Exhibit 10.7
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
November 21, 2003
among
PETSMART, INC.
as Lead Borrower for:
PETSMART, INC.
PETSMART STORE SUPPORT GROUP, INC.
as Borrowers
The LENDERS Party Hereto
FLEET NATIONAL BANK
as Issuing Bank
FLEET RETAIL GROUP, INC.
as Administrative Agent and Collateral Agent
CONGRESS FINANCIAL CORPORATION (WESTERN)
as Co-Agent
and
FLEET SECURITIES INC.
as Syndication Agent and Arranger
TABLE OF CONTENTS
PAGE
ARTICLE I....................................................................................... 10
Definitions..................................................................................... 10
SECTION 1.01..............................................................Defined Terms 10
SECTION 1.02............................................................Terms Generally 30
SECTION 1.03.....................................................Accounting Terms; GAAP 30
ARTICLE II...................................................................................... 30
Amount and Terms of Credit...................................................................... 30
SECTION 2.01..................................................Commitment of the Lenders 30
SECTION 2.02...............................................Increase in Total Commitment 30
SECTION 2.03..............................................Reserves; Changes to Reserves 33
SECTION 2.04............................................................Making of Loans 33
SECTION 2.05...............................................................Overadvances 34
SECTION 2.06............................................................Swingline Loans 35
SECTION 2.07..........................................................Letters of Credit 35
SECTION 2.08................................................Settlements Amongst Lenders 39
SECTION 2.09..................................................Notes; Repayment of Loans 40
SECTION 2.10..........................................................Interest on Loans 40
SECTION 2.11...........................................................Default Interest 41
SECTION 2.12...............................................................Certain Fees 41
SECTION 2.13......................................................Unused Commitment Fee 41
SECTION 2.14......................................................Letter of Credit Fees 41
(ii)
SECTION 2.15.............................................................Nature of Fees 42
SECTION 2.16....................................Termination or Reduction of Commitments 42
SECTION 2.17.................................................Alternate Rate of Interest 43
SECTION 2.18.......................................Conversion and Continuation of Loans 43
SECTION 2.19..............Mandatory Prepayment; Commitment Termination; Cash Collateral 44
SECTION 2.20.....................Optional Prepayment of Loans; Reimbursement of Lenders 45
SECTION 2.21.........................Maintenance of Loan Account; Statements of Account 46
SECTION 2.22..............................................................Cash Receipts 47
SECTION 2.23....................................................Application of Payments 49
SECTION 2.24............................................................Increased Costs 50
SECTION 2.25.........................................................Change in Legality 51
SECTION 2.26................................................Payments; Sharing of Setoff 51
SECTION 2.27......................................................................Taxes 53
SECTION 2.28...........................................Security Interests in Collateral 54
SECTION 2.29............................Mitigation Obligations; Replacement of Lenders. 54
ARTICLE III..................................................................................... 55
Representations and Warranties.................................................................. 55
SECTION 3.01.......................................................Organization; Powers 55
SECTION 3.02..............................................Authorization; Enforceability 55
SECTION 3.03.......................................Governmental Approvals; No Conflicts 55
SECTION 3.04........................................................Financial Condition 56
SECTION 3.05.................................................................Properties 56
SECTION 3.06.......................................Litigation and Environmental Matters 56
SECTION 3.07........................................Compliance with Laws and Agreements 57
(iii)
SECTION 3.08......................................Investment and Holding Company Status 57
SECTION 3.09......................................................................Taxes 57
SECTION 3.10......................................................................ERISA 57
SECTION 3.11................................................................Disclosure. 57
SECTION 3.12...............................................................Subsidiaries 58
SECTION 3.13..................................................................Insurance 58
SECTION 3.14..............................................................Labor Matters 58
SECTION 3.15.........................................................Security Documents 58
SECTION 3.16................................................Federal Reserve Regulations 58
SECTION 3.16...................................................................Solvency 59
ARTICLE IV...................................................................................... 59
Conditions...................................................................................... 59
SECTION 4.01.............................................................Effective Date 59
SECTION 4.02................Conditions Precedent to Each Loan and Each Letter of Credit 60
ARTICLE V....................................................................................... 61
Affirmative Covenants........................................................................... 61
SECTION 5.01.................................Financial Statements and Other Information 61
SECTION 5.02.................................................Notices of Material Events 63
SECTION 5.03...........................................Information Regarding Collateral 64
SECTION 5.04.............................................Existence; Conduct of Business 64
SECTION 5.05.....................................................Payment of Obligations 65
SECTION 5.06..................................................Maintenance of Properties 65
SECTION 5.07..................................................................Insurance 65
(iv)
SECTION 5.08..................................................Casualty and Condemnation 66
SECTION 5.09.............................Books and Records; Inspection and Audit Rights 66
SECTION 5.10.......................................................Compliance with Laws 67
SECTION 5.11......................................Use of Proceeds and Letters of Credit 67
SECTION 5.12....................................................Additional Subsidiaries 67
SECTION 5.13.........................................................Further Assurances 67
ARTICLE VI...................................................................................... 68
Negative Covenants.............................................................................. 68
SECTION 6.01.........................................Indebtedness and Other Obligations 68
SECTION 6.02......................................................................Liens 69
SECTION 6.03........................................................Fundamental Changes 70
SECTION 6.04..................Investments, Loans, Advances, Guarantees and Acquisitions 70
SECTION 6.05................................................................Asset Sales 72
SECTION 6.06......................Restricted Payments; Certain Payments of Indebtedness 72
SECTION 6.07...............................................Transactions with Affiliates 73
SECTION 6.08.....................................................Restrictive Agreements 73
SECTION 6.09............................................Amendment of Material Documents 73
SECTION 6.10....................................................Additional Subsidiaries 73
SECTION 6.11.........................................................Financial Covenant 73
ARTICLE VII..................................................................................... 73
Events of Default............................................................................... 73
SECTION 7.02............................................................When Continuing 76
SECTION 7.03........................................................Remedies on Default 76
(v)
SECTION 7.04....................................................Application of Proceeds 77
ARTICLE VIII.................................................................................... 77
The Agents...................................................................................... 77
SECTION 8.01.....................................Administration by Administrative Agent 77
SECTION 8.02.......................................................The Collateral Agent 77
SECTION 8.03.................................................Sharing of Excess Payments 77
SECTION 8.04..............................................Agreement of Required Lenders 78
SECTION 8.05........................................................Liability of Agents 78
SECTION 8.06..........................................Reimbursement and Indemnification 79
SECTION 8.07...........................................................Rights of Agents 80
SECTION 8.08.......................................Independent Lenders and Issuing Bank 80
SECTION 8.09.........................................................Notice of Transfer 80
SECTION 8.10............................................................Successor Agent 80
SECTION 8.11...........................................Reports and Financial Statements 80
SECTION 8.12...................................Co-Agent, Syndication Agent and Arranger 81
ARTICLE IX Miscellaneous....................................................................... 81
SECTION 9.01....................................................................Notices 81
SECTION 9.02........................................................Waivers; Amendments 81
SECTION 9.03.........................................Expenses; Indemnity; Damage Waiver 83
SECTION 9.04...........................Designation of Lead Borrower as Borrowers' Agent 84
SECTION 9.05.....................................................Successors and Assigns 86
SECTION 9.06...................................................................Survival 88
SECTION 9.07...................................Counterparts; Integration; Effectiveness 88
(vi)
SECTION 9.08...............................................................Severability 89
SECTION 9.09............................................................Right of Setoff 89
SECTION 9.10.................Governing Law; Jurisdiction; Consent to Service of Process 89
SECTION 9.11.......................................................WAIVER OF JURY TRIAL 90
SECTION 9.12...................................................................Headings 90
SECTION 9.13...................................................Interest Rate Limitation 90
SECTION 9.14.........................................................Additional Waivers 90
SECTION 9.15.............................Existing Credit Agreement Amended and Restated 91
(vii)
EXHIBITS
A. Assignment and Acceptance
B-1. Notes
B-2 Swingline Note
C. Opinion of Counsel to Loan Parties
D. Borrowing Base Certificate
(viii)
SCHEDULES
1.1 Lenders and Commitments
1.2 Facility Guarantors
1.3 Investment Policy
2.22(a) DDAs
2.22(b) Credit Card Arrangements
2.22(c) Blocked Accounts
3.05(c)(i) Title to Properties; Real Estate Owned
3.05(c)(ii) Leased Properties
3.06 Disclosed Matters
3.12 Subsidiaries
3.13 Insurance
5.01(c) Monthly Board Report
5.01(i) Financial Reporting Requirements
6.01 Indebtedness
6.02 Liens
6.04 Investments
(ix)
AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 21, 2003 among
PETSMART, INC., a Delaware corporation, having a principal place of
business at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, as Lead
Borrower for the Borrowers, being
said PETSMART, INC., and
PETSMART STORE SUPPORT GROUP, INC., a Delaware corporation,
having a principal place of business at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇;
the LENDERS party hereto; and
FLEET NATIONAL BANK, as Issuing Bank, a national banking association
having a place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇; and
FLEET RETAIL GROUP, INC. (f/k/a FLEET RETAIL FINANCE INC.), as
Administrative Agent and Collateral Agent for the Lenders, a Delaware
corporation, having its principal place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and
CONGRESS FINANCIAL CORPORATION (WESTERN), as Co-Agent.
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
W I T NE S S E T H
WHEREAS, the Borrowers have entered into a Credit Agreement dated as of
April 30, 2001 with, among others, Fleet National Bank, as Issuing Bank, Fleet
Retail Finance Inc., as Administrative Agent and Collateral Agent for the
Lenders party thereto and such Lenders (as amended and in effect, the "EXISTING
CREDIT AGREEMENT"); and
WHEREAS, the Borrowers desire to amend and restate the Existing Credit
Agreement in order (a) to decrease the amount of the Total Commitment to
$125,000,000 and (b) to make certain other amendments to the terms and
conditions of the Existing Credit Agreement.
NOW, THEREFORE, the parties hereto agree that the Existing Credit
Agreement shall be amended and restated in its entirety to read as follows:
ARTICLE I
Definitions
SECTION 1.01 Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ACH" shall mean automated clearing house transfers.
10
"Account" shall mean any right to payment for goods sold or leased or
for services rendered, whether or not earned by performance, or any right to
payment for credit extended for goods sold or leased or services rendered.
"Additional Commitment Lender" has the meaning provided therefor in
Section 2.02(a).
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means FRF, in its capacity as administrative
agent for the Lenders hereunder.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agents" shall mean collectively, the Administrative Agent and the
Collateral Agent.
"Alternate Base Rate" shall mean, for any day, the higher of (a) the
annual rate of interest then most recently announced by Fleet at its head office
in Boston, Massachusetts as its "Base Rate" and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1% (0.50%) per annum. If for any reason
the Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations thereof in accordance with
the terms hereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in Fleet's Base Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in Fleet's Base Rate or
the Federal Funds Effective Rate, respectively.
"Applicable Margin" means initially, the rates for Base Rate Loans and
Eurodollar Loans, set forth in Level 1, below:
Level Performance Criteria Base Rate Loans Eurodollar Loans
1 Excess Availability 0% 1.25%
greater than or equal
to 25% of the
Borrowing Base
2 Excess Availability 0.25% 1.50%
greater than 15% of
the Borrowing Base,
but less than 25% of
the Borrowing Base
11
3 Excess Availability 0.50% 1.75%
less than or equal to
15% of the Borrowing
Base
The Applicable Margin will remain at Level 1 through January 31, 2004. On the
first day of each February, May, August and November, commencing February 1,
2004, the Applicable Margin shall be adjusted based upon the average Excess
Availability for the immediately preceding three month period. Upon the
occurrence of an Event of Default, the Applicable Margin shall be immediately
increased to the percentages set forth in Level 3 (even if the Excess
Availability requirements for another Level have been met) and interest shall be
determined in the manner set forth in Section 2.11.
"Appraisal Percentage" shall mean 85%.
"Appraised Value" means the net appraised liquidation value of the
Borrowers' and Canadian Operating Subsidiary's Inventory as set forth in the
Borrowers' stock ledger (expressed as a percentage of the Cost of such
Inventory) as determined from time to time by the Administrative Agent in
accordance with its standard procedures and with the assistance of an
independent appraiser satisfactory to the Administrative Agent.
"Arranger" means FSI.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.05), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Availability Reserves" means such reserves as the Administrative Agent
from time to time determines in the Administrative Agent's reasonable discretion
as being appropriate to reflect the impediments to the Agents' ability to
realize upon the Collateral. Without limiting the generality of the foregoing,
Availability Reserves may include (but are not limited to) reserves based on (i)
Rent; (ii) Gift Certificates and Merchandise Credit Liability; (iii) Frequent
Shopper Programs; (iv) Layaways and Customer Deposits; (v) customs, duties, and
other costs to release Inventory which is being imported into the United States;
and (vi) outstanding taxes and other governmental charges, including, ad
valorem, real estate, personal property, and other taxes which might have
priority over the interests of the Collateral Agent in the Collateral.
"Base Rate Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Blocked Account Agreements" has the meaning set forth in Section
2.22(c).
"Blocked Account Banks" shall mean the banks with whom the Borrowers
have entered into Blocked Account Agreements.
"Blocked Accounts" shall have the meaning set forth in Section 2.22(c).
12
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrowers" means collectively, PETsMART, Inc., a Delaware corporation
and PETsMART Store Support Group, Inc., a Delaware corporation.
"Borrowing" shall mean (a) the incurrence of Loans of a single Type, on
a single date and having, in the case of Eurodollar Loans, a single Interest
Period, or (b) a Swingline Loan.
"Borrowing Base" means, at any time of calculation, an amount equal to
(a) the Receivables Advance Rate of the face amount of Eligible
Credit Card Receivables; plus
(b) the lesser of (i) Appraisal Percentage of the Appraised Value
of Eligible Inventory, or (ii) the Inventory Advance Rate of
(A) the Cost of Eligible Inventory minus (B) Inventory
Reserves; plus
(c) 100% of all Eligible Cash on Hand, provided that Eligible Cash
on Hand included in the Borrowing Base may not be withdrawn
from the deposit account at Fleet, thereby reducing the
Borrowing Base, unless and until the Lead Borrower furnishes
the Administrative Agent with (i) notice of such intended
withdrawal and (ii) a Borrowing Base Certificate as of the
date of such proposed withdrawal reflecting that, after giving
effect to such withdrawal, no Overadvance will result; minus
(d) the then amount of all Availability Reserves.
"Borrowing Base Certificate" has the meaning assigned to such term in
Section 5.01(f).
"Borrowing Request" means a request by the Lead Borrower on behalf of
the Borrowers for a Borrowing in accordance with Section 2.04.
"Breakage Costs" shall have the meaning set forth in Section 2.20(b).
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in Boston, Massachusetts are authorized or
required by law to remain closed, provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Canadian Operating Subsidiary" means 3003300 Nova Scotia Company.
"Capital Expenditures" means, for any period, the additions to
property, plant and equipment and other capital expenditures of the Borrowers
that are (or would be) set forth in a consolidated statement of cash flows of
the Borrowers for such period prepared in accordance with GAAP.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or
13
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP, and the amount of such obligations shall be the capitalized
amount thereof determined in accordance with GAAP.
"Cash Collateral Account" shall mean an interest-bearing account
established by the Borrowers with the Collateral Agent at Fleet under the sole
and exclusive dominion and control of the Collateral Agent designated as the
"PETsMART Cash Collateral Account".
"Cash Control Event" means that Excess Availability is less than the
Threshold Amount. For purposes of Section 2.22(h) hereof, the occurrence of a
Cash Control Event shall be deemed continuing notwithstanding that Excess
Availability may thereafter exceed the Threshold Amount unless and until Excess
Availability exceeds the Threshold Amount for sixty (60) consecutive days, in
which case a Cash Control Event shall no longer be deemed to be continuing for
purposes of Section 2.22(h) hereof; provided that a Cash Control Event shall be
deemed continuing (even if Excess Availability exceeds the Threshold Amount for
sixty consecutive days) if a Cash Control Event has occurred and been
discontinued on three (3) occasions in any twelve month period.
"Cash Receipts" has the meaning provided therefor in Section 2.22(c).
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 et seq.
"Change in Control" means, at any time, (a) occupation of a majority of
the seats (other than vacant seats) on the board of directors of the Lead
Borrower by Persons who were neither (i) nominated by the board of directors of
the Lead Borrower nor (ii) appointed by directors so nominated; or (b) the
acquisition of thirty-five percent (35%) or more of the capital stock of the
Lead Borrower by any Person or group of Persons, or (c) the failure of the Lead
Borrower to own, directly or indirectly, 100% of the capital stock of the other
Borrower and the Canadian Operating Subsidiary.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change, after the date of this
Agreement, in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority, or (c) compliance by any
Lender or the Issuing Bank (or, for purposes of Section 2.24(b), by any lending
office of such Lender or by such Lender's or the Issuing Bank's holding company,
if any) with any request, guideline or directive (whether or not having the
force of law) of any Governmental Authority made or issued after the date of
this Agreement.
"Charges" has the meaning provided therefor in Section 9.13.
"Closing Date" means April 30, 2001.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means any and all "Collateral" as defined in any
applicable Security Document.
14
"Collateral Agent" means FRF, in its capacity as collateral agent under
the Security Documents.
"Commercial Letter of Credit" means any Letter of Credit issued for the
purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by the Borrowers in the ordinary
course of business of the Borrowers.
"Commitment" shall mean, with respect to each Lender, the aggregate
commitment of such Lender hereunder in the amount set forth opposite its name on
SCHEDULE 1.1 hereto or as may subsequently be set forth in the Register from
time to time, as the same may be (i) reduced from time to time pursuant to
Section 2.16 or (ii) increased from time to time pursuant to Section 2.02
hereof.
"Commitment Fee" has the meaning provided therefor in Section 2.13.
"Commitment Increase" has the meaning provided therefor in Section
2.02(a).
"Commitment Increase Date" has the meaning provided therefor in Section
2.02(c).
"Commitment Percentage" shall mean, with respect to each Lender, that
percentage equivalent to such Lender's Commitment divided by the Total
Commitment hereunder; each Lender's Commitment Percentage shall be in the amount
set forth opposite its name on SCHEDULE 1.1 hereto or as may subsequently be set
forth in the Register from time to time, as the same may be increased from time
to time pursuant to Section 2.02 hereof.
..
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "Controlling" and "Controlled" have meanings correlative thereto.
"Cost" means the average cost of purchases, as reported on the
Borrowers' stock ledger, based upon the Borrowers' accounting practices which
are in effect on the date of this Agreement. "Cost" does not include inventory
capitalization costs or other non-purchase price charges (such as freight) used
in the Borrowers' calculation of cost of goods sold.
"Credit Card Notifications" has the meaning provided therefor in
Section 2.22(c).
"Credit Extensions" as of any day, shall be equal to the sum of (a) the
principal balance of all Loans then outstanding, and (b) the then amount of the
Letter of Credit Outstandings.
"DDAs" means any checking or other demand deposit account maintained by
any Borrower.
"DDA Notification" has the meaning provided therefor in Section
2.22(c).
"Default" means any event or condition that constitutes an Event of
Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"dollars" or "$" refers to lawful money of the United States of
America.
15
"Effective Date" means the date upon which the conditions precedent set
forth in Article 4.01 hereof have been satisfied or waived and this Agreement
has become effective.
"Eligible Cash On Hand" means cash of a Borrower or the Canadian
Operating Subsidiary from time to time deposited in a DDA in the name of a
Borrower or the Canadian Operating Subsidiary maintained with Fleet (excluding
any amounts on deposit in the Cash Collateral Account or in any other escrow, or
special purpose or restricted account, such as an account specifically
designated for payroll or sales taxes), which DDA is subject to a first
perfected security interest in favor of the Collateral Agent for the benefit of
itself and the Secured Parties.
"Eligible Credit Card Receivables" means Accounts due to a Borrower or
the Canadian Operating Subsidiary on a non-recourse basis from Visa, Mastercard,
American Express Co., Discovercard, and other major credit card processors
reasonably acceptable to the Administrative Agent as arise in the ordinary
course of business, which have been earned by performance and are deemed by the
Administrative Agent in its reasonable discretion to be eligible for inclusion
in the calculation of the Borrowing Base. Without limiting the foregoing, unless
otherwise approved in writing by the Administrative Agent, none of the following
shall be deemed to be Eligible Credit Card Receivables:
(a) Accounts that have been outstanding for more than
seven (7) Business Days from the date of sale;
(b) Accounts with respect to which a Borrower or the
Canadian Operating Subsidiary does not have good,
valid and marketable title thereto, free and clear of
any Lien (other than Liens granted to the Collateral
Agent, for its benefit and the ratable benefit of the
Secured Parties, pursuant to the Security Documents);
(c) Accounts that are not subject to a first priority
security interest in favor of the Collateral Agent,
for the benefit of itself and the Secured Parties.
(d) Accounts which are disputed, are with recourse, or
with respect to which a claim, counterclaim, offset
or chargeback has been asserted (to the extent of
such claim, counterclaim, offset or chargeback); or
(e) Accounts which the Administrative Agent determines in
its reasonable discretion to be uncertain of
collection.
"Eligible Inventory" shall mean, as of the date of determination
thereof, items of Inventory of the Borrowers and the Canadian Operating
Subsidiary that are finished goods, merchantable and readily saleable to the
public in the ordinary course deemed by the Administrative Agent in its
reasonable discretion to be eligible for inclusion in the calculation of the
Borrowing Base. Without limiting the foregoing, unless otherwise approved in
writing by the Administrative Agent, none of the following shall be deemed to be
Eligible Inventory:
(a) Inventory that is not owned solely by the Borrowers
or the Canadian Operating Subsidiary, or is leased or on consignment or
the Borrowers or the Canadian Operating Subsidiary do not have good and
valid title thereto;
16
(b) Inventory (including any portion thereof in transit
from vendors) that is not located at property that is owned or leased
by the Borrowers or the Canadian Operating Subsidiary;
(c) Inventory that represents (i) goods damaged,
defective or otherwise unmerchantable, (ii) goods that do not conform
in all material respects to the representations and warranties
contained in this Agreement or any of the Security Documents, or (iii)
goods to be returned to the vendor;
(d) Inventory that is not located in the United States of
America (excluding territories and possessions thereof) or Canada;
(e) Inventory that is not subject to a perfected
first-priority security interest in favor of the Collateral Agent for
the benefit of itself and the Secured Parties;
(f) Inventory which consists of samples, labels, bags,
packaging, and other similar non-merchandise categories;
(g) Inventory as to which insurance in compliance with
the provisions of Section 5.07 hereof is not in effect;
(h) Inventory which has been sold but not yet delivered
or as to which any Borrower or the Canadian Operating Subsidiary has
accepted a deposit;
(i) Inventory consisting of live stock, animals, fish and
other similar Inventory;
(j) Inventory consisting of work-in-process; or
(k) Inventory consigned by the Borrowers or the Canadian
Operating Subsidiary to any other Person, including without limitation,
Webvan Group, Inc.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, handling, treatment, storage, disposal, Release or
threatened Release of any Hazardous Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, natural resource damage, costs of
environmental remediation, administrative oversight costs, fines, penalties or
indemnities), of any Borrower directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
17
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Lead Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Lead Borrower or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by the Lead Borrower or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence
by the Lead Borrower or any of its ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by the Lead Borrower or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from the Lead Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" has the meaning assigned to such term in Section
7.01.
"Excess Availability" means, as of any date of determination, the
excess, if any, of (a) the lesser of the Borrowing Base or the Total Commitment,
over (b) the sum of (i) the outstanding Credit Extensions, and (ii) all then
held checks, accounts payable which are beyond credit terms then accorded the
Borrowers and overdrafts.
"Excluded Taxes" means, with respect to the Agents, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account
of any obligation of the Borrowers hereunder, (a) income or franchise taxes
imposed on (or measured by) its gross or net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which any Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by a Borrower
under Section 2.29(b), any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.27(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrowers with respect to such withholding tax pursuant to
Section 2.27(a).
18
"Existing Credit Agreement" has the meaning set forth in the Recitals
hereto.
"FRF" means Fleet Retail Group, Inc., a Delaware corporation.
"FRF Concentration Account" shall have the meaning set forth in Section
2.22(c).
"FSI" means Fleet Securities, Inc., a Massachusetts corporation.
"Facility Guarantee" means each Guaranty executed by any Facility
Guarantor in favor of the Agents, the Issuing Bank and the Lenders.
"Facility Guarantors" means the Persons listed on SCHEDULE 1.2 hereto
and all other Subsidiaries of each Borrower now existing or hereafter created
other than Foreign Subsidiaries.
"Facility Guarantors Collateral Documents" means all security
agreements, mortgages, pledge agreements, deeds of trust, and other instruments,
documents or agreements executed and delivered by any Facility Guarantor to
secure the Facility Guarantee.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by Fleet from three Federal funds brokers of recognized
standing selected by it.
"Fee Letter" means the letter entitled "Fee Letter" among the Borrowers
and the Administrative Agent of even date herewith, as such letter may from time
to time be amended.
"Financial Officer" means, with respect to any Borrower, the chief
financial officer, controller or assistant controller of such Borrower.
"Fleet" means Fleet National Bank, a national banking association.
"Fleet Disbursement Accounts" has the meaning provided therefor in
Section 2.22(f).
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than the United States of America, any State thereof or the
District of Columbia.
"Foreign Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Gift Certificate and Merchandise Credit Liability" means, at any time,
the aggregate face value at such time of (a) outstanding gift certificates and
gift cards of the Borrowers and/or the Canadian Operating Subsidiary entitling
the holder thereof to use all or a portion of the
19
certificate to pay all or a portion of the purchase price for any Inventory, and
(b) outstanding merchandise credits of the Borrowers and the Canadian Operating
Subsidiary.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation, provided that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law, including any material listed as a hazardous substance under
Section 101(14) of CERCLA.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement, or
other interest or currency exchange rate or commodity price hedging arrangement.
"Incremental Loan Commitment Requirements" means, with respect to any
request for a Commitment Increase made pursuant to Section 2.02 or any provision
of a Commitment Increase on a given Commitment Increase Date, the satisfaction
of each of the following conditions: (i) no Default or Event of Default then
exists, and (ii) the Borrower has not theretofore reduced the Commitments
pursuant to Section 2.16 hereof.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has
20
been assumed, provided that if such Indebtedness of others is non-recourse to
the credit of such Person, then the amount of Indebtedness ascribed to such
Person shall not exceed the fair market value of the property securing such
Indebtedness of others, (g) all Guarantees by such Person of Indebtedness of
others (including, without limitation, under any Synthetic Leases), (h) all
Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit,
(j) all obligations, contingent or otherwise, of such Person in respect of
bankers' acceptances, (k) all Hedging Agreements, and (l) the principal and
interest portions of all rental obligations of such Person under any Synthetic
Lease, tax retention operating lease, off-balance sheet loan or similar
off-balance sheet financing where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning provided therefor in Section 9.03(b).
"Interest Payment Date" means (a) with respect to any Base Rate Loan
(including a Swingline Loan), the last day of each calendar month, and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part, provided that if any Interest
Period for a Eurodollar Loan exceeds three (3) months, the Interest Payment Date
shall also mean the date which is three (3) months after the commencement of
such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Lead Borrower may elect, provided that (a) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (b) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period, and (c) any Interest Period which would otherwise
end after the Maturity Date shall end on the Maturity Date. For purposes hereof,
the date of a Borrowing initially shall be the date on which such Borrowing is
made and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Inventory" has the meaning assigned to such term in the Security
Agreement.
"Inventory Advance Rate" means sixty-five percent (65%).
"Inventory Reserves" means such reserves as may be established from
time to time by the Administrative Agent in the Administrative Agent's
reasonable discretion with respect to the determination of the saleability, at
retail, of the Eligible Inventory or which reflect such other factors as affect
the market value of the Eligible Inventory. Without limiting the generality of
the
21
foregoing, Inventory Reserves may include (but are not limited to) reserves
based on (i) obsolescence; (ii) seasonality; (iii) Shrink; (iv) imbalance; (v)
change in Inventory character; (vi) change in Inventory composition; (vii)
change in Inventory mix; (viii) markdowns (both permanent and point of sale);
(ix) retail markons and markups inconsistent with prior period practice and
performance; industry standards; current business plans; or advertising calendar
and planned advertising events.
"Investment Policy" means the investment policy of the Lead Borrower
adopted by the board of directors of the Lead Borrower and annexed hereto as
SCHEDULE 1.3, as such policy may be modified from time to time, with the prior
written consent of the Administrative Agent.
"Issuing Bank" means Fleet, in its capacity as the issuer of Letters of
Credit hereunder, and any successor to Fleet in such capacity as selected by the
Administrative Agent. The Issuing Bank may, in its discretion, arrange for one
or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in
which case the term "Issuing Bank" shall include any such Affiliate with respect
to Letters of Credit issued by such Affiliate.
"L/C Disbursement" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"Lead Borrower" means PETsMART, Inc., a Delaware corporation.
"Lenders" shall mean the Persons identified on SCHEDULE 1.1 hereto as
modified to include any Additional Commitment Lender and each assignee that
becomes a party to this Agreement as set forth in Section 9.05(b).
"Letter of Credit" shall mean a letter of credit, in form and substance
reasonably satisfactory to the Issuing Bank, that is issued pursuant to this
Agreement for the account of any Borrower, and shall include, without
limitation, a Standby Letter of Credit or Commercial Letter of Credit issued in
connection with the purchase of Inventory by any Borrower, and for other
purposes for which a Borrower has historically obtained letters of credit, or
for any other purpose that is reasonably acceptable to the Administrative Agent.
"Letter of Credit Fees" shall mean the fees payable in respect of
Letters of Credit pursuant to Section 2.14.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (a)
with respect to Letters of Credit outstanding at such time, the aggregate
maximum amount that then is or at any time thereafter may become available for
drawing or payment thereunder plus (b) all amounts theretofore drawn or paid
under Letters of Credit for which the Issuing Bank has not then been reimbursed.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate of interest (rounded upwards, if necessary to the next
1/16 of 1%) determined by the Administrative Agent to be the highest prevailing
rate per annum at which deposits in dollars are offered to Fleet by first class
banks in the London interbank market in which Fleet participates at 10:00 a.m.
(Boston time) not less than two Business Days before the first day of the
Interest Period for the subject Eurodollar Borrowing, for a deposit
approximately in the amount of the subject Borrowing and for a period of time
approximately equal to such Interest Period.
22
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Line Fee" means a fee equal to 0.25% per annum (on the basis of actual
days elapsed in a year of 365/366 days, as applicable) of the average daily
balance of the difference between (x) each Lender's Commitment and (y) the sum
of (i) such Lender's Commitment Percentage of the principal amount of Loans then
outstanding, and (ii) such Lender's Commitment Percentage of the then Letter of
Credit Outstandings for each day commencing on the date hereof and ending on but
excluding the Termination Date.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit, the Fee Letter, all Borrowing Base Certificates, the Blocked Account
Agreements, the DDA Notifications, the Credit Card Notifications, the Security
Documents, the Facility Guarantee, and any other instrument or agreement
executed and delivered in connection therewith.
"Loan Party or Loan Parties" means the Borrowers and the Facility
Guarantors.
"Loans" shall mean all loans (including, without limitation, Swingline
Loans) at any time made to the Borrowers or for account of the Borrowers
pursuant to this Agreement.
"Margin Stock" has the meaning assigned to such term in Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, assets, or financial condition of the Lead
Borrower and its Subsidiaries taken as a whole, or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or any of
the material rights or remedies of the Administrative Agent, the Collateral
Agent or the Lenders hereunder or thereunder.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit) or obligations in respect of one or more Hedging Agreements
of any one or more of the Borrowers in an aggregate principal amount exceeding
$5,000,000. For purposes of determining the amount of Material Indebtedness at
any time, the "principal amount" of the obligations in respect of any Hedging
Agreement at such time shall be the maximum aggregate amount that a Borrower
would be required to pay if such Hedging Agreement were terminated at that time.
"Maturity Date" means April 30, 2008.
"Maximum Rate" has the meaning provided therefor in Section 9.13.
"Minority Lenders" has the meaning provided therefor in Section
9.02(d).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
23
"Mortgages" means the Mortgages/Deeds of Trust, Security Agreements and
Assignments between the Loan Party owning any real estate encumbered thereby and
the Collateral Agent for the benefit of the Secured Parties.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event, (a) the cash proceeds
received in respect of such event, including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, in each case net of (b) the sum
of (i) all reasonable fees and out-of-pocket expenses (including appraisals, and
brokerage, legal, title and recording tax expenses and commissions) paid by any
Borrower to third parties (other than Affiliates) in connection with such event,
and (ii) in the case of a sale or other disposition of an asset (including
pursuant to a casualty or condemnation), the amount of all payments required to
be made by any Borrower as a result of such event to repay (or to establish an
escrow for the repayment of) Indebtedness (other than Loans) which is secured by
such asset and constitutes a Permitted Encumbrance that is senior to the Lien of
the Collateral Agent.
"Noncompliance Notice" has the meaning provided therefor in Section
2.06(b).
"Notes" shall mean (i) the promissory notes of the Borrowers
substantially in the form of Exhibit B-1, each payable to the order of a Lender,
evidencing the Loans, and (ii) the promissory note of the Borrowers
substantially in the form of Exhibit B-2, payable to the Swingline Lender,
evidencing the Swingline Loans.
"Obligations" has the meaning assigned to such term in the Security
Agreement.
"Other Taxes" means any and all current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"Overadvance" means, at any time of calculation, a circumstance in
which the Credit Extensions exceed the lesser of (a) the Total Commitment or (b)
the Borrowing Base.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Payment Conditions" means, at the time of determination, that (a) no
Default or Event of Default then exists or would arise as a result of the making
of the subject payment, and (b) prior to, and immediately after giving effect
to, the subject payment, and on a pro forma twelve months basis thereafter,
Excess Availability shall be equal to or greater than the Threshold Amount.
"Perfection Certificate" means a certificate in the form of Annex 1 to
the Security Agreement or any other form approved by the Collateral Agent.
"Permitted Encumbrances" means:
24
(a) Liens imposed by law for taxes that are not yet due
or are being contested in compliance with Section 5.05;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not
overdue by more than 60 days or are being contested in compliance with
Section 5.05;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII;
(f) easements, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations
and do not materially detract from the value of the affected property
or interfere with the ordinary conduct of business of the Borrowers or
any Subsidiary;
(g) leases and subleases and licenses and sublicenses of
property which do not materially interfere with the ordinary conduct of
the business of the Lead Borrower and its Subsidiaries; and
(h) Liens arising solely by virtue of any statutory or
common law provisions relating to banker's liens, liens in favor of
securities intermediaries, rights of set-off or similar rights and
remedies as to deposit accounts or securities accounts or other funds
maintained with depository institutions or securities intermediaries.
provided that, except as provided in any one or more of clauses (a) through (f)
above, the term "Permitted Encumbrances" shall not include any Lien securing
Indebtedness.
"Permitted Investments" means each of the following:
(a) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date
of acquisition thereof;
(b) investments in commercial paper maturing within 270
days from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
▇▇▇▇▇'▇;
25
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and demand
deposit and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the
United States of America or any State thereof that has a combined
capital and surplus and undivided profits of not less than
$500,000,000;
(d) fully collateralized repurchase agreements with a
term of not more than 30 days for securities described in clause (a)
above (without regard to the limitation on maturity contained in such
clause) and entered into with a financial institution satisfying the
criteria described in clause (c) above or with any primary dealer; and
(e) Investments made pursuant to the Investment Policy.
provided that, notwithstanding the foregoing, no such investments shall be
permitted when any Loans are outstanding unless (i) the investment is a
temporary investment pending expiration of an Interest Period for a Eurodollar
Loan, the proceeds of which investment will be applied to the Obligations after
the expiration of such Interest Period, and (ii) such investments are pledged to
the Collateral Agent as additional collateral for the Obligations pursuant to
such agreements as may be reasonably required by the Collateral Agent.
"Permitted Overadvance" means an Overadvance determined by the
Administrative Agent, in its reasonable discretion, (a) which is made to
maintain, protect or preserve the Collateral and/or the Lenders' rights under
the Loan Documents, or (b) which is otherwise in the Lenders' interests;
provided that Permitted Overadvances shall not (i) exceed five percent (5%) of
the then Borrowing Base in the aggregate outstanding at any time or (ii) remain
outstanding for more than forty-five (45) consecutive Business Days, unless in
either case the Required Supermajority Lenders otherwise agree; and provided
further that the foregoing shall not (1) modify or abrogate any of the
provisions of Section 2.07(f) hereof regarding the Lender's obligations with
respect to L/C Disbursements, or (2) result in any claim or liability against
the Administrative Agent (regardless of the amount of any Overadvance) for
"inadvertent Overadvances" (i.e. where an Overadvance results from changed
circumstances beyond the control of the Administrative Agent (such as a
reduction in the collateral value)), and further provided that in no event shall
the Administrative Agent make an Overadvance, if after giving effect thereto,
the principal amount of the Credit Extensions would exceed the Total Commitment.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Lead
Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA.
"Pledge Agreement" means the Pledge Agreement dated as of April 30,
2001 between, among others, the Borrowers, certain Facility Guarantors, and the
Collateral Agent for the benefit of the Secured Parties, as amended and in
effect from time to time.
26
"Prepayment Event" means any of the following events:
(a) any sale, transfer or other disposition (including
pursuant to a sale and leaseback transaction) of any property or asset
of a Borrower;
(b) any casualty or other insured damage to, or any
taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of a Borrower;
(c) the issuance by a Borrower of any equity securities,
other than any such issuance of equity securities to another Borrower;
or
(d) the incurrence by a Borrower of any Indebtedness of
the type described in clause (a), (b) or (c) of the definition of the
term "Indebtedness".
"Real Estate" means all land, together with the buildings, structures,
parking areas, and other improvements thereon, now or hereafter owned or leased
by any Borrower, including all easements, rights-of-way, and similar rights
relating thereto and all leases, tenancies, and occupancies thereof.
"Receivables Advance Rate" means eighty-five percent (85%).
"Register" has the meaning set forth in Section 9.05(c).
"Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Release" has the meaning set forth in Section 101(22) of CERCLA.
"Required Lenders" shall mean, at any time, Lenders having Commitments
at least equal to 51% of the Total Commitment, or if the Commitments have been
terminated, Lenders whose percentage of the outstanding Obligations (after
settlement and repayment of all Swingline Loans by the Lenders) aggregate not
less than 51% of all such Obligations.
"Required Supermajority Lenders" shall mean, at any time, Lenders
having Commitments outstanding representing at least 66 2/3% of the Total
Commitment or if the Commitments have been terminated, Lenders whose percentage
of the outstanding Obligations (after settlement and repayment of all Swingline
Loans by the Lenders) aggregate not less than 66 2/3% of all such Obligations.
"Reserves" means all (if any) Inventory Reserves, and Availability
Reserves.
27
"Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock or membership interests of any Borrower or any Subsidiary, or
any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of (a) any such shares of
capital stock or membership interests of any Borrower or any Subsidiary or (b)
any option, warrant or other right to acquire any such shares of capital stock
or membership interests of any Borrower or any Subsidiary.
"S&P" means Standard & Poor's.
"Secured Parties" has the meaning assigned to such term in the Security
Agreement.
"Security Agreement" means the Security Agreement dated as of April 30,
2001 among the Borrowers and the Collateral Agent for the benefit of the Secured
Parties, as amended and in effect from time to time.
"Security Documents" means the Security Agreement, the Pledge
Agreement, the Facility Guarantors Collateral Documents, the Mortgages, and each
other security agreement or other instrument or document executed and delivered
pursuant to Section 5.12 to secure any of the Obligations.
"Settlement Date" has the meaning provided in Section 2.08(b) hereof.
"Shrink" means Inventory which has been lost, misplaced, stolen, or is
otherwise unaccounted for.
"Solvent" means, with respect to any Person on a particular date, that
on such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair saleable value of the properties and assets
of such Person is not less than the amount that would be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in a business or a transaction, and is not about to engage in a business or
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged.
"Standby Letter of Credit" means any Letter of Credit other than a
Commercial Letter of Credit.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to
28
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Swingline Lender" means FRF, in its capacity as lender of Swingline
Loans hereunder.
"Swingline Loan" shall mean a Loan made by the Swingline Lender to the
Borrowers pursuant to Section 2.06 hereof.
"Synthetic Lease" means any lease or other agreement for the use or
possession of property creating obligations which do not appear as Indebtedness
on the balance sheet of the lessee thereunder but which, upon the insolvency or
bankruptcy of such Person, may be characterized as Indebtedness of such lessee
without regard to the accounting treatment.
"Taxes" means any and all current or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Termination Date" shall mean the earliest to occur of (i) the Maturity
Date, or (ii) the date on which the maturity of the Loans is accelerated and the
Commitments are terminated, or (iii) the date of the occurrence of any Event of
Default pursuant to Section 7.01(h) or 7.01(i) hereof.
"Threshold Amount" shall mean, at any time of measurement, the greater
of (a) $25,000,000, or (b) twenty percent (20%) of the Total Commitment.
"Total Commitment" shall mean, at any time, the sum of the Commitments
at such time.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Unused Commitment" shall mean, on any day, (a) the then Total
Commitment minus (b) the sum of (i) the principal amount of Loans then
outstanding (including the principal amount of Swingline Loans then outstanding)
and (ii) the then Letter of Credit Outstandings.
29
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.03 Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time.
ARTICLE II
Amount and Terms of Credit
SECTION 2.01 Commitment of the Lenders.
(a) Each Lender severally and not jointly with any other Lender,
agrees, upon the terms and subject to the conditions herein set forth, to extend
credit to the Borrowers on a revolving basis, in the form of Loans and Letters
of Credit and in an amount not to exceed the lesser of such Lender's Commitment
or such Lender's Commitment Percentage of the Borrowing Base, subject to the
following limitations:
(i) The aggregate outstanding amount of the
Loans and Letters of Credit Outstandings shall not at any time
exceed the lower of (i) $125,000,000 or, in each case, any
other amount to which the Commitments have then been increased
or reduced by the Borrowers pursuant to Sections 2.02 or 2.16,
and (ii) the then amount of the Borrowing Base.
(ii) No Lender shall be obligated to issue any
Letter of Credit, and Letters of Credit shall be available
from the Issuing Bank, subject to the ratable participation of
all Lenders, as set forth in Section 2.07. The Borrowers will
not at
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any time permit the aggregate Letter of Credit Outstandings to
exceed $125,000,000.
(iii) Subject to all of the other provisions of
this Agreement, Loans that are repaid may be reborrowed prior
to the Termination Date. No new Credit Extension, however,
shall be made to the Borrowers after the Termination Date.
(b) Each Borrowing of Loans (other than Swingline Loans) shall be
made by the Lenders pro rata in accordance with their respective Commitment
Percentages. The failure of any Lender to make any Loan shall neither relieve
any other Lender of its obligation to fund its Loan in accordance with the
provisions of this Agreement nor increase the obligation of any such other
Lender.
SECTION 2.02 Increase in Total Commitment.
(c) So long as the Incremental Loan Commitment Requirements are
satisfied, the Borrower shall have the right at any time, and from time to time,
to request an increase of the Total Commitment to an amount not to exceed
$200,000,000. Any such requested increase shall be first proposed in writing to
all existing Lenders on a pro rata basis. In the event that any existing Lender
does not notify the Administrative Agent within twenty-one (21) Business Days
from the receipt of the requested increase that the existing Lender will
increase its Commitment and of the amount of its increase, the existing Lender
shall be deemed to have declined the requested increase of its Commitment. To
the extent that one or more existing Lenders decline to increase their
respective Commitments, or decline to increase their Commitments to the amount
requested by the Borrower, the Arranger may arrange for other Persons to become
Lenders hereunder and to issue commitments in an amount equal to the amount of
the increase in the Total Commitment requested by the Borrower and not accepted
by the existing Lenders (each such increase by either a Lender or another
Person, a "Commitment Increase," and each such Person issuing, or Lender
increasing, its Commitment, an "Additional Commitment Lender"); provided,
however, that (i) no Lender shall be obligated to provide a Commitment Increase
as a result of any such request by the Borrower, and (ii) any Additional
Commitment Lender which is not an existing Lender shall be subject to the
approval of the Administrative Agent, the Issuing Bank, and the Swingline Lender
(which approval shall not be unreasonably withheld), and (iii) nothing contained
herein shall constitute the unconditional obligation of the Arranger to provide
or obtain commitments for such requested Commitment Increase, as the Arranger
only is agreeing hereby to use its best efforts to arrange for Additional
Commitment Lenders. Each Commitment Increase shall be in a minimum aggregate
amount of at least $10,000,000 and in integral multiples of $10,000,000 in
excess thereof.
(d) No Commitment Increase shall become effective unless and until
each of the following conditions have been satisfied:
(i) the Borrower, the Administrative Agent, and
any Additional Commitment Lender shall have executed and
delivered a joinder to the Loan Documents in such form as the
Administrative Agent may reasonably require;
31
(ii) the Incremental Loan Commitment Requirements
shall have been satisfied;
(iii) the Borrower shall have paid such fees and
other compensation to the Additional Commitment Lenders as the
Borrower and each such Additional Commitment Lenders may
agree;
(iv) the Borrower shall have paid such
arrangement fees to the Administrative Agent and/or the
Arranger as the Borrower and such Persons may agree;
(v) the Borrower shall deliver to the
Administrative Agent and the Lenders an opinion or opinions,
in form and substance reasonably satisfactory to the
Administrative Agent, from counsel to the Borrower reasonably
satisfactory to the Administrative Agent and dated such date
of effectiveness;
(vi) to the extent requested by any Additional
Commitment Lender, a Note will be issued at the Borrower's
expense, to each such Additional Commitment Lender, in
conformity with requirements of Section 2.09 hereof (with
appropriate modification to the extent necessary to reflect
the new Commitment of such Additional Commitment Lender); and
(vii) the Borrower and the Additional Commitment
Lenders shall have delivered such other instruments, documents
and agreements as the Administrative Agent may reasonably have
requested.
(e) The Administrative Agent shall promptly notify each Lender as
to the effectiveness of each Commitment Increase (with each date of such
effectiveness being referred to herein as a "Commitment Increase Date"), and at
such time (i) the Total Commitment under, and for all purposes of, this
Agreement shall be increased by the aggregate amount of such Commitment
Increases, (ii) Schedule 1.01 shall be deemed modified, without further action,
to reflect the revised Commitments and Commitment Percentages of the Lenders,
and (iii) this Agreement shall be deemed amended, without further action, to the
extent necessary to reflect such increased Total Commitment (including, without
limitation, Section 2.01(a)(i)).
(f) In connection with Commitment Increases hereunder, the Lenders
and the Borrower agree that, notwithstanding anything to the contrary in this
Agreement, (i) the Borrower shall, in coordination with the Administrative
Agent, (x) repay outstanding Loans of certain Lenders, and obtain Loans from
certain other Lenders (including the Additional Commitment Lenders), but in no
event in excess of each such Lender's Commitment, or (y) take such other actions
as reasonably may be required by the Administrative Agent, in each case to the
extent necessary so that all of the Lenders have advanced Loans in an amount
equal to their Commitment Percentages (determined after giving effect to any
increase in the Total Commitment pursuant to this Section 2.02) of the Loans
(other than Swingline Loans), and (ii) the Borrower shall pay to the Lenders any
costs of the type referred to in Section 2.20 in connection with any repayment
and/or Loans required pursuant to preceding clause (i).
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SECTION 2.03 Reserves; Changes to Reserves.
(g) The initial Inventory and Availability Reserves as of the date
of this Agreement are the following:
(i) Rent (an Availability Reserve): An amount
equal to two months base rents for a leased premises located
in Canada, in the states of Washington, Virginia, Pennsylvania
and any other state which grants a landlord a priority lien
for unpaid rent.
(ii) Shrink (an Inventory Reserve): An amount
equal to one percent (1%) of the gross sales from each of the
Borrowers' and the Canadian Operating Subsidiary's stores
since the date of the last physical inventory at each such
store.
(iii) Gift Certificate and Merchandise Credit
Liability (an Availability Reserve): An amount equal to fifty
percent of the Borrowers' and the Canadian Operating
Subsidiary's Gift Certificate and Merchandise Credit Liability
outstanding from time to time.
(iv) Canadian Provincial and Governmental Sales
Taxes (an Availability Reserve): An amount equal to 100% of
the outstanding amount accrued and unpaid for such taxes.
(h) The Administrative Agent may hereafter establish additional
Reserves or change any of the foregoing Reserves, in the exercise of the
reasonable judgment of the Administrative Agent.
SECTION 2.04 Making of Loans.
(i) Except as set forth in Sections 2.17 and 2.25, Loans (other
than Swingline Loans) by the Lenders shall be either Base Rate Loans or
Eurodollar Loans as the Lead Borrower on behalf of the Borrowers may request
subject to and in accordance with this Section 2.04, provided that all Swingline
Loans shall be only Base Rate Loans. All Loans made pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, be Loans of the
same Type. Each Lender may fulfill its Commitment with respect to any Loan by
causing any lending office of such Lender to make such Loan; but any such use of
a lending office shall not affect the obligation of the Borrowers to repay such
Loan in accordance with the terms of the applicable Note. Each Lender shall,
subject to its overall policy considerations, use reasonable efforts (but shall
not be obligated) to select a lending office which will not result in the
payment of increased costs by the Borrowers pursuant to Section 2.24. Subject to
the other provisions of this Section 2.04 and the provisions of Section 2.25,
Borrowings of Loans of more than one Type may be incurred at the same time, but
no more than five (5) Borrowings of Eurodollar Loans may be outstanding at any
time.
(j) The Lead Borrower shall give the Administrative Agent three
Business Days' prior telephonic notice (thereafter confirmed in writing) of each
Borrowing of Eurodollar Loans and one Business Day's prior notice of each
Borrowing of Base Rate Loans. Any such notice, to
33
be effective, must be received by the Administrative Agent not later than 2:00
p.m., Boston time, on the third Business Day in the case of Eurodollar Loans
prior to, and on the first Business Day in the case of Base Rate Loans prior to,
the date on which such Borrowing is to be made. Such notice shall be irrevocable
and shall specify the amount of the proposed Borrowing (which shall be in an
integral multiple of $500,000, but not less than $3,000,000 in the case of
Eurodollar Loans) and the date thereof (which shall be a Business Day) and shall
contain disbursement instructions. Such notice shall specify whether the
Borrowing then being requested is to be a Borrowing of Base Rate Loans or
Eurodollar Loans and, if Eurodollar Loans, the Interest Period with respect
thereto. If no election of Interest Period is specified in any such notice for a
Borrowing of Eurodollar Loans, such notice shall be deemed a request for an
Interest Period of one month. If no election is made as to the Type of Loan,
such notice shall be deemed a request for Borrowing of Base Rate Loans. The
Administrative Agent shall promptly notify each Lender of its proportionate
share of such Borrowing, the date of such Borrowing, the Type of Borrowing being
requested and the Interest Period or Interest Periods applicable thereto, as
appropriate. On the borrowing date specified in such notice, each Lender shall
make its share of the Borrowing available at the office of the Administrative
Agent at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, no later than 1:00 p.m.,
Boston time, in immediately available funds. Unless the Administrative Agent
shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender's share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with this
Section and may, in reliance upon such assumption, make available to the
Borrowers a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrowers severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrowers to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrowers, the interest rate applicable to Base Rate Loans. If
such Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing. Upon receipt of the
funds made available by the Lenders to fund any Borrowing, the Administrative
Agent shall disburse such funds in the manner specified in the notice of
borrowing delivered by the Lead Borrower and shall use reasonable efforts to
make the funds so received from the Lenders available to the Borrowers no later
than 4:00 p.m., Boston time.
SECTION 2.05 Overadvances. The Agents and the Lenders have no
obligation to make any Loan or to provide any Letter of Credit if an Overadvance
would result. The Administrative Agent may, in its discretion, make Permitted
Overadvances without the consent of the Lenders and each Lender shall be bound
thereby. Any Permitted Overadvances may constitute Swingline Loans. The making
of any Permitted Overadvance is for the benefit of the Borrowers; such Permitted
Overadvances constitute Loans and Obligations. The making of any such Permitted
Overadvances on any one occasion shall not obligate the Administrative Agent or
any Lender to make or permit any Permitted Overadvances on any other occasion or
to permit such Permitted Overadvances to remain outstanding.
34
SECTION 2.06 Swingline Loans
(k) The Swingline Lender is authorized by the Lenders, but is not
obligated, to make Swingline Loans up to $12,500,000 plus the Permitted
Overadvance in the aggregate outstanding at any time, consisting only of Base
Rate Loans, upon a notice of Borrowing received by the Administrative Agent and
the Swingline Lender (which notice, at the Swingline Lender's discretion, may be
submitted prior to 2:00 p.m., Boston time, on the Business Day on which such
Swingline Loan is requested). Swingline Loans shall be subject to periodic
settlement with the Lenders under Section 2.08 below.
(l) Swingline Loans may be made only in the following
circumstances: (A) for administrative convenience, the Swingline Lender may, but
is not obligated to, make Swingline Loans in reliance upon the Borrowers' actual
or deemed representations under Section 4.02, that the applicable conditions for
borrowing are satisfied or (B) for Permitted Overadvances, or (C) if the
conditions for borrowing under Section 4.02 cannot be fulfilled, the Lead
Borrower shall give immediate notice thereof to the Administrative Agent and the
Swingline Lender (a "Noncompliance Notice"), and the Administrative Agent shall
promptly provide each Lender with a copy of the Noncompliance Notice. If the
conditions for borrowing under Section 4.02 cannot be fulfilled, the Required
Lenders may direct the Swingline Lender to, and the Swingline Lender thereupon
shall, cease making Swingline Loans (other than Permitted Overadvances) until
such conditions can be satisfied or are waived in accordance with Section 9.02
hereof. Unless the Required Lenders so direct the Swingline Lender, the
Swingline Lender may, but is not obligated to, continue to make Swingline Loans
beginning one Business Day after the Non-Compliance Notice is furnished to the
Lenders. Notwithstanding the foregoing, no Swingline Loans shall be made
pursuant to this subsection (b) (other than Permitted Overadvances) if the
aggregate outstanding amount of the Loans and Letter of Credit Outstandings
would exceed the lower of (i) $125,000,000 or any other amount to which the
Commitments have then been increased or reduced by the Borrowers pursuant to
Sections 2.02 or 2.16, and (ii) the then amount of the Borrowing Base.
SECTION 2.07 Letters of Credit.
(m) Upon the terms and subject to the conditions herein set forth,
the Lead Borrower on behalf of the Borrowers may request the Issuing Bank, at
any time and from time to time after the date hereof and prior to the
Termination Date, to issue, and subject to the terms and conditions contained
herein, the Issuing Bank shall issue, for the account of the Borrowers one or
more Letters of Credit; provided that no Letter of Credit shall be issued if
after giving effect to such issuance (i) the aggregate Letter of Credit
Outstandings shall exceed $125,000,000, or (ii) the aggregate Loans and Letter
of Credit Outstandings would exceed the limitation set forth in Section
2.01(a)(i); and provided, further, that no Letter of Credit shall be issued if
the Issuing Bank shall have received notice from the Administrative Agent or the
Required Lenders that the conditions to such issuance have not been met.
(n) Each Standby Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the
35
date that is five Business Days prior to the Maturity Date, provided that each
Standby Letter of Credit may, upon the request of the Lead Borrower, include a
provision whereby such Letter of Credit shall be renewed automatically for
additional consecutive periods of 12 months or less (but not beyond the date
that is five Business Days prior to the Maturity Date) unless the Issuing Bank
notifies the beneficiary thereof at least 30 days prior to the then-applicable
expiration date that such Letter of Credit will not be renewed.
(o) Each Commercial Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date 120 days after the date of
the issuance of such Commercial Letter of Credit and (ii) the date that is five
Business Days prior to the Maturity Date.
(p) Drafts drawn under each Letter of Credit shall be reimbursed
by the Borrowers in dollars by paying to the Administrative Agent an amount
equal to such drawing not later than 2:00 p.m., Boston time, on (i) the date
that the Borrowers shall have received notice of such payment, if such notice is
received prior to 10:00 a.m., Boston time, on such date, or (ii) the Business
Day immediately following the day that the Borrowers receive such notice, if
such notice is received after 10:00 a.m., Boston time on the day of receipt,
provided that the Lead Borrower may, subject to the conditions to borrowing set
forth herein, request in accordance with Section 2.04 that such payment be
financed with a Base Rate Loan or Swingline Loan in an equivalent amount and, to
the extent so financed, the Borrowers' obligation to make such payment shall be
discharged and replaced by the resulting Base Rate Loan or Swingline Loan. The
Issuing Bank shall, promptly following its receipt thereof, examine all
documents purporting to represent a demand for payment under a Letter of Credit.
The Issuing Bank shall promptly notify the Administrative Agent and the
Borrowers by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Bank has made or will make payment thereunder, provided that
any failure to give or delay in giving such notice shall not relieve the
Borrowers of their obligation to reimburse the Issuing Bank and the Lenders with
respect to any such payment.
(q) If the Issuing Bank shall make any L/C Disbursement, then,
unless the Borrowers shall reimburse the Issuing Bank in full on the date such
payment is made, the unpaid amount thereof shall bear interest, for each day
from and including the date such payment is made to but excluding the date that
the Borrowers reimburse the Issuing Bank therefor, at the rate per annum then
applicable to Base Rate Loans, provided that, if the Borrowers fail to reimburse
such Issuing Bank when due pursuant to paragraph (d) of this Section, then
Section 2.11 shall apply. Interest accrued pursuant to this paragraph shall be
for the account of the Issuing Bank, except that interest accrued on and after
the date of payment by any Lender pursuant to paragraph (g) of this Section to
reimburse the Issuing Bank shall be for the account of such Lender to the extent
of such payment.
(r) Immediately upon the issuance of any Letter of Credit by the
Issuing Bank (or the amendment of a Letter of Credit increasing the amount
thereof), and without any further action on the part of the Issuing Bank, the
Issuing Bank shall be deemed to have sold to each Lender, and each such Lender
shall be deemed unconditionally and irrevocably to have purchased from the
Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender's Commitment Percentage, in such
Letter of Credit, each drawing thereunder and the obligations of the Borrowers
under this Agreement and the other Loan
36
Documents with respect thereto. Upon any change in the Commitments pursuant to
Section 9.05, it is hereby agreed that with respect to all Letter of Credit
Outstandings, there shall be an automatic adjustment to the participations
hereby created to reflect the new Commitment Percentages of the assigning and
assignee Lenders. Any action taken or omitted by the Issuing Bank under or in
connection with a Letter of Credit, if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for the Issuing Bank any
resulting liability to any Lender.
(s) In the event that the Issuing Bank makes any L/C Disbursement
and the Borrowers shall not have reimbursed such amount in full to the Issuing
Bank pursuant to this Section 2.07, the Issuing Bank shall promptly notify the
Administrative Agent, which shall promptly notify each Lender of such failure,
and each Lender shall promptly and unconditionally pay to the Administrative
Agent for the account of the Issuing Bank the amount of such Lender's Commitment
Percentage of such unreimbursed payment in dollars and in same day funds. If the
Issuing Bank so notifies the Administrative Agent, and the Administrative Agent
so notifies the Lenders prior to 11:00 a.m., Boston time, on any Business Day,
each such Lender shall make available to the Issuing Bank such Lender's
Commitment Percentage of the amount of such payment on such Business Day in same
day funds. If and to the extent such Lender shall not have so made its
Commitment Percentage of the amount of such payment available to the Issuing
Bank, such Lender agrees to pay to the Issuing Bank, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to the Administrative Agent for the account of the
Issuing Bank at the Federal Funds Effective Rate. Each Lender agrees to fund its
Commitment Percentage of such unreimbursed payment notwithstanding a failure to
satisfy any applicable lending conditions or the provisions of Sections 2.01 or
2.07, or the occurrence of the Termination Date. The failure of any Lender to
make available to the Issuing Bank its Commitment Percentage of any payment
under any Letter of Credit shall neither relieve any Lender of its obligation
hereunder to make available to the Issuing Bank its Commitment Percentage of any
payment under any Letter of Credit on the date required, as specified above, nor
increase the obligation of such other Lender. Whenever any Lender has made
payments to the Issuing Bank in respect of any reimbursement obligation for any
Letter of Credit, such Lender shall be entitled to share ratably, based on its
Commitment Percentage, in all payments and collections thereafter received on
account of such reimbursement obligation.
(t) Whenever the Borrowers desire that the Issuing Bank issue a
Letter of Credit (or the amendment, renewal or extension of an outstanding
Letter of Credit), the Lead Borrower shall give to the Issuing Bank and the
Administrative Agent at least two Business Days' prior written (including
telegraphic, telex, facsimile or cable communication) notice (or such shorter
period as may be agreed upon in writing by the Issuing Bank and the Lead
Borrower) specifying the date on which the proposed Letter of Credit is to be
issued, amended, renewed or extended (which shall be a Business Day), the stated
amount of the Letter of Credit so requested, the expiration date of such Letter
of Credit, the name and address of the beneficiary thereof, and the provisions
thereof. If requested by the Issuing Bank, the Borrowers shall also submit a
letter of credit application on the Issuing Bank's standard form in connection
with any request for the issuance, amendment, renewal or extension of a Letter
of Credit.
37
(u) The obligations of the Borrowers to reimburse the Issuing Bank
for any L/C Disbursement shall be unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation (it being understood that any such
payment by the Borrowers shall be without prejudice to, and shall not constitute
a waiver of, any rights the Borrowers might have or might acquire as a result of
the payment by the Issuing Bank of any draft or the reimbursement by the
Borrowers thereof): (i) any lack of validity or enforceability of any Letter of
Credit; (ii) the existence of any claim, setoff, defense or other right which
the Borrowers may have at any time against a beneficiary of any Letter of Credit
or against any of the Lenders, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction; (iii) any draft,
demand, certificate or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; (iv) payment by the
Issuing Bank of any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit; (v) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, that might, but for the provisions of this
Section, constitute a legal or equitable discharge of, or provide a right of
setoff against, the Borrowers' obligations hereunder; or (vi) the fact that any
Event of Default shall have occurred and be continuing. None of the
Administrative Agent, the Lenders, the Issuing Bank or any of their Affiliates
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of the Issuing Bank.
Nothing in this Section 2.07(i) shall be construed to excuse the Issuing Bank
from liability to the Borrowers to the extent of any direct damages (as opposed
to consequential damages, claims in respect of which are hereby waived by the
Borrowers to the extent permitted by applicable law) suffered by the Borrowers
that are caused by the Issuing Bank's failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of the Issuing Bank, the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented that appear on their
face to be in compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(v) If any Event of Default shall occur and be continuing, on the
Business Day that the Borrowers receive notice from the Administrative Agent or
the Required Lenders demanding the deposit of cash collateral pursuant to this
paragraph, the Borrowers shall deposit in the Cash Collateral Account an amount
in cash equal to 103% of the Letter of Credit Outstandings as of such date plus
any accrued and unpaid interest thereon. Each such deposit shall be held by the
Collateral Agent as collateral for the payment and performance of the
Obligations of the
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Borrowers under this Agreement. The Collateral Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
Cash Collateral Account. Other than any interest earned on the investment of
such deposits, which investments shall be made at the option and sole discretion
of the Collateral Agent at the request of the Borrowers and at the Borrowers'
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such Cash
Collateral Account shall be applied by the Collateral Agent to reimburse the
Issuing Bank for payments on account of drawings under Letters of Credit for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrowers for
the Letter of Credit Outstandings at such time or, if the Loans have matured or
the maturity of the Loans has been accelerated, be applied to satisfy other
Obligations of the Borrowers under this Agreement.
SECTION 2.08 Settlements Amongst Lenders
(w) The Swingline Lender may (but shall not be obligated to), at
any time, on behalf of the Borrowers (which hereby authorize the Swingline
Lender to act in their behalf in that regard) request the Administrative Agent
to cause the Lenders to make a Loan (which shall be an Base Rate Loan) in an
amount equal to such Lender's Commitment Percentage of the outstanding amount of
Swingline Loans made in accordance with Section 2.06, which request may be made
regardless of whether the conditions set forth in Article IV have been
satisfied. Upon such request, each Lender shall make available to the
Administrative Agent the proceeds of such Loan which proceeds shall be paid to
the Swingline Lender to be applied in reduction of the Swingline Loans. If the
Swingline Lender requires a Loan to be made by the Lenders and the request
therefor is received prior to 12:00 Noon, Boston time, on a Business Day, such
transfers shall be made in immediately available funds no later than 3:00 p.m.,
Boston time, that day; and, if the request therefor is received after 12:00
Noon, Boston time, then no later than 3:00 p.m., Boston time, on the next
Business Day. The obligation of each Lender to transfer such funds is
irrevocable, unconditional and without recourse to or warranty by the
Administrative Agent or the Swingline Lender. If and to the extent any Lender
shall not have so made its transfer to the Administrative Agent, such Lender
agrees to pay to the Administrative Agent, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date such
amount is paid to the Administrative Agent at the Federal Funds Effective Rate.
(x) The amount of each Lender's Commitment Percentage of
outstanding Loans (excluding Swingline Loans) shall be computed weekly (or more
frequently in the Administrative Agent's discretion) and shall be adjusted
upward or downward based on all Loans (excluding Swingline Loans) and repayments
of Loans (excluding Swingline Loans) received by the Administrative Agent as of
3:00 p.m., Boston time, on the first Business Day following the end of the
period specified by the Administrative Agent (such date, the "Settlement Date").
(y) The Administrative Agent shall deliver to each of the Lenders
promptly after the Settlement Date a summary statement of the amount of
outstanding Loans (excluding Swingline Loans) for the period and the amount of
repayments received for the period. As reflected on the summary statement: (x)
the Administrative Agent shall transfer to each Lender its applicable
39
Commitment Percentage of repayments, and (y) each Lender shall transfer to the
Administrative Agent (as provided below), or the Administrative Agent shall
transfer to each Lender, such amounts as are necessary to insure that, after
giving effect to all such transfers, the amount of Loans made by each Lender
with respect to Loans (excluding Swingline Loans) shall be equal to such
Lender's applicable Commitment Percentage of Loans (excluding Swingline Loans)
outstanding as of such Settlement Date. If the summary statement requires
transfers to be made to the Administrative Agent by the Lenders and is received
prior to 12:00 Noon, Boston time, on a Business Day, such transfers shall be
made in immediately available funds no later than 4:00 p.m., Boston time, that
day; and, if received after 12:00 Noon, Boston time, then no later than 4:00
p.m., Boston time, on the next Business Day. The obligation of each Lender to
transfer such funds is irrevocable, unconditional and without recourse to or
warranty by the Administrative Agent. If and to the extent any Lender shall not
have so made its transfer to the Administrative Agent, such Lender agrees to pay
to the Administrative Agent, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Administrative Agent at the Federal Funds Effective Rate.
SECTION 2.09 Notes; Repayment of Loans.
(z) The Loans outstanding to each Lender (and to the Swingline
Lender, with respect to Swingline Loans) shall be evidenced by a Note duly
executed on behalf of the Borrowers, dated the Effective Date, in substantially
the form attached hereto as Exhibit B-1 or B-2, as applicable, payable to the
order of each such Lender (or the Swingline Lender, as applicable) in an
aggregate principal amount equal to such Lender's Commitment (or, in the case of
the Note evidencing the Swingline Loans, $12,500,000).
(aa) The outstanding principal balance of all Swingline Loans shall
be repaid on the earlier of the Termination Date or, on the date otherwise
requested by the Swingline Lender in accordance with the provisions of Section
2.08(a). The outstanding principal balance of all other Obligations shall be
payable on the Termination Date (subject to earlier repayment as provided
below). Each Note shall bear interest from the date thereof on the outstanding
principal balance thereof as set forth in this Article II. Each Lender is hereby
authorized by the Borrowers to endorse on a schedule attached to each Note
delivered to such Lender (or on a continuation of such schedule attached to such
Note and made a part thereof), or otherwise to record in such Lender's internal
records, an appropriate notation evidencing the date and amount of each Loan
from such Lender, each payment and prepayment of principal of any such Loan,
each payment of interest on any such Loan and the other information provided for
on such schedule; provided, however, that the failure of any Lender to make such
a notation or any error therein shall not affect the obligation of the Borrowers
to repay the Loans made by such Lender in accordance with the terms of this
Agreement and the applicable Notes.
SECTION 2.10 Interest on Loans.
(bb) Subject to Section 2.11, each Base Rate Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as applicable) at a rate per annum that shall be equal to
the then Alternate Base Rate, plus the Applicable Margin for Base Rate Loans.
40
(cc) Subject to Section 2.11, each Eurodollar Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal, during each Interest Period applicable
thereto, to the Adjusted LIBO Rate for such Interest Period, plus the Applicable
Margin for Eurodollar Loans.
(dd) Accrued interest on all Loans shall be payable in arrears on
each Interest Payment Date applicable thereto, at maturity (whether by
acceleration or otherwise), after such maturity on demand and (with respect to
Eurodollar Loans) upon any repayment or prepayment thereof (on the amount
prepaid).
SECTION 2.11 Default Interest.
Effective upon the occurrence of any Event of Default and at all times
thereafter while such Event of Default is continuing, at the option of the
Administrative Agent or upon the direction of the Required Lenders, interest
shall accrue on all outstanding Loans (including Swingline Loans) (after as well
as before judgment, as and to the extent permitted by law) at a rate per annum
equal to the rate (including the Applicable Margin for Loans) in effect from
time to time plus 2.00% per annum, and such interest shall be payable on demand.
SECTION 2.12 Certain Fees.
The Borrowers shall pay to the Administrative Agent, for the account of
the Administrative Agent, the fees set forth in the Fee Letter as and when
payment of such fees is due as therein set forth.
SECTION 2.13 Unused Commitment Fee.
Each Lender shall be paid the Line Fee at the times and in the manner
set forth below. The Borrowers shall pay to the Administrative Agent for the
account of the Lenders, a commitment fee (the "Commitment Fee") equal to 0.25%
per annum (on the basis of actual days elapsed in a year of 365 or 366 days, as
applicable) of the average daily balance of the Unused Commitment for each day
commencing on and including the Effective Date and ending on but excluding the
Termination Date. The Commitment Fee so accrued in any calendar quarter shall be
payable on the first Business Day of the immediately succeeding calendar
quarter, except that all Commitment Fees so accrued as of the Termination Date
shall be payable on the Termination Date. If the Commitment Fee actually paid by
the Borrowers is insufficient to pay the Line Fee due the Lenders, the
deficiency shall be paid to the Lenders by the Swingline Lender from its own
funds (and the Borrowers shall have no liability with respect thereto). The
Administrative Agent shall pay the Commitment Fee (and any amounts payable by
the Swingline Lender hereunder) to the Lenders based upon their pro rata share
of the aggregate Line Fee due to all Lenders; provided that for purposes of
calculating the pro rata share of any Person which is both the Swingline Lender
and a Lender, such Person's share shall be equal to the difference between (i)
the sum of such Person's Commitment, and (ii) the sum of (A) such Person's
Commitment Percentage of the principal amount of Loans then outstanding
(including the principal amount of Swingline Loans then outstanding), and (B)
such Person's Commitment Percentage of the then Letter of Credit Outstandings.
SECTION 2.14 Letter of Credit Fees.
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(ee) The Borrowers shall pay the Administrative Agent, for the
account of the Lenders, on the last day of each calendar quarter, in arrears, a
fee (each, a "Letter of Credit Fee") equal to the following per annum
percentages of the average face amount of the following categories of Letters of
Credit outstanding during the subject quarter:
(i) Standby Letters of Credit: The Applicable
Margin for Eurodollar Loans.
(ii) Commercial Letters of Credit: The Applicable
Margin for Eurodollar Loans minus 0.50%.
(iii) After the occurrence and during the
continuance of an Event of Default, at the option of the
Administrative Agent or upon the direction of the Required
Lenders, the Letter of Credit Fee shall be increased by an
amount equal to two percent (2%) per annum.
(ff) The Borrowers shall pay to the Administrative Agent, for the
account of the Issuing Bank, and in addition to all Letter of Credit Fees
otherwise provided for hereunder, such fronting fees and other fees and charges
in connection with the issuance, negotiation, settlement, amendment and
processing of each Letter of Credit issued by the Issuing Bank as are
customarily imposed by the Issuing Bank to account parties of comparable credit
quality from time to time in connection with letter of credit transactions.
SECTION 2.15 Nature of Fees.
All fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent, for the respective accounts of the
Administrative Agent, the Issuing Bank, and the Lenders, as provided herein.
Once paid, all fees shall be fully earned (absent manifest error) and shall not
be refundable under any circumstances.
SECTION 2.16 Termination or Reduction of Commitments.
(gg) Upon at least two Business Days' prior written notice to the
Administrative Agent, the Borrowers may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Commitments.
Each such reduction shall be in the amount of $5,000,000 or any integral
multiple thereof. Each such reduction or termination shall (i) be applied
ratably to the Commitments of each Lender provided that, on the Effective Date,
the Commitments of the Lenders shall be reduced from the amounts in the Existing
Agreement to the amounts set forth on Schedule 1.01 (which reductions will not
be on a pro rata basis), and (ii) be irrevocable when given. At the effective
time of each such reduction or termination, the Borrowers shall pay to the
Administrative Agent for application as provided herein (i) all Commitment Fees
accrued on the amount of the Commitments so terminated or reduced through the
date thereof, and (ii) any amount by which the Credit Extensions outstanding on
such date exceed the amount to which the Commitments are to be reduced effective
on such date, in each case pro rata based on the amount prepaid.
42
SECTION 2.17 Alternate Rate of Interest.
If prior to the commencement of any Interest Period for a Eurodollar
Borrowing:
(hh) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(ii) the Administrative Agent is advised by the Required Lenders
that the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Borrowing
Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any
Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made
as a Borrowing of Base Rate Loans.
SECTION 2.18 Conversion and Continuation of Loans.
The Lead Borrower on behalf of the Borrowers shall have the right at
any time, on three Business Days' prior irrevocable notice to the Administrative
Agent (which notice, to be effective, must be received by the Administrative
Agent not later than 2:00 p.m., Boston time, on the third Business Day preceding
the date of any conversion), (x) to convert any outstanding Borrowings of Loans
(but in no event Swingline Loans) of one Type (or a portion thereof) to a
Borrowing of Loans of the other Type or (y) to continue an outstanding Borrowing
of Eurodollar Loans for an additional Interest Period, subject to the following:
(jj) no Borrowing of Loans may be converted into, or continued as,
Eurodollar Loans at any time when an Event of Default has occurred and is
continuing (nothing contained herein being deemed to obligate the Borrowers to
incur Breakage Costs upon the occurrence of an Event of Default unless the
Obligations are accelerated);
(kk) if less than a full Borrowing of Loans is converted, such
conversion shall be made pro rata among the Lenders, as applicable, in
accordance with the respective principal amounts of the Loans comprising such
Borrowing held by such Lenders immediately prior to such refinancing;
(ll) the aggregate principal amount of Loans being converted into
or continued as Eurodollar Loans shall be in an integral of $500,000 and at
least $3,000,000;
(mm) each Lender shall effect each conversion by applying the
proceeds of its new Eurodollar Loan or Base Rate Loan, as the case may be, to
its Loan being so converted;
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(nn) the Interest Period with respect to a Borrowing of Eurodollar
Loans effected by a conversion or in respect to the Borrowing of Eurodollar
Loans being continued as Eurodollar Loans shall commence on the date of
conversion or the expiration of the current Interest Period applicable to such
continuing Borrowing, as the case may be;
(oo) a Borrowing of Eurodollar Loans may be converted only on the
last day of an Interest Period applicable thereto;
(pp) each request for a conversion or continuation of a Borrowing
of Eurodollar Loans which fails to state an applicable Interest Period shall be
deemed to be a request for an Interest Period of one month; and
(qq) no more than five (5) Borrowings of Eurodollar Loans may be
outstanding at any time.
If the Lead Borrower does not give notice to convert any Borrowing of Eurodollar
Loans, or does not give notice to continue, or does not have the right to
continue, any Borrowing as Eurodollar Loans, in each case as provided above,
such Borrowing shall automatically be converted to a Borrowing of Base Rate
Loans at the expiration of the then-current Interest Period. The Administrative
Agent shall, after it receives notice from the Lead Borrower, promptly give each
Lender notice of any conversion, in whole or part, of any Loan made by such
Lender.
SECTION 2.19 Mandatory Prepayment; Commitment Termination; Cash
Collateral.
The outstanding Obligations shall be subject to mandatory prepayment as
follows:
(rr) If at any time the amount of the Credit Extensions exceeds the
lower of (i) the then amount of the Total Commitment and (ii) the then amount of
the Borrowing Base, the Borrowers will immediately upon notice from the
Administrative Agent (A) prepay the Loans in an amount necessary to eliminate
such excess, and (B) if, after giving effect to the prepayment in full of all
outstanding Loans such excess has not been eliminated, deposit cash into the
Cash Collateral Account in an amount equal to 103% of the Letters of Credit
Outstanding.
(ss) The Loans shall be repaid daily in accordance with the
provisions of Sections 2.22(h) and 2.23 hereof.
(tt) Subject to the foregoing, outstanding Base Rate Loans shall be
prepaid before outstanding Eurodollar Loans are prepaid. Each partial prepayment
of Eurodollar Loans shall be in an integral multiple of $500,000. No prepayment
of Eurodollar Loans shall be permitted pursuant to this Section 2.19 other than
on the last day of an Interest Period applicable thereto, unless the Borrowers
simultaneously reimburse the Lenders for all "Breakage Costs" (as defined below)
associated therewith. In order to avoid such Breakage Costs, as long as no Event
of Default has occurred and is continuing, at the request of the Lead Borrower,
the Administrative Agent shall hold all amounts required to be applied to
Eurodollar Loans in the Cash Collateral Account and will apply such funds to the
applicable Eurodollar Loans at the end of the then pending Interest Period
therefor (provided that the foregoing shall in no way limit or restrict the
44
Agents' rights upon the subsequent occurrence of an Event of Default). No
partial prepayment of a Borrowing of Eurodollar Loans shall result in the
aggregate principal amount of the Eurodollar Loans remaining outstanding
pursuant to such Borrowing being less than $3,000,000. Any prepayment of the
Loans shall not permanently reduce the Commitments.
(uu) All amounts required to be applied to all Loans hereunder
(other than Swingline Loans) shall be applied ratably in accordance with each
Lender's Commitment Percentage.
(vv) Upon the Termination Date, the credit facility provided
hereunder shall be terminated in full and the Borrowers shall pay, in full and
in cash, all outstanding Loans and all other outstanding Obligations.
SECTION 2.20 Optional Prepayment of Loans; Reimbursement of Lenders.
(ww) The Borrowers shall have the right at any time and from time
to time to prepay outstanding Loans in whole or in part, (x) with respect to
Eurodollar Loans, upon at least two Business Days' prior written, telex or
facsimile notice to the Administrative Agent prior to 2:00 p.m., Boston time,
and (y) with respect to Base Rate Loans, on the same Business Day if written,
telex or facsimile notice is received by the Administrative Agent prior to 2:00
p.m., Boston time, subject to the following limitations:
(i) Subject to Section 2.19, all prepayments
shall be paid to the Administrative Agent for application,
first, to the prepayment of outstanding Swingline Loans,
second, to the prepayment of other outstanding Loans ratably
in accordance with each Lender's Commitment Percentage, and
third, to the funding of a cash collateral deposit in the Cash
Collateral Account in an amount equal to 103% of all Letter of
Credit Outstandings.
(ii) Subject to the foregoing, outstanding Base
Rate Loans shall be prepaid before outstanding Eurodollar
Loans are prepaid. Each partial prepayment of Eurodollar Loans
shall be in an integral multiple of $500,000. No prepayment of
Eurodollar Loans shall be permitted pursuant to this Section
2.20 other than on the last day of an Interest Period
applicable thereto, unless the Borrowers simultaneously
reimburse the Lenders for all "Breakage Costs" (as defined
below) associated therewith. No partial prepayment of a
Borrowing of Eurodollar Loans shall result in the aggregate
principal amount of the Eurodollar Loans remaining outstanding
pursuant to such Borrowing being less than $3,000,000.
(iii) Each notice of prepayment shall specify the
prepayment date, the principal amount and Type of the Loans to
be prepaid and, in the case of Eurodollar Loans, the Borrowing
or Borrowings pursuant to which such Loans were made. Each
notice of prepayment shall be irrevocable and shall commit the
Borrowers to prepay such Loan by the amount and on the date
stated therein. The Administrative Agent shall, promptly after
receiving notice from the Borrowers hereunder, notify each
Lender of the principal amount and Type of the Loans held by
such Lender which are to be prepaid, the prepayment date and
the manner of application of the prepayment.
45
(xx) The Borrowers shall reimburse each Lender on demand for any
loss incurred by it in the reemployment of the funds released (i) resulting from
any prepayment (for any reason whatsoever, including, without limitation,
conversion to Base Rate Loans or acceleration by virtue of, and after, the
occurrence of an Event of Default) of any Eurodollar Loan required or permitted
under this Agreement, if such Loan is prepaid other than on the last day of the
Interest Period for such Loan or (ii) in the event that after the Lead Borrower
delivers a notice of borrowing under Section 2.04 in respect of Eurodollar
Loans, such Loans are not made on the first day of the Interest Period specified
in such notice of borrowing for any reason other than a breach by such Lender of
its obligations hereunder or the delivery of any notice pursuant to Section
2.17. Such loss of any Lender shall be reimbursed by the Borrowers in the amount
as reasonably determined by such Lender equal to the excess, if any, of (A) the
amount of interest which would have accrued to such Lender on the amount so paid
or not borrowed at a rate of interest equal to the Adjusted LIBO Rate for such
Loan, for the period from the date of such payment or failure to borrow to and
excluding the last day (x) in the case of a payment or refinancing with Base
Rate Loans other than on the last day of the Interest Period for such Loan, of
the then current Interest Period for such Loan or (y) in the case of such
failure to borrow, of the Interest Period for such Loan which would have
commenced on the date of such failure to borrow, over (B) the amount of interest
which would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the London interbank
market (collectively, "Breakage Costs"). Any Lender demanding reimbursement for
such loss shall deliver to the Borrowers from time to time one or more
certificates setting forth the amount of such loss as determined by such Lender
and setting forth in reasonable detail the manner in which such amount was
determined.
(yy) In the event the Borrowers fail to prepay any Loan on the date
specified in any prepayment notice delivered pursuant to Section 2.20(a), the
Borrowers on demand by any Lender shall pay to the Administrative Agent for the
account of such Lender any amounts required to compensate such Lender for any
loss incurred by such Lender as a result of such failure to prepay, including,
without limitation, any loss, cost or expenses incurred by reason of the
acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment. Any Lender demanding
such payment shall deliver to the Borrowers from time to time one or more
certificates setting forth the amount of such loss as determined by such Lender
and setting forth in reasonable detail the manner in which such amount was
determined.
(zz) Whenever any partial prepayment of Loans is to be applied to
Eurodollar Loans, such Eurodollar Loans shall be prepaid in the chronological
order of their Interest Payment Dates.
SECTION 2.21 Maintenance of Loan Account; Statements of Account.
(aaa) The Administrative Agent shall maintain an account on its
books in the name of the Borrowers (the "Loan Account") which will reflect (i)
all Swingline Loans and all loans and advances made by the Lenders to the
Borrowers or for the Borrowers' account, including the
46
Loans, (ii) all L/C Disbursements, fees and interest that have become payable as
herein set forth, and (iii) any and all other Obligations that have become
payable.
(bbb) The Loan Account will be credited with all amounts received by
the Administrative Agent from the Borrowers or from others for the Borrowers'
account, including all amounts received in the FRF Concentration Account from
the Blocked Account Banks, and the amounts so credited shall be applied as set
forth in Sections 2.23(a) and (b). After the end of each month, the
Administrative Agent shall send to the Borrowers a statement accounting for the
charges, loans, advances, prepayments, and other transactions occurring among
and between the Administrative Agent, the Lenders and the Borrowers during that
month. The monthly statements shall, absent manifest error, be an account
stated, which is final, conclusive and binding on the Borrowers.
SECTION 2.22 Cash Receipts.
(ccc) Annexed hereto as Schedule 2.22(a) is a list of all present
DDAs, which Schedule includes, with respect to each depository (i) the name and
address of that depository; (ii) the account number(s) maintained with such
depository; and (iii) to the extent known, a contact person at such depository.
(ddd) Annexed hereto as Schedule 2.22(b) is a list describing all
arrangements to which any Borrower is a party with respect to the payment to any
Borrower of the proceeds of all credit card charges for sales by any Borrower.
(eee) On or prior to the Effective Date, the Borrowers shall (i)
deliver to the Administrative Agent notifications executed on behalf of the
Borrowers to each depository institution with which any DDA is maintained in
form satisfactory to the Administrative Agent, of the Administrative Agent's
interest in such DDA (each, a "DDA Notification"), and (ii) deliver to the
Administrative Agent notifications executed on behalf of the Borrowers to each
of the Borrower's credit card clearinghouses and processors of notice in form
satisfactory to the Administrative Agent, (each, a "Credit Card Notification"),
and (iii) entered into agency agreements with the banks maintaining the deposit
accounts identified on Schedule 2.22(c) (collectively, the "Blocked Accounts"),
which agreements (the "Blocked Account Agreements") shall be in form and
substance satisfactory to the Administrative Agent. The DDA Notifications,
Credit Card Notifications and Blocked Account Agreements shall require, after
the occurrence and during the continuance of a Default or Cash Control Event,
the sweep on each Business Day of all available cash receipts from the sale of
Inventory and other assets, all collections of Accounts, and all other cash
payments received by the Borrowers from any Person or from any source or on
account of any sale or other transaction or event, including, without
limitation, any Prepayment Event (all such cash receipts and collections, "Cash
Receipts"), to a concentration account maintained by the Collateral Agent at
Fleet (the "FRF Concentration Account"). In that regard, after the occurrence,
and during the continuance, of a Default or Cash Control Event, the Borrowers
shall cause the ACH or wire transfer to a Blocked Account or to the FRF
Concentration Account, no less frequently than daily (and whether or not there
is then an outstanding balance in the Loan Account) of (A) the then contents of
each DDA, each such transfer to be net of any minimum balance, not to exceed
$10,000, as may be required to be
47
maintained in the subject DDA by the bank at which such DDA is maintained; and
(B) the proceeds of all credit card charges not otherwise provided for pursuant
hereto, and (C) all other Cash Receipts. Further, whether or not any Obligations
are then outstanding, after the occurrence and during the continuance of a
Default or Cash Control Event, the Borrowers shall cause the ACH or wire
transfer to the FRF Concentration Account, no less frequently than daily, of the
then entire ledger balance of each Blocked Account, net of such minimum balance,
not to exceed $10,000, as may be required to be maintained in the subject
Blocked Account by the bank at which such Blocked Account is maintained. In the
event that, notwithstanding the provisions of this Section 2.22, after the
occurrence and during the continuance of a Default or Cash Control Event, the
Borrowers receive or otherwise have dominion and control of any such proceeds or
collections, such proceeds and collections shall be held in trust by the
Borrowers for the Administrative Agent and shall not be commingled with any of
the Borrowers' other funds or deposited in any account of any Borrower other
than as instructed by the Administrative Agent.
(fff) The Borrowers shall, after the occurrence and during the
continuance of a Default or Cash Control Event, accurately report to the
Administrative Agent all amounts deposited in the Blocked Accounts to ensure the
proper transfer of funds as set forth above. If at any time other than the times
set forth above any cash or cash equivalents owned by the Borrowers are
deposited to any account, or held or invested in any manner, otherwise than in a
Blocked Account that is subject to a Blocked Account Agreement, the
Administrative Agent shall require the Borrowers to close such account and have
all funds therein transferred to an account maintained by the Administrative
Agent at Fleet and all future deposits made to a Blocked Account which is
subject to a Blocked Account Agreement.
(ggg) The Borrowers may (i) close DDAs or Blocked Accounts and/or
open new DDAs or Blocked Accounts, subject to the execution and delivery to the
Administrative Agent of appropriate DDA Notifications or Blocked Account
Agreements (unless expressly waived by the Administrative Agent) consistent with
the provisions of this Section 2.22 and otherwise satisfactory to the
Administrative Agent, and (ii) enter into any agreements with credit card
processors subject to the execution and delivery to the Administrative Agent of
appropriate Credit Card Notifications (unless expressly waived by the
Administrative Agent) consistent with the provisions of this Section 2.22 and
otherwise satisfactory to the Administrative Agent. Unless the Lead Borrower
shall have notified the Administrative Agent and complied with the provisions of
the immediately preceding sentence, the Borrowers may not maintain any bank
accounts or enter into any agreements with credit card processors other than the
ones expressly contemplated herein.
(hhh) The Borrowers may also maintain with the Administrative Agent
at Fleet one or more disbursement accounts (the "Fleet Disbursement Accounts")
to be used by the Borrowers for disbursements and payments (including payroll)
in the ordinary course of business or as otherwise permitted hereunder.
(iii) The FRF Concentration Account is, and shall remain, under the
sole dominion and control of the Collateral Agent. Each Borrower acknowledges
and agrees that (i) such Borrower has no right of withdrawal from the FRF
Concentration Account, (ii) the funds on deposit in the FRF Concentration
Account shall continue to be collateral security for all of the
48
Obligations and (iii) the funds on deposit in the FRF Concentration Account
shall be applied as provided in Section 2.23(a).
(jjj) So long as (i) no Default has occurred and is continuing, and
(ii) no Cash Control Event has occurred and is continuing, daily, the Borrowers
may direct, and shall have sole control over, the manner of disposition of its
funds in the DDA Accounts and Blocked Accounts. Effective upon notice to the
Lead Borrower from the Collateral Agent (x) after the occurrence and during the
continuance of a Default or (y) in the event of a Cash Control Event and during
the continuance thereof (which notice may be given by telephone if promptly
confirmed in writing), the FRF Concentration Account will, without any further
action on the part of any Borrower or the Collateral Agent convert into a closed
account under the exclusive dominion and control of the Collateral Agent in
which funds are held subject to the rights of the Collateral Agent hereunder. In
such event, all amounts in the FRF Concentration Account and all other Cash
Receipts from time to time may be applied to the Obligations in such order and
manner as provided in Section 2.23 hereof, and the Administrative Agent may, in
its discretion, but shall not be obligated to, transfer any amounts in the FRF
Concentration Account to the Fleet Disbursement Accounts.
SECTION 2.23 Application of Payments.
(kkk) Subject to the provisions of Section 2.22, all amounts
received in the FRF Concentration Account from any source, including the Blocked
Account Banks, shall be applied, on the day immediately following receipt, in
the following order: first, to pay interest due and payable on Credit Extensions
and to pay fees and expense reimbursements and indemnification then due and
payable to the Administrative Agent, FSI, the Issuing Bank, the Collateral
Agent, and the Lenders; second to repay outstanding Swingline Loans; third, to
repay other outstanding Loans that are Base Rate Loans and all outstanding
reimbursement obligations under Letters of Credit; fourth, to repay outstanding
Loans that are Eurodollar Loans and all Breakage Costs due in respect of such
repayment pursuant to Section 2.20(b) or, at the Borrowers' option (if no Event
of Default has occurred and is then continuing), to fund a cash collateral
deposit to the Cash Collateral Account sufficient to pay, and with direction to
pay, all such outstanding Eurodollar Loans on the last day of the then-pending
Interest Period therefor; fifth if any Event of Default has occurred and is
continuing, to fund a cash collateral deposit in the Cash Collateral Account in
an amount equal to 103% of all Letter of Credit Outstandings; sixth, to pay all
other Obligations that are then outstanding and payable. If all Obligations are
paid, any excess amounts shall be deposited in a separate cash collateral
account, and as long as no Event of Default then exists, shall be promptly
released to the Borrowers and shall be utilized by the Borrowers prior to any
further Loans being made. Any other amounts received by the Administrative
Agent, the Issuing Bank, the Collateral Agent, or any Lender as contemplated by
Section 2.22 shall also be applied in the order set forth above in this Section
2.23.
(lll) All credits against the Obligations shall be conditioned upon
final payment to the Administrative Agent of the items giving rise to such
credits and shall be subject to one (1) Business Day's clearance and collection.
If any item deposited to the FRF Concentration Account and credited to the Loan
Account is dishonored or returned unpaid for any reason, whether or not such
return is rightful or timely, the Administrative Agent shall have the right to
49
reverse such credit and charge the amount of such item to the Loan Account and
the Borrowers shall indemnify the Administrative Agent, the Collateral Agent,
the Issuing Bank and the Lenders against all claims and losses resulting from
such dishonor or return.
SECTION 2.24 Increased Costs.
(a) If any Change in Law shall:
(ii) impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended
by, any Lender or any holding company of any Lender (except
any such reserve requirement reflected in the Adjusted LIBO
Rate) or the Issuing Bank; or
(iii) impose on any Lender or the Issuing Bank or
the London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender or any
Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrowers will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's or the Issuing Bank's capital or on
the capital of such Lender's or the Issuing Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in Letters
of Credit held by, such Lender, or the Letters of Credit issued by the Issuing
Bank, to a level below that which such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company could have achieved but for such
Change in Law (taking into consideration such Lender's or the Issuing Bank's
policies and the policies of such Lender's or the Issuing Bank's holding company
with respect to capital adequacy), then from time to time the Borrowers will pay
to such Lender or the Issuing Bank, as the case may be, such additional amount
or amounts as will compensate such Lender or the Issuing Bank or such Lender's
or the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as the case may be, as specified in paragraph (a)
or (b) of this Section and setting forth in reasonable detail the manner in
which such amount or amounts were determined shall be delivered to the Borrowers
and shall be conclusive absent manifest error. The Borrowers shall pay such
Lender or the Issuing Bank, as the case may be, the amount shown as due on any
such certificate within ten (10) Business Days after receipt thereof.
(d) Failure or delay on the part of any Lender or the
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's or the
50
Issuing Bank's right to demand such compensation, provided that no Lender or
Issuing Bank shall be entitled to such compensation in connection with matters
that arose more than 90 days prior to the date such Lender or Issuing Bank
notifies the Lead Borrower of such matters.
SECTION 2.25 Change in Legality.
(a) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (x) any Change in Law shall make it unlawful for
a Lender to make or maintain a Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to a Eurodollar Loan or (y) at
any time any Lender determines that the making or continuance of any of its
Eurodollar Loans has become impracticable as a result of a contingency occurring
after the date hereof which adversely affects the London interbank market or the
position of such Lender in the London interbank market, then, by written notice
to the Borrowers, such Lender may (i) declare that Eurodollar Loans will not
thereafter be made by such Lender hereunder, whereupon any request by the
Borrowers for a Eurodollar Borrowing shall, as to such Lender only, be deemed a
request for an Base Rate Loan unless such declaration shall be subsequently
withdrawn; and (ii) require that all outstanding Eurodollar Loans made by it be
converted to Base Rate Loans, in which event all such Eurodollar Loans shall be
automatically converted to Base Rate Loans as of the effective date of such
notice as provided in paragraph (b) below. In the event any Lender shall
exercise its rights under clause (i) or (ii) of this paragraph (a), all payments
and prepayments of principal which would otherwise have been applied to repay
the Eurodollar Loans that would have been made by such Lender or the converted
Eurodollar Loans of such Lender shall instead be applied to repay the Base Rate
Loans made by such Lender in lieu of, or resulting from the conversion of, such
Eurodollar Loans.
(b) For purposes of this Section 2.25, a notice to the
Borrowers by any Lender pursuant to paragraph (a) above shall be effective, if
lawful, and if any Eurodollar Loans shall then be outstanding, on the last day
of the then-current Interest Period; and otherwise, if lawful, such notice shall
be effective on the date of receipt by the Borrowers.
SECTION 2.26 Payments; Sharing of Setoff.
(a) The Borrowers shall make each payment required to be
made by it hereunder or under any other Loan Document (whether of principal,
interest, fees or reimbursement of drawings under Letters of Credit, or of
amounts payable under Sections 2.20(b), 2.24 or 2.25, or otherwise) prior to
2:00 p.m., Boston time, on the date when due, in immediately available funds,
without setoff or counterclaim. Any amounts received after such time on any date
may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, except payments to be
made directly to the Issuing Bank or Swingline Lender as expressly provided
herein and except that payments pursuant to Sections 2.20(b), 2.24, 2.27 and
9.03 shall be made directly to the Persons entitled thereto and payments
pursuant to other Loan Documents shall be made to the Persons specified therein.
The Administrative Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, except with respect to Eurodollar Borrowings, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable for
the period of such extension. All payments under each Loan Document shall be
made in dollars.
51
(b) All funds received by and available to the
Administrative Agent to pay principal, unreimbursed drawings under Letters of
Credit, interest and fees then due hereunder, shall be applied in accordance
with the provisions of Section 2.23(a) hereof or Section 6.02 of the Security
Agreement or the Facility Guarantors' security agreement, as applicable, ratably
among the parties entitled thereto in accordance with the amounts of principal,
unreimbursed drawings under Letters of Credit, interest, and fees then due to
such respective parties. If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed drawings under Letters of Credit, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal and unreimbursed drawings under
Letters of Credit then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of principal and unreimbursed drawings under
Letters of Credit then due to such parties.
(c) If any Lender shall, by exercising any right of
setoff or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of its Loans or participations in drawings under Letters
of Credit or Swingline Loans resulting in such Lender's receiving payment of a
greater proportion of the aggregate amount of its Loans and participations in
drawings under Letters of Credit and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans and participations in drawings under Letters of
Credit and Swingline Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in drawings under Letters of Credit
and Swingline Loans, provided that (i) if any such participations are purchased
and all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrowers pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in drawings under Letters of
Credit to any assignee or participant, other than to the Borrowers or any
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrowers consent to the foregoing and agree, to the extent they may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrowers rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrowers in the amount
of such participation.
(d) Unless the Administrative Agent shall have received
notice from the Borrowers prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrowers will not make such payment, the Administrative
Agent may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
if the Borrowers have not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the
52
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.
(e) If any Lender shall fail to make any payment required
to be made by it pursuant to this Agreement, then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender's obligations under this Agreement until all such
unsatisfied obligations are fully paid.
SECTION 2.27 Taxes.
(a) Any and all payments by or on account of any
obligation of the Borrowers hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes, provided that if the Borrowers shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrowers shall make such deductions and (iii) the Borrowers
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes
to the relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify the Administrative
Agent, each Lender and the Issuing Bank, within 10 Business Days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by the Administrative Agent, such Lender or the Issuing Bank, as the case
may be, on or with respect to any payment by or on account of any obligation of
the Borrowers hereunder or under any other Loan Document (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrowers by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank setting forth in reasonable detail the manner in which such amount was
determined, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrowers to a Governmental Authority,
the Borrowers shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption
from or reduction in withholding tax shall deliver to the Borrowers and the
Administrative Agent two copies of either United States Internal Revenue Service
Form W8-BEN, or, in the case of a Foreign Lender's claiming exemption from or
reduction in U.S. Federal withholding tax under Section 871(h) or
53
881(c) of the Code with respect to payments of "portfolio interest", a Form
W-8ECI, or any subsequent versions thereof or successors thereto (and, if such
Foreign Lender delivers a Form W-8ECI, a certificate representing that such
Foreign Lender is not a bank for purposes of Section 881(c) of the Code, is not
a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of the Borrowers and is not a controlled foreign corporation related to
the Borrowers (within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Foreign Lender claiming complete exemption
from or reduced rate of, U.S. Federal withholding tax on payments by the
Borrowers under this Agreement and the other Loan Documents. Such forms shall be
delivered by each Foreign Lender on or before the date it becomes a party to
this Agreement (or, in the case of a transferee that is a participation holder,
on or before the date such participation holder becomes a transferee hereunder)
and on or before the date, if any, such Foreign Lender changes its applicable
lending office by designating a different lending office (a "New Lending
Office"). In addition, each Foreign Lender shall deliver such forms promptly
upon the obsolescence or invalidity of any form previously delivered by such
Foreign Lender. Notwithstanding any other provision of this Section 2.27(e), a
Foreign Lender shall not be required to deliver any form pursuant to this
Section 2.27(e) that such Foreign Lender is not legally able to deliver.
(f) The Borrowers shall not be required to indemnify any
Foreign Lender or to pay any additional amounts to any Foreign Lender in respect
of U.S. Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that the obligation to pay such additional amounts would not have arisen
but for a failure by such Foreign Lender to comply with the provisions of
paragraph (e) above. Should a Lender become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrowers shall, at such
Lender's expense, take such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.
SECTION 2.28 Security Interests in Collateral.
To secure their Obligations under this Agreement and the other Loan
Documents, the Borrowers shall grant to the Collateral Agent, for its benefit
and the ratable benefit of the other Secured Parties, a first-priority security
interest in all of the Collateral pursuant hereto and to the Security Documents
(subject to Permitted Encumbrances having priority over the Lien of the
Collateral Agent by operation of law).
SECTION 2.29 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section
2.24, or if the Borrowers are required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.27, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 2.24 or 2.27,
as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment;
provided, however, that the Borrowers shall not be liable for such costs and
expenses of a Lender requesting compensation if (i) such Lender becomes a party
to this Agreement on a date after the Effective Date and (ii) the relevant
Change in Law occurs on a date prior to the date such Lender becomes a party
hereto.
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(b) If any Lender requests compensation under Section
2.24, or if the Borrowers are required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.27, or if any Lender defaults in its obligation to fund Loans
hereunder, then the Borrowers may, at their sole expense and effort, upon notice
to such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.05), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment), provided that (i) the
Borrowers shall have received the prior written consent of the Administrative
Agent, the Issuing Bank and Swingline Lender, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in
unreimbursed drawings under Letters of Credit and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrowers (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.24 or payments required to be made pursuant to Section 2.27, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrowers to require such assignment and delegation cease to
apply.
ARTICLE III
Representations and Warranties
Each Loan Party represents and warrants to the Agents and the Lenders
that:
SECTION 3.01 Organization; Powers. Each Loan Party is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
SECTION 3.02 Authorization; Enforceability. The transactions
contemplated hereby and by the other Loan Documents to be entered into by each
Loan Party are within such Loan Party's corporate powers and have been duly
authorized by all necessary corporate and, if required, stockholder action. This
Agreement has been duly executed and delivered by each Loan Party that is a
party hereto and constitutes, and each other Loan Document to which any Loan
Party is a party, when executed and delivered by such Loan Party will
constitute, a legal, valid and binding obligation of such Loan Party (as the
case may be), enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03 Governmental Approvals; No Conflicts. The transactions to
be entered into pursuant to the Loan Documents (a) do not require any consent or
approval of, registration
55
or filing with, or any other action by, any Governmental Authority, except for
such as have been obtained or made and are in full force and effect and except
filings and recordings necessary to perfect Liens created under the Loan
Documents, (b) will not violate any applicable law or regulation or the charter,
by-laws or other organizational documents of any Loan Party or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Loan Party or its
assets, or give rise to a right thereunder to require any payment to be made by
any Loan Party, and (d) will not result in the creation or imposition of any
Lien on any asset of any Loan Party, except Liens created under the Loan
Documents.
SECTION 3.04 Financial Condition. The Lead Borrower has heretofore
furnished to the Lenders the financial statements for the Lead Borrower and its
Subsidiaries pursuant to the requirements of Section 5.01(a) and 5.01(c),
certified by a Financial Officer of the Borrowers. Such financial statements
present fairly, in all material respects, the financial position, results of
operations and cash flows of the Lead Borrower and its Subsidiaries as of the
dates and for the periods specified in such Sections in accordance with GAAP,
subject to year end audit adjustments and the absence of footnotes. Since the
date of such financial statements, there have been no changes in the assets,
liabilities, financial condition, or business of the Borrowers other than
changes in the ordinary course of business, the effect of which could not
reasonably be expected to have a Material Adverse Effect.
SECTION 3.05 Properties. (a) Except as disclosed in Schedules
3.05(c)(i) and 3.05(c)(ii), each Loan Party has good title to, or valid
leasehold interests in, all its real and personal property material to its
business, except for defects which could not reasonably be expected to have a
Material Adverse Effect.
(b) Each Loan Party owns, or is licensed to use, all
trademarks, trade names, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Loan Parties does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
(c) Schedule 3.05(c)(i) sets forth the address (including
county) of all Real Estate that is owned by the Loan Parties as of the Effective
Date, together with a list of the holders of any mortgage or other Lien thereon.
Schedule 3.05(c)(ii) sets forth the address (including county) of all Real
Estate that is leased by the Loan Parties as of the Effective Date, together
with a list of the holders of any mortgage or other Lien thereon. The
information on such Schedule shall be updated and supplemented from time to time
as required pursuant to the provisions of Section 5.03 hereof.
SECTION 3.06 Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Borrower, threatened
against or affecting any Loan Party (i) which could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than those set forth on Schedule 3.06) or (ii) that involve any of the Loan
Documents. The information on such Schedule 3.06 shall be updated and
supplemented from time to time as required pursuant to the provisions of Section
5.02 hereof.
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(b) Except for the matters set forth on Schedule 3.06 and
except with respect to any other matters that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect, no Loan
Party (i) has failed to comply with any Environmental Law or to obtain, maintain
or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no
change in the status of the matters set forth on Schedule 3.06 that,
individually or in the aggregate, has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
SECTION 3.07 Compliance with Laws and Agreements. Each Loan Party is in
compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, material agreements and
other instruments binding upon it or its property, and except where the failure
to do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. No Default has occurred and is continuing.
SECTION 3.08 Investment and Holding Company Status. No Loan Party 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 3.09 Taxes. Each Loan Party has timely filed or caused to be
filed all tax returns and reports required to have been filed and has paid or
caused to be paid all taxes required to have been paid by it, except (a) taxes
that are being contested in good faith by appropriate proceedings, for which
such Loan Party has set aside on its books adequate reserves, and as to which no
Lien has arisen, or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10 ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $500,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $1,000,000 the fair market value of
the assets of all such underfunded Plans.
SECTION 3.11 Disclosure. The Borrowers have disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which any
Loan Party is subject, and all other matters known to any of them, that,
individually or in the aggregate, could
57
reasonably be expected to result in a Material Adverse Effect. None of any of
the reports, financial statements, certificates or other information furnished
by or on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or any other Loan Document or
delivered hereunder or thereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
SECTION 3.12 Subsidiaries. Schedule 3.12 sets forth the name of, and
the ownership interest of each Loan Party in each Subsidiary as of the Effective
Date. The Loan Parties are not party to any joint venture, general or limited
partners of a general or limited partnership, or members of a limited liability
company, or any other similar business ventures or entities. The information on
such Schedule shall be updated and supplemented from time to time as required
pursuant to the provisions of Section 5.12 hereof.
SECTION 3.13 Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of the Borrowers and their Subsidiaries as
of the Effective Date. As of the Effective Date, all premiums in respect of such
insurance that are due and payable have been paid. The information on such
Schedule shall be updated and supplemented from time to time as required
pursuant to the provisions of Section 5.07 hereof.
SECTION 3.14 Labor Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against any Loan Party pending or, to the
knowledge of the Borrowers, threatened. The hours worked by and payments made to
employees of the Loan Parties 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 to the extent that any such violation could reasonably
be expected to have a Material Adverse Effect. All payments due from any Loan
Party, or for which any claim may be made against any Loan Party, 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 such member. The consummation of
the transactions contemplated by the Loan Documents 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 any Loan Party is bound. The
representations set forth herein shall be updated and supplemented from time to
time as required pursuant to the provisions of Section 5.02 hereof.
SECTION 3.15 Security Documents. The Security Documents create in favor
of the Collateral Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Collateral, as applicable,
and the Security Documents constitute the creation of a fully perfected first
priority Lien on, and security interest, in, all right, title and interest of
the Loan Parties thereunder in such Collateral, in each case prior and superior
in right to any other Person (except for Permitted Encumbrances having priority
over the Lien of the Collateral Agent pursuant to operation of law).
SECTION 3.16 Federal Reserve Regulations. (a) No Loan Party is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of buying or carrying Margin Stock.
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(b) No part of the proceeds of any Loan or any Letter of
Credit will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to buy or carry Margin Stock or to extend credit
to others for the purpose of buying or carrying Margin Stock or to refund
indebtedness originally incurred for such purpose or (ii) for any purpose that
entails a violation of, or that is inconsistent with, the provisions of the
Regulations of the Board, including Regulation U or X.
(c) Less than 25% of the assets of the Borrowers on a
consolidated basis consist of Margin Stock.
SECTION 3.17 Solvency. Each of the Loan Parties is Solvent. No transfer
of property is being made by any Loan Party and no obligation is being incurred
by any Loan Party in connection with the transactions contemplated by this
Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of any Loan Party.
ARTICLE IV
Conditions
SECTION 4.01 Effective Date. This Agreement shall become effective upon
the satisfaction (or waiver by the Administrative Agent) of the following
conditions precedent:
(a) The Agents (or their counsel) shall have received from each
party hereto other than the Lenders either (i) a counterpart of this Agreement
and all other Loan Documents signed on behalf of such party or (ii) written
evidence satisfactory to the Agents (which may include telecopy transmission of
a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement and all other Loan Documents.
(b) The Agents shall have received a favorable written opinion
(addressed to each Agent and the Lenders and dated the Effective Date) of
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., counsel for the Loan Parties substantially in
the form of Exhibit C (and of counsel for the Canadian Operating Subsidiary),
and covering such other matters relating to the Loan Parties, the Loan Documents
or the transactions contemplated thereby as the Required Lenders shall
reasonably request. The Borrowers hereby request such counsel to deliver such
opinion.
(c) The Agents shall have received such documents and certificates
as the Agents or their counsel may reasonably request relating to the
organization, existence and good standing of each Loan Party, the authorization
of the transactions contemplated by the Loan Documents and any other legal
matters relating to the Borrowers, the Facility Guarantors, the Loan Documents
or the transactions contemplated thereby, all in form and substance satisfactory
to the Agents and their counsel.
(d) The Agents shall have received a certificate, reasonably
satisfactory in form and substance to the Agents, with respect to the solvency
of the Lead Borrower and its Subsidiaries on a consolidated basis as of the
Effective Date.
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(e) The consummation of the transactions contemplated hereby shall
not (a) violate any applicable law, statute, rule or regulation or (b) conflict
with, or result in a default or event of default under, and as defined in, any
material agreement of any Loan Party.
(f) All necessary consents and approvals to the transactions
contemplated hereby shall have been obtained and shall be satisfactory to the
Agents.
(g) There shall not be pending any litigation or other proceeding,
the result of which could reasonably be expected to have a Material Adverse
Effect.
(h) There shall not have occurred any default of any material
contract or agreement of any Loan Party.
(i) The Collateral Agent shall have received all documents and
instruments, including Uniform Commercial Code financing statements, required by
law or reasonably requested by the Collateral Agent to be filed, registered or
recorded to create or perfect the first priority Liens intended to be created
under the Loan Documents (subject to Permitted Encumbrances having priority over
the Lien of the Collateral Agent pursuant to operation of law) and all such
documents and instruments shall have been so filed (or provision made therefor),
registered or recorded to the satisfaction of the Collateral Agent.
(j) All fees due at or immediately after the Effective Date and
all costs and expenses incurred by the Agents in connection with the
establishment of the credit facility contemplated hereby (including the fees and
expenses of counsel to the Agents) shall have been paid in full.
(k) Intentionally Omitted.
(l) There shall have been delivered to the Administrative Agent
such additional instruments and documents as the Agents or counsel to the Agents
reasonably may require or request.
The Administrative Agent shall notify the Borrowers and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at
or prior to 12:00 noon, Boston time, on November 21, 2003, (and, in the event
such conditions are not so satisfied or waived, this Agreement shall terminate
at such time).
SECTION 4.02 Conditions Precedent to Each Loan and Each Letter of
Credit.
The obligation of the Lenders to make each Loan and of the Issuing Bank
to issue each Letter of Credit, is subject to the following conditions
precedent:
(m) Notice. The Administrative Agent shall have received a notice
with respect to such Borrowing or issuance, as the case may be, as required by
Article II.
(n) Representations and Warranties. All representations and
warranties contained in this Agreement and the other Loan Documents or otherwise
made in writing in connection
60
herewith or therewith shall be true and correct in all material respects on and
as of the date of each Borrowing or the issuance of each Letter of Credit
hereunder with the same effect as if made on and as of such date, other than
representations and warranties that relate solely to an earlier date.
(o) No Default. On the date of each Borrowing hereunder and the
issuance of each Letter of Credit, the Loan Parties shall be in compliance with
all of the terms and provisions set forth herein and in the other Loan Documents
to be observed or performed and no Default or Event of Default shall have
occurred and be continuing.
(p) Borrowing Base Certificate. The Administrative Agent shall
have received the timely delivery of the most recently required Borrowing Base
Certificate, with each such Borrowing Base Certificate including schedules as
required herein by the Administrative Agent.
The request by the Borrowers for, and the acceptance by the Borrowers of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in this Section 4.02
have been satisfied at that time and that after giving effect to such extension
of credit the Borrowers shall continue to be in compliance with the Borrowing
Base. The conditions set forth in this Section 4.02 are for the sole benefit of
the Administrative Agent and each Lender and may be waived by the Administrative
Agent in whole or in part without prejudice to the Administrative Agent or any
Lender.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all L/C
Disbursements shall have been reimbursed, each Loan Party covenants and agrees
with the Agents and the Lenders that:
SECTION 5.01 Financial Statements and Other Information. The Borrowers
will furnish to the Agents:
(a) within 90 days after the end of each fiscal year of the Lead
Borrower, its consolidated and consolidating balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end of
and for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, all audited (in the case only of such consolidated
statements) and reported on by independent public accountants of recognized
national standing (without a "going concern" or like qualification or exception
and without a qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the Lead
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of the Lead Borrower, (i) its consolidated balance sheet and related
statements of operations, stockholders'
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equity and cash flows, and a summary of all Capital Expenditures, as of the end
of and for such fiscal quarter and the elapsed portion of the fiscal year, all
certified by one of its Financial Officers as presenting in all material
respects the financial condition and results of operations of the Lead Borrower
and its consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year end audit adjustments and the
absence of footnotes, and (ii) the separate balance sheet and related statements
of operations, stockholders' equity and cash flows, and a summary of all Capital
Expenditures, as of the end of and for such fiscal quarter and the elapsed
portion of the fiscal year, for the Lead Borrower, all certified by one of its
Financial Officers as presenting in all material respects the financial
condition and results of operations of such Persons in accordance with GAAP
consistently applied, subject to normal year end audit adjustments and the
absence of footnotes;
(c) at any time that a Cash Control Event exists, within 30 days
after the end of each fiscal month of the Lead Borrower, (i) the financial
report customarily delivered by the Lead Borrower to its board of directors
entitled "Monthly Board Report", substantially in the form annexed hereto as
Schedule 5.01(c) and containing, at a minimum, a consolidated balance sheet and
related statements of operations, as of the end of and for such fiscal month and
the elapsed portion of the fiscal year, and (ii) a statement of cash flows for
(A) the Lead Borrower and its consolidated Subsidiaries, and (B) the Lead
Borrower for such month and the elapsed portion of the fiscal year;
(d) concurrently with any delivery of financial statements under
clause (a), (b), or (c) above, a certificate of a Financial Officer of the Lead
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, and (ii) setting forth reasonably detailed
calculations (A) with respect to the financial statements delivered pursuant to
Section 5.01(c), above, a calculation of the average Excess Availability for
purposes of determining the "Applicable Margin", and (B) demonstrating
compliance with Section 6.11, and (iii) stating whether any change in GAAP or in
the application thereof has occurred since the date of the Lead Borrower's
audited financial statements referred to in Section 3.04 and, if any such change
has occurred, specifying the effect of such change on the financial statements
accompanying such certificate;
(e) within thirty (30) days prior to the commencement of each
fiscal year of the Lead Borrower, a detailed consolidated budget by month for
such fiscal year (including a projected consolidated balance sheet and related
statements of projected operations and cash flow as of the end of and for such
fiscal year) and, promptly when available, any significant revisions of such
budget;
(f) within five (5) days after the end of each month, a
certificate in the form of Exhibit D (a "Borrowing Base Certificate") showing
the Borrowing Base as of the close of business on the last day of the
immediately preceding month, each such Certificate to be certified as complete
and correct on behalf of the Borrowers by a Financial Officer of the Lead
Borrower, provided, however, that as long as no Loans are outstanding and the
Letter of Credit Outstandings are less than $40,000,000, such Borrowing Base
Certificate shall be required to be furnished within five (5) days after the end
of each three month period (unless the Lead
62
Borrower requests a Loan during such period, in which event a Borrowing Base
Certificate, as of the last day of the month immediately preceding such request
shall be furnished prior to such Loan being made); and provided, further
however, if and so long as a Cash Control Event exists, such Borrowing Base
Certificate (showing the Borrowing Base as of the close of business on the last
day of the immediately preceding week) shall be furnished weekly on Wednesday of
each week;
(g) promptly after the same become publicly available, copies of
all so-called 10K and 10Q reports and other material reports, proxy statements
and other materials filed by any Loan Party with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, as the
case may be;
(h) promptly upon receipt thereof, copies of all reports submitted
to any Loan Party by independent certified public accountants in connection with
each annual, interim or special audit of the books of the Loan Parties or any of
their Subsidiaries made by such accountants, including any management letter
commenting on the Loan Parties' internal controls submitted by such accountants
to management in connection with their annual audit;
(i) the financial and collateral reports described on Schedule
5.01(i) hereto, at the times set forth in such Schedule;
(j) notice of any intended sale or other disposition of assets of
any Loan Party not in the ordinary course of business or incurrence of any
Indebtedness permitted hereunder, in either case, to the extent the proceeds
therefrom would exceed $20,000,000, at least fifteen (15) days prior to the date
of consummation such sale or disposition or incurrence of such Indebtedness; and
(k) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of any Loan Party, or compliance with the terms of any Loan Document, as the
Agents or any Lender may reasonably request.
SECTION 5.02 Notices of Material Events. The Borrowers will furnish to
the Administrative Agent, the Issuing Bank, the Collateral Agent, and each
Lender prompt written notice of the following:
(l) the occurrence of any Default or Event of Default;
(m) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or affecting any
Loan Party or any Affiliate thereof that could reasonably be expected to result
in a Material Adverse Effect;
(n) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect; and
63
(o) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
(p) any change in any Borrower's chief executive officer,
president, or chief financial officer.
(q) any failure by any Loan Party to pay rent at any of such Loan
Party's locations, which failure continues for more than ten (10) days following
the day on which such rent first came due.
(r) the discharge by any Borrower of its present independent
accountants or any withdrawal or resignation by such independent accountants.
(s) any material change in the business, operations, or financial
affairs of the Loan Parties taken as a whole.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Lead Borrower setting
forth the details of the event or development requiring such notice and, if
applicable, any action taken or proposed to be taken with respect thereto.
SECTION 5.03 Information Regarding Collateral. (a) The Lead Borrower
will furnish to the Agents prompt written notice of any change (i) in any Loan
Party's corporate name or in any trade name used to identify it in the conduct
of its business or in the ownership of its properties, (ii) in the location of
any Loan Party's chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by it
or any office or facility at which Collateral owned by it is located (including
the establishment of any such new office or facility), provided that,
notwithstanding the foregoing, the Lead Borrower shall only be obligated to
furnish a store listing quarterly within 45 days of the end of each fiscal
quarter; (iii) in any Loan Party's corporate structure or jurisdiction of
incorporation or formation, or (iv) in any Loan Party's Federal Taxpayer
Identification Number or organizational identification number assigned to it by
its state of organization. The Lead Borrower also agrees promptly to notify the
Agents if any material portion of the Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual
financial statements with respect to the preceding fiscal year pursuant to
clause (a) of Section 5.01, the Lead Borrower shall deliver to the Agents a
certificate of a Financial Officer of the Lead Borrower setting forth the
information required pursuant to Section 2 of the Perfection Certificate or
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Closing Date or the date of the most
recent certificate delivered pursuant to this Section.
SECTION 5.04 Existence; Conduct of Business. Each Loan Party will, and
will cause each of the Subsidiaries to, do or cause to be done all things
necessary to comply with its respective charter, certificate of incorporation,
articles of organization, and/or other organizational documents, as applicable;
and by-laws and/or other instruments which deal with corporate governance, and
to preserve, renew and keep in full force and effect its legal existence
64
and, except such as could not reasonably be expected to have a Material Adverse
Effect, the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business,
provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.03.
SECTION 5.05 Payment of Obligations. Each Loan Party will, and will
cause each of the Subsidiaries to, pay its Indebtedness and other obligations,
including tax liabilities, before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) such Loan Party or such Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP, (c) such contest effectively suspends collection of the contested
obligation and enforcement of any Lien securing such obligation and (d) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect. Nothing contained herein shall be deemed to
limit the rights of the Administrative Agent under Section 2.03(b) hereof.
SECTION 5.06 Maintenance of Properties. Each Loan Party will, and will
cause each of the Subsidiaries to, keep and maintain all property material to
the conduct of its business in good working order and condition, ordinary wear
and tear excepted and with the exception of storing closings and asset
dispositions permitted hereunder.
SECTION 5.07 Insurance. (a) Each Loan Party shall (i) maintain
insurance with financially sound and reputable insurers reasonably acceptable to
the Administrative Agent (or, to the extent consistent with prudent business
practice, a program of self-insurance approved by the Administrative Agent) on
such of its property and in at least such amounts and against at least such
risks as is customary with companies in the same or similar businesses operating
in the same or similar locations, including public liability insurance against
claims for personal injury or death occurring upon, in or about or in connection
with the use of any properties owned, occupied or controlled by it (including
the insurance required pursuant to the Security Documents); (ii) maintain such
other insurance as may be required by law; and (iii) furnish to the
Administrative Agent, upon written request, full information as to the insurance
carried.
(b) Fire and extended coverage policies maintained with
respect to any Collateral shall be endorsed or otherwise amended to include (i)
a non-contributing mortgage clause (regarding improvements to real property) and
lenders' loss payable clause (regarding personal property), in form and
substance satisfactory to the Collateral Agent, which endorsements or amendments
shall provide that the insurer shall pay all proceeds otherwise payable to the
Loan Parties under the policies directly to the Collateral Agent, (ii) a
provision to the effect that none of the Loan Parties, the Administrative Agent,
the Collateral Agent, or any other party shall be a coinsurer and (iii) such
other provisions as the Collateral Agent may reasonably require from time to
time to protect the interests of the Lenders. Commercial general liability
policies shall be endorsed to name the Collateral Agent as an additional
insured. Business interruption policies shall name the Collateral Agent as a
loss payee and shall be endorsed or amended to include (i) a provision that,
from and after the Closing Date, the insurer shall pay all proceeds otherwise
payable to the Loan Parties under the policies directly to the Administrative
Agent or the Collateral Agent, (ii) a provision to the effect that none of the
Loan Parties, the Administrative Agent, the Collateral Agent or any other party
shall be a co-insurer and (iii) such other provisions as the Collateral Agent
may reasonably require from time to time
65
to protect the interests of the Lenders. Each such policy referred to in this
paragraph also shall provide that it shall not be canceled, modified or not
renewed (i) by reason of nonpayment of premium except upon not less than 30
days' prior written notice thereof by the insurer to the Collateral Agent
(giving the Collateral Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason except upon not less than 60 days' prior
written notice thereof by the insurer to the Collateral Agent. The Borrowers
shall deliver to the Collateral Agent, prior to the cancellation, modification
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 Collateral Agent) together with evidence satisfactory to the
Collateral Agent of payment of the premium therefor.
SECTION 5.08 Casualty and Condemnation. The Lead Borrower will furnish
to the Agents and the Lenders prompt written notice of any casualty or other
insured damage to any material portion of any Collateral or the commencement of
any action or proceeding for the taking of any material portion of the
Collateral or any part thereof or interest therein under power of eminent domain
or by condemnation or similar proceeding.
SECTION 5.09 Books and Records; Inspection and Audit Rights;
Appraisals. (a) Each Loan Party will, and will cause each of the Subsidiaries
to, keep proper books of record and account in which full, true and correct
entries are made of all dealings and transactions in relation to its business
and activities. Each Loan Party will, and will cause each of the Subsidiaries
to, permit any representatives designated by any Agent, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times during
normal business hours and as often as reasonably requested.
(b) Each Loan Party will, and will cause each of the
Subsidiaries to, from time to time upon the request of the Collateral Agent or
the Required Lenders through the Administrative Agent, permit any Agent or
professionals (including investment bankers, consultants, accountants, lawyers
and appraisers) retained by the Agents, upon reasonable prior notice and during
normal business hours, to conduct appraisals, commercial finance examinations
and other evaluations, including, without limitation, of (i) the Borrowers'
practices in the computation of the Borrowing Base and (ii) the assets included
in the Borrowing Base and related financial information such as, but not limited
to, sales, gross margins, payables, accruals and reserves, and pay the
reasonable fees and expenses of the Agents or such professionals with respect to
such evaluations and appraisals, provided that unless a Default has occurred and
is continuing, the Borrowers shall not be required to pay for any such
commercial finance examinations and appraisals undertaken except as set forth
below, and, provided further that, if the Borrowers elect to increase the Total
Commitment in accordance with the provisions of Section 2.02 hereof, the
Collateral Agent shall have the right, in its discretion, to undertake a
commercial finance examination and/or an appraisal prior to the Commitment
Increase Date at the Borrowers' expense, and provided further that if the
Borrowers have increased the Total Commitment in accordance with the provisions
of Section 2.02 hereof, in each fiscal year commencing with the Borrowers'
fiscal year in which such Total Commitment is increased, as long as average
Excess Availability for the last six months of the immediately preceding fiscal
year was equal to or greater than (A) $80,000,000, the Borrowers shall not be
required to pay for more than one commercial finance examination and one
inventory appraisal in the then current fiscal year, or (B) $40,000,000 (but
less than $80,000,000), the Borrowers shall not be required
66
to pay for more than three commercial finance examinations and three inventory
appraisals in the then current fiscal year or (C) if the Threshold Amount is not
achieved for any thirty day period in any fiscal year, the Borrowers shall be
required to pay for all commercial finance examinations and appraisals
undertaken during such fiscal year, provided further that, as long as a Default
has occurred and is continuing, the Borrowers shall be required to pay for all
commercial finance examinations and appraisals undertaken.
SECTION 5.10 Compliance with Laws. Each Loan Party will, and will cause
each of the Subsidiaries to, comply with all laws, rules, regulations and orders
of any Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.11 Use of Proceeds and Letters of Credit. The proceeds of
Loans made hereunder and Letters of Credit issued hereunder will be used only
(a) to finance the acquisition of working capital assets of the Borrowers,
including the purchase of inventory and equipment, in each case in the ordinary
course of business, (b) to finance Capital Expenditures of the Borrowers, and
(c) for general corporate purposes, including stock and bond repurchases to the
extent permitted herein. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations U and X.
SECTION 5.12 Additional Subsidiaries. If any additional Subsidiary is
formed or acquired after the Closing Date, the Lead Borrower will notify the
Agents and the Lenders thereof and (a) if such Subsidiary is not a Foreign
Subsidiary, the Borrowers will cause such Subsidiary to become a Loan Party
hereunder and under each applicable Security Document in the manner provided
therein within ten Business Days after such Subsidiary is formed or acquired and
promptly take such actions to create and perfect Liens on such Subsidiary's
assets to secure the Obligations as any Agent or the Required Lenders shall
reasonably request and (b) if any shares of capital stock or Indebtedness of
such Subsidiary are owned by or on behalf of any Loan Party, the Borrowers will
cause such shares and promissory notes evidencing such Indebtedness to be
pledged within ten Business Days after such Subsidiary is formed or acquired
(except that, if such Subsidiary is a Foreign Subsidiary, shares of stock of
such Subsidiary to be pledged may be limited to 65% of the outstanding shares of
voting stock of such Subsidiary).
SECTION 5.13 Further Assurances. (a) Each Loan Party will execute any
and all further documents, financing statements, agreements and instruments, and
take all such further actions (including the filing and recording of financing
statements and other documents), that may be required under any applicable law,
or which any Agent or the Required Lenders may reasonably request, to effectuate
the transactions contemplated by the Loan Documents or to grant, preserve,
protect or perfect the Liens created or intended to be created by the Security
Documents or the validity or priority of any such Lien, all at the expense of
the Loan Parties. The Loan Parties also agree to provide to the Agents, from
time to time upon request, evidence reasonably satisfactory to the Agents as to
the perfection and priority of the Liens created or intended to be created by
the Security Documents.
(b) If any material assets are acquired by any Loan Party
after the Closing Date (other than assets constituting Collateral under the
Security Agreement that become subject
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to the Lien of the Security Agreement upon acquisition thereof), the Lead
Borrower will notify the Agents and the Lenders thereof, and the Loan Parties
will cause such assets to be subjected to a Lien securing the Obligations and
will take such actions as shall be necessary or reasonably requested by any
Agent or the Required Lenders to grant and perfect such Liens, including actions
described in paragraph (a) of this Section, all at the expense of the Loan
Parties. Without limiting the foregoing, if a Loan Party acquires title to any
real property with, in whole or in part, the proceeds of any Credit Extension
hereunder, the Loan Party shall execute a Mortgage and such other documents as
the Collateral Agent may reasonably request in order to perfect the Lien of the
Collateral Agent therein and in the assets and rights associated therewith.
(c) Upon the request of the Administrative Agent, the
Borrowers shall cause each of its customs brokers to deliver an agreement to the
Administrative Agent covering such matters and in such form as the
Administrative Agent may reasonably require.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all L/C Disbursements
shall have been reimbursed, each Loan Party covenants and agrees with the Agents
and the Lenders that:
SECTION 6.01 Indebtedness and Other Obligations. The Loan Parties will
not, and will not permit any Subsidiary to, create, incur, assume or permit to
exist any Indebtedness, except:
(a) Indebtedness created under the Loan Documents;
(b) Indebtedness set forth in Schedule 6.01;
(c) Indebtedness of any Loan Party to any other Loan Party;
(d) Guarantees by any Loan Party of Indebtedness of any other Loan
Party or Subsidiary provided that Guarantees by any Borrower of Indebtedness
shall be subject to Section 6.04;
(e) Indebtedness of any Loan Party to finance the acquisition,
construction or improvement of any fixed or capital assets or software,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof or result in an earlier maturity date or decreased weighted average life
thereof, provided that for purposes of this Section 6.01, no real estate lease
shall be deemed a Capital Lease, and provided further that the aggregate
principal amount of Indebtedness permitted by this clause (e) shall not exceed
$100,000,000 at any time outstanding;
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(f) Indebtedness incurred to refinance any Real Estate owned by
any Loan Party or incurred in connection with sale-leaseback transactions
permitted hereunder, provided that the terms of such Indebtedness are reasonably
acceptable to the Administrative Agent;
(g) Intentionally Omitted;
(h) Indebtedness of Foreign Subsidiaries (other than the Canadian
Operating Subsidiary) in an aggregate principal amount not exceeding $25,000,000
at any time outstanding;
(i) other unsecured Indebtedness or subordinated Indebtedness,
provided that the terms of such Indebtedness are customary for the applicable
type of financing; and
(j) any refinancing of the Indebtedness described in any of the
foregoing clauses (b), (c), (d), (e), (h), or (i) as long as the principal
balance thereof is not increased, the other limitations set forth in those
clauses are fulfilled and no Default or Event of Default exists or would arise
after giving effect thereto.
SECTION 6.02 Liens. The Loan Parties will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(k) Liens created under the Loan Documents;
(l) Permitted Encumbrances;
(m) any Lien on any property or asset of any Loan Party set forth
in Schedule 6.02, provided that (i) such Lien shall not apply to any other
property or asset of any Loan Party and (ii) such Lien shall secure only those
obligations that it secures as of the Closing Date, and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;
(n) Liens on fixed or capital assets or software acquired,
constructed or improved by any Loan Party, provided that (i) such Liens secure
Indebtedness permitted by Section 6.01(e), (ii) such Liens and the Indebtedness
secured thereby are incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed 100% of the cost of acquiring, constructing or
improving such fixed or capital assets or software, and (iv) such Liens shall
not apply to any other property or assets of the Loan Parties;
(o) Liens to secure Indebtedness permitted by Section 6.01(f)
provided that such Liens shall not apply to any property or assets of the Loan
Parties other than the Real Estate so refinanced or which is the subject of a
sale-leaseback transaction;
(p) Liens to secure leases held by FRF or any of its Affiliates;
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(q) Liens to secure Indebtedness permitted by Section 6.01(h),
provided that such Liens shall attach only to the property and assets of the
Foreign Subsidiary obligated on such Indebtedness and not to the property of any
Loan Party;
(r) Liens existing on fixed or capital assets or software of a
Person immediately prior to its being consolidated with or merged into the Lead
Borrower or a Subsidiary or its becoming a Subsidiary, or a Lien existing on any
fixed or capital assets or software acquired by the Lead Borrower or any
Subsidiary at the time such property is so acquired (whether or not the
Indebtedness secured thereby shall have been assumed);
(s) Precautionary filings in respect of true leases; and
(t) Refinancings, renewals and replacements of Liens permitted
under this Section 6.02 provided that (A) the amount of Indebtedness secured
thereby is not increased, (B) such Liens do not extend to any property or assets
of the Loan Parties which immediately prior to such refinancing, renewal or
replacement were not subject to a Lien permitted hereunder, and (C) no Default
or Event of Default exists or would arise after giving effect thereto.
SECTION 6.03 Fundamental Changes. (a) The Loan Parties will not merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or liquidate or dissolve, except that if at the
time thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing, (i) any Subsidiary may merge into a Borrower in a
transaction in which a Borrower is the surviving corporation, and (ii) any
Subsidiary that is not a Borrower may merge into any Subsidiary that is not a
Borrower, provided that any such merger involving a Person that is not a wholly
owned Subsidiary immediately prior to such merger shall not be permitted unless
also permitted by Section 6.04.
(b) The Loan Parties will not engage to any material
extent in any business other than businesses of the type conducted by the Loan
Parties on the date of execution of this Agreement and businesses reasonably
related thereto.
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions.
The Loan Parties will not purchase, hold or acquire (including pursuant to any
merger with any Person that was not a wholly owned Subsidiary prior to such
merger) any capital stock, evidences of indebtedness or other securities
(including any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances (other than accounts
receivable created, and extensions of credit made, in the ordinary course of
business) to, guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except:
(u) Permitted Investments;
(v) investments existing on the Closing Date, and set forth on
Schedule 6.04, to the extent such investments would not be permitted under any
other clause of this Section;
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(w) equity investments, loans or advances made by any Loan Party
to any other Loan Party, provided that any such loans and advances made by a
Loan Party shall be evidenced by a promissory note pledged pursuant to the
Pledge Agreement;
(x) Guarantees constituting Indebtedness permitted by Section
6.01, provided that such Guarantees by the Borrowers, other than Guarantees of
Indebtedness permitted under Section 6.01(i), shall not exceed $20,000,000 in
the aggregate at any time outstanding;
(y) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(z) loans or advances to employees for the purpose of travel,
entertainment or relocation in the ordinary course of business in an amount not
to exceed $1,000,000 to any employee or $7,500,000 in the aggregate at any time
outstanding;
(aa) acquisitions of the capital stock or assets of any other
Person, provided that (i) no Cash Control Event exists immediately prior to, or
after giving effect to, the acquisition, and (ii) no Default or Event of Default
exists immediately prior to, or after giving effect to, the acquisition, and
(iii) the provisions of Section 5.12 are satisfied, or if the transaction is an
asset acquisition, reasonably promptly after such acquisition, the applicable
Loan Parties shall have executed such documents and agreements as the Collateral
Agent shall have reasonably requested in order to create and perfect the
Collateral Agent's Lien on the assets so acquired.
(bb) equity investments, loans or advances made by any Loan Party
to any Foreign Subsidiary in an aggregate amount not to exceed $10,000,000
outstanding at any time provided that (i) the Borrowers shall be in compliance
with the provisions of Section 6.11 hereof, immediately prior to, and
immediately after giving effect to, such investment, loan or advance, and on a
twelve month pro forma basis thereafter, and (ii) no Default or Event of Default
exists immediately prior to, or after giving effect, to any such investment,
loan or advance;
(cc) working capital advances to veterinarians who are tenants of
properties owned by or leased by a Loan Party in an aggregate amount not to
exceed $15,000,000 outstanding at any time, provided that no Default or Event of
Default exists immediately prior to, or after giving effect, to any such
advance;
(dd) loans to, or guarantees of obligations of, officers of any
Loan Party to exercise incentive stock options of the Lead Borrower, to purchase
capital stock of the Lead Borrower or to pay alternative minimum tax obligations
of such officers, provided that no Default or Event of Default exists
immediately prior to, or after giving effect, to any such loan or guarantee, and
provided further that such loans or guarantees shall not exceed an amount equal
to $7,500,000 in the aggregate at any time outstanding; and
(ee) investments in capital stock of PETsMART, Inc. or its
Subsidiaries permitted under Section 6.06(a).
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SECTION 6.05 Asset Sales. The Loan Parties will not, and will not
permit any of the Subsidiaries to, sell, transfer, lease or otherwise dispose of
any asset, including any capital stock, nor will the Loan Parties permit any of
the Subsidiaries to issue any additional shares of their capital stock or other
ownership interest in such Subsidiary, except:
(ff) (i) sales of Inventory and licensing of intellectual property
in the ordinary course of business, or (ii) sales or disposals of used or
surplus equipment or software, or (iii) Permitted Investments, in each case in
the ordinary course of business;
(gg) sales, transfers and dispositions among the Loan Parties and
their Subsidiaries, provided that any such sales, transfers or dispositions
involving a Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.07;
(hh) sale-leaseback transactions involving any Real Estate; and
(ii) Provided that no Overadvance shall result after giving effect
thereto, bulk sales or dispositions of the Borrowers' Inventory or Equipment not
in the ordinary course of business in an amount not to exceed, in the aggregate
from and after the Closing Date, fifteen percent (15%) of the Cost of the
Borrowers' Eligible Inventory or Equipment, as applicable, as of the Closing
Date;
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than sales, transfers and other dispositions permitted under
clause (b)) shall be made at arm's length and for fair value; and further
provided that the authority granted under clauses (b) through (d) hereof may be
terminated in whole or in part by the Agents upon the occurrence and during the
continuance of any Event of Default.
SECTION 6.06 Restricted Payments; Certain Payments of Indebtedness. (a)
The Loan Parties will not, and will not permit any Subsidiary to, declare or
make, or agree to pay or make, directly or indirectly, any Restricted Payment,
except as long as no Default or Event of Default exists or would arise therefrom
(i) the Loan Parties may declare and pay dividends with respect to their capital
stock payable solely in additional shares of their common stock, (ii) the
Subsidiaries of the Lead Borrower may declare and pay dividends ratably with
respect to their capital stock, and (iii) the Lead Borrower may repurchase its
capital stock or declare and pay cash dividends or other distributions if the
Payment Conditions are then satisfied.
(b) The Loan Parties will not, and will not permit any Subsidiary
to, make or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash securities or other property) of or in respect of
principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Indebtedness,
except:
(i) payment of regularly scheduled interest and
principal payments as and when due in respect of any permitted
Indebtedness; and
(ii) refinancings of Indebtedness described in
clause (i), above, to the extent permitted by Section 6.01.
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SECTION 6.07 Transactions with Affiliates. The Loan Parties will not,
and will not permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of business that are
at prices and on terms and conditions not less favorable to the Loan Parties or
such Subsidiary than could be obtained on an arm's-length basis from unrelated
third parties, (b) investments permitted under clauses (f) or (j) of Section
6.04, and (c) transactions between or among the Borrowers not involving any
other Affiliate.
SECTION 6.08 Restrictive Agreements. The Loan Parties will not, and
will not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Loan Parties or any Subsidiary
to create, incur or permit to exist any Lien upon any of its property or assets,
or (b) the ability of any Subsidiary to pay dividends or other distributions
with respect to any shares of its capital stock or to make or repay loans or
advances to the Loan Parties or any other Subsidiary or to guarantee
Indebtedness of the Loan Parties or any other Subsidiary, provided that (i) the
foregoing shall not apply to restrictions and conditions imposed by law or by
any Loan Document, (ii) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (iii) clause
(b) shall not apply to customary restrictions set forth in agreements of Foreign
Subsidiaries or the Lead Borrower related to their Indebtedness or leases on the
ability to pay dividends, and (iv) clause (a) of the foregoing shall not apply
to customary provisions in leases, licenses and other agreement restricting the
assignment, sublicensing, or subleasing thereof.
SECTION 6.09 Amendment of Material Documents. The Loan Parties will
not, and will not permit any Subsidiary to, amend, modify or waive any of its
rights under any leases or subleases relating to real estate, including, without
limitation, the Real Estate, to the extent that such amendment, modification or
waiver would be materially adverse to the interests of the Lenders.
SECTION 6.10 Additional Subsidiaries. The Loan Parties will not, and
will not permit any Subsidiary to, create any additional Subsidiary unless the
requirements of Section 5.12 are satisfied contemporaneously therewith.
SECTION 6.11 Financial Covenant. The Borrowers shall not permit Excess
Availability to be less than ten percent (10%) of the Borrowing Base at any
time.
ARTICLE VII
Events of Default
SECTION 7.01 Events of Default. If any of the following events ("Events
of Default") shall occur:
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(a) the Loan Parties shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any L/C Disbursement when and as
the same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Loan Parties shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or any other Loan Document, within
five (5) Business Days of the date when the same shall become due and payable;
(c) any representation or warranty made or deemed made by or on
behalf of any Loan Party in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;
(d) the Loan Parties shall fail to observe or perform any
covenant, condition or agreement contained in Section 2.22, in Sections 5.1,
5.4, 5.7, 5.9(b), 5.11 or 5.12, or in Article VI;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b), (c), or (d) of this Article), and such failure
shall continue unremedied for a period of 15 days after notice thereof from the
Administrative Agent to the Lead Borrower (which notice will be given at the
request of any Lender);
(f) any Loan Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness when and as the same shall become due and payable (after giving
effect to the expiration of any grace or cure period set forth therein);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any such Material Indebtedness or any trustee or agent on
its or their behalf to cause any such Material Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of any Loan Party or its debts, or of a substantial part of its
assets, under any federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any Loan
Party or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 45 days or an order or
decree approving or ordering any of the foregoing shall be entered;
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(i) any Loan Party shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief under
any federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in clause (h) of this Article, (iii) apply for or consent to the appointment of
a receiver, trustee, custodian, sequestrator, conservator or similar official
for any Loan Party or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing;
(j) any Loan Party shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money to the extent
not covered by insurance (coverage for which has not been disaffirmed or
reserved by the insurer) in an aggregate amount in excess of $25,000,000 shall
be rendered against any Loan Party or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any material assets of any Loan Party
to enforce any such judgment;
(l) an ERISA Event shall have occurred that when taken together
with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Loan Parties in an aggregate amount exceeding
$5,000,000;
(m) (i) any challenge by or on behalf of any Loan Party to the
validity of any Loan Document or the applicability or enforceability of any Loan
Document strictly in accordance with the subject Loan Document's terms or which
seeks to void, avoid, limit, or otherwise adversely affect any security interest
created by or in any Loan Document or any payment made pursuant thereto.
(ii) any challenge by or on behalf of any other Person
to the validity of any Loan Document or the applicability or enforceability of
any Loan Document strictly in accordance with the subject Loan Document's terms
or which seeks to void, avoid, limit, or otherwise adversely affect any security
interest created by or in any Loan Document or any payment made pursuant
thereto, in each case, as to which an order or judgment has been entered adverse
to the Agents and the Lenders.
(iii) any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral, with the priority required by the
applicable Security Document, except as a result of the sale or other
disposition of the applicable Collateral in a transaction permitted under the
Loan Documents;
(n) a Change in Control shall occur;
(o) the occurrence of any uninsured loss to the Collateral in
excess of $10,000,000;
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(p) the indictment of, or institution of any legal process or
proceeding against, any Loan Party, under any federal, state, municipal, and
other civil or criminal statute, rule, regulation, order, or other requirement
having the force of law where the relief, penalties, or remedies sought or
available include the forfeiture of any property of any Loan Party with an
aggregate value equal to or greater than $5,000,000 and/or the imposition of any
stay or other order, the effect of which could reasonably be to restrain in any
material way the conduct by the Loan Parties, taken as a whole, of their
business in the ordinary course; or
(q) except to the extent otherwise permitted in this Agreement,
the determination by any Borrower, whether by vote of such Borrower's board of
directors or otherwise to: suspend the operation of such Borrower's business in
the ordinary course, liquidate all or a material portion of such Borrower's
assets or store locations, or employ an agent or other third party to conduct
any so-called store closing, store liquidation or "Going-Out-Of-Business" sales;
then, and in every such event (other than an event with respect to any Loan
Party described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Lead
Borrower, take either or both of the following actions, at the same or different
times: (i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Loans then outstanding to be due and
payable in whole (or in part, in which case any principal not so declared to be
due and payable may thereafter be declared to be due and payable), and thereupon
the principal of the Loans so declared to be due and payable, together with
accrued interest thereon and all fees and other obligations of the Borrowers
accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Loan Parties; and in case of any event with respect to any
Loan Party described in clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrowers accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Loan Parties.
SECTION 7.02 When Continuing.
For all purposes under this Agreement, each Default and Event of
Default that has occurred shall be deemed to be continuing at all times
thereafter unless it either (a) is cured or corrected to the reasonable written
satisfaction of the Lenders in accordance with Section 9.02, or (b) is waived in
writing by the Lenders in accordance with Section 9.02.
SECTION 7.03 Remedies on Default
In case any one or more of the Events of Default shall have occurred
and be continuing, and whether or not the maturity of the Loans shall have been
accelerated pursuant hereto, the Administrative Agent may proceed to protect and
enforce its rights and remedies under this Agreement, the Notes or any of the
other Loan Documents by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or any instrument
pursuant to which the Obligations are evidenced, and, if such amount shall have
become due, by declaration or otherwise, proceed to enforce the payment thereof
or any other legal or equitable right of the
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Agents or the Lenders. No remedy herein is intended to be exclusive of any other
remedy and each and every remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or any other provision of law.
SECTION 7.04 Application of Proceeds
After the occurrence of an Event of Default and acceleration of the
Obligations, all proceeds realized from any Loan Party or on account of any
Collateral or, without limiting the foregoing, on account of any Prepayment
Event shall be applied in the manner set forth in Section 6.02 of the Security
Agreement. All amounts required to be applied to Loans hereunder (other than
Swingline Loans) shall be applied ratably in accordance with each Lender's
Commitment Percentage.
ARTICLE VIII
The Agents
SECTION 8.01 Administration by Administrative Agent.
The general administration of the Loan Documents shall be by the
Administrative Agent. The Lenders, the Collateral Agent and the Issuing Bank
each hereby irrevocably authorizes the Administrative Agent (i) to enter into
the Loan Documents to which it is a party and (ii) at its discretion, to take or
refrain from taking such actions as agent on its behalf and to exercise or
refrain from exercising such powers under the Loan Documents and the Notes as
are delegated by the terms hereof or thereof, as appropriate, together with all
powers reasonably incidental thereto. The Administrative Agent shall have no
duties or responsibilities except as set forth in this Agreement and the
remaining Loan Documents.
SECTION 8.02 The Collateral Agent.
Each Lender, the Administrative Agent and the Issuing Bank hereby
irrevocably (i) designate FRF as Collateral Agent under this Agreement and the
other Loan Documents, (ii) authorize the Collateral Agent to enter into the
Collateral Documents and the other Loan Documents to which it is a party and to
perform its duties and obligations thereunder and (iii) agree and consent to all
of the provisions of the Security Documents. All Collateral shall be held or
administered by the Collateral Agent (or its duly-appointed agent) for its
benefit and for the ratable benefit of the other Secured Parties. Any proceeds
received by the Collateral Agent from the foreclosure, sale, lease or other
disposition of any of the Collateral and any other proceeds received pursuant to
the terms of the Security Documents or the other Loan Documents shall be paid
over to the Administrative Agent for application as provided in Sections 2.19,
2.23, or 7.04, as applicable.
SECTION 8.03 Sharing of Excess Payments.
Each of the Lenders, the Agents and the Issuing Bank agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Loan Parties, including, but not limited to, a secured claim under
Section 506 of the Bankruptcy Code or other security or
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interest arising from, or in lieu of, such secured claim and received by such
Lender, any Agent or the Issuing Bank under any applicable bankruptcy,
insolvency or other similar law, or otherwise, obtain payment in respect of the
Obligations owed it (an "excess payment") as a result of which such Lender, such
Agent or the Issuing Bank has received payment of any Loans or other Obligations
outstanding to it in excess of the amount that it would have received if all
payments at any time applied to the Loans and other Obligations had been applied
in the order of priority set forth in Section 2.23, then such Lender, Agent or
the Issuing Bank shall promptly purchase at par (and shall be deemed to have
thereupon purchased) from the other Lenders, such Agent and the Issuing Bank, as
applicable, a participation in the Loans and Obligations outstanding to such
other Persons, in an amount determined by the Administrative Agent in good faith
as the amount necessary to ensure that the economic benefit of such excess
payment is reallocated in such manner as to cause such excess payment and all
other payments at any time applied to the Loans and other Obligations to be
effectively applied in the order of priority set forth in Section 2.23 pro rata
in proportion to its Commitment; provided, that if any such excess payment is
thereafter recovered or otherwise set aside such purchase of participations
shall be correspondingly rescinded (without interest). The Loan Parties
expressly consent to the foregoing arrangements and agree that any Lender, any
Agent or the Issuing Bank holding (or deemed to be holding) a participation in
any Loan or other Obligation may exercise any and all rights of banker's lien,
setoff or counterclaim with respect to any and all moneys owing by such Loan
Party to such Lender, such Agent or the Issuing Bank as fully as if such Lender,
Agent or the Issuing Bank held a Note and was the original obligee thereon, in
the amount of such participation.
SECTION 8.04 Agreement of Required Lenders.
(i) Upon any occasion requiring or permitting an approval,
consent, waiver, election or other action on the part of only the Required
Lenders, action shall be taken by the Agents for and on behalf or for the
benefit of all Lenders upon the direction of the Required Lenders, and any such
action shall be binding on all Lenders, and (ii) upon any occasion requiring or
permitting an approval, consent, waiver, election or other action on the part of
the Required Supermajority Lenders, action shall be taken by the Agents for and
on behalf or for the benefit of all Lenders upon the direction of the Required
Supermajority Lenders and any such action shall be binding on all Lenders. No
amendment, modification, consent, or waiver shall be effective except in
accordance with the provisions of Section 9.02.
(ii) Upon the occurrence of an Event of Default, the Agents shall
(A) within a reasonable time after obtaining actual knowledge thereof, notify
the Lenders thereof, and (B) (subject to the provisions of Section 9.02) take
such action with respect thereto as may be reasonably directed by the Required
Lenders; provided that unless and until the Agents shall have received such
directions, the Agents may (but shall not be obligated to) take such action as
they shall deem advisable in the best interests of the Lenders. In no event
shall the Agents be required to comply with any such directions to the extent
that the Agents believe that the Agents' compliance with such directions would
be unlawful or commercially unreasonable.
SECTION 8.05 Liability of Agents.
(iii) Each of the Agents, when acting on behalf of the Lenders and
the Issuing Bank, may execute any of its respective duties under this Agreement
by or through any of its respective officers, agents and employees, and none of
the Agents nor their respective directors, officers,
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agents or employees shall be liable to any of the Lenders or the Issuing Bank
for any action taken or omitted to be taken in good faith, or be responsible to
any of the Lenders or the Issuing Bank for the consequences of any oversight or
error of judgment, or for any loss, except to the extent of any liability
imposed by law by reason of such Agent's own gross negligence or willful
misconduct. The Agents and their respective directors, officers, agents and
employees shall in no event be liable to any of the Lenders or the Issuing Bank
for any action taken or omitted to be taken by them pursuant to instructions
received by them from the Required Lenders, or Required Supermajority Lenders,
as applicable, or in reliance upon the advice of counsel selected by the Agents.
Without limiting the foregoing, none of the Agents, nor any of their respective
directors, officers, employees, or agents shall be responsible to any Lender or
the Issuing Bank for the due execution, validity, genuineness, effectiveness,
sufficiency, or enforceability of, or for any statement, warranty or
representation in, this Agreement, any Loan Document or any related agreement,
document or order, or shall be required to ascertain or to make any inquiry
concerning the performance or observance by any Loan Party of any of the terms,
conditions, covenants, or agreements of this Agreement or any of the Loan
Documents.
(iv) None of the Agents nor any of their respective directors,
officers, employees, or agents shall have any responsibility to the Loan Parties
on account of the failure or delay in performance or breach by any Lender (other
than by the Agent in its capacity as a Lender) or the Issuing Bank of any of
their respective obligations under this Agreement or the Notes or any of the
Loan Documents or in connection herewith or therewith.
(v) The Administrative Agent and the Collateral Agent, in such
capacities hereunder, shall be entitled to rely on any communication,
instrument, or document reasonably believed by such Agent to be genuine or
correct and to have been signed or sent by a Person or Persons believed by such
Agent to be the proper Person or Persons, and, such Agent shall be entitled to
rely on advice of legal counsel, independent public accountants, and other
professional advisers and experts selected by such Agent.
SECTION 8.06 Reimbursement and Indemnification.
Each Lender agrees (i) to reimburse (x) each Agent for such Lender's
Commitment Percentage of any expenses and fees incurred by such Agent for the
benefit of the Lenders or the Issuing Bank under this Agreement, the Notes and
any of the Loan Documents, including, without limitation, counsel fees and
compensation of agents and employees paid for services rendered on behalf of the
Lenders or the Issuing Bank, and any other expense incurred in connection with
the operations or enforcement thereof not reimbursed by the Loan Parties and (y)
each Agent for such Lender's Commitment Percentage of any expenses of such Agent
incurred for the benefit of the Lenders or the Issuing Bank that the Loan
Parties have agreed to reimburse pursuant to Section 9.03 and has failed to so
reimburse and (ii) to indemnify and hold harmless the Agents and any of their
directors, officers, employees, or agents, on demand, in the amount of such
Lender's Commitment Percentage, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against it or any of them in any way relating to or
arising out of this Agreement, the Notes or any of the Loan Documents or any
action taken or omitted by it or any of them under this Agreement, the Notes or
any of the Loan Documents to the extent not reimbursed by the
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Loan Parties (except such as shall result from their respective gross negligence
or willful misconduct).
SECTION 8.07 Rights of Agents.
It is understood and agreed that FRF shall have the same rights and
powers hereunder (including the right to give such instructions) as the other
Lenders and may exercise such rights and powers, as well as its rights and
powers under other agreements and instruments to which it is or may be party,
and engage in other transactions with the Borrowers, as though it were not the
Administrative Agent or the Collateral Agent, respectively, of the Lenders under
this Agreement.
SECTION 8.08 Independent Lenders and Issuing Bank.
The Lenders and the Issuing Bank each acknowledge that they have
decided to enter into this Agreement and to make the Loans or issue the Letters
of Credit hereunder based on their own analysis of the transactions contemplated
hereby and of the creditworthiness of the Loan Parties and agree that the Agents
shall bear no responsibility therefor.
SECTION 8.09 Notice of Transfer.
The Agents may deem and treat a Lender party to this Agreement as the
owner of such Lender's portion of the Loans for all purposes, unless and until,
and except to the extent, an Assignment and Acceptance shall have become
effective as set forth in Section 9.05(b).
SECTION 8.10 Successor Agent
Any Agent may resign at any time by giving thirty (30) Business Days'
written notice thereof to the Lenders, the Issuing Bank, the other Agent and the
Lead Borrower. Upon any such resignation of any Agent, the Required Lenders
shall have the right to appoint a successor Agent, which so long as there is no
Default, or Event of Default, shall be reasonably satisfactory to the Lead
Borrower (whose consent shall not be unreasonably withheld or delayed). If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
of notice of resignation, the retiring Agent may, on behalf of the Lenders, the
other Agent and the Issuing Bank, appoint a successor Agent which shall be (i) a
commercial bank (or affiliate thereof) organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of a least $100,000,000, or (ii) a Lender capable of complying with all
of the duties of such Agent (and the Issuing Bank) hereunder (in the opinion of
the retiring Agent and as certified to the Lenders in writing by such successor
Agent) which, in the case of (i) and (ii) above, so long as there is no Default,
or Event of Default, shall be reasonably satisfactory to the Lead Borrower
(whose consent shall not be unreasonably withheld or delayed). Upon the
acceptance of any appointment as Agent by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation hereunder as such Agent, the provisions of this
Article VIII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was such Agent under this Agreement.
SECTION 8.11 Reports and Financial Statements.
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Promptly after receipt thereof from the Borrowers, the Administrative
Agent shall remit to each Lender and the Collateral Agent copies of all
financial statements required to be delivered by the Borrowers hereunder and all
commercial finance examinations and appraisals of the Collateral received by the
Administrative Agent.
SECTION 8.12 Co-Agent, Syndication Agent and Arranger. Notwithstanding
the provisions of this Agreement or any of the other Loan Documents, the
Co-Agent, the Syndication Agent and, except as provided in the commitment letter
for this transaction, the Arranger shall have no powers, rights, duties,
responsibilities or liabilities with respect to this Agreement and the other
Loan Documents.
ARTICLE IX
Miscellaneous
SECTION 9.01 Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to any Loan Party, to it at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇) with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP.
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇) Attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire;
(b) if to the Administrative Agent or the Collateral Agent, or the
Swingline Lender to Fleet Retail Group, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (Telecopy No. (617)
434-4339), with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire (Telecopy No. (617)
880-3456);
(c) if to any other Lender, to it at its address (or telecopy
number) set forth on the signature pages hereto or on any Assignment and
Acceptance for such Lender.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02 Waivers; Amendments. (a) No failure or delay by the
Agents, the Issuing Bank or any Lender in exercising any right or power
hereunder or under any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agents, the Issuing Bank and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they
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would otherwise have. No waiver of any provision of any Loan Document or consent
to any departure by any Loan Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. Without limiting the generality of the foregoing,
the making of a Loan or issuance of a Letter of Credit shall not be construed as
a waiver of any Default, regardless of whether the Agents, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document
nor any provision hereof or thereof may be waived, amended or modified except,
in the case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Agents and the Loan Parties that are parties thereto, in each case
with the consent of the Required Lenders, provided that no such agreement shall
(i) increase the Commitment of any Lender without the written consent of such
Lender, (ii) reduce the principal amount of any Loan or L/C Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan or L/C
Disbursement, or any interest thereon, or any fees payable hereunder, or reduce
the amount of, waive or excuse any such payment, or postpone the scheduled date
of expiration of the Commitments or the Maturity Date, without the written
consent of each Lender affected thereby, (iv) change Sections 2.19, 2.22, or
2.23 or Section 6.02 of the Security Agreement, without the written consent of
each Lender, (v) change any of the provisions of this Section 9.02 or the
definition of the term "Required Lenders" or "Required Supermajority Lenders" or
any other provision of any Loan Document specifying the number or percentage of
Lenders required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender, (vi) release any Loan Party from its obligations under any Loan
Document, or limit its liability in respect of such Loan Document, without the
written consent of each Lender, (vii) except for sales described in Section 6.05
or as permitted in the Security Documents, release any material portion of the
Collateral from the Liens of the Security Documents, without the written consent
of each Lender, (viii) change the definition of the term "Borrowing Base" or any
component definition thereof if as a result thereof the amounts available to be
borrowed by the Borrowers would be increased, without the written consent of
each Lender, provided that the foregoing shall not limit the discretion of the
Administrative Agent to change, establish or eliminate any Reserves, (ix)
increase the Permitted Overadvance, without the written consent of each Lender,
(x) subordinate the Obligations hereunder, or the Liens granted hereunder or
under the other Loan Documents, to any other Indebtedness or Lien, as the case
may be without the prior written consent of each Lender, and provided further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Agents or the Issuing Bank without the prior written consent of
the Agents or the Issuing Bank, as the case may be.
(c) Notwithstanding anything to the contrary contained herein, no
modification, amendment or waiver which increases the maximum amount of the
Swingline Loans to an amount in excess of $12,500,000 (or such greater amount to
which such limit has been previously increased in accordance with the provisions
of this Section 9.02(c)) shall be made without the written consent of the
Required Supermajority Lenders.
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(d) Notwithstanding anything to the contrary contained in this
Section 9.02, in the event that the Borrowers request that this Agreement or any
other Loan Document be modified, amended or waived in a manner which would
require the consent of the Lenders pursuant to Sections 9.02(b) or 9.02(c) and
such amendment is approved by the Required Lenders, but not by the requisite
percentage of the Lenders, the Borrowers and the Required Lenders shall be
permitted to amend this Agreement without the consent of the Lender or Lenders
which did not agree to the modification or amendment requested by the Borrowers
(such Lender or Lenders, collectively the "Minority Lenders") to provide for (w)
the termination of the Commitment of each of the Minority Lenders, (x) the
addition to this Agreement of one or more other financial institutions, or an
increase in the Commitment of one or more of the Required Lenders, so that the
aggregate Commitments after giving effect to such amendment shall be in the same
amount as the aggregate Commitments immediately before giving effect to such
amendment, (y) if any Loans are outstanding at the time of such amendment, the
making of such additional Loans by such new or increasing Lender or Lenders, as
the case may be, as may be necessary to repay in full the outstanding Loans
(including principal, interest, and fees) of the Minority Lenders immediately
before giving effect to such amendment and (z) such other modifications to this
Agreement or the Loan Documents as may be appropriate and incidental to the
foregoing.
(e) No notice to or demand on any Loan Party shall entitle any
Loan Party to any other or further notice or demand in the same, similar or
other circumstances. Each holder of a Note shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not a
Note shall have been marked to indicate such amendment, modification, waiver or
consent and any consent by a Lender, or any holder of a Note, shall bind any
Person subsequently acquiring a Note, whether or not a Note is so marked. No
amendment to this Agreement shall be effective against the Borrowers unless
signed by the Borrowers.
SECTION 9.03 Expenses; Indemnity; Damage Waiver. (a) The Loan Parties
shall, jointly and severally, pay (i) all reasonable out-of-pocket expenses
incurred by the Agents and their Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Agents, outside consultants for the
Agents, appraisers, for commercial finance examinations and environmental site
assessments, in connection with the syndication of the credit facilities
provided for herein, the preparation and administration of the Loan Documents or
any amendments, modifications or waivers of the provisions thereof (whether or
not the transactions contemplated hereby or thereby shall be consummated), (ii)
all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all reasonable out-of-pocket
expenses incurred by the Agents, the Issuing Bank or any Lender, including the
reasonable fees, charges and disbursements of any counsel and any outside
consultants for the Agents, the Issuing Bank or any Lender, for appraisers,
commercial finance examinations, and environmental site assessments, in
connection with the enforcement or protection of its or their rights in
connection with the Loan Documents, including its or their rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit; provided that the Lenders who are not the Agents or the Issuing Bank
shall be entitled to reimbursement for no more than one counsel representing all
such Lenders (absent a conflict of interest in which case the Lenders may engage
and be reimbursed for additional counsel).
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(b) The Loan Parties shall, jointly and severally,
indemnify the Agents, the Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable and
documented fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of any Loan Document or
any other agreement or instrument contemplated hereby, the performance by the
parties to the Loan Documents of their respective obligations thereunder or the
consummation of the transactions contemplated by the Loan Documents or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by the Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property currently or formerly owned or operated by any
Loan Party or any of the Subsidiaries, or any Environmental Liability related in
any way to any Loan Party or any of the Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee or any Affiliate of such
Indemnitee (or of any officer, director, employee, advisor or agent of such
Indemnitee or any such Indemnitee's Affiliates).
(c) To the extent that any Loan Party fails to pay any
amount required to be paid by it to the Agents or the Issuing Bank under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Agents or the Issuing Bank, as the case may be, such Lender's pro rata share
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount, provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Agents or the Issuing Bank. For
purposes hereof, a Lender's "pro rata share" shall be determined based upon its
share of the Total Commitment at the time.
(d) To the extent permitted by applicable law, no Loan
Party shall assert, and each hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the transactions contemplated by the Loan Documents, any
Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
SECTION 9.04 Designation of Lead Borrower as Borrowers' Agent.
(d) Each Borrower hereby irrevocably designates and appoints the
Lead Borrower as that Borrower's agent to obtain Loans and Letters of Credit
hereunder, the proceeds of which shall be available to each Borrower for those
uses set forth herein. As the disclosed principal for its agent, each Borrower
shall be obligated to the Agents and each Lender on account of Loans so made and
Letters of Credit so issued hereunder as if made directly by the Lenders to that
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Borrower, notwithstanding the manner by which such Loans and Letters of Credit
are recorded on the books and records of the Lead Borrower and of any other
Borrower.
(e) Each Borrower recognizes that credit available to it hereunder
is in excess of and on better terms than it otherwise could obtain on and for
its own account and that one of the reasons therefor is its joining in the
credit facility contemplated herein with the other Borrower. Consequently, each
Borrower hereby assumes and agrees to discharge all Obligations of the other
Borrower as if the Borrower so assuming were the other Borrower.
(f) The Lead Borrower shall act as a conduit for each Borrower
(including itself, as a "Borrower") on whose behalf the Lead Borrower has
requested a Loan.
(i) The Lead Borrower shall cause the transfer
of the proceeds of each Loan to the (those) Borrower(s) on
whose behalf such Loan was obtained. Neither the Agents nor
any Lender shall have any obligation to see to the application
of such proceeds.
(ii) If, for any reason, and at any time during
the term of this Agreement,
(A) any Borrower, including the Lead
Borrower, as agent for the Borrowers, shall be unable
to, or prohibited from carrying out the terms and
conditions of this Agreement (as determined by the
Administrative Agent in the Administrative Agent's
sole and absolute discretion); or
(B) the Administrative Agent deems it
inexpedient (in the Administrative Agent's sole and
absolute discretion) to continue making Loans and
cause Letters of Credit to be issued to or for the
account of any particular Borrower, or to channel
such Loans and Letters of Credit through the Lead
Borrower,
then the Lenders may make Loans directly to, and cause the
issuance of Letters of Credit directly for the account of such
of the Borrowers as the Administrative Agent determines to be
expedient, which Loans may be made without regard to the
procedures otherwise included herein.
(g) In the event that the Administrative Agent determines to forgo
the procedures included herein pursuant to which Loans and Letters of Credit are
to be channeled through the Lead Borrower, then the Administrative Agent may
designate one or more of the Borrowers to fulfill the financial and other
reporting requirements otherwise imposed herein upon the Lead Borrower.
(h) Each of the Borrowers shall remain liable to the Agents and
the Lenders for the payment and performance of all Obligations (which payment
and performance shall continue to be secured by all Collateral granted by each
of the Borrowers) notwithstanding any
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determination by the Administrative Agent to cease making Loans or causing
Letters of Credit to be issued to or for the benefit of any Borrower.
(i) The authority of the Lead Borrower to request Loans on behalf
of, and to bind, the Borrowers, shall continue unless and until the
Administrative Agent acts as provided in subparagraph (c), above, or the
Administrative Agent actually receives
(i) written notice of: (i) the termination of
such authority, and (ii) the subsequent appointment of a
successor Lead Borrower, which notice is signed by the
respective Presidents of each Borrower (other than the
President of the Lead Borrower being replaced) then eligible
for borrowing under this Agreement; and
(ii) written notice from such successive Lead
Borrower (i) accepting such appointment; (ii) acknowledging
that such removal and appointment has been effected by the
respective Presidents of such Borrowers eligible for borrowing
under this Agreement; and (iii) acknowledging that from and
after the date of such appointment, the newly appointed Lead
Borrower shall be bound by the terms hereof, and that as used
herein, the term "Lead Borrower" shall mean the newly
appointed Lead Borrower.
SECTION 9.05 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 permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that no
Loan Party may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any such
attempted assignment or transfer without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of Credit) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Agents, the Issuing Bank and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or
a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it), provided that
(i) except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Lead Borrower (but only if no Default then exists), the Agents and
the Issuing Bank must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld or delayed), (ii) except in the case
of an assignment to a Lender or an Affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitment or Loans, the
amount of the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than (A) $10,000,000 prior to the occurrence of an Event of Default and (B)
$5,000,000 after the occurrence and during the continuance of an Event of
Default, unless in each case the Administrative Agent and (only if no Default
then exists) the Lead Borrower otherwise consent, (iii) each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender's rights and obligations, (iv) the parties to each
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assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, and, after completion of the syndication of the Loans, together
with a processing and recordation fee of $3,500. Subject to acceptance and
recording thereof pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Section 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as
an agent of the Loan Parties, shall maintain at one of its offices in Boston,
Massachusetts a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans and L/C Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive and the Loan Parties, the
Administrative Agent, the Issuing Bank and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Lead Borrower,
the Issuing Bank and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the processing and
recordation fee referred to in paragraph (b) of this Section and any written
consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
(e) Any Lender may, without the consent of the Loan
Parties, the Agents, and the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it), provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Loan Parties, the Agents, the Issuing Bank and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation in
the Commitments, the Loans and the Letters of Credit Outstandings shall provide
that such Lender shall retain the sole right to enforce the Loan Documents and
to approve any amendment, modification or waiver of any provision of the Loan
Documents, provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Loan
Parties agree that
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each Participant shall be entitled to the benefits of Sections 2.24, 2.26 and
2.27 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.09 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.26(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any
greater payment under Section 2.24 or 2.27 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Lead Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.27 unless (i) the Lead Borrower is notified of the participation sold
to such Participant and such Participant agrees, for the benefit of the
Borrowers, to comply with Section 2.27(f) as though it were a Lender and (ii)
such Participant is eligible for exemption from the withholding tax referred to
therein, following compliance with Section 2.27(f).
(g) Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest, provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
SECTION 9.06 Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Agents, the Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.24, 2.27 and 9.03 and Article VIII shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement or any
provision hereof.
SECTION 9.07 Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Agents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Agents and the
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Lenders and when the Administrative Agent shall have received counterparts
hereof that, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 9.08 Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.09 Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Loan Parties against any of and all the obligations of the Loan Parties now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) that such Lender may have.
SECTION 9.10 Governing Law; Jurisdiction; Consent to Service of
Process.
(j) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS.
(k) Each Loan Party hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Superior Court of the Commonwealth of Massachusetts sitting in Suffolk County
and of the United States District Court, District of Massachusetts, sitting in
Boston, Massachusetts, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such Superior Court of
the Commonwealth of Massachusetts or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Agents, the Issuing Bank or any Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document
against any Loan Party or their properties in the courts of any jurisdiction.
(l) Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of any suit, action or
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proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section.
(m) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.12 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.13 Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts that are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.14 Additional Waivers.
(n) The Obligations are the joint and several obligations of each
Loan Party. To the fullest extent permitted by applicable law, the obligations
of each Loan Party hereunder shall not be affected by (i) the failure of any
Agent or any other Secured Party to assert any claim or demand or to enforce or
exercise any right or remedy against any other Loan Party under the
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provisions of this Agreement, any other Loan Document or otherwise, (ii) except
for amendments and waivers entered into in accordance with the provisions of
Section 9.02 hereof, any rescission, waiver, amendment or modification of, or
any release from any of the terms or provisions of, this Agreement or any other
Loan Document, including with respect to any other Borrower of the Obligations
under this Agreement, or (iii) the failure to perfect any security interest in,
or the release of, any of the security held by or on behalf of the Collateral
Agent or any other Secured Party.
(o) The obligations of each Loan Party hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason
(other than the final payment in full in cash of the Obligations or amendments
and waivers entered into in accordance with the provisions of Section 9.02
hereof), including any claim of waiver, release, surrender, alteration or
compromise of any of the Obligations, and shall not be subject to any defense or
set-off, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each Loan
Party hereunder shall not be discharged or impaired or otherwise affected by the
failure of any Agent or any other Secured Party to assert any claim or demand or
to enforce any remedy under this Agreement, any other Loan Document or any other
agreement, by any waiver or modification of any provision of any thereof, by any
default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of any Loan Party or that would otherwise operate as
a discharge of any Loan Party as a matter of law or equity (other than the final
payment in full in cash of all the Obligations).
(p) To the fullest extent permitted by applicable law, each Loan
Party waives any defense based on or arising out of any defense of any other
Loan Party or the unenforceability of the Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of any other Loan
Party, other than the final payment in full in cash of all the Obligations. The
Collateral Agent and the other Secured Parties may, at their election, foreclose
on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with any other Loan Party, or exercise any other right or remedy
available to them against any other Loan Party, without affecting or impairing
in any way the liability of any Loan Party hereunder except to the extent that
all the Obligations have been finally paid in full in cash. Pursuant to
applicable law, each Loan Party waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Loan Party against any other Loan Party, as the case may be,
or any security.
(q) Upon payment by any Loan Party of any Obligations, all rights
of such Loan Party against any other Loan Party arising as a result thereof by
way of right of subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subordinate and junior in right of payment to the prior
final payment in full in cash of all the Obligations, as more particularly set
forth in an Indemnity, Subrogation and Contribution Agreement to be entered into
amongst the Loan Parties. In addition, any indebtedness of any Loan Party now or
hereafter
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held by any other Loan Party is hereby subordinated in right of payment to the
prior payment in full of the Obligations. None of the Loan Parties will demand,
▇▇▇ for, or otherwise attempt to collect any such indebtedness. If any amount
shall erroneously be paid to any Loan Party on account of (a) such subrogation,
contribution, reimbursement, indemnity or similar right or (b) any such
indebtedness of any Loan Party, such amount shall be held in trust for the
benefit of the Secured Parties and shall forthwith be paid to the Collateral
Agent to be credited against the payment of the Obligations, whether matured or
unmatured, in accordance with the terms of the Loan Documents.
SECTION 9.15 Existing Credit Agreement Amended and Restated. This
Agreement shall amend and restate the Existing Credit Agreement in its entirety.
On the Effective Date, the rights and obligations of the parties under the
Existing Credit Agreement shall be subsumed within and be governed by this
Agreement; provided, however, that each of the "Loans" (as such term is defined
in the Existing Credit Agreement) outstanding under the Existing Credit
Agreement on the Effective Date shall, for purposes of this Agreement, be
included as Loans hereunder and each of the "Letters of Credit" (as defined in
the Existing Credit Agreement) outstanding under the Existing Credit Agreement
on the Effective Date shall be Letters of Credit hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as a sealed instrument
as of the day and year first above written.
PETSMART, INC.
as Lead Borrower and Borrower
By_________________________
Name:
Title:
PETSMART STORE SUPPORT GROUP, INC.
By_________________________
Name:
Title:
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FLEET RETAIL GROUP, INC.,
as Administrative Agent, as Collateral
Agent, as Swingline Lender, and as
Lender
By:________________________
Name:______________________
Title:_______________________
Address:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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FLEET NATIONAL BANK,
as Issuing Bank
By:__________________________
Name:________________________
Title:_______________________
Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CONGRESS FINANCIAL CORPORATION (WESTERN),
as Co-Agent and Lender
By:__________________________
Name:________________________
Title:_______________________
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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▇▇▇▇▇ FARGO FOOTHILL, LLC
as Lender
By:__________________________
Name:________________________
Title:_______________________
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
By:__________________________
Name:________________________
Title:_______________________
Address:
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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