured by Liens
permitted by Section 5.11 containing restrictions on the ability to
transfer or grant Liens on the assets securing such Debt, (B) customary
restrictions contained in purchase and sale agreements limiting the
transfer of the subject assets pending closing, (C) customary
non-assignment provisions in leases and other contracts entered into in the
ordinary course of business, (D) pursuant to applicable law, (E) agreements
in effect as of the Closing Date and not entered into in contemplation of
the Transactions and (F) the other Existing Facilities Documents and the
Forward Commitment Agreement as in effect on the Closing Date.
(b) The Borrower will not, and will not permit any Subsidiary to,
enter into or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary to (i) make
Restricted Payments in respect of any capital stock of such Subsidiary held
by, or pay any Debt owed to, the Borrower or any other Subsidiary, (ii)
make any Investment in the Borrower or any other Subsidiary, or (iii)
transfer any of its assets to the Borrower or any other Subsidiary, except
for such encumbrances or restrictions existing under or by reason of (A)
any restriction existing under the Loan Documents, the Second Priority Debt
Documents, the Senior Loan Documents, the Indentures or the Forward
Commitment Agreement, (B) any restrictions with respect to PCS imposed
pursuant to a PCS Disposition pending the consummation thereof, (C)
customary non-assignment provisions in leases and other contracts entered
into in the ordinary course of business, and (D) as required by applicable
law.
(c) The Borrower will not, and will not permit any Subsidiary to, make
or offer to make any optional or voluntary payment, prepayment, repurchase
or redemption or, or otherwise voluntarily or optionally defease, debt
under the other Existing Facilities, the Exchange Debt Obligations, the
Synthetic Lease Facilities, the Existing Notes (as defined in Annex 3)
(other than pursuant to the Exchange Offer (as defined in Annex 3)), the
Exchange Notes or any other Debt for borrowed money of the Borrower or any
Subsidiary, or segregate funds for any such payment, prepayment,
repurchase, redemption or defeasance, except for refinancings, refundings
and exchanges pursuant to Section 5.16(d), repurchases or redemption of
such Debt for consideration consisting solely of common stock of the
Borrower or Qualified Preferred Stock or prepayments of Capital Leases in
connection with the sale, closing or relocation of Stores.
SECTION 5.08. Further Assurances. The Borrower will, and will cause each
of the Subsidiary Guarantors to, execute any and all further documents,
financing statements, recordations, agreements and instruments, and take
all further action (including filing Uniform Commercial Code and other
financing statements, recordations, mortgages and deeds of trust) that may
be required under applicable law, or that the Required Banks, the
Administrative Agent or the Second Priority Collateral Trustee may
reasonably request, in order to effectuate the transactions contemplated by
the Loan Documents and in order to grant, preserve, protect and perfect the
validity and priority of the security interests created or intended to be
created by the RCF Collateral Documents. The Borrower will cause any
subsequently acquired or organized Domestic Subsidiary to execute a Second
Priority Subsidiary Guarantee Agreement, Second Priority Indemnity,
Subrogation and Contribution Agreement, Second Priority Subsidiary Security
Agreement and any applicable financing statement or other recordation from
time to time, and to comply with the terms thereof. The Borrower agrees to
cause to be provided such evidence as the Second Priority Collateral
Trustee or the Administrative Agent shall reasonably request as to the
perfection and priority status of each such security interest and Lien.
SECTION 5.09. Subsidiaries. The Borrower will cause all of its
Subsidiaries that own Collateral to be "Unrestricted Subsidiaries" as
defined in, and for all purposes of, each of the Indentures and will
deliver such documents to the trustees under each of the Indentures and
take such actions thereunder as may be necessary to effect the foregoing.
SECTION 5.10. Restriction on Sale and Leaseback Transactions. Except
for a sale or transfer by a Subsidiary to a Subsidiary Guarantor, the
Borrower will not, and will not permit any Subsidiary to, enter into any
Sale and Leaseback Transaction after the Closing Date other than
(a) a Sale and Leaseback Transaction listed on Schedule 5.10,
(b) with respect to any property other than a Mortgaged Property owned
by the Borrower or any Subsidiary Guarantor as of the Closing Date, for a
lease for a period, including renewals, not exceeding 24 months, by the end
of which period it is intended that the use of such property or equipment
by the lessee will be discontinued; provided, however, that such Sale and
Leaseback Transaction will be subject to Section 5.19(b),
(c) with respect to any property other than a Mortgaged Property, if
entered into in respect of property acquired, developed or constructed by
the Borrower or a Subsidiary after the Closing Date, if such Sale and
Leaseback Transaction is entered into within 24 months from the date of
completion of such acquisition, development or construction (which, in the
case of any Store, shall be deemed to be 24 months from the date of the
opening of such Store), or
(d) if none of clauses (a) through (c) above are applicable, any other
Sale and Leaseback Transaction not involving a Mortgaged Property, subject
to Section 5.19(b).
SECTION 5.11. Restriction on Liens. The Borrower will not, and will
not permit any Subsidiary to, create, issue, incur, assume or guarantee any
Secured Debt; provided that the foregoing covenant shall not apply to the
following:
(a) (i) any Lien on any property in connection with a Sale and
Leaseback Transaction permitted by Section 5.10, (ii) the acquisition by
the Borrower or a Subsidiary of property subject to any Lien upon such
property existing at the time of acquisition thereof, whether or not
assumed by the Borrower or such Subsidiary and not created in anticipation
of such acquisition, which acquisition is not otherwise prohibited by this
Agreement, or (iii) any conditional sales agreement or other title
retention agreement with respect to any property hereafter acquired;
provided that the Lien does not attach to other property except unimproved
real property previously owned upon which any new construction has taken
place and subsequent additions to such acquired or constructed property;
(b) any Lien created for the sole purpose of extending, renewing or
refunding, in whole or part, any Lien permitted by this Section 5.11 or any
Lien securing the Debt of the Borrower or of any Subsidiary on the date of
this Agreement or of a corporation at the time such corporation becomes a
Subsidiary, or any extensions, renewals or refundings of any such Lien;
provided that the principal amount of Debt secured thereby shall not exceed
the principal amount of Debt so secured at the time of such extension,
renewal or refunding and that such extension, renewal or refunding Lien
shall be limited to all or that part of the same property which secured the
Debt so extended, renewed or refunded;
(c) any Lien securing Debt of a Subsidiary owing to a Subsidiary
Guarantor;
(d) any Lien created by the Loan Documents;
(e) any Lien created by the Senior Loan Documents; provided that (i)
with respect to any specific Collateral which is also Senior Collateral, a
Lien is created simultaneously under the Second Priority Collateral
Documents and is subject to the Collateral Trust and Intercreditor
Agreement and (ii) the aggregate principal amount of Senior Debt
Obligations to be secured by such Lien shall not exceed the amount
permitted by Section 6.02 of the Collateral Trust and Intercreditor
Agreement;
(f) any Lien under the Exchange Debt First Priority Collateral
Documents in favor of the Exchange Debt Parties, provided that such Lien is
limited to the Exchange Debt First Priority Collateral;
(g) any Lien under the PCS Pledge Agreement and the ▇▇▇▇▇▇▇▇▇.▇▇▇
Pledge Agreement in favor of the Existing Facility Parties and the
Synthetic Lease Parties, provided that such Lien is limited to the
"Collateral" as such term is defined in each such document;
(h) existing Liens under the Synthetic Lease Documents and Liens under
Synthetic Leases permitted pursuant to Section 5.25;
(i) Liens identified on Schedule 5.11(i); provided, however, that such
Liens do not attach to any other property other than that identified in
such Schedule;
(j) Liens in respect of Debt or Attributable Debt permitted under
Sections 5.16(f), (g), (h), (i) and (j) so long as such Liens attach only
to (i) the equipment subject to such financing, (ii) the property to which
they attach on the Closing Date (or in the case of any operating lease
which is reclassified as a Capital Lease, any property subject to such
lease on the Closing Date), or (iii) the property or assets constructed,
developed or purchased with such financing; and
(k) any Lien on Net Cash Proceeds of Reduction Events allocated to the
Exchange Note Obligations in accordance with the Collateral Trust and
Intercreditor Agreement, which Lien arises pursuant to Section 10.14 of the
Exchange Note Indenture.
SECTION 5.12. Capital Expenditures. The aggregate amount of
Consolidated Capital Expenditures for any period set forth below shall not
exceed the amount set forth below opposite such period:
PERIOD AMOUNT
IF NO PCS DIVESTITURE IF A PCS DIVESTITURE
HAS BEEN CONSUMMATED HAS BEEN CONSUMMATED
ON OR BEFORE THE LAST ON OR BEFORE THE LAST
DAY OF SUCH PERIOD, DAY OF SUCH PERIOD,
MAXIMUM CONSOLIDATED MAXIMUM RETAIL
CAPITAL EXPENDITURES CAPITAL EXPENDITURES
Fiscal quarter ending on August 26, 2000 $70,000,000 $64,000,000
Two fiscal quarters ending on November 25, 2000 $138,000,000 $125,000,000
Three fiscal quarters ending on March 3, 2001 $205,000,000 $186,000,000
Four fiscal quarters ending on June 2, 2001 $270,000,000 $245,000,000
Four fiscal quarters ending on September 1, 2001 $265,000,000 $241,000,000
Four fiscal quarters ending on December 1, 2001 $265,000,000 $242,000,000
Four fiscal quarters ending on March 2, 2002 $265,000,000 $243,000,000
Four fiscal quarters ending on June 1, 2002 $265,000,000 $243,000,000
SECTION 5.13. Minimum EBITDA. The aggregate amount of Consolidated
EBITDA, Retail EBITDA or PCS EBITDA, as the case may be, for any period set
forth below shall not be less than the amount set forth below opposite such
period:
PERIOD AMOUNT
IF NO PCS DIVESTITURE IF A PCS DIVESTITURE IF NO PCS DIVESTITURE
HAS BEEN CONSUMMATED HAS BEEN CONSUMMATED HAS BEEN CONSUMMATED
ON OR BEFORE THE LAST ON OR BEFORE THE LAST ON OR BEFORE THE LAST
DAY OF SUCH PERIOD, DAY OF SUCH PERIOD, DAY OF SUCH PERIOD,
MINIMUM CONSOLIDATED MINIMUM RETAIL EBITDA MINIMUM PCS EBITDA
EBITDA
Fiscal quarter ending on August 26, 2000 $95,000,000 $75,000,000 N/A
Two fiscal quarters ending on November 25, 2000 $232,000,000 $178,000,000 N/A
Three fiscal quarters ending on March 3, 2001 $426,000,000 $335,000,000 N/A
Four fiscal quarters ending on March 3, ▇▇▇▇ ▇/▇, ▇/▇ $100,000,000
Four fiscal quarters ending on June 2, 2001 $569,000,000 $444,000,000 N/A
Four fiscal quarters ending on September 1, 2001 $646,000,000 $504,000,000 N/A
Four fiscal quarters ending on December 1, 2001 $722,000,000 $563,000,000 N/A
Four fiscal quarters ending on March 2, 2002 $860,000,000 $689,000,000 $100,000,000
Four fiscal quarters ending on June 1, 2002 $894,000,000 $720,000,000 N/A
SECTION 5.14. Minimum Interest Coverage Ratio. At no time shall the
Consolidated Interest Coverage Ratio or the Retail Interest Coverage Ratio,
as the case may be, for any period be less than the amount set forth below
opposite such period:
PERIOD AMOUNT
IF NO PCS DIVESTITURE IF A PCS DIVESTITURE
HAS BEEN CONSUMMATED HAS BEEN CONSUMMATED
ON OR BEFORE THE LAST ON OR BEFORE THE LAST
DAY OF SUCH PERIOD, THE DAY OF SUCH PERIOD, THE
MINIMUM CONSOLIDATED MINIMUM RETAIL INTEREST
INTEREST COVERAGE RATIO COVERAGE RATIO
Fiscal quarter ending on August 26, 2000 .70 .67
Two fiscal quarters ending on November 25, 2000 .81 .79
Three fiscal quarters ending on March 3, 2001 .96 .95
Four fiscal quarters ending on June 2, 2001 .96 .94
Four fiscal quarters ending on September 1, 2001 1.07 1.04
Four fiscal quarters ending on December 1, 2001 1.18 1.14
Four fiscal quarters ending on March 2, 2002 1.39 1.37
Four fiscal quarters ending on June 1, 2002 1.40 1.40
SECTION 5.15. Minimum Fixed Charge Coverage Ratio. At no time shall
the Consolidated Fixed Charge Coverage Ratio or the Retail Fixed Charge
Coverage Ratio, as the case may be, for any period set forth below be less
than the amount set forth below opposite such period:
PERIOD AMOUNT
IF NO PCS DIVESTITURE IF A PCS DIVESTITURE
HAS BEEN CONSUMMATED HAS BEEN CONSUMMATED
ON OR BEFORE THE LAST ON OR BEFORE THE LAST
DAY OF SUCH PERIOD, THE DAY OF SUCH PERIOD, THE
MINIMUM CONSOLIDATED MINIMUM RETAIL FIXED
CHARGE COVERAGE RATIO CHARGE COVERAGE RATIO
Fiscal quarter ending on August 26, 2000 .83 .83
Two fiscal quarters ending on November 25, 2000 .89 .88
Three fiscal quarters ending on March 3, 2001 .96 .95
Four fiscal quarters ending on June 2, 2001 .96 .94
Four fiscal quarters ending on September 1, 2001 1.01 .99
Four fiscal quarters ending on December 1, 2001 1.06 1.04
Four fiscal quarters ending on March 2, 2002 1.19 1.17
Four fiscal quarters ending on June 1, 2002 1.20 1.19
SECTION 5.16. Restriction on Debt. The Borrower will not, and will
not permit any of its Subsidiaries to, incur or at any time be liable with
respect to any Debt or any Attributable Debt in respect of any Sale and
Leaseback Transaction except:
(a) Debt under the Senior Loan Documents in a principal amount no
greater than the amount permitted by Section 6.02 of the Collateral Trust
and Intercreditor Agreement;
(b) Debt under the Loan Documents, the other Existing Facility
Obligations, the Exchange Debt Obligations, the Exchange Note Obligations,
and Debt under the Indentures in each case in a principal amount not
greater than the principal amount thereof on the Closing Date after giving
effect to the Transactions; provided that no Subsidiary Guarantor will have
any liability thereon except its obligations under the Second Priority
Collateral Documents or the Exchange Debt First Priority Collateral
Documents;
(c) Attributable Debt of (i) the Synthetic Lease Obligations in a
principal amount not greater than the principal amount thereof on the
Closing Date, plus amounts permitted pursuant to Section 5.25; provided
that no Subsidiary Guarantor will have any liability thereon except its
obligations under the Second Priority Collateral Documents and (ii) any
Sale and Leaseback Transactions in existence on the Closing Date;
(d) unsecured Debt of the Borrower extending, or having the effect of
extending the maturity of, or refunding, refinancing or exchanging, in
whole or in part, Debt described in clauses (a), (b) and (c), provided that
(i) the terms of any such extending, refunding, refinancing or exchanging
of Debt, and of any agreement entered into and of any instrument issued in
connection therewith, are otherwise permitted by the Loan Documents, (ii)
the terms relating to principal amount, amortization, maturity,
convertibility and subordination (if any), and other material terms taken
as a whole, of any such extending, refunding, refinancing or exchanging of
Debt, and of any agreement entered into and of any instrument issued in
connection therewith, are no less favorable in any material respect to the
Borrower and the Subsidiaries or the Banks than the terms of any agreement
or instrument governing the Debt being extended, refunded, refinanced or
exchanged and the interest rate applicable to such extending, refunding or
refinancing or exchanging of Debt does not exceed the then applicable
market interest rate and (iii) the principal amount of such extending,
refunding, refinancing or exchanging of Debt shall not be increased above
the principal amount of the Debt being extended, refunded, refinanced or
exchanged outstanding immediately prior to such extension, refunding,
refinancing or exchanging;
(e) indorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business;
(f) Debt for borrowed money and Capital Leases existing on the date
hereof and set forth in Schedule 5.16(f), but not any extensions, renewals
or replacements of such Debt;
(g) Debt or Attributable Debt in respect of Capital Leases (whether or
not in the form of Sale and Leaseback Transactions or Synthetic Leases) so
long as such Capital Leases were leases existing as of the Closing Date,
which are reclassified from operating leases to Capital Leases;
(h) Debt (including Capital Leases) and Attributable Debt in respect
of Synthetic Leases and Sale and Leaseback Transactions in respect of
equipment financing or leasing in the ordinary course of business of the
Borrower and its Subsidiaries consistent with past practices;
(i) Debt (including Capital Leases) and Attributable Debt in respect
of Synthetic Leases and Sale and Leaseback Transactions entered into to
finance the acquisition, development, construction or opening of any Store
after the Closing Date which is not inconsistent with the Borrower's
business plan delivered pursuant to Section 3.01(e); provided that such
Debt or Attributable Debt is (x) incurred within 24 months of the
completion of the acquisition, development, construction or opening
thereof, and any Lien securing such Debt or Attributable Debt is limited to
the Store financed with the proceeds thereof or (y) in the case of a Sale
and Leaseback Transaction, permitted under Section 5.10(a), (b) or (c);
(j) Debt (including Capital Leases) and Attributable Debt in respect
of Synthetic Leases and Sale and Leaseback Transactions incurred to finance
the acquisition after the Closing Date of property or assets provided that
(i) such Debt or Attributable Debt is incurred within 24 months of the
acquisition of such property or assets, (ii) any Lien securing such Debt or
Attributable Debt is limited to the property or assets financed with the
proceeds thereof and (iii) the aggregate principal amount of Debt and
Attributable Debt incurred pursuant to this clause (j) shall not exceed
$50,000,000 at any time outstanding;
(k) Debt in respect of the Independent Standby Letters of Credit, or
any extension, renewals, replacements or reissuances thereof; provided that
the aggregate drawable stated amount and unreimbursed drawings of all
Independent Standby Letters of Credit outstanding at any time shall not
exceed $34,000,000 less the stated amount of any such letters of credit
which expire or are not extended, replaced or renewed;
(l) Debt of the Borrower and its Subsidiaries in respect of
intercompany Investments permitted under Sections 5.17(a); and
(m) unsecured Debt of the Borrower not otherwise permitted by this
Section in an aggregate principal amount at any time outstanding not to
exceed (i) $100,000,000 less (ii) the aggregate amount of any increases in
the amount of Debt permitted under subsection (a) above by reason of clause
(i) of the proviso to Section 6.02 of the Collateral Trust and
Intercreditor Agreement.
SECTION 5.17. Limitation on Investments and Acquisitions. (a) Neither
the Borrower nor any Subsidiary will make or acquire any Investment in any
Person other than:
(i) Investments in Subsidiary Guarantors, other than PCS and its
Subsidiaries;
(ii) Investments of the Borrower and the Subsidiary Guarantors in
existence on the Closing Date;
(iii) advances made by Rite Aid Hdqtrs. Corp. to PCS that reduce the
intercompany payable due from Rite Aid Hdqtrs. Corp. to PCS;
(iv) Temporary Cash Investments;
(v) Investments received as consideration for any sale or other
disposition permitted by Section 5.19;
(vi) Investments in ▇▇▇▇▇▇▇▇▇.▇▇▇ existing on the date hereof;
(vii) Investments of PCS and its Subsidiaries in PCS and its
Subsidiaries;
(viii) Investments by the Subsidiaries of the Borrower in the
Borrower, but only to the extent that the uses of the proceeds of
such Investments would be permitted as uses of proceeds of the loans
made under the Senior Credit Facility pursuant to Section 5.24(b)
thereof;
(ix) Exchange Notes issued by the Borrower to and held by SPV
pursuant to the Forward Commitment Agreement; and
(x) any Investment by a Subsidiary Guarantor in a Person other than a
Subsidiary that is not otherwise permitted by the foregoing clauses
of this Section if, immediately after such Investment is made or
acquired, the aggregate net book value of all Investments permitted
by this clause (x) does not exceed at any one time outstanding the
greater of (A) $200,000,000 or (B) after the delivery of the Initial
Financial Statements, 10% of Consolidated Net Worth.
(b) The Borrower will not, and will not permit any Subsidiary to,
consummate any Business Acquisition to the extent that the aggregate
consideration paid or payable by the Borrower or any Subsidiary (including
Debt assumed or consolidated in accordance with generally accepted
accounting principles) in connection with all such Business Acquisitions on
or after the Closing Date would exceed $15,000,000.
SECTION 5.18. Consolidations and Mergers. (a) Without limiting the
restrictions on Business Acquisitions set forth above, the Borrower will
not consolidate or merge with or into any other Person; provided that the
Borrower may merge with another Person if (i) the Borrower is the
corporation surviving such merger, (ii) immediately after giving effect to
such merger, no Default shall have occurred and be continuing, and (iii) if
such other Person is a Subsidiary Guarantor, such Subsidiary Guarantor
shall have no property that constitutes Collateral.
(b) No Subsidiary Guarantor will consolidate or merge with or into any
other Person, except
(i) without limiting the restrictions on Business Acquisitions set
forth above, a Subsidiary Guarantor may merge with another Person if
(A) either (1) a Subsidiary Guarantor is the corporation surviving
such merger, or (2) the Subsidiary Guarantor that merges with such
Person shall have no property that constitutes Second Priority
Collateral, and (B) immediately after giving effect to such merger,
no Default shall have occurred and be continuing,
(ii) PCS or its Subsidiaries may consolidate with or merge into
another Person as part of a PCS Disposition.
SECTION 5.19. Dispositions of Assets. (a) The Borrower will not
dispose of any capital stock of any Subsidiary Guarantor other than to
another Subsidiary Guarantor, or permit any Subsidiary Guarantor to issue
capital stock to any Person other than the Borrower or another Subsidiary
Guarantor, except in each case for a PCS Disposition; provided that no such
issuance or disposition of capital stock of PCS shall be to any Subsidiary
Guarantor and no such issuance or disposition of capital stock of a
Subsidiary of PCS shall be to the Borrower or any Subsidiary Guarantor
other than PCS or a Subsidiary of PCS.
(b) The Borrower will not, and will not permit any Subsidiary
Guarantor to, dispose of any property or assets except
(i) any Permitted Disposition;
(ii) any PCS Disposition or sale or other disposition of the capital
stock of ▇▇▇▇▇▇▇▇▇.▇▇▇;
(iii) any other disposition of property or assets of the Borrower or
any Subsidiary for fair value not in the ordinary course of business;
provided that with respect to such dispositions of Collateral under
this clause, (1) at least 75% of the consideration therefor shall
consist of cash, and (2) the Net Cash Proceeds of such disposition of
Collateral are applied as provided in Section 4.05 of the Collateral
Trust and Intercreditor Agreement.
(c) The consideration received by the Borrower or the applicable
Subsidiary Guarantor for any PCS Disposition or the disposition of the
capital stock of ▇▇▇▇▇▇▇▇▇.▇▇▇ shall be for the fair market value of such
disposition and consist solely of a combination of at least 75% cash and no
more than 25% of publicly traded securities, in each case payable and
deliverable at the closing of such disposition, unless, (i) in the case of
a PCS Disposition, the "Required Banks" under the PCS Facility otherwise
agree or (ii) in the case of a disposition of the capital stock of
▇▇▇▇▇▇▇▇▇.▇▇▇, the Required Banks otherwise agree. Consideration in the
form of forgiveness of intercompany obligations shall be disregarded for
purposes of determinations of compliance with this Section 5.19(c).
SECTION 5.20. Use of Proceeds. The proceeds of the Tranche A Loans
made under the Existing Agreement were used by the Borrower solely to repay
commercial paper maturing on or prior to the date of the related borrowing
thereunder or to extend and renew loans outstanding under the Existing
Agreement, the proceeds of which loans were used solely to repay commercial
paper (or to refund other borrowings the proceeds of which were used solely
to repay commercial paper), which commercial paper provided funds for the
payment of the purchase price of the capital stock of PCS. The proceeds of
the Tranche B Loans made under the Existing Agreement were used by the
Borrower for the Borrower's general corporate purposes. No such use of
proceeds have or will be, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any "MARGIN STOCK"
within the meaning of Regulation U, other than publicly traded securities
issued to the Borrower in connection with the sale of the capital stock of
PCS. The Borrower will ensure that no such use of proceeds violates
Regulation T, U or X.
SECTION 5.21. Restrictions on Asset Holdings by the Borrower. The
Borrower will not at any time (i) make or hold any Investments other than
investments in the capital stock of ▇▇▇▇▇▇▇▇▇.▇▇▇ and its Subsidiaries
(including any distributions or other assets received in respect thereto),
Investments received as consideration in connection with the PCS
Disposition or a disposition of ▇▇▇▇▇▇▇▇▇.▇▇▇, intercompany advances to
Subsidiaries, and Investments permitted by clause (iii) below, (ii) acquire
or hold any Stores, other capital assets, inventory or accounts receivable,
other than any real estate which the Borrower holds only as lessor, and
which is leased and operated by another Person, or (iii) acquire or hold
cash, cash equivalents, Temporary Cash Investments or balances in bank
accounts other than such amounts as are reasonably anticipated (at the time
so acquired or held) to be utilized within five Business Days to pay costs,
expenses and other obligations of the Borrower referred to in Section
5.24(b) of the Senior Credit Facility.
SECTION 5.22. Restricted Payments. After the date hereof, neither the
Borrower nor any Subsidiary will declare or make any Restricted Payment other
than
(a) payments of dividends to Subsidiary Guarantors,
(b) payments of cash dividends required to be made in respect of the
capital stock listed on Schedule 5.22(b), and
(c) payments of cash dividends to the Borrower to the extent necessary
to enable the Borrower to make payments otherwise permitted by the Loan
Documents;
provided that no such Restricted Payments may be made by PCS or any
Subsidiary of PCS to any Person other than PCS or a Subsidiary of PCS.
SECTION 5.23. Business of Borrower and Subsidiaries. The Borrower
will not, and will not cause or permit any of the Subsidiaries to, engage
at any time in any business or business activity other than the business
conducted on the Closing Date by it and business activities reasonably
incidental thereto. Without limitation of the foregoing, the Borrower will
not permit SPV to have any assets or liabilities or conduct any business
other than as specifically contemplated by the Forward Commitment
Agreement.
SECTION 5.24. Transactions with Affiliates. The Borrower will not,
and will not cause or permit any of the Subsidiaries to, directly or
indirectly enter into or conduct any transactions or series of transactions
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any Affiliate of the
Borrower, other than the payment of transaction costs approved by the
Administrative Agent before the Closing Date (an "AFFILIATE TRANSACTION"),
other than
(a) the payment of compensation to directors, officers, and employees of
the Borrower and its Subsidiaries in the ordinary course of business;
(b) payments in respect of Affiliate Transactions required to be made
pursuant to agreements or arrangements in effect on the Closing Date and
set forth in Schedule 5.24 hereto;
(c) Affiliate Transactions involving the acquisition of inventory in
the ordinary course of business, provided that (i) the terms of such
Affiliate Transaction are (A) set forth in writing, (B) in the best
interests of the Borrower or such Subsidiary as the case may be, and (C) no
less favorable to the Borrower or such Subsidiary, as the case may be, than
those that could be obtained in a comparable arm's length transaction with
a person that is not an Affiliate of the Borrower, and (ii) if such
Affiliate Transaction involves aggregate payments or value in excess of
$50,000,000, the board of directors of the Borrower (including a majority
of the disinterested members of the board of directors) approves such
Affiliate Transaction and, in its good faith judgment, believes that such
Affiliate Transaction complies with clauses (i)(B) and (C) of this
paragraph;
(d) the issuance of Exchange Notes by the Borrower to the SPV as
contemplated by the Forward Commitment Agreement;
(e) Affiliate Transactions between or among the Borrower and/or one or
more Subsidiary Guarantors; provided that any such transaction between PCS
or a Subsidiary of PCS (a "PCS ENTITY"), on the one hand, and the Borrower
or a Subsidiary Guarantor which is not a PCS Entity, on the other hand,
shall be in the ordinary course of business; and
(f) any other Affiliate Transaction, provided that (i) the terms of
such Affiliate Transaction are (A) set forth in writing, (B) in the best
interests of the Borrower or such Subsidiary, as the case may be, and (C)
no less favorable to the Borrower or such Subsidiary, as the case may be,
than those that could be obtained in a comparable arm's length transaction
with a person that is not an Affiliate of the Borrower, and (ii) if such
Affiliate Transaction involves aggregate payments or value in excess of
$25,000,000 in any 12-month period, the board of directors of the Borrower
(including a majority of the disinterested members of the board of
directors) approves such Affiliate Transaction and, in its good faith
judgment, believes that such Affiliate Transaction complies with clauses
(i)(B) and (i)(C) of this paragraph and (iii) if such Affiliate Transaction
involves aggregate payments or value in excess of $50,000,000 in any
12-month period, the Borrower obtains a written opinion from an independent
investment banking firm or appraiser of national prominence, as appropriate
to the effect that such transaction is fair to the Borrower or such
Subsidiary, as the case may be, from a financial point of view.
SECTION 5.25. New Synthetic Leases. Neither the Borrower nor any
Subsidiary will enter into any Synthetic Lease after the Closing Date if,
after giving effect thereto, the aggregate amount financed under all
Synthetic Leases entered into in any period of twelve consecutive calendar
months commencing after the date hereof would exceed $35,000,000 unless
such Synthetic Lease is otherwise permitted under Section 5.16(h), (i) or
(j).
SECTION 5.26. Corporate Separateness. The Borrower will, and will
cause each Subsidiary to, take all necessary steps to maintain its identity
as a separate legal entity from other Persons and to make it manifest to
third parties that it is an entity with assets and liabilities distinct
from those of each of other Person.
SECTION 5.27. Limitation on Derivative Obligations. The Borrower will
not, and will not permit any of its Subsidiaries to, incur or at any time
be liable with respect to any monetary liability under any Derivative
Obligations; unless such Derivative Obligations are entered into for bona
fide hedging purposes of the Borrower or its Subsidiary Guarantors (as
determined in good faith by the board of directors or senior management of
the Borrower) and correspond in terms of notional amount, duration,
currencies and interest rates, as applicable, to Debt of the Borrower or
its Subsidiary Guarantors incurred without violation of this Agreement or
to business transactions of the Borrower or its Subsidiary Guarantors on
customary terms entered into in the ordinary course of business, and do not
exceed an amount equal to the aggregate principal amount of the Senior
Obligations and the Second Priority Debt Obligations.
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any Loan,
or shall fail to pay within five days of the due date thereof any interest,
fees or other amount payable hereunder;
(b) the Borrower or any Subsidiary Guarantor shall fail to observe or
perform any covenant contained in Sections 5.07, 5.10, 5.11, 5.12, 5.13,
5.14, 5.15, 5.16, 5.17, 5.18, 5.19, 5.20, 5.21, 5.22, 5.23, 5.24, 5.25,
5.26 and 5.27;
(c) the Borrower or any Subsidiary Guarantor shall fail to observe or
perform any covenant or agreement contained in the Loan Documents (other
than those covered by clause (a) or (b) above) in the case of covenants set
forth in Section 5.06, for 5 days, and in the case of any other such
covenant, for 20 days after written notice thereof has been given to the
Borrower by the Administrative Agent at the request of the Required Banks;
(d) any representation, warranty, certification or statement made (or
deemed made) by the Borrower or any Subsidiary Guarantor in any Loan
Document or in any certificate, financial statement or other document
delivered pursuant to any Loan Document shall prove to have been incorrect
in any material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Financial Obligations, including any obligation to
reimburse letter of credit obligations or to post cash collateral in
respect thereof, when due or within the applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Financial Obligations;
(g) any event or condition shall occur (other than in connection with
a violation of Section 5.17, 5.18 or 5.19 of the Senior Credit Facility)
which enables (or, if such event or condition does not otherwise give rise
to a Default hereunder, which with the giving of notice or lapse of time or
both would enable) the holder of such Material Financial Obligations or any
Person acting on such holder's behalf to accelerate the maturity thereof;
(h) the Borrower or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate action to
authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be commenced against
the Borrower or any Subsidiary seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;
or an order for relief shall be entered against the Borrower or any
Subsidiary under the federal bankruptcy laws as now or hereafter in effect;
(j) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $5,000,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the
ERISA Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate,
to impose liability (other than for premiums under Section 4007 of ERISA)
in respect of, or to cause a trustee to be appointed to administer, any
Material Plan; or a condition shall exist by reason of which the PBGC would
be entitled to obtain a decree adjudicating that any Material Plan must be
terminated; or there shall occur a complete or partial withdrawal from, or
a default, within the meaning of Section 4219(c)(5) of ERISA, with respect
to, one or more Multiemployer Plans which could cause one or more members
of the ERISA Group to incur a current payment obligation in excess of
$25,000,000;
(k) judgments or orders, individually or in the aggregate, for the
payment of money in excess of $25,000,000 shall be rendered against the
Borrower or any Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days;
(l) (i) any Lien created by any Second Priority Collateral Document
shall at any time fail to constitute a valid and (to the extent required by
such Second Priority Collateral Document) perfected Lien on all of the
Second Priority Collateral purported to be subject thereto, securing the
obligations purported to be secured thereby, with the priority required by
the Second Priority Loan Documents; provided, however, such failure
continues uncured for 30 days, or (ii) the Borrower or any Subsidiary shall
so assert in writing, or any Second Priority Collateral Document shall
become invalid or the Borrower or any Subsidiary shall so assert in
writing; or
(m) any Lien created by either Pledge Agreement shall at any time fail
to constitute a valid and (to the extent required by such Pledge Agreement)
perfected Lien on all of the collateral purported to be subject thereto,
securing the obligations purported to be secured thereby, with the priority
required by the Loan Documents, or the Borrower shall so assert in writing;
or
(n) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) (other than Green
Equity Investors III, L.P., and its Affiliates) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
SEC under said Act) of 20% or more of the outstanding shares of common
stock of the Borrower; or, during any period of 12 consecutive calendar
months, individuals who were directors of the Borrower on the first day of
such period shall cease to constitute a majority of the board of directors
of the Borrower;
then, and in every such event, the Administrative Agent shall if requested
by Banks holding more than 50% in aggregate principal amount of the Loans,
by notice to the Borrower declare the Loans (together with accrued interest
thereon) to be, and the Loans (together with accrued interest thereon)
shall thereupon become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived
by the Borrower; provided that in the case of any of the Events of Default
specified in clause (h) or (i) above with respect to the Borrower, without
any notice to the Borrower or any other act by the Administrative Agent or
the Banks, Loans (together with accrued interest thereon) shall become
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower
SECTION 6.02. Notice of Default. The Administrative Agent shall give
notice to the Borrower under Section 6.01(c) promptly upon being requested
to do so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE ADMINISTRATIVE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to the Administrative Agent by the terms
thereof, together with all such powers as are reasonably incidental
thereto.
SECTION 7.02. Administrative Agent and Affiliates. ▇▇▇▇▇▇ Guaranty
Trust Company of New York (or any successor Administrative Agent that is a
Bank) shall have the same rights and powers under the Loan Documents as any
other Bank and may exercise or refrain from exercising the same as though
it were not the Administrative Agent, and ▇▇▇▇▇▇ Guaranty Trust Company of
New York (or any such successor) and its affiliates may accept deposits
from, lend money to, and generally engage in any kind of business with the
Borrower or any Subsidiary or affiliate of the Borrower as if it were not
the Administrative Agent.
SECTION 7.03. Action by Administrative Agent. The obligations of the
Administrative Agent under the Loan Documents are only those expressly set
forth therein. Without limiting the generality of the foregoing, the
Administrative Agent shall not be required to take any action with respect
to any Default, except as expressly provided in Article 6 and in the
Collateral Documents.
SECTION 7.04. Consultation with Experts. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower),
independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or
experts.
SECTION 7.05. Liability of Administrative Agent. Neither the
Administrative Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action
taken or not taken by it or any of them in connection herewith (i) with the
consent or at the request of the Required Banks (or such other number or
percentage of Banks as may be specified in the Loan Documents for
particular purposes) or (ii) in the absence of its or their own gross
negligence or willful misconduct. Neither the Administrative Agent nor any
of its affiliates nor any of their respective directors, officers, agents
or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made
in connection with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the
Borrower; (iii) the satisfaction of any condition specified in Article 3,
except receipt of items required to be delivered to the Administrative
Agent; or (iv) the validity, effectiveness or genuineness of this
Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Administrative Agent shall not incur any liability
by acting in reliance upon any notice, consent, certificate, statement, or
other writing (which may be a bank wire, telex or similar writing) believed
by it to be genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Credit Exposure, indemnify the Administrative Agent, its
affiliates and their respective directors, officers, agents and employees
(to the extent not reimbursed by the Borrower) against any cost, expense
(including counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitees' gross negligence or
willful misconduct) that such indemnitees may suffer or incur in connection
with this Agreement or any action taken or omitted by such indemnitees
hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any
action under this Agreement.
SECTION 7.08. Successor Administrative Agent. (a) The Administrative
Agent may (i) resign at any time by giving notice thereof to the Banks and
the Borrower (ii) be removed at any time with or without cause by the
Required Banks. Upon any such resignation or removal, the Required Banks
shall have the right, with (so long as no Default shall have occurred and
be continuing) the consent of the Borrower, to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been
so appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent gives
notice of resignation, then the retiring or removed Administrative Agent
may (i) on behalf of the Banks, appoint a successor Administrative Agent,
which shall be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $500,000,000 or (ii) by notice to the
Banks, declare its resignation immediately effective, in which event the
responsibilities of the Administrative Agent under the Loan Documents shall
thereafter be discharged by the Required Banks collectively until such time
as they shall have appointed a successor Administrative Agent in accordance
with the foregoing provisions of this Section. Upon the acceptance of its
appointment as Administrative Agent by a successor Administrative Agent,
such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring or removed
Administrative Agent. The retiring or removed Administrative Agent shall be
discharged from its duties and obligations under the Loan Documents upon
the acceptance of appointment by a successor Administrative Agent, or if
earlier, upon the giving of notice by the retiring or removed
Administrative Agent pursuant to clause (ii) of the second preceding
sentence. After any retiring or removed Administrative Agent's resignation
or removal hereunder as Administrative Agent, the provisions of this
Article shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent.
(b) The parties hereto agree that effective July 31, 2000, (i) ▇▇▇▇▇▇
Guaranty Trust Company of New York shall resign as Administrative Agent and
(ii) Citicorp USA, Inc. shall be appointed successor Administrative Agent,
all without further action or consent by any party hereto.
SECTION 7.09. Administrative Agent's Fees. The Borrower shall pay to
the Administrative Agent for its own account fees in the amounts and at the
times previously agreed upon between the Borrower and the Administrative
Agent.
SECTION 7.10. Steering Committee. The Administrative Agent may from
time to time as it may deem appropriate consult with members of a Steering
Committee with respect to proposed amendments or waivers under the Loan
Documents, Defaults thereunder and exercise of rights and remedies in
connection therewith. The Administrative Agent may designate the members of
such Steering Committee from time to time in its discretion, subject to
acceptance by any Bank so appointed. Any member of such Steering Committee
may resign at any time. Membership on such Steering Committee shall not
impose any duty or obligation whatsoever on any Bank, and the provisions of
this Section shall not in any way alter or affect the other provisions of
the Loan Documents dealing with requisite consents of or instructions from
the Banks for actions on the part of the Administrative Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any
Euro-Dollar Loan:
(a) the Administrative Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered
to the Reference Banks in the London interbank market for such
Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the Credit
Exposures advise the Administrative Agent that the Adjusted London
Interbank Offered Rate as determined by the Administrative Agent will
not adequately and fairly reflect the cost to such Banks of funding
their Euro-Dollar Loans for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Administrative Agent notifies
the Borrower that the circumstances giving rise to such suspension no
longer exist, the obligations of the Banks to make Euro-Dollar Loans, or to
continue or convert outstanding Loans as or into Euro-Dollar Loans, shall
be suspended, and each outstanding Euro-Dollar Loan shall be converted into
a Base Rate Loan on the last day of the then current Interest Period
applicable thereto.
SECTION 8.02. Illegality. (a) If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Euro-Dollar
Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency
shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans and such
Bank shall so notify the Administrative Agent, the Administrative Agent
shall forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Administrative
Agent that the circumstances giving rise to such suspension no longer
exist, the obligation of such Bank to make Euro-Dollar Loans, or to convert
outstanding Loans into Euro-Dollar Loans or continue outstanding Loans as
Euro-Dollar Loans, shall be suspended. Before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the
need for giving such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank.
(b) If such notice is given, each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either (a) on the last
day of the then current Interest Period applicable to such Euro-Dollar Loan
if such Bank may lawfully continue to maintain and fund such Loan as a
Euro-Dollar Loan to such day or (b) immediately if such Bank shall
determine that it may not lawfully continue to maintain and fund such Loan
as a Euro-Dollar Loan to such day. Interest and principal on any such Base
Rate Loan shall be payable on the same dates as, and on a pro rata basis
with, the interest and principal payable on the related Euro-Dollar Loans
of the other Banks.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after
the date hereof, the adoption of any applicable law, rule or regulation, or
any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable
Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency
shall impose, modify or deem applicable any reserve (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding any such requirement reflected in an
applicable Euro-Dollar Reserve Percentage), special deposit, insurance
assessment or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Bank (or its Applicable Lending
Office) or shall impose on any Bank (or its Applicable Lending Office) or
on the London interbank market any other condition affecting its
Euro-Dollar Loans, its Note or its obligation to make Euro-Dollar Loans and
the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any Euro-Dollar
Loan, or to reduce the amount of any sum received or receivable by such
Bank (or its Applicable Lending Office) under this Agreement or under its
Note with respect thereto, by an amount deemed by such Bank to be material,
then, within 15 days after demand by such Bank (with a copy to the
Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change
in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Bank (or its
Parent) as a consequence of such Bank's obligations hereunder to a level
below that which such Bank (or its Parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by such Bank
to be material, then from time to time, within 15 days after demand by such
Bank (with a copy to the Administrative Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank
(or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Administrative
Agent of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Bank to compensation pursuant to this
Section and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
clearly demonstrable error. In determining such amount, such Bank may use
any reasonable averaging and attribution methods.
SECTION 8.04. Taxes. (a) Any and all payments by the Borrower to or
for the account of any Bank or the Administrative Agent hereunder or under
any Note shall be made free and clear of and without deduction for any and
all present or future taxes, duties, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Bank and the Administrative Agent, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction under the
laws of which such Bank or the Administrative Agent (as the case may be) is
organized or any political subdivision thereof and, in the case of each
Bank, taxes imposed on its income, and franchise or similar taxes imposed
on it, by the jurisdiction of such Bank's Applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes, duties, 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 Bank or the Administrative Agent, (i) the sum payable
shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 8.04) such Bank 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,
(iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law and
(iv) the Borrower shall furnish to the Administrative Agent, at its address
referred to in Section 9.01, the original or a certified copy of a receipt
evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, or
charges or similar levies which arise from any payment made hereunder or
under any Note or from the execution or delivery of, or otherwise with
respect to, any Loan Document (hereinafter referred to as "OTHER TAXES").
(c) The Borrower agrees to indemnify each Bank and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 8.04) paid by such Bank
or the Administrative Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 15 days from the
date such Bank or the Administrative Agent (as the case may be) makes
demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of
this Agreement in the case of each Bank listed on the signature pages
hereof and on or prior to the date on which it becomes a Bank in the case
of each other Bank, and from time to time thereafter if requested in
writing by the Borrower (but only so long as such Bank remains lawfully
able to do so), shall provide the Borrower with (i)(x) an Internal Revenue
Service form W-8BEN (or any successor form), in duplicate, certifying that
such Bank is entitled to benefits under an income tax treaty to which the
United States is a party which reduces the rate of withholding tax on
payments of interest or (y) an Internal Revenue Service form W-8ECI (or any
successor form), in duplicate, certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a
trade or business in the United States or (ii) solely if such Bank is
claiming exemption from United States withholding tax under Section 871(h)
or 881(c) of the Internal Revenue Code with respect to payments of
"portfolio interest", an Internal Revenue Service form W-8BEN (or any
successor form), and a certificate representing that such Bank is not a
bank for purposes of Section 881(c) of the Internal Revenue Code, is not a
10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of the Borrower and is not a controlled foreign
corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Internal Revenue Code). If the form provided by a Bank at
the time such Bank 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" as defined in
Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form pursuant to Section 8.04(d) (unless
such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which a form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
8.04(a) with respect to Taxes imposed by the United States; provided,
however, that should a Bank, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall take such
steps as such Bank shall reasonably request to assist such Bank to recover
such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 8.04, then such Bank will
change the jurisdiction of its Applicable Lending Office so as to eliminate
or reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Bank, is not otherwise disadvantageous to
such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03 or 8.04 with respect to its Euro-Dollar
Loans and the Borrower shall, by at least five Euro-Dollar Business Days'
prior notice to such Bank through the Administrative Agent, have elected
that the provisions of this Section shall apply to such Bank, then, unless
and until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer exist, all
Loans which would otherwise be made by such Bank as (or continued as or
converted into) Euro-Dollar Loans shall instead be Base Rate Loans (on
which interest and principal shall be payable contemporaneously with the
related Euro-Dollar Loans of the other Banks). If such Bank notifies the
Borrower that the circumstances giving rise to such suspension or demand
for compensation no longer exist, the principal amount of each such Base
Rate Loan shall be converted into a Euro-Dollar Loan on the first day of
the next succeeding Interest Period applicable to the related Euro-Dollar
Loans of the other Banks.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party: (x) in
the case of the Borrower or the Administrative Agent, at its address or
facsimile number set forth on the signature pages hereof, (y) in the case
of any Bank, at its address or facsimile number set forth in its
Administrative Questionnaire or (z) in the case of any party, such other
address or facsimile number as such party may hereafter specify for the
purpose by notice to the Administrative Agent and the Borrower. Each such
notice, request or other communication shall be effective (i) if given by
facsimile, when such communication is transmitted to the facsimile number
specified in this Section and confirmation of receipt is received, (ii) if
given by mail, 72 hours after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid or (iii) if given
by any other means, when delivered at the address specified in this
Section; provided that notices to the Administrative Agent under Article 2
or Article 8 shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Administrative
Agent or any Bank in exercising any right, power or privilege under any
Loan Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and
remedies provided in the Loan Documents shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall pay
(i) all reasonable out-of-pocket expenses of the Administrative Agent,
including fees and disbursements of special counsel for the Administrative
Agent, in connection with the preparation and administration of the Loan
Documents, any waiver or consent thereunder or any amendment thereof or any
Default or alleged Default hereunder, (ii) the reasonable fees and
disbursements of E&Y Restructuring LLC, financial advisor to the ▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇▇, in connection with the engagement contemplated by Section
3.01(v), (iii) if an Event of Default occurs, all out-of-pocket expenses
incurred by the Administrative Agent and each Bank, including fees and
disbursements of counsel, in connection with such Event of Default and (iv)
all costs and expenses, including reasonable attorneys' fees (including
allocated costs of internal counsel) and costs of settlement, incurred by
the Administrative Agent and the Banks in enforcing any obligations of or
in collecting any payments due from the Borrower or any Subsidiary
Guarantor hereunder or under the other Loan Documents (including in
connection with the sale of, collection from, or other realization upon any
of the Collateral or the enforcement of the Second Priority Subsidiary
Guarantee Agreement) or in connection with any refinancing or restructuring
of the credit arrangements provided under this Agreement in the nature of a
"work-out" or pursuant to any insolvency or bankruptcy proceedings.
(b) The Borrower agrees to indemnify the Administrative Agent and each
Bank, their respective affiliates and the respective directors, officers,
agents and employees of the foregoing (each an "INDEMNITEE") and hold each
Indemnitee harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be incurred by such
Indemnitee in connection with any administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto)
brought or threatened relating to or arising out of this Agreement or any
actual or proposed use of proceeds of Loans hereunder; provided that no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct as determined by a
court of competent jurisdiction.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest
due with respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of
principal and interest due with respect to any Note held by such other
Bank, the Bank receiving such proportionately greater payment shall
purchase such participations in the Notes held by the other Banks, and such
other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Notes held by the
Banks shall be shared by the Banks pro rata; provided that nothing in this
Section shall impair the right of any Bank to (i) exercise any right of
set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other than its
indebtedness under the Notes or (ii) to tender a portion of its Credit
Exposure in exchange for common stock of the Borrower and debt under the
Exchange Debt Facility without being required to share any proportionately
greater payment such Bank may receive in connection with the Equity
Conversion. The Borrower agrees, to the fullest extent it may effectively
do so under applicable law, that any holder of a participation in a Note
acquired pursuant to the foregoing arrangements may exercise rights of
set-off or counterclaim and other rights with respect to such participation
as fully as if such holder of a participation were a direct creditor of the
Borrower in the amount of such participation.
SECTION 9.05. Amendments and Waivers. (a) Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the
Required Banks (and, if the rights or duties of the Administrative Agent
are affected thereby, by the Administrative Agent); provided that no such
amendment or waiver shall, unless signed by all the Banks, (i) subject any
Bank to any additional obligation, (ii) reduce the principal of or rate of
interest on any Loan or any fees hereunder, (iii) postpone the date fixed
for any payment of principal of or interest on any Loan or any fees
hereunder (iv) change Section 9.04 or this Section 9.05 or (v) change the
aggregate unpaid principal amount of the Notes, or the number of Banks,
which shall be required for the Banks or any of them to take any action
under this Section or any other provision of the Loan Documents.
(b) Any provision of any RCF Collateral Document may be amended or
waived if, but only if, such amendment or waiver is in writing and is
signed by the requisite parties specified therein. If any RCF Collateral
Document requires the consent of the Administrative Agent for an amendment
or waiver thereof but does not specify the requisite consent or instruction
of the Banks therefor, the Administrative Agent shall consent to such
amendment or waiver only with the consent of the Required Banks; provided
that no such amendment or waiver shall, unless consented to by all Banks,
(i) alter in a manner adverse to the Banks the priorities specified in the
RCF Collateral Documents, (ii) effect or permit a release of (y) any of the
RCF Collateral under the PCS Pledge Agreement or the ▇▇▇▇▇▇▇▇▇.▇▇▇ Pledge
Agreement or (z) all or substantially all of the RCF Collateral under the
Second Priority Collateral Documents, collectively, or (iii) release all or
substantially all Subsidiary Guarantors from their obligations under the
Second Priority Subsidiary Guarantee Agreement. Notwithstanding the
foregoing, Collateral shall be released from the Lien of any RCF Collateral
Document from time to time as necessary to effect any sale of RCF
Collateral permitted by the Loan Documents, and the Administrative Agent
shall execute and deliver all release documents reasonably requested to
evidence such release, provided that arrangements satisfactory to the
Administrative Agent shall have been made for application of the cash
proceeds thereof in accordance with the applicable provisions of the Loan
Documents and for the pledge of any non-cash proceeds thereof in accordance
with the applicable provisions of the Pledge Agreements or, to the extent
required thereby, the other RCF Collateral Documents. If a Subsidiary
Guarantor ceases to be a Subsidiary of the Borrower in a transaction
permitted by the Loan Documents, or ceases to own any property that
constitutes Second Priority Collateral, at the request of and at the
expense of the Borrower, such Subsidiary Guarantor shall be released from
the Second Priority Subsidiary Guarantee Agreement, the Second Priority
Subsidiary Security Agreement and each other Loan Document to which it is a
party.
SECTION 9.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the
Borrower may not assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in any or all
of its Loans. In the event of any such grant by a Bank of a participating
interest to a Participant, whether or not upon notice to the Borrower and
the Administrative Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this
Agreement. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole
right and responsibility to enforce the obligations of the Borrower
hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement;
provided that such participation agreement may provide that such Bank will
not agree to any modification, amendment or waiver of this Agreement
described in clause (i), (ii) or (iii) of Section 9.05(a) without the
consent of the Participant. The Borrower agrees that each Participant
shall, to the extent provided in its participation agreement, be entitled
to the benefits of Article 8 with respect to its participating interest. An
assignment or other transfer which is not permitted by subsection (c) or
(d) below shall be given effect for purposes of this Agreement only to the
extent of a participating interest granted in accordance with this
subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part of all, of
its rights and obligations under this Agreement and the Notes, and such
Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of Exhibit C
hereto executed by such Assignee and such transferor Bank, with (and
subject to) notice to, and the subscribed consent of, the Borrower, so long
as no Default shall have occurred and be continuing, and the Administrative
Agent (such consent of the Borrower and the Administrative Agent not to be
unreasonably withheld or delayed); provided that (i) if an Assignee is an
affiliate of such transferor Bank or is a Bank prior to giving effect to
such assignment, such notice shall be given but no such consent shall be
required. Upon execution and delivery of such instrument and payment by
such Assignee to such transferor Bank of an amount equal to the purchase
price agreed between such transferor Bank and such Assignee, such Assignee
shall be a Bank party to this Agreement and shall have all the rights and
obligations of a Bank with a Credit Exposure as set forth in such
instrument of assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no further consent
or action by any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the transferor Bank, the
Administrative Agent and the Borrower shall make appropriate arrangements
so that, if required, a new Note is issued to the Assignee. In connection
with any such assignment, the transferor Bank shall pay to the
Administrative Agent an administrative fee for processing such assignment
in the amount of $2,500. If the Assignee is not incorporated under the laws
of the United States of America or a state thereof, it shall, prior to the
first date on which interest or fees are payable hereunder for its account,
deliver to the Borrower and the Administrative Agent certification as to
exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations
hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office
under certain circumstances or at a time when the circumstances giving rise
to such greater payment did not exist.
SECTION 9.07. Collateral. Each of the Banks represents to the
Administrative Agent and each of the other Banks that it in good faith is
not relying upon any "MARGIN STOCK" (as defined in Regulation U) as
collateral in the extension of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance
with the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York State court sitting in
New York City for purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby. The
Borrower irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient
forum.
SECTION 9.09. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.11. Collateral Trust and Intercreditor Agreement. Each Bank
hereby authorizes the Administrative Agent and the Second Priority
Collateral Trustee to enter into the Collateral Trust and Intercreditor
Agreement and the other RCF Collateral Documents on its behalf, and agrees
that the Second Priority Collateral Trustee may enforce the rights and
remedies of the Banks under each Second Priority Collateral Document to the
extent provided therein.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
RITE AID CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Title: Senior Executive Vice President
Address: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President
BANK OF AMERICA, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Managing Director
THE CHASE MANHATTAN BANK
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Vice President
CITIBANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Vice President
MELLON BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Senior Vice President
WACHOVIA BANK, N.A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Senior Vice President
SUNTRUST BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President
BANK ONE, NA (Main Office - Chicago)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: First Vice President
ABN AMRO BANK N.V.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Group Senior Vice President
BANK OF MONTREAL
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Director
THE BANK OF NEW YORK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
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Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Managing Director
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ ▇. ▇'▇▇▇▇▇▇
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Title: Vice President
COMMERZBANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Assistant Treasurer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Senior Vice President
FIRST UNION NATIONAL BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Senior Vice President/Director
FLEET NATIONAL BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Director
THE FUJI BANK LIMITED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President & Manager
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY
By: /s/ Takuya Honjo
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Title: Deputy General Manager
KEYBANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Vice President
ROYAL BANK OF CANADA
By: /s/ ▇▇▇▇ ▇▇▇▇
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Title: Manager
THE SANWA BANK, LIMITED, NEW YORK BRANCH
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
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Title: Vice President and Area Manager
THE SUMITOMO BANK, LIMITED
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Senior Vice President
THE TOKAI BANK, LIMITED
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Assistant General Manager
UBS AG, STAMFORD BRANCH
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Director
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Director
Loan Portfolio Support, US
ALLFIRST BANK
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Senior Managing Director
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
By: /s/ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President
Address:
Attention:
Facsimile No.:
SCHEDULE I
OUTSTANDING LOANS
TOTAL
TRANCHE A TRANCHE B OUTSTANDING
BANK LOANS LOANS LOANS
----- --------------- --------------- ---------------
▇▇▇▇▇▇ Guaranty Trust Company of New York $0.00 $0.00 $0.00
Bank of America, N.A. 23,200,000.00 77,809,920.00 101,009,920.00
The Chase Manhattan Bank 9,600,000.00 32,197,208.00 41,797,208.00
Mellon Bank, N.A. 9,600,000.00 32,197,208.00 41,797,208.00
PNC Bank, National Association 321,090.00 22,918,298.00 23,239,388.00
Wachovia Bank, N.A. 9,600,000.00 32,197,208.00 41,797,208.00
SunTrust Bank 8,000,000.00 26,831,007.00 34,831,007.00
Bank One, NA (Main Office - Chicago) 6,000,000.00 20,123,255.00 26,123,255.00
ABN AMRO Bank N.V. 6,000,000.00 20,123,255.00 26,123,255.00
Bank of Montreal 6,000,000.00 20,123,255.00 26,123,255.00
The Bank of New York 6,000,000.00 20,123,255.00 26,123,255.00
The Bank of Nova Scotia 6,000,000.00 20,123,255.00 26,123,255.00
Bank of Tokyo-Mitsubishi Trust Company 0.00 9,223,987.00 9,223,987.00
Commerzbank AG, New York and Grand 6,000,000.00 20,123,255.00 26,123,255.00
Cayman Branches
First Union National Bank 0.00 0.00 0.00
Fleet National Bank 6,000,000.00 20,123,255.00 26,123,255.00
The Fuji Bank Limited 6,000,000.00 20,123,255.00 26,123,255.00
The Industrial Bank of Japan Trust Company 6,000,000.00 20,123,255.00 26,123,255.00
KeyBank National Association 6,000,000.00 20,123,255.00 26,123,255.00
Royal Bank of Canada 0.00 14,524,617.00 14,524,617.00
The Sanwa Bank, Limited, New York Branch 6,000,000.00 20,123,255.00 26,123,255.00
The Sumitomo Bank, Limited 6,000,000.00 20,123,255.00 26,123,255.00
The Tokai Bank, Limited 6,000,000.00 20,123,255.00 26,123,255.00
UBS AG, Stamford Branch 6,000,000.00 20,123,255.00 26,123,255.00
Citibank, N.A. 5,600,000.00 18,781,705.00 24,381,705.00
Bear, ▇▇▇▇▇▇▇ & Co. Inc. 0.00 14,524,617.00 14,524,617.00
Allfirst Bank 4,000,000.00 13,415,504.00 17,415,504.00
TOTAL OUTSTANDING LOANS $153,921,090.00 $576,346,850.00 $730,267,940.00
EXHIBIT A
NOTE
New York, New York
June 12, 2000
For value received, Rite Aid Corporation, a Delaware corporation (the
"BORROWER"), promises to pay to the order of _____________ (the "BANK"),
for the account of its Applicable Lending Office, the unpaid principal
amount of each Loan made by the Bank to the Borrower pursuant to the Credit
Agreement referred to below on the last day of the Interest Period relating
to such Loan. The Borrower promises to pay interest on the unpaid principal
amount of each such Loan on the dates and at the rate or rates provided for
in the Credit Agreement. All such payments of principal and interest shall
be made in lawful money of the United States in Federal or other
immediately available funds at the office of ▇▇▇▇▇▇ Guaranty Trust Company
of New York, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇.
All Loans made by the Bank, the Types thereof and all repayments of
the principal thereof shall be recorded by the Bank and, if the Bank so
elects in connection with any transfer or enforcement hereof, appropriate
notations to evidence the foregoing information with respect to each such
Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder
or under the Credit Agreement.
This note is one of the Notes referred to in the RCF Facility dated
as of June 12, 2000 among the Borrower, the Banks from time to time parties
thereto and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as Administrative
Agent (as the same may be amended from time to time, the "CREDIT
AGREEMENT"). Terms defined in the Credit Agreement are used herein with the
same meanings. Reference is made to the Credit Agreement for provisions for
the prepayment hereof and the acceleration of the maturity hereof.
Payment of principal and interest on this Note is secured by security
interests in certain collateral pursuant to the RCF Collateral Documents.
RITE AID CORPORATION
By: _____________________________
Name:
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
______________________________________________________________________________
Amount of
Amount of Type of Principal Notation
Date Loan Loan Repaid Made By
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
EXHIBIT C
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _____, 20__ among [ASSIGNOR] (the "ASSIGNOR"),
[ASSIGNEE] (the "ASSIGNEE"), [RITE AID CORPORATION (the "BORROWER")] and
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent (the
"ADMINISTRATIVE AGENT").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "AGREEMENT")
relates to the RCF Facility dated as of June 12, 2000 among [Rite Aid
Corporation (the "BORROWER")] the Borrower, the Assignor and the other
Banks parties thereto, as Banks, and the Administrative Agent (as amended
from time to time, the "CREDIT AGREEMENT");
WHEREAS, Loans made to the Borrower by the Assignor under the Credit
Agreement in the aggregate principal amount of $_______ are outstanding at
the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion
of its outstanding Loans thereunder in an amount equal to $___________ (the
"ASSIGNED AMOUNT") and the Assignee proposes to accept assignment of such
rights and assume the corresponding obligations from the Assignor on such
terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned Amount,
including the purchase from the Assignor of the corresponding portion of
the principal amount of the Loans made by the Assignor outstanding at the
date hereof. Upon the execution and delivery hereof by the Assignor, the
Assignee, the Borrower and the Administrative Agent and the payment of the
amounts specified in Section 3 required to be paid on the date hereof (i)
the Assignee shall, as of the date hereof, succeed to the rights and be
obligated to perform the obligations of a Bank under the Credit Agreement
with a Credit Exposure in an amount equal to the Assigned Amount, and (ii)
the Credit Exposure of the Assignor shall, as of the date hereof, be
reduced by a like amount and the Assignor released from its obligations
under the Credit Agreement to the extent such obligations have been assumed
by the Assignee. The assignment provided for herein shall be without
recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds an amount equal to $_______.(1) Each of
the Assignor and the Assignee hereby agrees that if it receives any amount
under the Credit Agreement which is for the account of the other party
hereto, it shall receive the same for the account of such other party to
the extent of such other party's interest therein and shall promptly pay
the same to such other party.
-----------
(1) Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the Assignee.
It may be preferable in an appropriate case to specify these amounts
generically or by formula rather than as a fixed sum.
[SECTION 4. Consent of [the Borrower and] the Administrative Agent.
This Agreement is conditioned upon the consent of [the Borrower and] the
Administrative Agent pursuant to Section 9.06(c) of the Credit Agreement.
The execution of this Agreement by [the Borrower and] the Administrative
Agent is evidence of this consent. Pursuant to Section 9.06(c) the Borrower
agrees to execute and deliver a Note payable to the order of the Assignee
to evidence the assignment and assumption provided for herein.]
SECTION 5. Non-reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition, or
statements of the Borrower, or the validity and enforceability of the
obligations of the Borrower in respect of the Credit Agreement or any Note.
The Assignee acknowledges that it has, independently and without reliance
on the Assignor, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and will continue to be responsible for making its own
independent appraisal of the business, affairs and financial condition of
the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date
first above written.
[ASSIGNOR]
By_________________________________
Title:
[ASSIGNEE]
By_________________________________
Title:
[RITE AID CORPORATION
By_________________________________
Title:]
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent
By_________________________________
Title: