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Exhibit 4.3
Execution Copy
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LOAN AND SECURITY AGREEMENT
FLEET RETAIL FINANCE INC.,
AS ADMINISTRATIVE AGENT AND
COLLATERAL AGENT FOR THE LENDERS REFERENCED HEREIN,
FLEET NATIONAL BANK,
AS ISSUER,
SHOPKO STORES, INC.,
AS LEAD BORROWER
FOR:
SHOPKO STORES, INC.
PAMIDA, INC.,
AS BORROWERS,
AND
EACH OF THE SUBSIDIARIES OF SHOPKO STORES, INC.,
NAMED HEREIN,
EACH AS A GUARANTOR
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FLEET SECURITIES, INC.,
AS ARRANGER
▇▇▇▇▇▇ FINANCIAL INC.,
AS DOCUMENTATION AGENT
BANK OF AMERICA, N.A.,
AS SYNDICATION AGENT
GENERAL ELECTRIC CAPITAL CORPORATION, THE CIT GROUP/BUSINESS
CREDIT, INC., NATIONAL CITY COMMERCIAL FINANCE, INC. AND
▇.▇. ▇▇▇▇▇▇ BUSINESS CREDIT CORP. THROUGH THE CHASE MANHATTAN BANK,
AS CO-AGENTS
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DATED AS OF MARCH 9, 2001
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TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS.............................................................................................1
SECTION 2 THE REVOLVING CREDIT AND THE TERM LOAN.................................................................28
2.1 Establishment Of Revolving Credit............................................................28
2.2 Advances In Excess Of Borrowing Base (OverLoans).............................................29
2.3 Risks Of Value Of Collateral.................................................................29
2.4 Commitment To Make Revolving Credit Loans And Support Letters Of Credit......................29
2.5 Loan Requests................................................................................30
2.6 Making Of Revolving Credit Loans.............................................................31
2.7 Swing Line Loans.............................................................................32
2.8 The Term Loan................................................................................32
2.9 The Loan Account.............................................................................33
2.10 The Notes....................................................................................33
2.11 Payment Of The Loan Account..................................................................34
2.12 Interest On Loans............................................................................35
2.13 Voluntary Reduction Of Commitment And Revolving Credit Ceiling...............................36
2.14 Commitment Fee...............................................................................36
2.15 Administrative Agent's Fee...................................................................37
2.16 Unused Fee...................................................................................37
2.17 Early Termination Fee........................................................................37
2.18 Procedures For Issuance Of L/Cs..............................................................37
2.19 Fees For L/Cs................................................................................38
2.20 Concerning L/Cs..............................................................................39
2.21 Changed Circumstances........................................................................41
2.22 Designation Of Lead Borrower As Borrowers' Agent.............................................42
2.23 Lenders' Commitments.........................................................................43
2.24 Replacement Of Lender.......................................................................44
2.25 Extension of Maturity Date...................................................................45
SECTION 3 CONDITIONS PRECEDENT...................................................................................45
3.1 Corporate Due Diligence......................................................................45
3.2 Legal Opinions...............................................................................46
3.3 Documents....................................................................................46
3.4 Officers' Certificates.......................................................................46
3.5 Representations And Warranties...............................................................46
3.6 All Fees And Expenses Paid...................................................................46
3.7 No Default...................................................................................46
3.8 No Adverse Change............................................................................46
3.9 Perfection Of Encumbrances...................................................................46
3.10 Satisfaction Of Existing Indebtedness........................................................46
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3.11 Consents And Approvals.......................................................................47
3.12 No Defaults Under Applicable Law Or Material Agreements......................................47
3.13 No Litigation................................................................................47
3.14 No Negative Impact On Syndication............................................................47
3.15 No Change In Governmental Regulations........................................................47
3.16 Excess Availability..........................................................................47
3.17 Financial Statements.........................................................................47
3.18 Commitment Letter and Fee Letter.............................................................47
3.19 Business Plan................................................................................47
3.20 Benefit Of Conditions Precedent..............................................................48
SECTION 4 GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS......................................................48
4.1 Payment And Performance Of Liabilities.......................................................48
4.2 Due Organization; Authorization; No Conflicts................................................48
4.3 Trade Names..................................................................................49
4.4 Intellectual Property........................................................................50
4.5 Locations....................................................................................50
4.6 Title To Assets; Liens; Limitations on Liens.................................................51
4.7 Indebtedness.................................................................................53
4.8 Insurance....................................................................................53
4.9 Licenses.....................................................................................54
4.10 Leases.......................................................................................54
4.11 Requirements Of Law..........................................................................55
4.12 Labor Relations..............................................................................55
4.13 Maintain Collateral..........................................................................56
4.14 Taxes........................................................................................56
4.15 No Margin Stock; Investment Company..........................................................58
4.16 ERISA........................................................................................58
4.17 Hazardous Materials..........................................................................58
4.18 Litigation...................................................................................59
4.19 Dividends; Investments; Corporate Action.....................................................59
4.20 Loans........................................................................................60
4.21 Protection Of Assets.........................................................................61
4.22 Lines of Business............................................................................61
4.23 Affiliate Transactions.......................................................................61
4.24 Further Assurances...........................................................................61
4.25 Adequacy Of Disclosure.......................................................................62
4.26 No Restrictions On Liabilities...............................................................62
4.27 Permitted Refinancing of Certain Indebtedness; Amendments....................................63
4.28 Limitations on Capital Expenditures..........................................................63
4.29 Store Closings...............................................................................63
4.30 Certain Proceeds.............................................................................63
4.31 Post Closing Matters.........................................................................63
4.32 Other Covenants..............................................................................64
SECTION 5 FINANCIAL REPORTING AND PERFORMANCE COVENANTS..........................................................64
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5.1 Maintain Records.............................................................................64
5.2 Access To Records............................................................................65
5.3 Immediate Notice To Administrative Agent.....................................................65
5.4 Borrowing Base Certificate...................................................................67
5.5 Monthly Reports..............................................................................67
5.6 Quarterly Reports............................................................................67
5.7 Annual Reports...............................................................................67
5.8 Officers' Certificates.......................................................................68
5.9 Inventories, Appraisals, And Audits..........................................................68
5.10 Additional Financial Information.............................................................69
5.11 Financial Performance Covenants..............................................................70
SECTION 6 USE OF COLLATERAL......................................................................................71
6.1 Use Of Inventory Collateral..................................................................71
6.2 Inventory Quality............................................................................71
6.3 Adjustments and Allowances...................................................................71
6.4 Validity of Accounts.........................................................................72
6.5 Notification to Account Debtors..............................................................72
SECTION 7 CASH MANAGEMENT; PAYMENT OF LIABILITIES................................................................72
7.1 Depository Accounts..........................................................................72
7.2 Credit Card Receipts.........................................................................73
7.3 The Concentration, Blocked, and Operating Accounts...........................................73
7.4 Proceeds and Collections.....................................................................74
7.5 Payment of Liabilities.......................................................................75
SECTION 8 GRANT OF SECURITY INTEREST.............................................................................75
8.1 Grant of Security Interest...................................................................75
8.2 Extent and Duration of Security Interest.....................................................77
SECTION 9 ADMINISTRATIVE AGENT AS CREDIT PARTIES' ATTORNEY-IN-FACT...............................................77
9.1 Appointment as Attorney-In-Fact..............................................................77
9.2 No Obligation to Act.........................................................................78
SECTION 10 EVENTS OF DEFAULT.....................................................................................78
10.1 Failure to Pay Loans.........................................................................78
10.2 Failure to Make Other Payments...............................................................78
10.3 Failure to Perform Covenant Or Liability (No Grace Period)...................................78
10.4 Failure to Perform Covenant or Liability (Grace Period)......................................78
10.5 Misrepresentation............................................................................79
10.6 Acceleration of Other Debt; Breach of Lease..................................................79
10.7 Uninsured Casualty Loss......................................................................79
10.8 Attachment; Judgment; Restraint of Business..................................................79
10.9 Business Failure.............................................................................79
10.10 Bankruptcy...................................................................................80
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10.11 Indictment - Forfeiture......................................................................80
10.12 Challenge to Loan Documents..................................................................80
10.13 Change in Control............................................................................80
SECTION 11 RIGHTS AND REMEDIES UPON DEFAULT......................................................................81
11.1 Acceleration.................................................................................81
11.2 Rights of Enforcement........................................................................81
11.3 Sale of Collateral...........................................................................81
11.4 Occupation of Business Location..............................................................82
11.5 Grant of Nonexclusive License................................................................83
11.6 Assembly of Collateral.......................................................................83
11.7 Rights and Remedies..........................................................................83
SECTION 12 FUNDINGS AND DISTRIBUTIONS............................................................................84
12.1 Funding Procedures...........................................................................84
12.2 Swing Line Loans.............................................................................84
12.3 Administrative Agent's Covering of Funding...................................................85
12.4 Ordinary Course Distributions................................................................87
SECTION 13 ACCELERATION AND LIQUIDATION..........................................................................88
13.1 Acceleration Notices.........................................................................88
13.2 Acceleration.................................................................................88
13.3 Initiation of Liquidation....................................................................88
13.4 Actions at and Following Initiation of Liquidation...........................................88
13.5 Administrative Agent's Conduct of Liquidation................................................89
13.6 Distribution of Liquidation Proceeds.........................................................89
13.7 Relative Priorities to Proceeds of Liquidation...............................................90
SECTION 14 THE ADMINISTRATIVE AGENT..............................................................................91
14.1 Appointment of the Administrative Agent......................................................91
14.2 Responsibilities of Administrative Agent; Other Agents.......................................91
14.3 Concerning Distributions by the Administrative Agent.........................................92
14.4 Dispute Resolution...........................................................................93
14.5 Distributions of Notices and of Documents....................................................93
14.6 Confidential Information.....................................................................93
14.7 Reliance By Administrative Agent.............................................................93
14.8 Non-Reliance on Administrative Agent and Other Lenders.......................................94
14.9 Indemnification..............................................................................95
14.10 Resignation of Administrative Agent..........................................................95
SECTION 15 ACTION BY ADMINISTRATIVE AGENT - CONSENTS - AMENDMENTS - WAIVERS......................................96
15.1 Administration of Credit Facilities..........................................................96
15.2 Actions Requiring or on Direction of Majority Lenders........................................96
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15.3 Actions Requiring or on Direction Of Supermajority Revolving Credit Lenders..................96
15.4 Actions Requiring or Directed by Unanimous Consent...........................................96
15.5 Actions Requiring Swing Line Lender Consent..................................................98
15.6 Actions Requiring Issuer Consent.............................................................98
15.7 Actions Requiring Administrative Agent's Consent.............................................98
15.8 Miscellaneous Actions........................................................................99
15.9 Actions Requiring Lead Borrower's Consent....................................................99
15.10 NonConsenting Lender........................................................................100
SECTION 16 ASSIGNMENTS BY LENDERS...............................................................................101
16.1 Assignments and Assumptions.................................................................101
16.2 Assignment Procedures.......................................................................101
16.3 Effect of Assignment........................................................................102
SECTION 17 NOTICES..............................................................................................103
17.1 Notice Addresses............................................................................103
17.2 Notice Given................................................................................104
SECTION 18 TERMINATION..........................................................................................114
18.1 Termination of Revolving Credit.............................................................114
18.2 Actions on Termination......................................................................114
SECTION 19 GUARANTY.............................................................................................105
19.1 Guaranty....................................................................................105
19.2 No Impairment of Guaranty...................................................................106
19.3 Subrogation.................................................................................107
19.4 Credit Agreement............................................................................107
19.5 Maximum Guaranteed Amount...................................................................107
SECTION 20 MISCELLANEOUS........................................................................................107
20.1 Protection of Collateral....................................................................107
20.2 Publicity...................................................................................107
20.3 Successors and Assigns......................................................................108
20.4 Severability................................................................................108
20.5 Amendments; Course of Dealing...............................................................108
20.6 Power of Attorney...........................................................................109
20.7 Application of Proceeds.....................................................................109
20.8 Increased Costs.............................................................................109
20.9 Costs and Expenses of the Administrative Agent..............................................110
20.10 Copies and Facsimiles.......................................................................110
20.11 Governing Law...............................................................................111
20.12 Consent to Jurisdiction.....................................................................111
20.13 Indemnification.............................................................................111
20.14 Rules of Construction.......................................................................112
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20.15 Intent......................................................................................113
20.16 Participations..............................................................................113
20.17 Right of Set-Off............................................................................114
20.18 Pledges.....................................................................................114
20.19 Maximum Interest Rate.......................................................................114
20.20 Waivers.....................................................................................114
20.21 Additional Waivers..........................................................................115
20.22 Confidentiality.............................................................................116
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EXHIBITS
Exhibit A Form of Swing Line Note
Exhibit B-1 Form of Revolving Credit Note
Exhibit B-2 Form of Term Note
Exhibit C Closing Documents List
Exhibit D Form of Borrowing Base Certificate
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Blocked Account Agreement
Exhibit G Form of DDA Notification
Exhibit H Form of Credit Card Notification
SCHEDULES
Schedule 1.1(a) Payables
Schedule 1.1(b) Initial Store Closings
Schedule 2.18 Existing Fleet Letters of Credit
Schedule 2.23 Commitments and Percentages
Schedule 4.2(b) Corporate Information
Schedule 4.2(d) Corporate Structure
Schedule 4.2(e) Affiliates
Schedule 4.3 Trade Names
Schedule 4.5 Locations and Landlords
Schedule 4.6(a) Encumbrances
Schedule 4.6(b) Consigned Property
Schedule 4.7 Existing Indebtedness
Schedule 4.8 Insurance Policies
Schedule 4.10 Leases
Schedule 4.12 Employee Matters
Schedule 4.14 Taxes
Schedule 4.18 Litigation
Schedule 4.19 Existing Investments
Schedule 4.23 Affiliate Transactions
Schedule 5.5 Financial Reporting Requirements
Schedule 7.1 Deposit Accounts
Schedule 7.2 Credit Card Arrangements
Schedule 7.3 Blocked Account Banks
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THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), dated as of March 9,
2001 is made by and among Fleet Retail Finance Inc., as Administrative Agent and
Collateral Agent (in any such capacity, herein the "Administrative Agent"), a
Delaware corporation with offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, as agent for the ratable benefit of the Issuer (as defined below) and the
"Lenders", who are, at present, those financial institutions identified on the
signature pages of this Agreement and who in the future are those Persons (if
any) who become "Lenders" in accordance with the provisions of Section 2.23,
below; the Lenders; Fleet National Bank ("Fleet"), a bank organized under the
laws of the United States of America, having an office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as issuing bank (in such capacity, the "Issuer");
ShopKo Stores, Inc. (in such capacity, the "Lead Borrower"), a Wisconsin
corporation with its principal executive offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, as agent for ShopKo Stores, Inc. and Pamida, Inc., a Delaware
corporation with its principal executive offices at ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (each, a "Borrower" and collectively with the Lead Borrower, the
"Borrowers") and each of the guarantors listed in Schedule 4.2(b) (each a
"Guarantor" and collectively, "Guarantors"), in consideration of the mutual
covenants contained herein and benefits to be derived herefrom,
W I T N E S S E T H:
SECTION 1
DEFINITIONS
As used herein, the following terms have the following meanings or are
defined in the section of this Agreement so indicated:
"Account Advance Rate": 85%.
"Accounts" and "Accounts Receivable": include, without limitation,
"accounts" as defined in the Uniform Commercial Code in effect in the State of
New York on the date hereof and also all: accounts, accounts receivable,
health-care-insurance receivables, Receivables and rights to payment (whether or
not earned by performance) (i) for property that has been or is to be sold,
leased, assigned, or otherwise disposed of; (ii) for services rendered or to be
rendered; (iii) for a policy of insurance issued or to be issued insuring
Accounts or Inventory; and (iv) arising out of the use of a credit or charge
card or information contained on or used with such card; and also all reclaimed,
returned, rejected or repossessed Inventory (if any), the sale of which gave
rise to any Account.
"ACH": Automated clearing house.
"Acquisition": The purchase or acquisition of all or substantially all of
the assets of any Person, the purchase of a controlling equity interest in any
Person, or the merger or consolidation of any Person with any other Person, in
any transaction or group of transactions which are part of a common plan.
"Administrative Agent": As defined in the Preamble hereto.
"Administrative Agent's Cover": As defined in Section 12.3(c)(i).
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"Administrative Agent's Rights and Remedies": As defined in Section 11.7.
"Affiliate": The following:
(a) With respect to any two Persons, a relationship in which (i) one
such Person holds, directly or indirectly, not less than twenty five
percent (25%) of the capital stock, beneficial interests, partnership
interests, or other equity interests of the other Person; or (ii) one such
Person has, directly or indirectly, the right, under ordinary
circumstances, to vote for the election of a majority of the directors (or
other body or Person who has those powers customarily vested in a board of
directors of a corporation) of the other Person; or (iii) not less than
twenty five percent (25%) of their respective ownership is directly or
indirectly held by the same third Person.
(b) Any Person which: is a parent, brother-sister or Subsidiary, of
any Credit Party; could have its tax returns or financial statements
consolidated with any Credit Party's; could be a member of the same
controlled group of corporations (within the meaning of Section 1563(a)(1),
(2) and (3) of the Internal Revenue Code of 1986, as amended from time to
time) of which any Credit Party is a member; controls, is controlled by or
is under common control with any Credit Party.
"Agent's Fee": As defined in Section 2.15.
"Agency Agreement": The Agency Agreement, dated January 30, 2001 between
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and the Lead Borrower.
"Agency Agreement L/C": The letter of credit issued pursuant to the Agency
Agreement naming the Administrative Agent as beneficiary.
"Agency Amount": The amount set forth on each Borrowing Base Certificate as
the Agency Amount which shall be equal to the Guaranteed Amount (as defined in
the Agency Agreement) less any amounts paid by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in respect of the
Guaranteed Amount; provided, however, that the Agency Amount shall not exceed
$13,985,000.00 and, if the Agency Agreement L/C has not been delivered to the
Administrative Agent and is not in full force and effect, the Agency Amount
shall be $0.00.
"Agreement": As defined in the Preamble hereto.
"Applicable Law": As to any Person: (i) All statutes, rules, regulations,
orders, or other requirements having the force of law and (ii) all court orders
and injunctions, arbitrator's decisions, and/or similar rulings, in each
instance ((i) and (ii)) of or by any federal, state, municipal, and other
Governmental Authority, or court, tribunal, panel, or other body which has or
claims jurisdiction over such Person, or any property of such Person.
"Applicable Margin": The rates for Base Margin Loans and Eurodollar Loans
based upon the following criteria:
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Level Operating Cash Flow Applicable Margin Applicable Margin
----- ------------------- ----------------- -----------------
1 >175,000,000.00 0% 2.00%
2 <=175,000,000.00 0.25% 2.25%
and >$125,000,000.00
3 <125,000,000.00 0.50% 2.50%
The Applicable Margin shall initially be established at no less than those rates
set forth in Level 2 and shall remain at such Level for the first twelve (12)
months after the Closing Date regardless of Operating Cash Flow. Thereafter, the
Applicable Margin shall be determined on a quarterly basis as of the day that
the Lead Borrower provides the Administrative Agent with the most recent report
required pursuant to Section 5.6 (the "Change Date"), based on the Operating
Cash Flow for the preceding twelve (12) months; provided that the Applicable
Margin with respect to any Loan outstanding as of the Change Date shall change
effective as of the Interest Payment Date with respect to such Loan first
occurring on or after such Change Date. Notwithstanding the foregoing, from and
after the Closing Date, Level 3 shall be in effect for each day in any month (as
of the first day of such month) if Availability falls below $60,000,000 during
such month regardless of the then applicable Operating Cash Flow. During the
existence of an Event of Default, interest shall accrue at the rate set forth in
Section 2.12(f).
"Appraised Inventory Liquidation Value": The product of (a) the Cost of
Eligible Inventory (net of Inventory Reserves) multiplied by (b) a percentage,
determined from the then most recent appraisal of the Inventory Credit Parties'
Inventory undertaken at the request of the Administrative Agent by an
independent appraiser reasonably acceptable to the Administrative Agent, that
reflects the appraiser's opinion of the net recovery on the Inventory Credit
Parties' Inventory in the event of an in-store liquidation of such Inventory.
"Appraised Inventory Percentage": 85%.
"Assignee Lender": As defined in Section 16.1(a).
"Assigning Lender": As defined in Section 16.1(a).
"Assignment and Acceptance": As defined in Section 16.2.
"Availability": The lesser of (a) or (b), where:
(a) is the result of ((i) +(ii)) - ((iii)+(iv)+(v)), where
(i) is the Revolving Credit Ceiling,
(ii) is the aggregate outstanding amount of Term Loans,
(iii) is the aggregate unpaid balance of the Loan Account,
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(iv) is, without duplication, the aggregate undrawn Stated Amount
of all then outstanding L/Cs, and
(v) is the aggregate amount of any unreimbursed drawings under
any L/C
and
(b) is the result of (i) - ((ii)+(iii)+(iv)), where
(i) is the Borrowing Base,
(ii) is the aggregate unpaid balance of the Loan Account,
(iii) is, without duplication, the aggregate undrawn Stated Amount
of all then outstanding L/Cs, and
(iv) is the aggregate amount of any unreimbursed drawings under
any L/C.
"Availability Reserves": Such reserves as the Administrative Agent from
time to time determines (after consultation with the Lead Borrower (whose
consent to any Availability Reserve shall not be required)) in the
Administrative Agent's reasonable business judgment and in good faith as being
appropriate to reflect the impediments to the Administrative Agent's 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 the
following:
(a) Customer Credit Liabilities.
(b) To the extent the Inventory or Accounts subject to such taxes or
other governmental charges or claims are otherwise included in the
Borrowing Base, taxes and other governmental charges or claims, including,
ad valorem, personal property, and other taxes and claims for wages, in
each case, which have priority over the Collateral Interests of the
Administrative Agent in the Collateral.
(c) Payables beyond normal terms, other than payables described on
Schedule 1.1(a); provided that the amount of the payables so described are
not increased.
(d) Amounts payable to Payless for sales of Payless Inventory pursuant
to the Payless Agreement.
"Bankruptcy Code": Title 11, U.S.C., as amended from time to time.
"Base": For any day, (a) the Base Rate announced from time to time by Fleet
(or any successor in interest to Fleet) as its "Base Rate" or (b) if no such
Base Rate is announced by Fleet, the Federal Funds Effective Rate in effect on
such day plus one-half of one percent (0.50%) per annum. Any change in the Base
Rate due to a change in Fleet's Base Rate or the
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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.
"Base Margin Loan": Each Loan while bearing interest at the Base Margin
Rate.
"Base Margin Rate": The aggregate of Base plus the Applicable Margin for
Base Margin Loans.
"Blocked Account": Any DDA into which the contents of any other DDA is
transferred and any account maintained by the Administrative Agent to receive
the proceeds of Capital Events and casualty insurance proceeds related to
Collateral.
"Blocked Account Agreement": An agreement in the form of Exhibit F, with
such changes as may be acceptable to the Administrative Agent.
"Borrower" and "Borrowers": As defined in the Preamble hereto.
"Borrowing Base": The aggregate of the following:
The aggregate of the face amount of Eligible Credit Card Receivables
and Eligible Pharmacy Accounts multiplied by the Account Advance Rate
plus
the lesser of (a) the Cost of Eligible Inventory (net of Inventory
Reserves) multiplied by the Inventory Advance Rate or (b) the Appraised
Inventory Percentage of the Appraised Inventory Liquidation Value
plus
the Agency Amount
minus
the aggregate of the Availability Reserves.
"Borrowing Base Certificate": As defined in Section 5.4.
"Business Day": Any day other than (a) a Saturday or Sunday; (b) any day on
which banks in Boston, Massachusetts or Green Bay, Wisconsin, and when involving
any DDA or Blocked Account, the office of the financial institution at which
that DDA or Blocked Account, as the case may be, is maintained, generally are
not open to the general public for the purpose of conducting commercial banking
business; or (c) a day on which the principal office of the Administrative Agent
is not open to the general public to conduct business.
"Capital Event": The issuance by any Credit Party on or after the Closing
Date (a) of Indebtedness for borrowed money (other than Indebtedness permitted
pursuant to Sections 4.7(f) and 4.7(g)) or (b) of any equity interest for cash,
excluding (i) any sale or issuance to
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management, employees or directors pursuant to stock option or similar plans and
(ii) the sale or issuance of equity resulting in an aggregate amount of gross
proceeds on and after the Closing Date not to exceed $25,000,000.00. Nothing
contained in this definition or in any provision relating to Capital Events
shall permit or be deemed to permit any Credit Party to effectuate a Capital
Event which is otherwise prohibited hereunder.
"Capital Expenditures": The expenditure of funds or the incurrence of
liabilities which are capitalized in accordance with GAAP.
"Capital Lease": Any lease which is capitalized in accordance with GAAP.
"Cash Control Event": Either (a) the occurrence and continuance of any
Event of Default, or (b) Availability at any time is less than $80,000,000.00
for three consecutive Business Days or less than $50,000,000.00 on any Business
Day. For purposes hereof, the occurrence of a Cash Control Event under clause
(b) hereof shall be deemed continuing notwithstanding that Availability may
thereafter exceed the amounts set forth in such clause unless and until
Availability exceeds $100,000,000.00 for thirty consecutive days, in which case
a Cash Control Event shall no longer be deemed to be continuing for purposes of
clause (b) hereof (until a subsequent occurrence of (b) above).
"Change in Control": The occurrence of any of the following:
(a) The acquisition, by any group of persons (within the meaning of
the Securities Exchange Act of 1934, as amended) or by any Person, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission) of 33 1/3% or more of the issued and outstanding
capital stock of the Lead Borrower having the right, under ordinary
circumstances, to vote for the election of directors of the Lead Borrower,
other than (i) the Lead Borrower or (ii) any trustee or other fiduciary
holding securities under an employee benefit plan of the Lead Borrower.
(b) More than half of the persons who were directors of the Lead
Borrower on the first day of any period consisting of twelve (12)
consecutive calendar months (the first of which twelve (12) month periods
commencing with the first day of the month during which this Agreement was
executed), cease, for any reason other than retirement, death or
disability, to be directors of the Lead Borrower, and their respective
replacements are not nominated or appointed by a majority of the Persons
who were directors on the first day of such twelve (12) consecutive
calendar months or who were nominated or appointed by directors so
nominated or appointed.
(c) Any failure of the Lead Borrower to own, beneficially and of
record, 100% of the capital stock of all other Credit Parties, either
directly or indirectly through one or more other Credit Parties.
"Chattel Paper": As defined in the Uniform Commercial Code as in effect in
the State of New York on the date hereof.
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"Closing Date": The date upon which the conditions precedent set forth in
Section 3 hereof have been satisfied or waived and the Term Loan and the first
Revolving Credit Loans are to be made and L/Cs to be issued hereunder.
"Closing Documents List": As attached hereto as Exhibit C.
"Co-Agents": collectively, General Electric Capital Corporation, The CIT
Group/Business Credit, Inc., National City Commercial Finance, Inc. and ▇.▇.
▇▇▇▇▇▇ Business Credit Corp. through The Chase Manhattan Bank.
"Collateral": As defined in Section 8.1.
"Collateral Interest": Any interest in property to secure an obligation,
including, without limitation, a security interest, lien, mortgage, or deed of
trust.
"Commitment": As to any Lender, the sum of the Term Loan Commitment and
Revolving Credit Commitment of such Lender.
"Commitment Fee": As defined in Section 2.14.
"Commitment Letter": The Commitment Letter dated January 24, 2001, among
ShopKo Stores, Inc, the Administrative Agent and the Arranger.
"Concentration Account": As defined in Section 7.3.
"Consent": Actual consent given by the Lender from whom such consent is
sought; or the passage of seven (7) Business Days from receipt of written notice
to a Lender from the Administrative Agent of a proposed course of action to be
followed by the Administrative Agent without such Lender's giving the
Administrative Agent written notice of that Lender's objection to such course of
action, provided that the Administrative Agent may rely on such passage of time
as consent by a Lender only if such written notice states that consent will be
deemed effective if no objection is received within such time period.
"Consolidated": When used to modify a financial term, test, statement, or
report, refers to the application or preparation of such term, test, statement
or report (as applicable) based upon the consolidation, in accordance with GAAP,
of the financial condition or operating results of the Lead Borrower and its
Subsidiaries.
"Cost": The lower of (a) or (b), where:
(a) is the calculated cost of purchases, based upon the accounting
practices of the Credit Parties in effect on the date on which this
Agreement was executed, as such calculated cost is determined from the
Inventory Credit Parties' perpetual inventory system.
(b) is, the value of Inventory at market, as determined in accordance
with GAAP.
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"Cost" does not include inventory capitalization costs or other non-purchase
price charges (such as freight) used in the Inventory Credit Parties'
calculation of cost of goods sold.
"Costs of Collection": Includes, without limitation, all reasonable
attorneys' fees and out-of-pocket expenses incurred by the Administrative Agent,
and all reasonable out-of-pocket costs incurred by the Administrative Agent in
the administration of the Liabilities and/or the Loan Documents, including,
without limitation, reasonable costs and expenses associated with travel by or
on behalf of the Administrative Agent, where such costs and expenses are related
to or in respect of the Administrative Agent's: administration and management of
the Liabilities; negotiation, documentation, and amendment of any Loan Document;
or efforts to preserve, protect, collect, or enforce the Collateral, the
Liabilities, and/or the Administrative Agent's Rights and Remedies and/or any of
the rights and remedies of the Administrative Agent against or in respect of any
guarantor or other person liable in respect of the Liabilities (whether or not
suit is instituted in connection with such efforts). "Costs of Collection" shall
also include the reasonable fees and expenses of Lenders' Special Counsel. The
Costs of Collection are Liabilities, and at the Administrative Agent's option
may bear interest at the then effective Base Margin Rate.
"Covenant Compliance Event": Availability at any time is less than
$60,000,000.00.
"Credit Parties": The Borrowers, the Guarantors and any other Subsidiary of
the Lead Borrower that becomes a party to any Loan Document.
"Customer Credit Liability": Gift certificates, merchandise credits,
layaway obligations, frequent shopping programs, and similar liabilities of any
Credit Party to its retail customers and prospective customers.
"DDA": Any checking or other demand daily depository account maintained by
any Credit Party in which proceeds of any Credit Party's Inventory or Accounts
are deposited.
"Default": Any occurrence, circumstance, or state of facts with respect to
a Credit Party which (a) is an Event of Default; or (b) would become an Event of
Default if any requisite notice were given and/or any requisite period of time
were to run and such occurrence, circumstance, or state of facts were not
absolutely cured or waived in writing by the requisite Lenders hereunder within
any applicable grace period.
"Delinquent Lender": As defined in Section 12.3(c).
"Deposit Account": As defined in the Uniform Commercial Code as in effect
in the State of New York on the date hereof.
"Diversion Inventory": Inventory purchased and/or held by a Credit Party
for sale to a retailer, wholesaler, distributor or other non-consumer who is not
a Credit Party.
"Documentary L/Cs": L/Cs issued pursuant to this Agreement for the account
of any Borrower to support any Inventory Credit Party's purchases in the
ordinary course of
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business of Inventory for use in its retail store business, the drawing under
which requires the delivery of bills of lading, airway bills or other similar
types of documents of title.
"Documentation Agent": ▇▇▇▇▇▇ Financial Inc.
"Documents": As defined in the Uniform Commercial Code in effect in the
State of New York on the date hereof.
"Early Termination Fee": As defined in Section 2.17.
"EBITDA": Consolidated earnings before interest, taxes, depreciation, and
amortization, each as determined in accordance with GAAP.
"Eligible Assignee": A bank, insurance company, finance company or other
financial institution or fund engaged in the business of making or investing in
commercial loans in the ordinary course of its business having a combined
capital and surplus or assets under management in excess of $300,000,000 or any
Affiliate of any Lender, or any Person to whom a Lender assigns its rights and
obligations under this Agreement as part of a programmed assignment and transfer
of such Lender's rights in and to a material portion of such Lender's portfolio
of asset-based credit facilities.
"Eligible Credit Card Receivables": Accounts of any Inventory Credit Party
due on a non-recourse basis (other than any unasserted chargebacks) from major
credit card processors as arise in the ordinary course of business, and as have
been earned by performance. 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 six (6) Business
Days from the date of sale;
(b) Accounts with respect to which a Credit Party does not have good,
valid and marketable title thereto, free and clear of any Encumbrance
(other than Encumbrances granted to the Administrative Agent, for its
benefit and the ratable benefit of the other Lenders, pursuant to the Loan
Documents and unasserted claims pursuant to the merchant bank agreement
relating to the credit card account);
(c) 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);
(d) Accounts in which the Administrative Agent does not have a
perfected security interest which is prior and superior to all other
security interests, claims and Encumbrances (other than unasserted claims
pursuant to the merchant bank agreement relating to the credit card); and
(e) Accounts which the Administrative Agent determines in its
reasonable discretion and in good faith to be uncertain of collection.
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"Eligible Inventory": Inventory owned by any Inventory Credit Party and
maintained by an Inventory Credit Party at a warehouse or held for sale in any
of the Inventory Credit Parties' retail stores, in each case in the United
States of America (including its territories and possessions), which is
reflected in the perpetual inventory system of the Inventory Credit Parties, as
to which Inventory the Administrative Agent has a perfected security interest
which is prior and superior to all other security interests, claims, and
Encumbrances. "Eligible Inventory" also includes Inventory ("Eligible L/C
Inventory") as to which a Documentary L/C has been issued with an expiry date
within sixty (60) days of such date of determination and which, if owned by and
in the possession of the applicable Inventory Credit Party, would be treated as
Eligible Inventory hereunder (as determined by the Administrative Agent in good
faith and in its reasonable discretion), but only if such Inventory has been
consigned to the Issuer or the applicable Inventory Credit Party (along with
delivery to the Issuer or such Inventory Credit Party, as applicable, of the
documents of title with respect thereto) and is subject to custom broker
agreement in form and substance satisfactory to the Administrative Agent. In no
event, however, does "Eligible Inventory" include: any inventory in transit to
any Inventory Credit Party (other than Eligible L/C Inventory), any inventory in
foreign locations (other than Eligible L/C Inventory), prescription optical
inventory, samples, non-merchandise inventory (such as labels, bags, and
packaging materials); damaged goods; return to vendor merchandise; packaways;
Diversion Inventory or consigned inventory (including, without limitation, the
Payless Inventory).
"Eligible L/C Inventory": As defined in the definition of Eligible
Inventory.
"Eligible Pharmacy Accounts": Pharmacy Accounts other than those Accounts
listed below unless such Accounts have been approved in writing by the
Administrative Agent:
(a) Pharmacy Accounts that have been outstanding for more than sixty
(60) days from invoice;
(b) All Pharmacy Accounts of an account debtor if 25% or more of such
account debtor's Pharmacy Accounts have been outstanding for more than
sixty (60) days from invoice;
(c) Pharmacy Accounts with respect to which a Credit Party does not
have good, valid and marketable title thereto, free and clear of any
Encumbrance (other than Encumbrances granted to the Administrative Agent,
for its benefit and the ratable benefit of the other Secured Parties,
pursuant to the Loan Documents);
(d) Pharmacy 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);
(e) Pharmacy Accounts with respect to which the Administrative Agent
does not have a perfected security interest which is prior and superior to
all other security interests, claims and Encumbrances; and
(f) Pharmacy Accounts collected at the store-level.
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"Eligible Pharmacy Inventory": Eligible Inventory consisting of
prescription and pharmaceutical merchandise which is, under prevailing industry
standards, a covered medication under medical insurance and prescription drug
plans together with all diabetic supplies.
"Employee Benefit Plan": As defined in ERISA.
"Encumbrance": Each of the following:
(a) A Collateral Interest or agreement to create or grant a Collateral
Interest; the interest of a lessor under a Capital Lease; conditional sale
or other title retention agreement; a sale of accounts receivable or
chattel paper; or any other arrangement pursuant to which any Person is
entitled to any preference or priority with respect to the property or
assets of another Person or the income or profits of such other Person;
each of the foregoing whether consensual or non-consensual and whether
arising by way of agreement, operation of law, legal process or otherwise.
(b) The filing of any financing statement under the UCC or comparable
law of any jurisdiction.
"End Date": The date upon which all of the following shall have occurred
(a) all Liabilities (excluding any unmatured contingent reimbursement and
indemnification Liabilities) have been paid in full, (b) all L/C's issued
hereunder have been terminated or secured to the satisfaction of the
Administrative Agent (or cash collateralized in an amount equal to 103% of the
undrawn face amount thereof in a manner acceptable to the Administrative Agent)
and (c) all obligations of any Lender to make loans and advances and to provide
other financial accommodations to the Borrowers hereunder shall have been
irrevocably terminated.
"Environmental Laws": All of the following:
(a) Any Applicable Law which regulates or relates to, or imposes any
standard of conduct or liability on account of or in respect to
environmental protection matters, including, without limitation, Hazardous
Materials, as are now or hereafter in effect.
(b) The common law relating to damage to Persons or property from
Hazardous Materials.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate": Any Person which is under common control with any Credit
Party within the meaning of Section 4001 of ERISA or is part of a group which
includes any Credit Party and which would be treated as a single employer under
Section 414 of the Internal Revenue Code of 1986, as amended.
"Eurodollar Business Day": Any day which is both a Business Day and a day
on which the principal market in Eurodollars in which Fleet participates is open
for dealings in United States Dollar deposits.
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"Eurodollar Loan": Any Loan which bears interest at a Eurodollar Rate.
"Eurodollar Offer Rate": That rate of interest (rounded upwards, if
necessary, to the next 1/100 of 1%) determined by the Administrative Agent to be
the prevailing rate per annum at which deposits in U.S. Dollars are offered to
Fleet, by first-class banks in the Eurodollar market in which Fleet participates
at or about 10:00 AM (Boston) two (2) Eurodollar Business Days before the first
day of the Interest Period for the subject Eurodollar Loan, for a deposit
approximately in the amount of the subject loan for a period of time
approximately equal to such Interest Period.
"Eurodollar Rate": That per annum rate which is the aggregate of the
Eurodollar Offer Rate plus the Applicable Margin for Eurodollar Loans, except
that, in the event that the Administrative Agent determines that any Lender may
be subject to the Reserve Percentage, the "Eurodollar Rate" shall mean, with
respect to any Eurodollar Loans then outstanding (from the date on which that
Reserve Percentage first became applicable to such Eurodollar Loans), and with
respect to all Eurodollar Loans thereafter made (but only so long as a Lender is
subject to a Reserve Percentage), an interest rate per annum equal the sum of
(a) plus (b), where:
(a) is the decimal equivalent of the following fraction:
Eurodollar Offer Rate
--------------------------
1 minus Reserve Percentage
(b) is the Applicable Margin for Eurodollar Loans.
"Events of Default": As defined in Article 10.
"Excluded Asset": All Operating Property of the Credit Parties, all
Subsidiary Stock and any other property of the Credit Parties which is not
Collateral hereunder.
"Exempt DDA": A depository account maintained by any Credit Party, the only
contents of which may be transfers from the Operating Account which are used
solely (i) for ▇▇▇▇▇ cash purposes; or (ii) for payroll.
"Existing Indentures": Collectively, all of the following:
(a) Indenture between the Lead Borrower and First Trust National
Association, as Trustee, dated as of March 12, 1992, as supplemented May
22, 1998, with respect to the Lead Borrower's 9.25% Senior Notes due March
15, 2022;
(b) Indenture between the Lead Borrower and First Trust National
Association, as Trustee, dated as of March 12, 1992, as supplemented May
22, 1998, with respect to the Lead Borrower's 8.50% Senior Notes due March
15, 2002;
(c) Indenture between the Lead Borrower and First Trust National
Association, as Trustee, dated as of July 15, 1993, as supplemented May 22,
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1998, with respect to the Lead Borrower's 6.50% Senior Notes due July 15,
2003 and with respect to the Lead Borrower's 9.00% Senior Notes due July
15, 2004.
"Federal Funds Effective Rate". For any day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal fund
brokers, as published for such day (or, if such day is not a Business Day, for
the next preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for such day on such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by the
Administrative Agent.
"Fee Letter": That letter dated January 24, 2001, and styled "Fee Letter"
between the Lead Borrower and the Administrative Agent, as such letter may from
time to time be amended or modified.
"Fiscal": When followed by "month" or "quarter", the relevant fiscal period
based on the Lead Borrower's fiscal year and accounting conventions.
"Fleet": As defined in the Preamble hereto.
"GAAP": Principles which are consistent with those promulgated or adopted
by the Financial Accounting Standards Board and its predecessors (or successors)
in effect and applicable to that accounting period in respect of which reference
to GAAP is being made, provided, however, in the event of a Material Accounting
Change, then unless otherwise specifically agreed to by the Administrative Agent
and the Lead Borrower, (a) the Credit Parties' compliance with the financial
performance covenants imposed pursuant to Section 5.11 shall be determined as if
such Material Accounting Change had not taken place and (b) the Lead Borrower
shall include, with its monthly, quarterly, and annual financial statements a
schedule, certified by the Lead Borrower's chief financial officer, on which the
effect of such Material Accounting Change on that statement shall be described.
"General Intangible": As defined in the Uniform Commercial Code in effect
in the State of New York on the date hereof.
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇": ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Retail Partners, LLC, a Delaware limited
liability company.
"Goods": As defined in the Uniform Commercial Code in effect in the State
of New York on the date hereof, and also includes all things that are movable
when a security interest therein attaches and also all computer programs
embedded in goods and any supporting information provided in connection with a
transaction relating to the program if (i) the program is associated with the
goods in such manner that it customarily is considered part of the goods or (ii)
by becoming the owner of the goods, a Person acquires a right to use the program
in connection with the goods.
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"Governmental Authority": Any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantors": As defined in the Preamble hereto and includes all direct and
indirect wholly owned domestic subsidiaries of the Lead Borrower now in
existence or hereafter acquired or created.
"Hazardous Materials": Any (a) substance which is defined or regulated as a
hazardous material in or under any Environmental Law and (b) oil in any physical
state.
"Hedge Agreements": All obligations of any Person in respect of interest
rate swap agreements, currency swap agreements and other similar agreements
designed to hedge against fluctuations in interest rates or foreign exchange
rates.
"Indebtedness": All indebtedness and obligations of or assumed by any
Person on account of or in respect to, without duplication, any of the
following: (a) in respect of money borrowed (including any indebtedness which is
non-recourse to the credit of such Person but which is secured by an Encumbrance
on any asset of such Person) whether or not evidenced by a promissory note,
bond, debenture or other written obligation to pay money; (b) in connection with
any letter of credit or acceptance transaction (including, without limitation,
the face amount of all letters of credit and acceptances issued for the account
of such Person or reimbursement on account of which such Person would be
obligated); (c) in connection with the sale or discount of accounts receivable
or chattel paper of such Person; (d) as lessee under Capital Leases; (e) on
account of Hedge Agreements; or (f) in connection with any sale and leaseback
transaction. "Indebtedness" also includes: (a) indebtedness of others secured by
an Encumbrance on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; (b) any guaranty, endorsement, suretyship or other
undertaking pursuant to which that Person may be liable on account of any
obligation of any third party; or (c) the Indebtedness of a partnership or joint
venture for which such Person is liable as a general partner or joint venturer.
"Indemnified Person": As defined in Section 20.13.
"Information": As defined in Section 20.22.
"Initial Store Closings": The closing of stores, disposition of related
assets, employee reductions and disposition of vacant real estate, all with
respect to the locations set forth on Schedule 1.1(b).
"Intercompany Subordinated Demand Promissory Note" the intercompany note
required to be executed and delivered by the Credit Parties on the Closing Date
pursuant to the Closing Documents List.
"Instruments": As defined in the Uniform Commercial Code in effect in the
State of New York on the date hereof.
"Interest Payment Date": With reference to (a) each Eurodollar Loan: the
last day of the Interest Period relating thereto (provided that if the Interest
Period is greater than three
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months in length, the Interest Payment Date shall be the last day of the third
month of such Interest Period and the last day of the Interest Period); the
Termination Date; and the End Date; and (b) each Base Margin Loan: the first day
of each month; the Termination Date; and the End Date.
"Interest Period": The following:
(a) With respect to each Eurodollar Loan: Subject to Subsection (c),
below, the period commencing on the date of the making or continuation of,
or conversion to, the subject Eurodollar Loan and ending one, two, three,
or six months thereafter, as the Lead Borrower may elect by notice
(pursuant to Section 2.5) to the Administrative Agent
(b) With respect to each Base Margin Loan: Subject to Subsection (c),
below, the period commencing on the date of the making or continuation of
or conversion to such Base Margin Loan and ending on that date (i) as of
which the subject Base Margin Loan is converted to a Eurodollar Loan, as
the Lead Borrower may elect by notice (pursuant to Section 2.5) to the
Administrative Agent, or (ii) on which the subject Base Margin Loan is paid
by the Borrowers.
(c) The setting of Interest Periods is in all instances subject to the
following:
(i) Any Interest Period for a Base Margin Loan which would
otherwise end on a day which is not a Business Day shall be extended
to the next succeeding Business Day.
(ii) Any Interest Period for a Eurodollar Loan which would
otherwise end on a day that is not a Business Day shall be extended to
the next succeeding Business Day, unless that succeeding Business Day
is in the next calendar month, in which event such Interest Period
shall end on the last Business Day of the month during which the
Interest Period ends.
(iii) Subject to Subsection (iv) below, any Interest Period
applicable to a Eurodollar Loan, which Interest Period begins on a day
for which there is no numerically corresponding day in the calendar
month during which such Interest Period ends, shall end on the last
Business Day of the month during which that Interest Period ends.
(iv) Any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(v) The number of Interest Periods in effect at any one time
is subject to Section 2.12(d) hereof.
"Inventory": Includes, without limitation, "inventory" as defined in the
Uniform Commercial Code in effect in the State of New York on the date hereof
and also all: (a) Goods which are leased by a Person as lessor; are held by a
Person for sale or lease or to be furnished
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under a contract of service; are furnished by a Person under a contract of
service; or consist of raw materials, work in process, or materials used or
consumed in a business; (b) Goods of said description in transit; (c) Goods of
said description which are returned, repossessed and rejected; (d) packaging,
advertising, and shipping materials related to any of the foregoing; and (e)
Documents which represent any of the foregoing.
"Inventory Advance Rate":
(a) As to Eligible Inventory (other than Eligible Pharmacy Inventory)
owned by the ShopKo Inventory Pool, 69% of the Cost of such Eligible
Inventory (from January 1 through July 31 of each year), 70% of the Cost of
such Eligible Inventory (from August 1 though September 30 of each year)
and 71% of the Cost of such Eligible Inventory (at all other times);
(b) as to Eligible Inventory (other than Eligible Pharmacy Inventory)
owned by the Pamida Inventory Pool, 66% of the Cost of such Eligible
Inventory (from January 1 through September 30 of each year) and 67% of the
Cost of such Eligible Inventory (at all other times); and
(c) as to Eligible Pharmacy Inventory, 68% of the Cost of such
Eligible Pharmacy Inventory.
"Inventory Credit Party": Any Credit Party which is a member of the ShopKo
Inventory Pool or the Pamida Inventory Pool.
"Inventory Reserves": Such Reserves as may be established from time to time
by the Administrative Agent (after consultation with the Lead Borrower (whose
consent to any Inventory Reserve shall not be required)), without duplication,
in the Administrative Agent's reasonable business judgment 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 foregoing, Inventory Reserves may include
(but are not limited to) reserves based on, without duplication, the following:
(a) Obsolescence (based upon Inventory on hand beyond a given number
of days);
(b) seasonality;
(c) shrinkage;
(d) imbalance;
(e) change in Inventory character;
(f) change in Inventory composition;
(g) change in Inventory mix;
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(h) markdowns (both permanent and point of sale); and
(i) retail markons and markups inconsistent with prior period practice
and performance; or advertising calendar and planned advertising events.
"Investment Property": As defined in the Uniform Commercial Code in effect
in the State of New York on the date hereof.
"Issuer": The issuer of any L/C. The Issuer shall be Fleet or such other
Revolving Credit Lender (or Affiliate of a Revolving Credit Lender) as the
Administrative Agent may, in its discretion, select with the consent of the Lead
Borrower whose consent shall not be unreasonably delayed or withheld.
"L/C": Any letter of credit, the issuance of which is procured by the
Administrative Agent for the account of any Borrower and any acceptance made on
account of such letter of credit.
"Lead Borrower": As defined in the Preamble hereto.
"Lease": Any lease or other agreement, no matter how styled or structured,
pursuant to which a Credit Party is entitled to the use or occupancy of any
space.
"Lenders": The Revolving Credit Lenders and the Term Loan Lenders.
"Lenders' Special Counsel": A single counsel, selected by the Majority
Lenders during the existence of an Event of Default, to represent the interests
of the Lenders in connection with the enforcement, attempted enforcement, or
preservation of any rights and remedies under this, or any other Loan Document,
as well as in connection with any "workout", forbearance, or restructuring of
the credit facility contemplated hereby.
"Letter-of-Credit Right": Any right to payment or performance under an L/C,
whether or not the beneficiary has demanded or is at the time entitled to demand
payment or performance.
"Liabilities": Collectively, the following:
(a) All and each of the following, whether now existing or hereafter
arising, under this Agreement or under any of the other Loan Documents:
(i) Any and all direct and indirect liabilities, debts, and
obligations of each Credit Party to the Secured Parties, each of every
kind, nature, and description.
(ii) Each obligation to repay any loan, advance, indebtedness,
note, obligation, overdraft, or amount now or hereafter owing by any
Credit Party to the Secured Parties (including all future advances
whether or not made pursuant to a commitment by any Secured Parties),
whether or not any of such are liquidated, unliquidated, primary,
secondary,
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secured, unsecured, direct, indirect, absolute, contingent, or of any
other type, nature, or description, or by reason of any cause of
action which any Secured Party may hold against any Credit Party.
(iii) All notes and other obligations of each Credit Party now or
hereafter assigned to or held by any Secured Party, each of every
kind, nature, and description.
(iv) All interest, fees, charges, expenses and other amounts
which may be charged by any Secured Party to any Credit Party and/or
which may be due from any Credit Party to any Secured Party from time
to time.
(v) All costs and expenses incurred or paid by any Secured Party
in respect of any agreement between any Credit Party and such Secured
Party or instrument furnished by any Credit Party to any Secured Party
(including, without limitation, Costs of Collection, attorneys' fees,
and all reasonable court and litigation costs and expenses).
(vi) Any and all covenants of each Credit Party to or with any
Secured Party and any and all obligations of each Credit Party to act
or to refrain from acting in accordance with any agreement between
that Credit Party and any Secured Party or instrument furnished by
that Credit Party to any Secured Party.
(vii) Each of the foregoing as if each reference to "any Secured
Party" includes each Affiliate of the Administrative Agent.
(b) Any and all direct or indirect liabilities, debts, and obligations
of each Credit Party to the Administrative Agent or any Affiliate of the
Administrative Agent, each of every kind, nature, and description owing on
account of any service or accommodation provided to, or for the account of
any Credit Party pursuant to this or any other Loan Document, including
cash management services and the issuances of L/Cs.
(c) All expenditures on behalf of any Credit Party made by any Secured
Party as permitted hereunder or under any other Loan Document.
"Line Fee": A fee equal to 0.375% per annum of the average difference,
during the quarter just ended (or relevant period with respect to the payment
being made on the Termination Date) between the Revolving Credit Ceiling and the
sum of (a) the aggregate of the unpaid principal balance of the Revolving Credit
Loans (other than the Swing Line Loans) and (b) the undrawn Stated Amount of
L/Cs outstanding during the relevant period.
"Liquidation": The exercise, by the Administrative Agent of those rights
accorded to the Administrative Agent under the Loan Documents as a creditor of
the Credit Parties during the existence of an Event of Default looking towards
the realization on the
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Collateral. Derivations of the word "Liquidation" (such as "Liquidate") are used
with like meaning in this Agreement.
"Loan Account": As defined in Section 2.9(a).
"Loan Documents": This Agreement, the Fee Letter, the Notes, each
instrument and document executed and/or delivered as contemplated by Section 3,
below, and each other instrument or document from time to time executed and/or
delivered in connection with the arrangements contemplated hereby, including in
connection with any transaction with the Administrative Agent or any Affiliate
of the Administrative Agent, including, without limitation, any transaction
which arises out of any cash management, depository or letter of credit services
provided by the Administrative Agent or any Affiliate of the Administrative
Agent (such Affiliates, the "Other Transactions Counterparties") to any Credit
Party, as each may be amended or otherwise modified from time to time.
"Loans": The Revolving Credit Loans and Term Loans.
"Majority Lenders": at any time, Lenders (other than Delinquent Lenders)
holding more than 50% of the sum of (i) the aggregate unpaid principal amount of
the Term Loans then outstanding (other than Term Loans held by Delinquent
Lenders) and (ii) the aggregate amount of Revolving Credit Commitments (other
than any Revolving Credit Commitments held by Delinquent Lenders) then in
effect, or, if the Revolving Credit Commitments have been terminated, the
aggregate amount of Revolving Credit Loans then outstanding (other than any
Revolving Credit Loans held by Delinquent Lenders).
"Material Accounting Change": Any change in GAAP applicable to accounting
periods subsequent to the Credit Parties' fiscal year most recently completed
prior to the execution of this Agreement, which change has a material effect on
the Credit Parties' Consolidated financial condition or operating results, as
reflected on financial statements and reports prepared by or for the Credit
Parties, when compared with such condition or results as if such change had not
taken place or where preparation of the Credit Parties' statements and reports
in compliance with such change results in the breach of a financial performance
covenant imposed pursuant to Section 5.11 where such a breach would not have
occurred if such change had not taken place or vice versa.
"Material Adverse Effect": A material adverse effect on the business,
assets or condition (financial or otherwise) of the Credit Parties, taken as a
whole, or on the value of the Collateral taken as a whole.
"Maturity Date": March 12, 2004, or if such date is extended pursuant to
Section 2.25, March 12, 2005.
"Nominee": A business entity (such as a corporation or limited partnership)
formed by the Administrative Agent to own or manage any Post Foreclosure Asset.
"NonConsenting Lender": As defined in Section 15.10.
"Notice of Acceleration": Written notice as follows:
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(a) From the Administrative Agent to the Revolving Credit Lenders, as
provided in Section 13.1(a).
(b) From the Majority Lenders to the Administrative Agent, as provided
in Section 13.1(b).
"Notes": As defined in Section 2.10(b).
"Operating Account": As defined in Section 7.3.
"Operating Cash Flow": As to the Lead Borrower and its Subsidiaries, for
any period, Consolidated EBITDA minus Capital Expenditures incurred during such
period, all as determined in accordance with GAAP.
"Operating Property": Any retail store, warehouse, distribution center,
office, land or other facility or real property owned or used by the Lead
Borrower or any of its Subsidiaries having an area (including all floor area) in
excess of 30,000 square feet in the aggregate; provided that any parcel of land
(including all facilities and improvements thereon) which is owned by the Lead
Borrower or any of its Subsidiaries and no part of which is used by the Lead
Borrower or any of its Subsidiaries and no part of which is under construction
or development for use by the Lead Borrower or any of its Subsidiaries shall not
constitute an Operating Property until such time as any such use, construction
or development begins.
"Other Transactions Counterparties": As defined in the definition of Loan
Documents.
"OverLoan": A loan, advance, or providing of credit support (such as the
issuance of any L/C) to the extent that, immediately after its having been made,
Availability is less than zero.
"Pamida Inventory Pool": collectively, Pamida Inc., P.M. Place Stores
Company and Seaway Importing Company.
"Participant": As defined in Section 20.16.
"Payless": Payless Shoe Source, Inc..
"Payless Agreement": The License Agreement dated July 23, 1999 (as in
effect on such date) between Payless and ShopKo Stores, Inc.
"Payless Inventory": Inventory owned by Payless which is sold through the
Credit Parties' stores pursuant to the Payless Agreement.
"Payment Intangible": Any general intangible under which the account
debtor's principal obligation is a monetary obligation.
"Permissible OverLoans": Revolving Credit Loans which are OverLoans, but as
to which each of the following conditions is satisfied: (a) the Revolving Credit
Ceiling is not
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exceeded; and (b) when aggregated with all other Permissible OverLoans, such
Revolving Credit Loans do not aggregate more than five percent (5%) of the
aggregate of the Borrowing Base; (c) the Permissible OverLoans shall not remain
outstanding for more than forty-five (45) consecutive days, and (d) such
Revolving Credit Loans are made or undertaken in the Administrative Agent's
discretion to protect and preserve the interests of the Revolving Credit
Lenders.
"Permitted Acquisitions": An Acquisition in which each of the following
conditions are satisfied:
(a) No Default or Event of Default then exists or would arise from the
consummation of such Acquisition.
(b) Such Acquisition shall have been approved by the Board of
Directors of the Person (if such Person is a corporation) which is the
subject or "target" of such Acquisition and such Person shall not have
announced that it will oppose such Acquisition or shall not have commenced
any action which alleges that such Acquisition will violate applicable law.
(c) The Lead Borrower shall have furnished the Administrative Agent
with thirty (30) days prior notice of such intended Acquisition and shall
have furnished the Administrative Agent with a business plan, a current
draft of the acquisition agreement, summary of any due diligence undertaken
by any Credit Party in connection with such Acquisition, appropriate
financial statements of the Person which is the subject of such
Acquisition, pro forma financial statements for the twelve month period
following such Acquisition after giving effect to such Acquisition, and
such other information as the Administrative Agent may reasonably require.
(d) The structure of the Acquisition shall be acceptable to the
Administrative Agent in its reasonable judgment, which acceptance shall not
be unreasonably withheld or delayed. After consummation of the Acquisition,
a Credit Party shall own directly or indirectly a majority of the equity
interests in the Person being acquired and shall control a majority of any
voting interests, and/or shall otherwise control the governance of the
Person being acquired.
(e) If the Acquisition involves a merger, consolidation or stock
acquisition, the Person which is the subject of such Acquisition shall be
engaged in a line of business reasonably related to that of the Lead
Borrower.
(f) If the Person which is the subject of such Acquisition will be
maintained as a Subsidiary of the Lead Borrower, the Administrative Agent
shall have received a guaranty of the Liabilities from such Subsidiary and
a security interest in such Subsidiary's inventory, accounts and other
property of the same nature as constitutes Collateral in order to secure
the Liabilities.
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(g) The total consideration paid for such Acquisition (in the form of
cash, earn outs, property, or assumption of Indebtedness, exclusive of
common stock of the Lead Borrower) shall not exceed $10,000,000.00 and the
total consideration paid for all such Acquisitions (in the form of cash,
earn outs, property, or assumption of Indebtedness, exclusive of common
stock of the Lead Borrower) shall not exceed $50,000,000.00 in the
aggregate.
(h) After giving effect to the Acquisition, Availability shall be at
least $100,000,000.00 and Availability is projected on a pro forma basis to
be at least $100,000,000.00 for the twelve months immediately following
such Acquisition.
provided that, Acquisitions of Prescription Lists and individual Acquisitions of
less than $1,000,000.00 and aggregating less than $10,000,000.00 during the term
of this Agreement shall be permitted without the need to satisfy subsections (b)
through (h), above.
"Permitted Encumbrances": Any of the following:
(a) Encumbrances for taxes, assessments or governmental charges not
yet due or which are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are
maintained on the books of the Credit Parties in accordance with GAAP, and
provided further that no notice of tax or other lien has been filed with
respect thereto.
(b) Carrier's, warehousemen's, mechanics', materialmen's, repairmen's,
landlord's, or similar Encumbrances arising in the ordinary course of
business which are not overdue by more than thirty (30) days or that are
being contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of the
Credit Parties in accordance with GAAP.
(c) Pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation.
(d) Deposits to secure customs, duties, the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature in the ordinary course of business.
(e) Easements, rights of way, leases, restrictions, minor title
irregularities and other similar encumbrances incurred in the ordinary
course of business that in the aggregate are not substantial in amount and
which do not in any case materially detract from the value of the real
estate subject thereto or materially interfere with the conduct of the
business of the Credit Parties.
(f) Any interest or title of a lessor under any lease entered into by
any Credit Party in the ordinary course of business but only with respect
to the assets so leased.
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The inclusion of the foregoing as "Permitted Encumbrances" shall not limit or
impair the right of the Administrative Agent to impose Reserves on account
thereof in accordance with the provisions of this Agreement.
"Permitted Investments": 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 not more than one year from the date of acquisition thereof;
(b) investments in commercial paper maturing not more than one year
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard & Poor's or
from ▇▇▇▇▇'▇ Investment Services, Inc.;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing not more than one year from the date of acquisition
thereof issued or guaranteed by or placed with, 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;
(e) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's or from ▇▇▇▇▇'▇
Investment Services, Inc.; and
(f) investments in money market funds, substantially all the assets of
which are comprised of securities of the types described in clauses (a)
through (e) above.
"Person": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other enterprise or entity.
"Pharmacy Accounts": All of the Inventory Credit Parties' now owned or
hereinafter acquired and arising rights to payment for services rendered and/or
goods sold or leased, in each case, in connection with dispensing prescriptions,
pharmaceuticals, medications and controlled substances, whether or not earned by
performance, and whether constituting
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accounts, general intangibles, chattel paper, interests or claims in or under
insurance policies, or otherwise, and all rights to payment from insurance
companies, managed care organizations, pharmacy plans, governmental entities and
other third parties (or the pharmacy plan administrators of such companies,
organizations, plans, entities and other third parties) that support or secure
any of the foregoing in whole or in part, all proceeds and insurance proceeds of
the foregoing, and any contracts and records with respect to any of the
foregoing.
"Post Foreclosure Asset": All or any part of the Collateral, ownership of
which is acquired by the Administrative Agent or a Nominee on account of the
"bidding in" at a disposition as part of a Liquidation or by reason of a "deed
in lieu" type of transaction.
"Prescription Lists": Lists of customers for which specific prescription
information is regularly maintained in the ordinary course of business.
"Proceeds": Includes, without limitation, "Proceeds" as defined in the
Uniform Commercial Code in effect in the State of New York on the date hereof
and shall also include: (i) whatever is collected on, or distributed on account
of, Collateral; (ii) rights arising out of Collateral; (iii) to the extent of
the value of Collateral, claims arising out of the loss, non-conformity, or
interference with the use of, defects or infringement of rights in, or damage
to, Collateral; and (iv) to the extent of the value of Collateral and to the
extent payable to any Credit Party or Secured Party, insurance payable by reason
of the loss or nonconformity of, defects or infringement of rights in, or damage
to, Collateral.
"Realty Sale": Any sale, lease, conveyance, transfer, financing, or other
disposition by any Credit Party (including by way of merger, consolidation or a
sale-leaseback transaction) in any transaction or group of transactions that are
part of a common plan, of any real estate or any other assets other than
Accounts or Inventory.
"Receipts": All cash, cash equivalents, money, checks, credit card slips,
receipts and other proceeds from any sale of the Collateral.
"Receivable": Any right to payment for goods sold or leased or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel
Paper and whether or not it has been earned by performance (including, without
limitation, any Account).
"Receivables Collateral": That portion of the Collateral which consists of
(a) Accounts, (b) instruments arising from, relating to, or constituting
proceeds of, the Credit Parties' Accounts, Inventory and Pharmacy Accounts, (c)
documents relating to the Credit Parties' Inventory, (d) Payment Intangibles
arising from, relating to, or constituting proceeds of, the Credit Parties'
Accounts, Inventory and Pharmacy Accounts and (e) Letter-of-Credit Rights,
bankers' acceptances, and all other rights to payment arising from, or relating
to, or constituting proceeds of, the Credit Parties' Accounts, Inventory and
Pharmacy Accounts.
"Register": As defined in Section 16.2(c).
"Related Entity": Any Person in which a Credit Party is a partner, joint
venturer, stockholder, or member or in which a Credit Party holds an equity or
other ownership interest, and which Person does not constitute a Subsidiary of
any Credit Party.
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"Requirements of Law": As to any Person:
(a) Applicable Law;
(b) that Person's organizational documents; or
(c) that Person's by-laws and/or other instruments which deal with
corporate or similar governance, as applicable.
"Reserve Percentage": The decimal equivalent of that rate applicable to a
Lender under regulations issued from time to time by the Board of Governors of
the Federal Reserve System for determining the maximum reserve requirement of
that Lender with respect to "Eurocurrency liabilities" as defined in such
regulations. The Reserve Percentage applicable to a particular Eurodollar Loan
shall be based upon that in effect during the subject Interest Period, with
changes in the Reserve Percentage which take effect during such Interest Period
to take effect (and to consequently change any interest rate determined with
reference to the Reserve Percentage) if and when such change is applicable to
such loans.
"Reserves": The following: Availability Reserves and Inventory Reserves.
Notwithstanding any provisions of this Agreement to the contrary, (a) the
imposition of a new Reserve or a change to a then existing Reserve may be made
only with not less than five (5) Business Days prior notice to the Lead
Borrower, except that an increase or decrease in the amount of a then existing
Reserve, which increase or decrease is calculated in accordance with the same
methodology as was utilized to establish the existing Reserve and merely
reflects the results of mathematical computations of the items already in the
category to which such Reserve applies (such as a change in the aggregate of
Customer Credit Liabilities), may be made without such notice and (b) the
Administrative Agent shall impose a new Reserve or change a Reserve only
utilizing the same criteria as the Administrative Agent utilizes in imposing or
changing Reserves for other of its similar borrowers and in the exercise of good
faith.
"Revolving Credit": As defined in Section 2.1.
"Revolving Credit Ceiling": $500,000,000.00.
"Revolving Credit Commitment": With respect to each Revolving Credit
Lender, that amount set forth on Schedule 2.23, (as such amounts may change in
accordance with the provisions of this Agreement).
"Revolving Credit Commitment Percentage": With respect to each Revolving
Credit Lender, that percentage set forth on Schedule 2.23, (as such percentages
may change in accordance with the provisions of this Agreement).
"Revolving Credit Lenders": Each Person who is or becomes a "Revolving
Credit Lender" in accordance with the provisions of this Agreement.
"Revolving Credit Loans": Loans made under the Revolving Credit, except
that where the term "Revolving Credit Loan" is used with reference to available
interest rates
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applicable to the loans under the Revolving Credit, it refers to so much of the
unpaid principal balance of the Loan Account as bears the same rate of interest
for the same Interest Period.
"Revolving Credit Note": As defined in Section 2.10.
"SEC": The United States Securities and Exchange Commission.
"Secured Parties": collectively, the Administrative Agent, the Lenders, the
Issuer and the Other Transactions Counterparties, and a "Secured Party" shall
mean any of the foregoing.
"ShopKo Inventory Pool": collectively, ShopKo Stores, Inc., ShopKo
Properties, Inc., ▇▇▇▇-▇▇▇▇▇▇▇, Incorporated and SKO Holdings, Inc.
"Standby L/Cs": L/Cs issued pursuant to this Agreement, the drawing under
which does not require the delivery of bills of lading, airway bills or other
similar types of documents of title, or which are customarily referred to as
standby letters of credit.
"Stated Amount": The maximum amount for which an L/C may be honored.
"Subsidiary": Any corporation, association, partnership, limited liability
company, trust, or other business entity of which the designated parent shall at
any time own directly or indirectly through a Subsidiary or Subsidiaries at
least a majority (by number of votes or controlling interests) of the
outstanding voting interests.
"Subsidiary Stock": All shares of capital stock of any Subsidiary of the
Lead Borrower.
"Supermajority Revolving Credit Lenders": Prior to termination of the
Revolving Credit Commitments, Revolving Credit Lenders (other than Delinquent
Lenders) holding 66 2/3% or more of the Revolving Credit Commitments (other than
any Revolving Credit Commitments held by Delinquent Lenders). After termination
of the Revolving Credit Commitments, Revolving Credit Lenders (other than
Delinquent Lenders) holding 66 2/3% or more of the Liabilities (other than any
Liabilities held by Delinquent Lenders).
"Supporting Obligation": A Letter-of-Credit Right or secondary obligation
which supports the payment or performance of an Account, Chattel Paper, a
Document, a General Intangible, an Instrument or Investment Property.
"Swing Line": The facility pursuant to which the Swing Line Lender may
advance Revolving Credit Loans aggregating up to the Swing Line Loan Ceiling.
"Swing Line Lender": Fleet Retail Finance Inc.
"Swing Line Loan Ceiling": $40,000,000.00.
"Swing Line Loans": As defined in Section 2.7(a).
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"Swing Line Note" As defined in Section 2.7(c).
"Syndication Agent": Bank of America, N.A.
"Term Loan Commitment": With respect to each Term Loan Lender, that amount
set forth on Schedule 2.23, (as such amounts may change in accordance with the
provisions of this Agreement).
"Term Loan Lenders": Each Person who is or becomes a Term Loan Lender in
accordance with this Agreement.
"Term Loan Percentage": As to any Term Loan Lender, the percentage which
the aggregate principal amount of such Term Loan Lender's Term Loans then
outstanding constitutes of the aggregate principal amount of the Term Loans then
outstanding.
"Term Loans": As defined in Section 2.8, except that where the term "Term
Loan" is used with reference to available interest rates applicable to the Term
Loans, it refers to so much of the unpaid principal balance of the Term Loans as
bears the same rate of interest for the same Interest Period.
"Termination Date": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 10.10, below; or (c) the
Administrative Agent's notice to the Lead Borrower setting the Termination Date
on account of the occurrence of any Event of Default other than as described in
Section 10.10, below.
"Terminating Credit Facilities": collectively, (i) the Credit Agreement
between ShopKo Stores, Inc. and Bankers Trust Company, as Agent, and the other
parties thereto, dated July 8, 1997, (ii) the Credit Agreement between ShopKo
Stores, Inc. and Bank of America, as Agent, and the other parties thereto, dated
August 29, 2000, (iii) the Amended and Restated Banker's Acceptance Facility
between ShopKo Stores, Inc. and Fleet National Bank, dated March 24, 2000 and
(iv) the Fleet Master Commercial Letter of Credit Reimbursement and Security
Agreement (the "Fleet LOC Facility").
"Total Commitment Percentage": As to any Lender, the percentage that such
Lender's Commitment constitutes of the aggregate Commitment of all Lenders.
"Total Term Loan Commitment": $100,000,000.00.
"Transfer": Wire transfer pursuant to the wire transfer system maintained
by the Board of Governors of the Federal Reserve Board, or as otherwise may be
agreed to from time to time by the Administrative Agent making such Transfer and
the subject Revolving Credit Lender. Wire instructions may be changed in the
same manner that Notice Addresses may be changed (Section 17.1), except that no
change of the wire instructions for Transfers to any Revolving Credit Lender
shall be effective without the consent of the Administrative Agent.
"UCC": The Uniform Commercial Code as in effect from time to time in the
State of New York.
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"Unanimous Consent": Prior to termination of the Revolving Credit
Commitments, Consent of Lenders (other than Delinquent Lenders) holding 100% of
(i) the aggregate unpaid principal amount of the Term Loans then outstanding
(other than Term Loans held by Delinquent Lenders) and (ii) (A) prior to
termination of the Revolving Credit Commitments, the Revolving Credit
Commitments (other than Revolving Credit Commitments held by Delinquent Lenders)
or (B) after termination of the Revolving Credit Commitments, the aggregate
unpaid principal amount of the Revolving Credit Loans then outstanding (other
than Revolving Credit Loans held by Delinquent Lenders).
"Unused Fee": A fee equal to 0.375% per annum of the average difference,
during the quarter just ended (or relevant period with respect to the payment
being made on the Termination Date) between the Revolving Credit Ceiling and the
sum of (a) the aggregate of the unpaid principal balance of the Revolving Credit
Loans (including the Swing Line Loans) and (b) the undrawn Stated Amount of L/Cs
outstanding during the relevant period.
SECTION 2
THE REVOLVING CREDIT AND THE TERM LOAN
2.1 Establishment Of Revolving Credit. (a) The Revolving Credit Lenders
hereby establish a revolving line of credit (the "Revolving Credit") in the
Borrowers' favor pursuant to which each Revolving Credit Lender, subject to, and
in accordance with, this Agreement, acting through the Administrative Agent,
shall make loans and advances and otherwise provide financial accommodations to
and for the account of the Borrowers as provided herein.
(b) Loans, advances, and financial accommodations under the Revolving
Credit shall be made with reference to the Borrowing Base and shall be subject
to Availability. The Borrowing Base and Availability shall be determined by the
Administrative Agent by reference to Borrowing Base Certificates furnished as
provided in Section 5.4, below. Such determination shall take into account those
Reserves as may be applicable thereto. The initial Reserves as of the date of
this Agreement are the following:
(i) Customer Credit Liabilities (an Availability Reserve): An amount
equal to 50% of the outstanding Customer Credit Liabilities from time to
time.
(ii) Shrinkage (an Inventory Reserve): As to the Lead Borrower,
$10,000,000.00, and as to Pamida, $5,000,000.00.
(iii) Damaged Goods (an Inventory Reserve): An amount equal to the
value of damaged and return to vendors Inventory as reflected in the Credit
Parties' books and records.
(iv) Rent (an Availability Reserve): An amount equal to all past due
rent and warehouse charges for any of the Credit Parties' locations where
Collateral is located and where such charges have priority over the
Collateral Interests of the Administrative Agent in the Collateral.
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(v) L/C Landing Costs Reserve (an Inventory Reserve): An amount
equal to the historical amount that the Credit Parties are required to pay
for customs, duties and other similar charges incurred in connection with
Inventory purchases.
(c) The commitment of each Revolving Credit Lender to provide such loans,
advances, and financial accommodations is subject to Section 2.23.
(d) The proceeds of borrowings under the Revolving Credit (and the Term
Loans) shall be used solely to refinance the Terminating Credit Facilities on
the Closing Date and Indebtedness under the Existing Indentures as they mature
(subject to Section 4.27), and for general corporate purposes of the Borrowers,
including, without limitation, to fund certain stock and bond repurchases
(subject to Section 4.27), to finance the issuance of Standby and Documentary
L/Cs, purchases of Inventory by the Inventory Credit Parties and to provide for
the Credit Parties' other working capital and Capital Expenditures needs, all
solely to the extent permitted by this Agreement.
2.2 Advances In Excess Of Borrowing Base (OverLoans). (a) No Revolving
Credit Lender has any obligation to make any Revolving Credit Loan, or otherwise
to provide any credit to or for the benefit of the Borrowers where the result of
such Revolving Credit Loan or credit is an OverLoan; provided that the
Administrative Agent is permitted (but not obligated) to make Permissible
OverLoans and to be reimbursed therefor by the Revolving Credit Lenders pursuant
to Section 12.3.
(b) The Revolving Credit Lenders' obligations, among themselves, are
subject to Section 12.3(a) (which relates to each Revolving Credit Lender's
making amounts available to the Administrative Agent).
(c) The Revolving Credit Lenders' providing of an OverLoan on any one
occasion does not affect the obligations of each Borrower hereunder (including
each Borrower's obligation to immediately repay any amount which otherwise
constitutes an OverLoan) nor obligate the Revolving Credit Lenders to do so on
any other occasion.
2.3 Risks Of Value Of Collateral. The Administrative Agent's reference to a
given asset in connection with the making of Revolving Credit Loans and the
providing of financial accommodations under the Revolving Credit and/or the
monitoring of compliance with the provisions hereof shall not be deemed a
determination by the Administrative Agent or any Revolving Credit Lender
relative to the actual value of the asset in question. All risks concerning the
value of the Collateral are and remain upon the Credit Parties. All Collateral
secures the prompt, punctual, and faithful performance of the Liabilities
whether or not relied upon by the Administrative Agent in connection with the
making of Revolving Credit Loans and the providing of financial accommodations
under the Revolving Credit.
2.4 Commitment To Make Revolving Credit Loans And Support Letters Of
Credit. Subject to the provisions of this Agreement (including with respect to
the making of Permissible OverLoans), the Revolving Credit Lenders shall make a
loan or advance under the
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Revolving Credit and the Issuer shall issue an L/C for the account of any
Borrower, in each instance if duly and timely requested by the Lead Borrower as
provided herein provided that:
(a) Availability will not be exceeded.
(b) no Default has occurred and is continuing.
2.5 Loan Requests. (a) Requests for Revolving Credit Loans or for the
continuance or conversion of an interest rate applicable to a Loan may be
requested by the Lead Borrower in such manner as may from time to time be
reasonably acceptable to the Administrative Agent.
(b) Subject to the provisions of this Agreement, the Lead Borrower may
request a Revolving Credit Loan and elect an interest rate and Interest Period
to be applicable to a Loan or continue or convert an interest rate applicable to
existing Loans by giving notice to the Administrative Agent by no later than the
following:
(i) If such Loan is to be, or is to be converted to, a Base Margin
Loan: By 1:00 PM Boston time one (1) Business Day before the date on which
the subject Loan is to be made or is to be so converted. Base Margin Loans
requested by the Lead Borrower, other than those resulting from the
conversion of a Eurodollar Loan, shall not be less than $500,000.00.
(ii) If such Loan is to be, or is to be continued as, or converted
to, a Eurodollar Loan: By 1:00 PM Boston time three (3) Eurodollar Business
Days before the commencement of any new Interest Period or the end of the
then applicable Interest Period. Eurodollar Loans and conversions to
Eurodollar Loans shall each be not less than $1,000,000.00 and in
increments of $1,000,000.00 in excess of such minimum.
(iii) Any Eurodollar Loan which matures while an Event of Default
exists shall be converted, at the option of the Administrative Agent, to a
Base Margin Loan notwithstanding any notice from the Lead Borrower that
such Loan is to be continued as a Eurodollar Loan.
(c) Any request for a Revolving Credit Loan or for the continuance or
conversion of an interest rate applicable to a Loan which is made after the
applicable deadline therefor, as set forth above, shall be deemed to have been
made at the opening of business on the then next Business Day or Eurodollar
Business Day, as applicable.
(d) The Lead Borrower may request that the Administrative Agent cause the
issuance by the Issuer of L/Cs for the account of the Borrowers as provided in
Section 2.18.
(e) The Administrative Agent may rely on any request for a Loan or other
financial accommodation under the Revolving Credit which the Administrative
Agent, in good faith, believes to have been made by a Person duly authorized to
act on behalf of the Lead Borrower and may decline to make any such requested
loan or advance, or issuance, or to provide any such financial accommodation
pending the Administrative Agent's being furnished
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with such documentation concerning that Person's authority to act as may be
satisfactory to the Administrative Agent.
(f) A request by the Lead Borrower for a loan or advance, or other
financial accommodation under this Agreement shall be irrevocable and shall
constitute certification by each Credit Party that as of the date of such
request, each of the following is true and correct:
(i) Each representation which is made herein or in any of the Loan
Documents is then true and complete in all material respects as of and as
if made on the date of such request (except for representations that relate
to an earlier date, in which case that representation shall have been true
on such earlier date).
(ii) No Default then exists.
(g) If, at any time or from time to time, any Default exists:
(i) The Administrative Agent may, or at the request of the Majority
Lenders shall, suspend the Revolving Credit immediately.
(ii) Neither the Administrative Agent nor any Revolving Credit Lender
shall be obligated, during such suspension, to make any Revolving Credit
Loans or to provide any financial accommodation hereunder nor shall the
Administrative Agent, any Revolving Credit Lender or the Issuer be
obligated, during such suspension, to issue, or cause to be issued, any
L/C.
(iii) The Administrative Agent may suspend the right of the Lead
Borrower to request any Eurodollar Loan or to convert any Base Margin Loan
to a Eurodollar Loan.
2.6 Making Of Revolving Credit Loans. (a) A Loan shall be made by the
transfer of the proceeds of such Loan to the Operating Account or as otherwise
instructed by the Lead Borrower.
(b) A Loan shall be deemed to have been made under this Agreement (and the
Borrowers shall be indebted to the Administrative Agent and the Lenders for the
amount thereof immediately) at the following:
(i) The Administrative Agent's initiation of the transfer of the
proceeds of such Loan in accordance with the Lead Borrower's instructions
(if such Loan is of funds requested by the Lead Borrower).
(ii) The charging of the amount of such Loan to the Loan Account (in
all other circumstances).
(c) There shall not be any recourse to or liability of the Administrative
Agent or any Lender, on account of:
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(i) Any delay in the making of any Loan requested under this
Agreement.
(ii) Any delay by any bank or other depository institution in
treating the proceeds of any such Loan as collected funds.
(iii) Any delay in the receipt, and/or any loss, of funds which
constitute a Loan under this Agreement, the wire transfer of which was
properly initiated by the Administrative Agent in accordance with wire
instructions provided to the Administrative Agent by the Lead Borrower.
2.7 Swing Line Loans. (a) For ease of administration, Base Margin Loans may
be made by the Swing Line Lender (in the aggregate, the "Swing Line Loans") in
accordance with the procedures set forth in this Agreement for the making of
loans and advances under the Revolving Credit, except that the Lead Borrower may
request a Swing Line Loan by giving notice to the Administrative Agent by no
later than 1:00 PM on the Business Day on which the subject Swing Line Loan is
to be made. The unpaid principal balance of the Swing Line Loans shall not at
any one time be in excess of the Swing Line Loan Ceiling.
(b) The aggregate unpaid principal balance of Swing Line Loans shall bear
interest at the rate applicable to Base Margin Loans and shall be repayable as a
loan under the Revolving Credit.
(c) The Borrowers' obligation to repay Swing Line Loans shall be evidenced
by a Note in the form of Exhibit A (the "Swing Line Note"), executed by the
Borrowers, and payable to the Swing Line Lender. Neither the original nor a copy
of that Note shall be required, however, to establish or prove any Liability.
Upon the Swing Line Lender's request, the Borrowers shall execute a replacement
of any Swing Line Note which has been lost, mutilated, or destroyed thereof and
deliver such replacement to the Swing Line Lender.
(d) For all purposes of this Loan Agreement, the Swing Line Loans and the
Borrowers' obligations to the Swing Line Lender constitute Revolving Credit
Loans and are secured as "Liabilities".
(e) Swing Line Loans may be subject to periodic settlement with the
Revolving Credit Lenders as provided in this Agreement.
2.8 The Term Loan. The Term Lenders hereby each agree to make a term loan
(a "Term Loan") to the Borrowers on the Closing Date in an amount not to exceed
the amount of the Term Loan Commitment of such Term Lender. The Term Loans (or a
portion thereof) may from time to time be Eurodollar Loans or Base Rate Loans,
as determined by the Borrower and notified to the Administrative Agent in
accordance with the continuation and conversion procedures set forth with
respect to Loans in Section 2.5.
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2.9 The Loan Account.
(a) An account ("Loan Account") shall be opened on the books of the
Administrative Agent in which a record shall be kept of all Loans made and L/Cs
issued under this Agreement.
(b) The Administrative Agent shall also keep a record (either in the Loan
Account or elsewhere, as the Administrative Agent may from time to time elect)
of all interest, fees, service charges, costs, expenses and other debits owed to
the Administrative Agent and each Lender on account of the Liabilities and of
all credits against such amounts so owed.
(c) All credits against the Liabilities shall be conditional upon final
payment to the Administrative Agent for the account of each Lender of the items
giving rise to such credits. The amount of any item credited against the
Liabilities which is charged back against the Administrative Agent or any Lender
for any reason or is not so paid shall be a Liability and shall be added to the
Loan Account, whether or not the item so charged back or not so paid is
returned.
(d) Except as otherwise provided herein, all fees, service charges, costs,
and expenses for which any Borrower is obligated hereunder are payable on
demand. In the determination of Availability, the Administrative Agent may deem
fees, service charges, accrued interest, and other payments which are due and
payable as having been advanced under the Revolving Credit when such amounts are
due and payable.
(e) The Administrative Agent, without the request of the Lead Borrower, may
advance under the Revolving Credit any interest, fee, service charge, expense or
other payment to which the Administrative Agent or any Lender is entitled from
any Borrower pursuant hereto and may charge the same to the Loan Account
notwithstanding that such amount so advanced may result in the Borrowing Base
being exceeded. Such action on the part of the Administrative Agent shall not
constitute a waiver of the Administrative Agent's rights and each Borrower's
obligations under Section 2.11(b). Any amount which is added to the principal
balance of the Loan Account as provided in this Section 2.9(e) shall bear
interest at the interest rate then and thereafter applicable to Base Margin
Loans.
(f) Any statement rendered by the Administrative Agent or any Lender to the
Lead Borrower concerning the Liabilities shall be considered correct and
accepted by each Borrower and shall be conclusively binding upon each Borrower
unless the Lead Borrower provides the Administrative Agent with written
objection thereto within one hundred twenty (120) days from the mailing of such
statement, which written objection shall indicate, with particularity, the
reason for such objection. The Loan Account and the Administrative Agent's books
and records concerning the loan arrangement contemplated herein and the
Liabilities shall be prima facie evidence and proof of the items described
therein.
2.10 The Notes.
(a) The Borrowers' obligation to repay loans and advances under the
Revolving Credit, with interest as provided herein, shall be evidenced by notes
(each, a
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"Revolving Credit Note") in the form of Exhibit B-1, executed by each Borrower,
one payable to each Revolving Credit Lender.
(b) The Borrowers' obligation to repay Term Loans, with interest as
provided herein, shall be evidenced by notes (each a "Term Note" and,
collectively with the Revolving Credit Notes, and the Swing Line Note the
"Notes") in the form of Exhibit B-2, executed by each Borrower, one payable to
each Term Lender.
(c) Neither the original nor a copy of any Note shall be required, however,
to establish or prove any Liability. Upon a Lender's request and, if applicable,
the delivery of an appropriate lost instrument indemnity, each Borrower shall
execute a replacement thereof and deliver such replacement to the Administrative
Agent in the event that any Revolving Credit Note or Term Note is ever lost,
mutilated, or destroyed.
2.11 Payment Of The Loan Account. (a) Subject to Section 2.17, the
Borrowers may repay all or any portion of the principal balance of the Loan
Account from time to time until the Termination Date; provided, however, that
the Borrowers may not optionally prepay any Term Loans prior to the first
anniversary of the Closing Date.
(b) The Borrowers, without notice or demand from the Administrative Agent
or any Lender, shall pay the Administrative Agent that amount, from time to
time, which is necessary so that (i) there is no OverLoan outstanding and (ii)
the Term Loans of each Term Lender do not exceed such Term Lender's Term Loan
Commitment.
(c) During the continuance of a Cash Control Event, the Borrowers shall
repay, first, the Revolving Credit and, second, all other Liabilities (other
than the Term Loans prior to the Termination Date):
(i) in an amount equal to the proceeds realized from the sale or
other disposition of, or realization upon, any Collateral;
(ii) in an amount equal to the proceeds realized from any Capital
Event and/or casualty insurance proceeds relating to Collateral received by
any Borrower to the extent that such proceeds are not reinvested in
replacement assets within 180 days after the date of receipt of such
proceeds; and
(iii) in accordance with the provisions of Article 7 hereof;
provided that if no Revolving Loans or other Liabilities (other than Term Loans
prior to the Termination Date) are outstanding all such amounts (up to 103% of
the aggregate amount of the outstanding Term Loans) described in clauses (c)(i),
(ii) and (iii) shall be held pending such application in the Concentration
Account or a cash collateral account established with the Administrative Agent
on terms and conditions satisfactory to the Administrative Agent (and each of
the Credit Parties hereby grants to the Administrative Agent a continuing
security interest in all amounts at any time on deposit in such cash collateral
account to secure the Liabilities).
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All amounts prepaid under this Section 2.11(c) on account of the Revolving
Credit may be reborrowed under the Revolving Credit, subject to and in
accordance with, the terms of this Agreement.
(d) Subject to Section 2.17, the Borrowers shall repay the then entire
unpaid balance of the Loan Account and all other Liabilities on the Termination
Date.
(e) No payment of Eurodollar Loans shall be permitted hereunder other than
on the last day of an Interest Period applicable thereto, unless the Borrowers
simultaneously reimburse the Lenders for all amounts described in Section
2.11(f) below associated therewith. In order to avoid payment of the amounts
described in Section 2.11(f) below, 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 a
non-interest bearing 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
Administrative Agent's rights upon the subsequent occurrence of an Event of
Default).
(f) The Borrowers shall indemnify the Administrative Agent and each Lender
and hold the Administrative Agent and each Lender harmless from and against any
actual loss, cost or expense (including loss of anticipated profits and amounts
payable by the Administrative Agent or such Lender on account of "breakage fees"
(so-called)) which the Administrative Agent or such Lender actually sustains or
incurs (including, without limitation, by virtue of acceleration after the
occurrence of any Event of Default) as a consequence of the following:
(i) Default by any Borrower in payment of the principal amount of or
any interest on any Eurodollar Loan as and when due and payable, including
any such loss or expense arising from interest or fees payable by such
Lender in order to maintain its Eurodollar Loans.
(ii) Default by any Borrower in making a borrowing or conversion
after the Lead Borrower has given (or is deemed to have given) a request
for a Loan or a request to convert a Loan from one applicable interest rate
to another.
(iii) The making of any payment on a Eurodollar Loan or the making of
any conversion of any such Loan to a Base Margin Loan on a day that is not
the last day of the applicable Interest Period with respect thereto.
2.12 Interest On Loans. (a) Each Loan shall bear interest at the Base
Margin Rate unless timely notice is given (as provided in Section 2.5) that the
subject Loan (or a portion thereof) is, or is to be converted to, a Eurodollar
Loan.
(b) Each Loan which consists of a Eurodollar Loan shall bear interest at
the applicable Eurodollar Rate.
(c) Subject to, and in accordance with, the provisions of this Agreement,
the Lead Borrower may cause all or a part of the unpaid principal balance of the
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Loan Account to bear interest at the Base Margin Rate or the Eurodollar Rate as
specified from time to time by the Lead Borrower.
(d) The Lead Borrower shall not select, renew, or convert any interest rate
for a Loan such that, in addition to interest at the Base Margin Rate, there are
more than nine (9) Eurodollar Rates applicable to the Loans at any one time.
(e) The Borrowers shall pay accrued and unpaid interest on each Loan in
arrears as follows:
(i) on each Interest Payment Date for that Loan; and
(ii) during the existence of any Event of Default, with such frequency
as may be determined by the Administrative Agent.
(f) During the existence of any Event of Default (and whether or not the
Administrative Agent exercises the Administrative Agent's rights on account
thereof), all Loans shall bear interest, at the option of the Administrative
Agent or at the instruction of the Majority Lenders at a rate which is the rate
then in effect plus two percent (2%) per annum.
(g) Interest shall be calculated (i) with respect to Base Margin Loans, on
the basis of a 365 day year and for actual days elapsed, and (ii) with respect
to Eurodollar Loans, on the basis of a 360 day year and for actual days elapsed.
L/C Fees, the Line Fee and Unused Fees shall be calculated on the basis of a 365
day year and for actual days elapsed.
2.13 Voluntary Reduction Of Commitment And Revolving Credit Ceiling. The
Lead Borrower may reduce, or terminate, the Term Loan Commitments, the Revolving
Credit Commitments and the Revolving Credit Ceiling, in whole or in part from
time to time, by furnishing three (3) Business Days' written notice to the
Administrative Agent, whereupon the Commitments of the applicable Lenders shall
be reduced pro rata in accordance with their Term Loan Percentage or their
Revolving Credit Commitment Percentages, as the case may be; provided, however,
that the Lead Borrower may not voluntarily reduce or terminate the Term Loan
Commitments prior to the first anniversary of the Closing Date. Upon the
effective date of any such reduction or termination, (i) the Borrowers shall pay
to the Administrative Agent for the benefit of the applicable Lenders a pro rata
portion of any Early Termination Fee that would be payable under Section 2.17 as
a result of such reduction or termination (based upon the amount by which the
amount so reduced or terminated exceeds $100,000,000.00 in any 12-month period),
(ii) the Borrowers shall pay to the Administrative Agent for the benefit of the
Revolving Credit Lenders the accrued Unused Fee as of the date of such reduction
or termination, and (iii) the Borrowers shall pay to the Administrative Agent
for the benefit of the Lenders any amounts required under Section 2.11(b) and
Section 2.11(f) hereof. No reduction or termination of the Term Loan
Commitments, the Revolving Credit Commitments or the Revolving Credit Ceiling
may be reinstated.
2.14 Commitment Fee. In consideration of the commitment to make loans and
advances to the Borrowers under this Agreement and to maintain sufficient funds
available for
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such purpose, there has been earned and the Borrowers shall pay the "Commitment
Fee" (so referred to herein) in the amount and payable as provided in the Fee
Letter.
2.15 Administrative Agent's Fee. In addition to any other fee or expense to
be paid by the Borrowers on account of the Revolving Credit, the Borrowers shall
pay the Administrative Agent the "Agent's Fee" at the times and in the amounts
as set forth in the Fee Letter.
2.16 Unused Fee. In addition to any other fee to be paid by the Borrowers
on account of the Revolving Credit, each Revolving Credit Lender shall be paid
the Line Fee by the Administrative Agent at the times and in the manner set
forth below. The Borrowers shall pay to the Administrative Agent for the account
of the Revolving Credit Lenders, the Unused Fee. If the Unused Fee actually paid
by the Borrowers is insufficient to pay an amount equal to the Line Fee to the
Revolving Credit Lenders, the deficiency shall be paid to the Revolving Credit
Lenders by the Swing Line Lender from its own funds (and the Borrowers shall
have no liability with respect thereto). The Administrative Agent shall pay the
Line Fee (and any amounts payable by the Swing Line Lender hereunder) to the
Revolving Credit Lenders based upon their pro rata share of an amount equal to
the aggregate Line Fee due to all Revolving Credit Lenders; provided that, for
purposes of calculating the pro rata share of any Person which is both the Swing
Line Lender and a Revolving Credit Lender, such Person's share shall be equal to
the difference between (i) the sum of such Person's Revolving Credit Commitment,
and (ii) the sum of (A) such Person's Revolving Credit Commitment Percentage of
the principal amount of the Revolving Loans then outstanding (including the
principal amount of Swing Line Loans then outstanding), and (B) such Person's
Revolving Credit Commitment Percentage of the then undrawn Stated Amount of
outstanding L/Cs. The Unused Fee shall be paid in arrears, on the first day of
each quarter after the execution of this Agreement and on the Termination Date.
2.17 Early Termination Fee. In the event that (i) the Termination Date
occurs, for any reason, prior to the second anniversary hereof (other than by
virtue of the Borrowers' refinancing of the Liabilities with the Administrative
Agent or any of its Affiliates) or (ii) the Lead Borrower voluntarily reduces
the Commitments pursuant to Section 2.13, the Borrowers shall pay to the
Administrative Agent for the benefit of the Lenders whose Commitments are
terminated or reduced, an "Early Termination Fee" (so referred to herein) in an
amount equal to (a) one-half of one percent (0.50%) of the aggregate amount of
the Commitments so terminated or reduced, if the Termination Date or reduction
occurs before the first anniversary after the Closing Date, or (b) one quarter
of one percent (0.25%) of the aggregate amount of the Commitments so terminated
or reduced, if the Termination Date or reduction occurs on or after the first
anniversary after the Closing Date and on or before the second anniversary of
the Closing Date.
2.18 Procedures For Issuance Of L/Cs. (a) The Lead Borrower may request
that the Administrative Agent cause the issuance by the Issuer of L/Cs for the
account of any Borrower. Each such request shall be in such manner as may from
time to time be acceptable to the Administrative Agent. The letters of credit
listed on Schedule 2.18 issued by Fleet and outstanding on the Closing Date
shall be deemed to be issued hereunder as "L/C"s and shall be subject to all of
the provisions of this Agreement applicable to L/Cs.
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(b) The Issuer shall issue any L/C so requested by the Lead Borrower,
provided that, at the time that the request is made, the Revolving Credit has
not been suspended as provided in Section 2.5(g) and if so issued:
(i) the aggregate Stated Amount of all L/Cs then outstanding, does
not exceed Two Hundred Million Dollars and No Cents ($200,000,000.00); and
(ii) the expiry of the L/C is not later than the earlier of thirty
(30) days prior to the Maturity Date or the following:
(A) Standby's: One (1) year from initial issuance, or
(B) Documentary's: One hundred eighty (180) days from issuance.
(iii) an OverLoan will not result from the issuance of the subject
L/C.
(c) Each Borrower shall execute such documentation to apply for and support
the issuance of an L/C as may be reasonably required by the Issuer.
(d) There shall not be any recourse to, nor liability of, the
Administrative Agent or any Revolving Credit Lender on account of
(i) any delay or refusal by an Issuer to issue an L/C;
(ii) any action or inaction of an Issuer on account of or in respect
to, any L/C.
(e) The Borrowers shall reimburse the Issuer for the amount of any honoring
of a drawing under an L/C on the same day on which such honoring takes place.
The Administrative Agent, without the request of any Borrower, may advance under
the Revolving Credit (and charge to the Loan Account) the amount of any honoring
of any L/C and other amount for which any Borrower, the Issuer, or the Revolving
Credit Lenders become obligated on account of, or in respect to, any L/C. Such
advance shall be made whether or not any Default exists or such advance would
result in an OverLoan. Such action shall not constitute a waiver of the
Administrative Agent's rights under Section 2.11(b) hereof.
2.19 Fees For L/Cs. (a) The Borrowers shall pay to the Administrative
Agent (for the benefit of the Revolving Credit Lenders) a fee, on account of
L/Cs, the issuance of which had been procured by the Administrative Agent,
quarterly in arrears, and on the Termination Date and on the End Date, equal to
the following:
(i) with respect to all Standby L/Cs: At a rate per annum equal to
the Applicable Margin for Eurodollar Loans at the time of calculation of
such fees multiplied by the weighted average Stated Amount of all such
Standby L/Cs outstanding during the period in respect of which such fee is
being paid; and
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(ii) with respect to all Documentary L/Cs: At a rate per annum equal
to 0.50% less than the Applicable Margin for Eurodollar Loans at the time
of calculation of such fees multiplied by the weighted average Stated
Amount of all such Documentary L/Cs outstanding during the period in
respect of which such fee is being paid;
provided that, during the existence of any Event of Default, such fees shall be
increased by two percent (2%) per annum.
(b) In addition to the fees to be paid as provided in Subsection 2.19(a),
above, the Borrowers shall pay to the Administrative Agent (or to the Issuer, if
so requested by Administrative Agent), on demand, all issuance, processing,
negotiation, amendment, and administrative fees and other amounts customarily
charged by the Issuer on account of, or in respect to, any L/C.
(c) If any change in Applicable Law shall either:
(i) impose, modify or deem applicable any reserve, special deposit
or similar requirements against letters of credit heretofore or hereafter
issued by any Issuer or with respect to which any Revolving Credit Lender
or any Issuer has an obligation to lend to fund drawings under any L/C; or
(ii) impose on any Issuer any other condition or requirements
relating to any such letters of credit;
and the result of any event referred to in Section 2.19(c)(i) or 2.19(c)(ii),
above, shall be to increase the cost to any Revolving Credit Lender or to any
Issuer of issuing or maintaining any L/C (which increase in cost shall be the
result of such Issuer's reasonable allocation among that Revolving Credit
Lender's or Issuer's letter of credit customers of the aggregate of such cost
increases resulting from such events), then, upon demand by the Administrative
Agent and delivery by the Administrative Agent to the Lead Borrower of a
certificate of an officer of the subject Revolving Credit Lender or the subject
Issuer describing such change in law, executive order, regulation, directive, or
interpretation thereof, its effect on such Revolving Credit Lender or such
Issuer, and the basis for determining such increased costs and their allocation,
the Borrowers shall, within thirty (30) days after demand therefor, pay to the
Administrative Agent, from time to time as specified by the Administrative
Agent, such amounts as shall be sufficient to compensate the subject Revolving
Credit Lender or the subject Issuer for such increased cost. Any Revolving
Credit Lender's or any Issuer's determination of costs incurred under Section
2.19(c)(i) or 2.19(c)(ii), above, and the allocation, if any, of such costs
among the Borrowers and other letter of credit customers of such Revolving
Credit Lender or such Issuer, if done in good faith and made on an equitable
basis and in accordance with such officer's certificate, shall be conclusive and
binding on the Borrowers.
2.20 Concerning L/Cs. (a) (a) None of the Issuer, the Issuer's
correspondents, any Revolving Credit Lender, the Administrative Agent or any
advising, negotiating, or paying bank with respect to any L/C shall be
responsible in any way for:
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(i) The performance by any beneficiary under any L/C of that
beneficiary's obligations to any Borrower.
(ii) The form, sufficiency, correctness, genuineness, authority of
any person signing; falsification; or the legal effect of; any documents
called for under any L/C if (with respect to the foregoing) such documents
on their face appear to be in order.
(b) The Issuer may honor, as complying with the terms of any L/C and of any
drawing thereunder, any drafts or other documents otherwise in order, but signed
or issued by an administrator, executor, conservator, trustee in bankruptcy,
debtor in possession, assignee for the benefit of creditors, liquidator,
receiver, or other legal representative of the party authorized under such L/C
to draw or issue such drafts or other documents.
(c) Unless otherwise agreed to, in the particular instance, each Borrower
hereby authorizes any Issuer to:
(i) Select an advising bank, if any.
(ii) Select a paying bank, if any.
(iii) Select a negotiating bank.
(d) All directions, correspondence, and funds transfers relating to any L/C
are at the risk of the Borrowers. The Issuer shall have discharged the Issuer's
obligations under any L/C which, or the drawing under which, includes payment
instructions, by the initiation of the method of payment called for in, and in
accordance with, such instructions (or by any other commercially reasonable and
comparable method). None of the Administrative Agent, any Revolving Credit
Lender, or the Issuer shall have any responsibility for any inaccuracy,
interruption, error, or delay in transmission or delivery by post, facsimile,
telegraph or cable, or for any inaccuracy of translation.
(e) The Administrative Agent's, each Revolving Credit Lender's, and the
Issuer's rights, powers, privileges and immunities specified in or arising under
this Agreement are in addition to any heretofore or at any time hereafter
otherwise created or arising, whether by statute or rule of law or contract.
(f) Except to the extent otherwise expressly provided hereunder or agreed
to in writing by the Issuer and the Lead Borrower, documentary L/Cs will be
governed by the Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce, Publication No. 500, and standby L/Cs will be
governed by International Standby Practices ISP98 (adopted by the International
Chamber of Commerce on April 6, 1998) and any respective subsequent revisions
thereof.
(g) The obligations of the Borrowers under this Agreement with respect to
L/Cs are absolute, unconditional, and irrevocable and shall be performed
strictly in accordance with the terms hereof under all circumstances, whatsoever
including, without limitation, the following:
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(i) Any lack of validity or enforceability or restriction,
restraint, or stay in the enforcement of this Agreement, any L/C, or any
other agreement or instrument relating thereto.
(ii) Any Borrower's consent to any amendment or waiver of, or consent
to the departure from, any L/C.
(iii) The existence of any claim, set-off, defense, or other right
which any Borrower may have at any time against the beneficiary of any L/C.
(iv) Absent the gross negligence or willful misconduct of the Issuer,
any honoring of a drawing under any L/C, which drawing possibly could have
been dishonored due to a non-material technicality based upon a strict
construction of the terms of the L/C.
2.21 Changed Circumstances. (a) (a) The Administrative Agent may advise the
Lead Borrower that the Administrative Agent has made the good faith
determination (which determination shall be final and conclusive) of any of the
following:
(i) Adequate and fair means do not exist for ascertaining the rate
for Eurodollar Loans;
(ii) The continuation of or conversion of any Loan to a Eurodollar
Loan has been made impracticable or unlawful by the occurrence of a
contingency that materially and adversely affects the applicable market or
the compliance by the Administrative Agent or any Lender in good faith with
any Applicable Law; or
(iii) The indices on which the interest rates for Eurodollar Loans are
based shall no longer represent the effective cost to the Administrative
Agent or any Lender for U.S. dollar deposits in the interbank market for
deposits in which it regularly participates.
(b) In the event that the Administrative Agent advises the Lead Borrower of
an occurrence described in Section 2.21(a), then, until the Administrative Agent
notifies the Lead Borrower that the circumstances giving rise to such notice no
longer apply:
(i) the obligation of the Administrative Agent or each Lender to
make loans of the type affected by such changed circumstances or to permit
the Lead Borrower to select the affected interest rate as otherwise
applicable to any Loans shall be suspended; and
(ii) any notice which the Lead Borrower had given the Administrative
Agent with respect to any Eurodollar Loan, the time for action with respect
to which has not occurred prior to the Administrative Agent's having given
notice pursuant to Section 2.21(a), shall be deemed at the option of the
Administrative Agent to not have been given.
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2.22 Designation Of Lead Borrower As Borrowers' Agent. (a) Each Borrower
hereby irrevocably designates and appoints the Lead Borrower as that Borrower's
agent to obtain Loans and L/Cs under this Agreement, the proceeds of which shall
be available to each Borrower for those uses as those set forth in Section
2.1(d). As the disclosed principal for its agent, each Borrower shall be
obligated to the Administrative Agent and each Lender on account of Loans so
made and L/Cs so issued under this Agreement as if made directly by the Lenders
to that Borrower, notwithstanding the manner by which such Loans and L/Cs are
recorded on the books and records of the Lead Borrower and of any Borrower.
(b) Each Borrower recognizes that credit available to it under this
Agreement 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 all other Borrowers. Consequently,
each Borrower hereby assumes and agrees to discharge all Liabilities of all
other Borrowers as if the Borrower so assuming were each other Borrower.
(c) 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.
(d) The proceeds of each loan and advance provided under this Agreement
which is requested by the Lead Borrower shall be deposited into the Operating
Account or as otherwise indicated by the Lead Borrower. The Lead Borrower shall
cause the transfer of the proceeds thereof to the (those) Borrower(s) on whose
behalf such loan and advance was obtained. Neither the Administrative Agent nor
any Lender shall have any obligation to see to the application of such proceeds.
(e) If, for any reason, and at any time during the term of this Agreement,
(i) 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
(ii) the Administrative Agent deems it inexpedient (in the
Administrative Agent's sole and absolute discretion) to continue making
Revolving Credit Loans and issue L/Cs to or for the account of any
particular Borrower, or to channel such Revolving Credit Loans and L/Cs
through the Lead Borrower,
then the Revolving Credit Lenders may make Revolving Credit Loans directly to,
and issue L/Cs directly for the account of such of the Borrowers as the
Administrative Agent determines to be expedient, which loans or advances may be
made without regard to the procedures otherwise included herein.
(f) In the event that the Administrative Agent determines to forgo the
procedures included herein pursuant to which Revolving Credit Loans and L/Cs are
to be channeled through the Lead Borrower, then the Administrative Agent may
designate one or more
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of the Borrowers to fulfill the financial and other reporting requirements
otherwise imposed herein upon the Lead Borrower.
(g) Each of the Borrowers shall remain liable to the Administrative Agent
and the Lenders for the payment and performance of all Liabilities (which
payment and performance shall continue to be secured by all Collateral granted
by each of the Borrowers) notwithstanding any determination by the
Administrative Agent to cease making Revolving Credit Loans or L/Cs to or for
the benefit of any Borrower.
(h) 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 Section 2.22(e), above, or the Administrative Agent actually
receives
(i) written notice of: (A) the termination of such authority, and
(B) 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 (A) accepting
such appointment; (B) acknowledging that such removal and appointment has
been effected by the respective Presidents of such Borrowers eligible for
borrowing under this Agreement; and (C) 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 and include the newly appointed Lead Borrower.
2.23 Lenders' Commitments. (a) Subject to Section 16.1 (which provides for
assignments and assumptions of Commitments), each Revolving Credit Lender's
"Revolving Credit Commitment Percentage", and "Revolving Credit Commitment"
(respectively so referred to herein) and each Term Loan Lender's "Term Loan
Percentage", and "Term Loan Commitment" (respectively so referred to herein) is
set forth on Schedule 2.23.
(b) The obligations of each Revolving Credit Lender are several and not
joint. No Revolving Credit Lender shall have any obligation to make any loan or
advance under this Agreement in excess of the lesser of the following:
(i) that Revolving Credit Lender's Revolving Credit Commitment
Percentage of the subject loan or advance or of Availability; or
(ii) that Revolving Credit Lender's Commitment.
(c) The obligations of each Term Loan Lender are several and not joint. No
Term Loan Lender shall have any obligation to make any loan or advance under
this Agreement in excess of that Term Loan Lender's Term Loan Commitment.
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(d) No Lender shall have any liability to the Credit Parties on account of
the failure of any other Lender to provide any loan or advance under the nor any
obligation to make up any shortfall which may be created by such failure.
(e) The Commitments, Term Loan Percentages, Revolving Credit Commitment
Percentages, and identities of the Lenders may be changed, from time to time by
the reallocation or assignment of Commitments, Term Loan Percentages and
Revolving Credit Commitment Percentages amongst the Lenders or with other
Persons who determine to become "Lenders" in accordance with the provisions of
Article 16 hereof.
(f) Upon written notice given the Lead Borrower from time to time by the
Administrative Agent, of any assignment or allocation referenced in Section
2.23(e):
(i) Each Borrower shall execute one or more replacement Notes to
reflect such changed Commitments, Term Loan Percentages, Revolving Credit
Commitment Percentages, and identities and shall deliver such replacement
Notes to the Administrative Agent (which promptly thereafter shall deliver
to the Lead Borrower the Notes so replaced) provided however, in the event
that a Note is to be exchanged following its acceleration or the entry of
an order for relief under the Bankruptcy Code with respect to any Borrower,
the Administrative Agent, in lieu of causing the Borrowers to execute one
or more new Notes, may issue the Administrative Agent's Certificate
confirming the resulting Commitments and Term Loan Percentages and
Revolving Credit Commitment Percentages.
(ii) Such change shall be effective from the effective date specified
in such written notice and any Person added as a Lender shall have all
rights and privileges of a Lender hereunder thereafter as if such Person
had been a signatory to this Agreement and any other Loan Document to which
a Lender is a signatory and any Person removed as a Lender shall be
relieved of any obligations or responsibilities of a Lender hereunder
thereafter.
2.24 Replacement Of Lender. (a) If any Lender requests compensation under
Sections 2.19(c) or 20.8, then such Lender shall use its reasonable best efforts
to designate a different lending office for funding or booking L/Cs 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 Sections
2.19(c) or 20.8, 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.
(b) If any Lender requests compensation under Sections 2.19(c) or 20.8,
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 Article 16), 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) if such
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assignee is not an existing Lender, the Borrowers shall have received the prior
written consent of the Administrative Agent, the Issuers and Swing Line Lender,
which consent shall not unreasonably be delayed or 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 L/Cs and Swing Line
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) such assignment will result in a reduction in such compensation,
payments or costs. 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.
2.25 Extension of Maturity Date. The Lead Borrower may elect to extend the
original Maturity Date for a period of one year; provided that (i) the Lead
Borrower provides the Administrative Agent with written notice (which notice
shall be irrevocable) of its option to so extend the original Maturity Date no
sooner than 240 days and no later than 120 days prior to the original Maturity
Date, (ii) as of the date of such notice and on the original Maturity Date no
Default or Event of Default exists, (iii) on the date of such notice, the Lead
Borrower provides the Administrative Agent with a business plan acceptable to
the Administrative Agent (in the Administrative Agent's reasonable business
judgment and in good faith) demonstrating pro forma Availability during each
month of such additional year of at least $80,000,000 and (iv) on the date of
such notice, the Lead Borrower pays to the Administrative Agent, for the pro
rata account of each Lender, a non refundable fee equal to 0.25% of the
Commitments of such Lender.
SECTION 3
CONDITIONS PRECEDENT
As a condition to the effectiveness of this Agreement, the establishment of
the Revolving Credit, and the making of the Term Loan and the first Revolving
Credit Loan and issuance of the first L/Cs under the Revolving Credit, each of
the documents respectively described in Sections 3.1 through and including 3.4,
(each in form and substance satisfactory to the Administrative Agent) shall have
been delivered to the Administrative Agent, and the conditions respectively
described in Sections 3.5 through and including 3.19, shall have been satisfied:
3.1 Corporate Due Diligence. (a) Certificates of corporate good standing
for each Credit Party, respectively issued by the Secretary of State for the
state in which that Credit Party is incorporated.
(b) Certificates of due qualification, in good standing, issued by the
Secretary(ies) of State of each State in which the nature of the business
conducted by the Credit Parties, or assets owned by any Credit Party, requires
such qualification and the failure to so qualify would have a Material Adverse
Effect.
(c) Certificates of each Credit Party's Secretary (or, if such Credit Party
has no Secretary, its Assistant Secretary) of the due adoption, continued
effectiveness, and setting
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forth the texts of, each corporate resolution adopted in connection with the
establishment of the loan arrangement contemplated by the Loan Documents and
attesting to the true signatures of each Person authorized as a signatory to any
of the Loan Documents.
3.2 Legal Opinions. Opinions of counsel to the Credit Parties in form and
substance reasonably satisfactory to the Administrative Agent.
3.3 Documents. Duly executed originals of each Loan Document, the documents
and instruments listed on the Closing Documents List and such additional
instruments and documents as the Administrative Agent or its counsel may
reasonably require or request.
3.4 Officers' Certificates. Certificates executed by the President or the
Chief Financial Officer of each Credit Party and stating that the
representations and warranties made by the Credit Parties to the Administrative
Agent, the Issuer and the Lenders in the Loan Documents are true and complete in
all material respects as of the date of such Certificate, and that no event has
occurred which is or which, solely with the giving of notice or passage of time
(or both) would be an Event of Default.
3.5 Representations And Warranties. Each of the representations made by or
on behalf of each Credit Party in this Agreement or in any of the other Loan
Documents or in any other report, statement, document, or paper provided by or
on behalf of each Credit Party shall be true and complete in all material
respects as of the date as of which such representation or warranty was made.
3.6 All Fees And Expenses Paid. All fees due at or immediately after the
first funding under the Revolving Credit this Agreement and all costs and
expenses incurred by the Administrative Agent in connection with the
establishment of the credit facility contemplated hereby (including the fees and
expenses of counsel to the Administrative Agent) shall have been paid in full.
3.7 No Default. No Default shall then exist.
3.8 No Adverse Change. No event shall have occurred or failed to occur,
which occurrence or failure has had or could reasonably be expected to have a
materially adverse effect upon any Credit Party's assets, operations, business,
condition (financial or otherwise) or income when compared with such at the
Fiscal quarter ending on or about October 31, 2000, provided that the Initial
Store Closings shall be deemed not to have had a Material Adverse Effect.
3.9 Perfection Of Encumbrances. The Administrative Agent shall have
received all documents and instruments, including Uniform Commercial Code
financing statements, required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded to create or perfect
the first priority Encumbrances intended to be created under the Loan Documents
and all such documents and instruments shall have been so filed, registered or
recorded to the satisfaction of the Administrative Agent.
3.10 Satisfaction Of Existing Indebtedness. The Administrative Agent shall
have received payoff letters with respect to each of the Terminating Credit
Facilities (other than
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the Fleet LOC Facility), satisfactory in form and substance to the
Administrative Agent, together with releases of all Encumbrances, if any, held
with respect to such Terminating Credit Facilities on the assets of the Credit
Parties. Contemporaneously with the first advance under the Revolving Credit,
the Borrowers shall pay all indebtedness reflected in such payoff letter in
full. With respect to the Fleet LOC Facility, the Administrative Agent shall
have received satisfactory evidence of the termination thereof and the
conversion of all letters of credit thereunder to L/C's hereunder.
3.11 Consents And Approvals. All necessary consents and approvals to the
transactions contemplated hereby shall have been obtained and shall be
reasonably satisfactory to the Administrative Agent.
3.12 No Defaults Under Applicable Law Or Material Agreements. The
consummation of the transactions contemplated hereby shall not (a) violate any
Requirement of Law or (b) conflict with, or result in a default or event of
default under, any material agreement of any Credit Party, including, without
limitation, the Existing Indentures. No event shall exist which is, or solely
with the passage of time, the giving of notice or both, would be a default under
the Existing Indentures or any other material agreement of any Credit Party.
3.13 No Litigation. There shall not exist any litigation or other
proceedings the result of which could have a Material Adverse Effect.
3.14 No Negative Impact On Syndication. There shall not have occurred any
disruption or material adverse change in the financial or capital markets in
general that would, in the reasonable opinion of the Administrative Agent, have
a material adverse effect on the markets for loan syndications or equity
securities in particular, or adversely affect the syndication of the Loans.
3.15 No Change In Governmental Regulations. No material changes shall have
occurred in governmental regulations or policies affecting the Credit Parties,
the Administrative Agent, the Issuer, or the Lenders prior to the Closing Date.
3.16 Excess Availability. After giving effect to all Loans made and L/Cs
issued on the Closing Date, Availability on the Closing Date shall be at least
$85,000,000.
3.17 Financial Statements. The Administrative Agent shall have received
financial statements for the period ending October 28, 2000, in form and
substance satisfactory to the Administrative Agent, and there shall not, in the
reasonable judgment of the Administrative Agent, be any material adverse change
in the consolidated financial condition of the Credit Parties since the date of
such financial statements, other than any change resulting from the Initial
Store Closings.
3.18 Commitment Letter and Fee Letter. The Credit Parties shall have
complied with all of their obligations under the Commitment Letter and the Fee
Letter.
3.19 Business Plan. The Administrative Agent shall have received a
satisfactory updated business plan of the Credit Parties reflecting, among other
things, the store closings publicly announced on January 31, 2001 and any
related restructuring charges.
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3.20 Agency Agreement L/C. The Administrative Agent shall have received the
Agency Agreement L/C.
3.21 Benefit Of Conditions Precedent. The conditions set forth in this
Article 3 are for the sole benefit of the Administrative Agent, the Issuer and
each Lender and may be waived by the Administrative Agent in whole or in part
without prejudice to the Administrative Agent, the Issuer or any Lender.
No document shall be deemed delivered to the Administrative Agent or any
Lender until received and accepted by the Administrative Agent at its offices in
Boston, Massachusetts. Under no circumstances shall this Agreement take effect
until executed and accepted by the Administrative Agent at said offices.
SECTION 4
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
To induce each Lender and the Issuer to establish the credit facility
contemplated herein and to induce the Lenders to provide Loans and the Issuer to
issue L/Cs under the Revolving Credit (each of which Loans shall be deemed to
have been made, and L/Cs to have been issued, in reliance thereupon) the Credit
Parties, in addition to all other representations, warranties, and covenants
made by any Credit Party in any other Loan Document, make those representations,
warranties, and covenants included in this Agreement:
4.1 Payment And Performance Of Liabilities. The Credit Parties shall pay
each of their respective payment Liabilities when due (or when demanded, if
payable on demand) and shall promptly, punctually, and faithfully perform each
other Liability.
4.2 Due Organization; Authorization; No Conflicts. (a) Each Credit Party
presently is and hereafter shall remain in good standing as a corporation under
the laws of the State in which it is organized, and is and shall hereafter
remain duly qualified and in good standing in every other State in which, by
reason of the nature or location of each Credit Party's assets or operation of
each Credit Party's business, such qualification may be necessary, except where
the failure to so qualify would not have a Material Adverse Effect.
(b) As of the Closing Date, each Credit Party's respective organizational
identification number assigned to it by the State of its incorporation and its
respective federal employer identification number is stated on Schedule 4.2(b).
A mailing address at which each of the Credit Parties may be contacted is ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(c) No Credit Party shall change its State of organization; any
organizational identification number assigned to that Credit Party by that
State; or that Credit Party's federal taxpayer identification number, except
upon forty-five (45) days prior written notice to the Administrative Agent.
(d) The corporate ownership structure of the Lead Borrower and each of its
Subsidiaries is set forth on Schedule 4.2(d). Each Credit Party (other than the
Lead Borrower) is a wholly-owned direct or indirect Subsidiary of the Lead
Borrower. Each direct and indirect
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Subsidiary of the Lead Borrower (except for ShopKo Pharmacies, Inc.) is a Credit
Party hereunder. ShopKo Pharmacies, Inc. owns no assets, has no material
liabilities, conducts no operations and will be dissolved by its corporate
parent, as contemplated by Section 4.32. Pamida Foundation does not own and
shall not obtain any material assets, has no and shall not incur any material
liabilities, does not and shall not conduct any operations and is and shall
maintain its status as a tax-exempt foundation under Section 501(c)(3) of the
Internal Revenue Code. None of ShopKo Holdings, Pamida One LLC, Pamida Two LLC,
Pamida Three LLC, Pamida Four LLC, Pamida Five LLC, Pamida Six LLC or Pamida
Seven LLC is a Subsidiary or Affiliate of any Credit Party.
(e) Each Affiliate, as of the Closing Date, is listed on Schedule 4.2(e).
The Lead Borrower shall provide the Administrative Agent with prior written
notice of any entity's becoming or ceasing to be an Affiliate.
(f) Each Credit Party has all requisite corporate power and authority to
execute and deliver all Loan Documents to which that Credit Party is a party and
has and will hereafter retain all requisite corporate power to perform all
Liabilities.
(g) The execution and delivery by each Credit Party of each Loan Document
to which it is a party; each Credit Party's consummation of the transactions
contemplated by such Loan Documents (including, without limitation, the creation
of Collateral Interests by that Credit Party to secure the Liabilities); each
Credit Party's performance under those of the Loan Documents to which it is a
party; the borrowings hereunder; and the use of the proceeds thereof:
(i) have been duly authorized by all necessary corporate action;
(ii) do not, and will not, contravene in any material respect any
provision of any Requirement of Law, any Existing Indenture or any other
material obligation of that Credit Party; and
(iii) will not result in the creation or imposition of, or the
obligation to create or impose, any Encumbrance upon any assets of that
Credit Party pursuant to any Requirement of Law or obligation, except
pursuant to the Loan Documents;
(h) The Loan Documents have been duly executed and delivered by each Credit
Party and are the legal, valid and binding obligations of each Credit Party,
enforceable against each Credit Party in accordance with their respective terms,
except as enforceability is limited by bankruptcy, insolvency, or other laws
relating to or affecting generally the enforcement of creditors' rights and
except to the extent that the availability of the remedy of specific performance
or injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
4.3 Trade Names. (a) Schedule 4.3 is a listing, as of the Closing Date, of:
(i) all names under which any Credit Party ever conducted its
business during the preceding five (5) years other than names associated
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exclusively with the ProVantage Health Services business that have not been
used in at least the six months immediately preceding the Closing Date; and
(ii) all Persons with whom any Credit Party ever consolidated or
merged, or from whom any Credit Party ever acquired in a single transaction
or in a series of related transactions substantially all of such Person's
assets, in each case within the preceding five (5) years, other than
acquisitions of, and consolidations and mergers with, single store local
retail pharmacy businesses occurring more than six months prior to the
Closing Date.
(b) The Lead Borrower will provide the Administrative Agent with not less
than twenty-one (21) days prior written notice (with reasonable particularity)
of any change to any Credit Party's name from that under which that Credit Party
is conducting its business at the execution of this Agreement and will not
effect such change unless each Credit Party is then in compliance with all
provisions of this Agreement.
4.4 Intellectual Property. (a) Each Credit Party owns and possesses, or
has the right to use (and will hereafter own, possess, or have such right to
use) all patents, industrial designs, trademarks, trade names, trade styles,
brand names, service marks, logos, copyrights, trade secrets, know-how,
confidential information, and other intellectual or proprietary property of any
third Person reasonably necessary for that Credit Party's conduct of that Credit
Party's business, except where the failure to so own, possess or have the right
to use would not have a Material Adverse Effect.
(b) The conduct by each Credit Party of that Credit Party's business does
not presently infringe (nor will any Credit Party conduct its business in the
future so as to infringe) the patents, industrial designs, trademarks, trade
names, trade styles, brand names, service marks, logos, copyrights, trade
secrets, know-how, confidential information, or other intellectual or
proprietary property of any third Person in any manner that would have a
Material Adverse Effect.
4.5 Locations. (a) The Collateral, and the books, records, and papers of
the Credit Parties pertaining thereto, are kept and maintained solely at the
following locations:
(i) the Lead Borrower's chief executive offices which, as of the
Closing Date, are at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇; and
(ii) those locations which are listed on Schedule 4.5 which Schedule
includes, as of the Closing Date, with respect to each such location, the
name of the Credit Party that uses such premises, the name of the Credit
Party that owns the Inventory located at such premises, the name and
address of the landlord on the Lease which covers such location (or an
indication that a Credit Party owns the subject location) and of all
service bureaus with which any such records are maintained and the names
and addresses of each of the Credit Parties' landlords.
(b) No Credit Party shall remove any of the Collateral from said chief
executive office or those locations listed with respect to such Credit Party on
Schedule 4.5 or any
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location with respect to such Credit Party opened in accordance with Section
4.5(c) or transfer, sell or otherwise convey title to such Collateral to another
Credit Party except for the following purposes:
(i) to accomplish sales of Inventory in the ordinary course of
business;
(ii) to move Inventory from one such location to another such
location;
(iii) to utilize such of the Collateral as is removed from such
locations in the ordinary course of business;
(iv) to dispose of Inventory that is not Eligible Inventory; or
(v) to open or close stores or to move the chief executive office.
unless the Administrative Agent, to the extent required by the Administrative
Agent shall have received and filed additional UCC financing statements with
respect to such removed or transferred Collateral.
(c) The Credit Parties will not open any new locations at which any Credit
Party maintains, offers for sale or stores any of the Collateral unless, to the
extent required by the Administrative Agent, the Administrative Agent shall have
received and filed additional UCC financing statements with respect to
Collateral at such new location if required by any Requirement of Law then in
effect (as determined by the Administrative Agent). The Lead Borrower will
promptly notify the Administrative Agent in writing of any new location at which
any Credit Party maintains, offers for sale, or stores any of the Collateral.
The Credit Parties will not enter into any leases for any new locations at any
time an Event of Default exists.
(d) Except as otherwise disclosed pursuant to this Section 4.5 or as
hereafter disclosed to the Administrative Agent, no Inventory of the Credit
Parties with an aggregate Cost greater than $5,000,000.00 is in the care or
custody of any third party or stored or entrusted with a bailee or other third
party and Inventory with an aggregate Cost greater than $5,000,000.00 shall not
hereafter be placed under such care, custody, storage, or entrustment unless a
warehouseman's or bailee's agreement reasonably acceptable to the Administrative
Agent has been provided to the Administrative Agent in respect thereof.
4.6 Title To Assets; Liens; Limitations on Liens. (a) (a) The Credit
Parties are, and shall hereafter remain, the owners of all Collateral, in each
case free and clear of all Encumbrances with the exception of the following:
(i) Encumbrances in favor of the Administrative Agent, or, with
respect to L/Cs issued hereunder, the Issuer;
(ii) those Encumbrances (if any) listed on Schedule 4.6(a) and any
renewals or refinancings thereof that do not increase the amount of
Indebtedness secured thereby or extend such Encumbrances to other property
of the Credit Parties;
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(iii) Permitted Encumbrances;
(iv) Encumbrances granted to secure Indebtedness incurred to finance
the acquisition of fixed or capital assets, provided that (1) any such
Encumbrance shall attach only to the assets so acquired by the Borrowers
with the proceeds of such Indebtedness and shall not extend to any other
assets of the Borrowers and (2) that the amount of Indebtedness secured
thereby is not increased;
(v) Encumbrances granted to secure Indebtedness permitted pursuant
to Section 4.7(f) hereof, provided that any such Encumbrance shall attach
only to the real estate, and improvements thereto, so financed by the
Borrowers with the proceeds of such Indebtedness and shall not extend to
any other assets of the Borrowers, and further provided that if there is
located on such real estate any Inventory of the Borrowers or any other
Collateral or any books and records relating thereto, the mortgagee
obtaining such Encumbrance shall have furnished the Administrative Agent
with an agreement permitting the Administrative Agent reasonable access to
the real estate on which the mortgagee holds such Encumbrance for the
purpose of repossessing and/or disposing of any Collateral located therein
and waiving any rights in and to all Collateral, all on terms reasonably
acceptable to the Administrative Agent;
(vi) Judgment liens with respect to judgments that do not constitute
an Event of Default under Section 10.8 hereof;
(vii) Encumbrances upon any property or assets (other than
Collateral) of any Person existing immediately prior to the time of any
Permitted Acquisition of such Person or such Person's property or assets by
a Borrower, provided that such Encumbrances were not granted in
contemplation of, or in connection with, such Permitted Acquisition;
(viii) Encumbrances in favor of Payless to secure the Lead Borrower's
obligations for sales of Payless Inventory pursuant to the Payless
Agreement and consisting solely of liens on receivables and proceeds
arising directly from sales of Payless Inventory; and
(ix) Encumbrances consisting of (1) unasserted claims and (2)
asserted claims not to exceed $25,000.00 at any time unpaid and outstanding
for more than five Business Days, in each case related to credit card
receivables pursuant to merchant bank agreements related thereto.
(b) Except as disclosed on Schedule 4.6(b), no Credit Party has, and none
shall have, possession of any property on consignment to that Credit Party in
excess of $10,000,000.00 unless (i) the Lead Borrower has furnished the
Administrative Agent with ten (10) days prior written notice of its intent to
acquire such property on consignment, and (ii) if the Administrative Agent so
requests, an intercreditor agreement with the consignor on terms reasonably
acceptable to the Administrative Agent has been delivered to the Administrative
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Agent, and (iii) the aggregate amount of property consigned to the Credit
Parties shall not exceed ten percent of the Cost of the Credit Parties'
Inventory at any time.
(c) No Credit Party will, or will allow any of its Subsidiaries to,
directly or indirectly, create, incur, assume of suffer to exist any Lien (other
than a Lien of the type described in clauses (a)(ii), (iii), (vi) and (viii) of
this Section 4.6) of any kind on any now owned or hereafter acquired Excluded
Asset securing any Indebtedness (other than Liens permitted to secure
Indebtedness permitted to be incurred under Sections 4.7(f) and (g)) unless such
Credit Party secures or causes such Subsidiary to secure the Liabilities equally
and ratably with such Indebtedness for so long as such Indebtedness is so
secured; provided however, that if any of the Liens permitted above cause any of
the Existing Indentures to be secured by the assets subject to such Lien, the
Credit Parties will cause the Liabilities to become secured by such assets
equally and ratably with such Existing Indentures.
4.7 Indebtedness. The Credit Parties do not and shall not hereafter have
any Indebtedness with the exceptions of the following:
(a) any Indebtedness on account of the Term Loans, the Revolving
Credit or the L/Cs;
(b) the Indebtedness (if any) listed on Schedule 4.7, and any renewals
or refinancings thereof that does not increase the principal amount
thereof;
(c) unsecured Indebtedness due to any Credit Party by any other Credit
Party that is subordinated to the Liabilities in a manner satisfactory to
the Administrative Agent;
(d) Indebtedness not otherwise permitted in this Section, not to
exceed $25,000,000.00 in the aggregate at any time outstanding;
(e) Indebtedness on account of Hedge Agreements on terms and in such
amounts as may be reasonably acceptable to the Administrative Agent;
(f) Indebtedness secured by Operating Properties not to exceed
$300,000,000.00 in aggregate principal amount outstanding at any time to
the extent such Indebtedness is permitted to be so incurred and secured
under the Existing Indentures and would not require or result in the
granting of an Encumbrance on any Operating Property in favor of the
holders of the notes issued under any such Existing Indenture;
(g) Indebtedness not to exceed $25,000,000.00 in the aggregate at any
time outstanding secured by Encumbrances permitted by Section 4.6(a)(iv);
and
(h) Indebtedness of the Borrowers consisting of a guaranty of
obligations of a Credit Party otherwise permitted hereunder.
4.8 Insurance. (a) Schedule 4.8 is a schedule of all insurance policies
owned by the Credit Parties or under which any Credit Party is the named insured
as of the Closing
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Date. Each of such material policies is in full force and effect. Neither the
issuer of any such policy nor any Credit Party is in default or violation of any
such policy in any material respect.
(b) The Credit Parties shall have and maintain at all times insurance
covering such risks, in such amounts, containing such terms, in such form, for
such periods, and written by such companies as is customarily maintained by
prudent companies in the Credit Parties' industry (including such levels of
self-insurance as are deemed prudent by the Lead Borrower). The Credit Parties
shall also have and maintain at all times insurance covering the Collateral, in
such amounts, containing such terms, in such form, for such periods, and written
by such companies as may be reasonably satisfactory to the Administrative Agent.
(c) All property insurance related to the Collateral and liability
insurance carried by the Credit Parties shall provide for a minimum of thirty
(30) days' written notice of cancellation to the Administrative Agent and all
such liability insurance and insurance which covers the Collateral shall include
an endorsement in favor of the Administrative Agent (and the Issuer and the
Lenders, in the case of liability insurance), which endorsement shall provide
that the insurance, to the extent of the Administrative Agent's interest
therein, shall not be impaired or invalidated, in whole or in part, by reason of
any act or neglect of any Credit Party or by the failure of any Credit Party to
comply with any warranty or condition of the policy.
(d) The Lead Borrower shall furnish the Administrative Agent from time to
time with certificates or other evidence satisfactory to the Administrative
Agent regarding compliance by the Credit Parties with the foregoing
requirements.
(e) In the event of the failure by the Credit Parties to maintain insurance
as required herein, the Administrative Agent, at its option, may obtain such
insurance, provided, however, the Administrative Agent's obtaining of such
insurance shall not constitute a cure or waiver of any Event of Default
occasioned by the Credit Parties' failure to have maintained such insurance.
4.9 Licenses. Each material license, distributorship, franchise, and
similar agreement issued to any Credit Party, or to which any Credit Party is a
party, is in full force and effect, except where the failure to be in full force
and effect would not have a Material Adverse Effect. No party to any such
license or agreement is in default or violation thereof, where such default or
violation would have a Material Adverse Effect. As of the Closing Date, no
Credit Party has received any notice or threat of cancellation of any such
license or agreement. The Lead Borrower shall promptly furnish the
Administrative Agent with copies of any notice or threat of cancellation of any
such license or agreement which would have a Material Adverse Effect.
4.10 Leases. Schedule 4.10 is a schedule of all effective Leases and
Capital Leases in an amount greater than $1,000,000.00 as of the Closing Date,
other than Leases and Capital Leases which are to be terminated in connection
with the Initial Store Closings. Each of such Leases and Capital Leases is in
full force and effect, except where the failure to be in full force and effect
would not have a Material Adverse Effect. No party to any such Lease or Capital
Lease is in default or violation of any such Lease or Capital Lease where such
default or violation would have a Material Adverse Effect. As of the Closing
Date, no Credit Party has
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received any notice or threat of cancellation of any such Lease or Capital
Lease, except for cancellations which would not have a Material Adverse Effect.
Each Credit Party hereby authorizes the Administrative Agent at any time and
from time to time during the existence of an Event of Default to contact any of
the Credit Parties' respective landlords in order to confirm the Credit Parties'
continued compliance with the terms and conditions of the Lease(s) between the
subject Credit Party and that landlord and to discuss such issues, concerning
the subject Credit Party's occupancy under such Lease(s), as the Administrative
Agent may determine.
4.11 Requirements Of Law. Each Credit Party is in compliance with, and
shall hereafter comply with and use its assets in compliance with, all
Requirements of Law except where the failure of such compliance will not have a
Material Adverse Effect. No Credit Party has received any notice of any
violation of any Requirement of Law (other than of a violation which would not
have a Material Adverse Effect), which violation has not been cured or otherwise
remedied.
4.12 Labor Relations. (a) As of the Closing Date, no Credit Party is a
party to any collective bargaining or other labor contract.
(b) There is not presently pending and, to any Credit Party's knowledge,
there is not threatened any of the following which would have a Material Adverse
Effect:
(i) any strike, slowdown, picketing, work stoppage, or employee
grievance process;
(ii) any proceeding against or affecting any Credit Party relating to
the alleged violation of any Applicable Law pertaining to labor relations
or before the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable governmental body, organizational
activity, or other labor or employment dispute against or affecting any
Credit Party;
(iii) any lockout of any employees by any Credit Party (and no such
action is contemplated by any Credit Party); or
(iv) any application for the certification of a collective bargaining
agent.
(c) No event has occurred or circumstance exists which would provide the
basis for any work stoppage or other labor dispute that would have a Material
Adverse Effect.
(d) Except as set forth on Schedule 4.12, each Credit Party:
(i) has complied and will comply with all Applicable Laws relating
to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and
plant closing, except where the failure to so comply would not have a
Material Adverse Effect; and
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(ii) is not and will not become liable for the payment of more than
any amount of compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for that Credit Party's failure to comply with
any Applicable Law referenced in Section 4.12(d)(i), which would have a
Material Adverse Effect or would result in a claim in excess of
$1,000,000.00 on any Collateral with priority over the Encumbrances of the
Administrative Agent therein.
(e) The Lead Borrower shall furnish prompt notice to the Administrative
Agent of the occurrence of any event described in subparagraphs 4.12(a) through
and including 4.12(d) which would have been disclosed to the Administrative
Agent had such occurrence existed as of the Closing Date.
4.13 Maintain Collateral. The Credit Parties shall:
(a) keep the Collateral in good order and repair (ordinary wear and
tear and insured casualty excepted);
(b) not suffer or cause the waste or destruction of any material part
of the Collateral;
(c) not use any of the Collateral in violation in any material
respect of any policy of insurance thereon;
(d) maintain a system to ensure that, with respect to sales of
pharmacy Inventory (such as prescriptions, pharmaceuticals, medications and
controlled substances) giving rise to rights to payment from any
third-party payor insurance companies, managed care organizations,
government entities, pharmacy plans (or the pharmacy plan administrators of
such companies, organizations or entities), which are Pharmacy Accounts and
with whom the Credit Parties do not have an existing contractual
relationship, (i) each purchaser of pharmacy Inventory executes an
assignment of benefits form (assigning reimbursement rights to the Lead
Borrower) and (ii) copies of such assignments are sent to all such
third-party payors, it being understood that the term "third-party payor"
in this clause (d) shall not include any retail purchaser of such pharmacy
Inventory.
(e) not sell, lease, or otherwise dispose of any of the Collateral,
other than the following:
(i) the sale of Inventory in the ordinary course of business or in
compliance with this Agreement; and
(ii) the turning over to the Administrative Agent of all Receipts
during the existence of a Cash Control Event as provided herein.
4.14 Taxes. (a) With respect to the Credit Parties' federal, state, and
local tax liability and obligations:
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(i) The Lead Borrower, in material compliance with all Applicable
Law, has properly filed all returns due to be filed up to the date of this
Agreement.
(ii) As of the Closing Date, except as described on Schedule 4.14:
(A) At no time has any Credit Party received from any taxing
authority any request to perform any examination of or with respect to
any Credit Party nor any other written or verbal notice in any way
relating to any claimed failure by any Credit Party to comply with all
Applicable Law concerning payment of any taxes or other amounts in the
nature of taxes.
(B) No agreement exists which waives or extends any statute of
limitations applicable to the right of any taxing authority to assert
a deficiency or make any other claim for or in respect of federal
income taxes.
(C) No issue has been raised in any tax examination of any Credit
Party which, by application of similar principles, reasonably would be
expected to result in the assertion of a deficiency for any fiscal
year open for examination, assessment, or claim by any taxing
authority which would have a Material Adverse Effect.
(b) The Credit Parties have, and hereafter shall: pay, as they become due
and payable, all taxes and unemployment contributions and other charges of any
kind or nature levied, assessed or claimed against any Credit Party or the
Collateral by any person or entity whose claim could result in an Encumbrance
upon any asset of any Credit Party or by any Governmental Authority (provided
that the Credit Party shall not be required to pay any such taxes or claims as
long as such tax or claim is being disputed by the Credit Parties in good faith,
the Credit Parties have established adequate reserves therefor in accordance
with GAAP, and no notice of tax lien has been filed with respect thereto);
properly exercise any trust responsibilities imposed upon any Credit Party by
reason of withholding from employees' pay or by reason of any Credit Party's
receipt of sales tax or other funds for the account of any third party; timely
make all contributions and other payments as may be required pursuant to any
Employee Benefit Plan now or hereafter established by any Credit Party; and
timely file all tax and other returns and other reports with each Governmental
Authority to whom any Credit Party is obligated to so file.
(c) During the existence of any Event of Default, at its option, the
Administrative Agent may, but shall not be obligated to, pay any such taxes,
unemployment contributions, and any and all other charges levied or assessed
upon any Credit Party or the Collateral by any Person or Governmental Authority,
and make any contributions or other payments on account of the Credit Parties'
Employee Benefit Plan as the Administrative Agent, in the Administrative Agent's
discretion, may deem necessary or desirable, to protect, maintain, preserve,
collect, or realize upon any or all of the Collateral or the value thereof or
any right or remedy pertaining thereto, provided, however, the Administrative
Agent's making of any such payment shall not constitute a cure or waiver of any
Event of Default occasioned by the Credit Parties' failure to have made such
payment.
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4.15 No Margin Stock; Investment Company. No Credit Party is engaged in the
business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulations U, T, and X of the Board of
Governors of the Federal Reserve System of the United States). No part of the
proceeds of any borrowing hereunder will be used at any time to purchase or
carry any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock. No Credit Party is (i) an
investment company or a company controlled by an investment company within the
meaning of the Investment Company Act of 1940, as amended, or (ii) subject to
any other law which purports to regulate or restrict its ability to borrow money
or to consummate the transactions contemplated by this Agreement or the other
Loan Documents or to perform its obligations hereunder or thereunder (other than
Regulation X of the Board).
4.16 ERISA. (a) Neither any Credit Party nor any ERISA Affiliate has ever
taken any of the following actions that would have a Material Adverse Effect:
(i) violated or failed to be in compliance with any Credit Party's
Employee Benefit Plan;
(ii) failed timely to file all reports and filings required by ERISA
to be filed by any Credit Party;
(iii) engaged in any nonexempt "prohibited transactions" or
"reportable events" (respectively as described in ERISA);
(iv) engaged in, or committed, any act such that a tax or penalty
reasonably could be imposed upon any Credit Party on account thereof
pursuant to ERISA;
(v) accumulated any material cumulative funding deficiency within
the meaning of ERISA;
(vi) terminated any Employee Benefit Plan such that a lien could be
asserted against any assets of any Credit Party on account thereof pursuant
to ERISA; or
(vii) have any obligation under any Employee Benefit Plan which is a
multiemployer plan within the meaning of Section 4001(a) of ERISA for
withdrawal liability.
(b) Neither any Credit Party nor any ERISA Affiliate shall ever engage in
any action of the type described in Section 4.16(a) to the extent that any of
the foregoing would have a Material Adverse Effect.
4.17 Hazardous Materials. (a) No Credit Party has ever: (i) been legally
responsible for any release or threat of release of any Hazardous Material or
(ii) received notification of the incurrence of any expense in connection with
the assessment, containment, or removal of any Hazardous Material for which that
Credit Party would be responsible, except
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where such release or threat of release or incurrence of such expense would not
have a Material Adverse Effect.
(b) Each Credit Party shall: (i) dispose of any Hazardous Material only in
compliance with all Environmental Laws and (ii) have possession of any Hazardous
Material only in the ordinary course of that Credit Party's business and in
compliance with all Environmental Laws, except, in each case, where the failure
to do so would not have a Material Adverse Effect.
4.18 Litigation. As of the Closing Date, except as described in Schedule
4.18, there is not presently pending or threatened by or against any Credit
Party any suit, action, proceeding, or investigation which, if determined
adversely to any Credit Party, could have a Material Adverse Effect.
4.19 Dividends; Investments; Corporate Action. No Credit Party shall:
(a) pay any cash dividend or make any other distribution in respect of
any class of that Credit Party's capital stock, except the Subsidiaries of
the Lead Borrower may pay such dividends or make such distributions to the
Lead Borrower;
(b) redeem, retire, purchase, or acquire any of the Lead Borrower's
capital stock, provided that, as long as no Default exists or would arise
therefrom, the Lead Borrower may redeem, purchase, retire or acquire its
capital stock so long as (A) prior to and after giving effect to such
repurchase Availability is at least $100,000,000.00 and Availability is
projected on a pro forma basis to be at least $100,000,000.00 for the
twelve month period immediately following such redemption, purchase,
retirement or acquisition, and (B) the maximum amount which the Lead
Borrower may expend for all such stock repurchases under this clause (iii)
after the Closing Date shall not exceed $10,000,000.00 per annum plus, in
any fiscal year of the Lead Borrower, the lesser of (i) $15,000,000.00 and
(ii) 50% of the Consolidated net income of the Credit Parties for the
preceding 12-month period for which financial statements are available (as
determined in accordance with GAAP).
(c) Invest in or purchase any stock or securities or rights to
purchase any such stock or securities, of any Person, except (i)
investments described in Schedule 4.19, (ii) investments and purchases of
equity by the Lead Borrower in any other Borrower, (iii) Permitted
Investments, (iv) investments representing stock or obligations issued to a
Credit Party in settlement of claims against any other Person by reason of
a composition or adjustment of debt or a reorganization of any debtor of a
Credit Party, (v) Permitted Acquisitions, as long as no Default exists or
would arise therefrom, (vi) as permitted in Section 4.20, (vii) warrants or
other similar rights received for no additional consideration in connection
with a transaction otherwise permitted pursuant to this Agreement, and
(viii) other investments not to exceed $2,000,000.00 in the aggregate.
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(d) Merge or consolidate or be merged or consolidated with or into any
other Person, except that (i) any Subsidiary of a Credit Party may merge
with or into the Lead Borrower or any other wholly owned Subsidiary of the
Lead Borrower, and (ii) Permitted Acquisitions, as long as no Default
exists or would arise therefrom.
(e) Consolidate any of that Credit Party's operations with those of
any other Person, except that any Subsidiary of a Credit Party may
consolidate its operations with or into the Lead Borrower or any other
wholly owned Subsidiary of the Lead Borrower.
(f) Organize or create any Affiliate or Related Entity to the extent
that the Credit Parties' investment in all such Affiliates and Related
Entities after the Closing Date (whether as equity, intercompany loan or
otherwise and whether such Affiliate or Related Entity is organized or
created after the Closing Date) exceeds $1,000,000.00 in the aggregate,
provided that no such investment shall be made during the existence of a
Cash Control Event and provided, further, that, if any such Affiliate or
Related Party becomes a subsidiary of the Lead Borrower it shall become a
Guarantor hereunder in a manner satisfactory to the Administrative Agent.
(g) Subordinate any other material debts or other material obligations
owed to that Credit Party by any third party to any other debts owed by
such third party to any other Person.
(h) Acquire any assets other than in the ordinary course and conduct
of that Credit Party's business as conducted at the execution of this
Agreement, except for Permitted Acquisitions, as long as no Default exists
or would arise therefrom.
4.20 Loans. No Credit Party shall make or suffer to exist any loans or
advances to, nor acquire the Indebtedness of, any Person, provided, however, the
foregoing does not prohibit any of the following:
(a) advance payments made to that Credit Party's suppliers in the
ordinary course;
(b) advances to that Credit Party's officers, employees, and
salespersons with respect to reasonable expenses to be incurred by such
officers, employees, and salespersons for the benefit of that Credit Party,
which expenses are properly substantiated by the person seeking such
advance and properly reimbursable by that Credit Party;
(c) unsecured intercompany loans amongst the Credit Parties that are
subordinated to the Liabilities in a manner satisfactory to the
Administrative Agent;
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(d) in addition to any loans permitted by clauses (b) and (e) of this
Section 4.20, loans to Affiliates and Related Entities of the Credit
Parties (other than Credit Parties) provided that the Credit Parties'
investment in all such Affiliates and Related Entities after the Closing
Date (whether as equity, intercompany loans or otherwise and whether such
Affiliate or Related Entity is organized or created after the Closing Date)
shall not exceed $1,000,000.00 in the aggregate provided that no loans
permitted solely by this Section 4.20(d) shall be made during the existence
of a Cash Control Event;
(e) loans made after the Closing Date to employees, officers and
salespersons of the Credit Parties consistent with past practices provided
that (i) any loans to any individual shall not exceed $500,000.00 in the
aggregate outstanding at any time, and (ii) all such loans to employees,
officers and salespersons of the Credit Parties shall not exceed
$2,500,000.00 in the aggregate outstanding at any time.
4.21 Protection Of Assets. The Administrative Agent, in the Administrative
Agent's reasonable discretion, and from time to time during the existence of an
Event of Default, may discharge any tax or Encumbrance on any of the Collateral,
or take any other action which the Administrative Agent may deem necessary or
desirable to repair, insure, maintain, preserve, collect, or realize upon any of
the Collateral. The Administrative Agent shall not have any obligation to
undertake any of the foregoing and shall have no liability on account of any
action so undertaken except where there is a specific finding in a judicial
proceeding (in which the Administrative Agent has had an opportunity to be
heard), from which finding no further appeal is available, that the
Administrative Agent had acted in actual bad faith or in a grossly negligent
manner. The Credit Parties shall pay to the Administrative Agent, on demand, or
the Administrative Agent, in its discretion, may add to the Loan Account, all
amounts paid or incurred by the Administrative Agent pursuant to this Section
4.21.
4.22 Lines of Business. No Credit Party shall engage in any business other
than the business in which it is currently engaged or a business reasonably
related thereto.
4.23 Affiliate Transactions. Except as described on Schedule 4.23 or as
otherwise permitted under this Agreement, no Credit Party shall make any
payment, nor give any value, to any Affiliate that is not a Credit Party except
for goods and services actually purchased by that Credit Party from, or sold by
that Credit Party to, such Affiliate for a price and on terms which shall be no
less favorable to that Credit Party than those which would have been charged and
imposed in an arms length transaction.
4.24 Further Assurances. (a) Each Credit Party shall execute and deliver to
the Administrative Agent such instruments, documents, and papers, and shall do
all such things from time to time hereafter as the Administrative Agent may
reasonably request to carry into effect the provisions and intent of this
Agreement; to protect and perfect the Administrative Agent's Collateral
Interests in the Collateral; and to comply in all material respects with all
applicable statutes and laws, and facilitate the collection of the Receivables
Collateral. Each Credit Party shall execute all such instruments as may be
reasonably required by the Administrative Agent
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with respect to the recordation and/or perfection of the Collateral Interests
created or contemplated herein.
(b) Each Credit Party hereby designates the Administrative Agent as that
Credit Party's true and lawful attorney, with full power of substitution, to
sign and file any financing statements and other documents and instruments in
order to perfect or protect the Administrative Agent's Collateral Interests in
the Collateral.
(c) A carbon, photographic, or other reproduction of this Agreement or of
any financing statement or other instrument executed pursuant to this Section
4.24 shall be sufficient for filing to perfect the security interests granted
herein.
4.25 Adequacy Of Disclosure.
(a) All financial statements furnished to the Administrative Agent and to
each Lender by each Credit Party have been prepared in accordance with GAAP
consistently applied and present fairly in all material respects the condition
of the Credit Parties at the date(s) thereof and the results of operations and
cash flows for the period(s) covered (provided, however, that unaudited
financial statements are subject to normal year end adjustments and to the
absence of footnotes). There has been no change in the Consolidated financial
condition, results of operations, or cash flows of the Credit Parties since the
date(s) of such financial statements, other than changes in the ordinary course
of business, and changes which have not had a Material Adverse Effect.
(b) As of the Closing Date, no Credit Party has any material contingent
obligations or obligation under any Lease, excluding synthetic leases not
reported under GAAP, or Capital Lease which is not noted in the Credit Parties'
Consolidated financial statements furnished to the Administrative Agent and to
each Lender prior to the execution of this Agreement.
(c) No document, instrument, agreement, or paper now or hereafter given to
the Administrative Agent or to any Lender by or on behalf of each Credit Party
in connection with the execution of this Agreement by the Administrative Agent
and each Lender (other than projections and forecasts, which are and will be
made in good faith using reasonable assumptions) contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein not misleading. There is
no fact known to any Credit Party which has, or which, in the foreseeable future
would likely have, a Material Adverse Effect which has not been disclosed in
writing to the Administrative Agent and to each Lender.
4.26 No Restrictions On Liabilities. Except for agreements as currently in
existence as disclosed in Schedule 4.7, no Credit Party shall enter into or
directly or indirectly become subject to any agreement which prohibits or
restricts, in any manner, any Credit Party's:
(a) creation of, and granting of Collateral Interests in favor of the
Administrative Agent; and
(b) incurrence of Liabilities.
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4.27 Permitted Refinancing of Certain Indebtedness; Amendments. No Borrower
shall (1) incur Indebtedness under this Agreement for the purpose of (a) making
a payment on the Indebtedness outstanding under the Existing Indentures at the
maturity date thereof unless, both before and immediately after giving effect to
any such payment, (i) no Default or Event of Default exists and (ii)
Availability as projected by the Lead Borrower (to the reasonable satisfaction
of the Administrative Agent) equals or exceeds $60,000,000.00 at all times
during the twelve month period immediately following such payment or (b) making
any optional prepayment on or redemption or purchase of any Indebtedness (other
than Indebtedness in respect of Capital Leases and purchase money Indebtedness
and other similar Indebtedness permitted under Section 4.7(g)), other than on
the maturity date thereof, unless, both before and immediately after giving
effect to any such prepayment, redemption or purchase, (i) no Default or Event
of Default exists and (ii) Availability as projected by the Lead Borrower (to
the reasonable satisfaction of the Administrative Agent) equals or exceeds
$100,000,000.00 at all times during the twelve month period immediately
following such prepayment, redemption or purchase or (2) make any payment with
respect to any Indebtedness owing to any other Credit Party that is not a
Borrower. No Credit Party shall amend or modify the terms of the Existing
Indentures in a manner adverse to the Lenders (in the reasonable judgment of the
Administrative Agent) or amend, terminate, replace or otherwise modify the
Intercompany Subordinated Demand Promissory Note.
4.28 Limitations on Capital Expenditures. The Credit Parties shall not make
or commit to make any Capital Expenditures in excess of (a) $250,000,000.00
during the term of this Agreement plus the lesser of (i) 50% of the aggregate
net cash proceeds realized by the Credit Parties from any Realty Sale during the
term of this Agreement and (ii) $50,000,000 or (b) $120,000,000.00 in any Fiscal
year of the Credit Parties.
4.29 Store Closings. Other than the Initial Store Closings, the Credit
Parties shall not close or announce the closure of any store locations if the
Cost of all Inventory located in such closed stores exceeds, in the aggregate,
twenty percent (20%) of the Cost of the Credit Parties' Inventory existing as of
the Closing Date.
4.30 Certain Proceeds. (a) During the continuance of a Cash Control Event,
the Credit Parties shall deposit all proceeds from Capital Events and casualty
insurance proceeds relating to Collateral into a Blocked Account maintained by
the Administrative Agent solely to hold such proceeds.
(b) The Credit Parties shall maintain a system to track proceeds received
with respect to Payless Inventory and shall transmit all such proceeds within
ten (10) days of the receipt thereof to Payless or an account maintained by the
Credit Parties solely for the deposit of such proceeds.
4.31 Maturities of Indebtedness under the Existing Indentures. At all times
during the period beginning thirty (30) days prior to any scheduled maturity of
any Indebtedness under any Existing Indenture through the date of such scheduled
maturity, the Credit Parties shall (a) cause Availability to be at least
$45,000,000.00 (after giving effect to the repayment in full of such
Indebtedness) and (b) have, either through additional Availability (in excess of
$45,000,000.00) or cash (not subject to any Lien, other than Permitted
Encumbrances) in a
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segregated account (or a combination thereof) funds available to repay such
maturing Indebtedness in its entirety.
4.32 Post Closing Matters. (a) The Lead Borrower shall make best efforts to
deliver to the Administrative Agent a duly executed release of guaranty in form
and substance reasonably satisfactory to the Administrative Agent with respect
to the Continuing Parent Guaranty of Payment dated April 1, 1990, between the
Lead Borrower and IBM Credit Corporation.
(b) The Lead Borrower shall use best efforts to dissolve ShopKo Pharmacies,
Inc. as soon as possible, but in no event later than June 30, 2001.
(c) The Lead Borrower shall use best efforts to insure that a Notice of
Assignment has been sent to each Eligible Pharmacy Account no later than March
31, 2001.
(d) The Lead Borrower shall establish a new Blocked Account with Fleet and
terminate the Blocked Account described on Schedule 7.3 no later than August 30,
2001.
4.33 Other Covenants. No Credit Party shall indirectly do or cause to be
done any act which, if done directly by that Credit Party, would breach any
covenant contained in this Agreement.
SECTION 5
FINANCIAL REPORTING AND PERFORMANCE COVENANTS
5.1 Maintain Records. The Credit Parties shall:
(a) at all times, keep proper books of account, in which full, true,
and accurate entries shall be made in all material respects of all of the
Credit Parties' financial transactions, all in accordance with GAAP applied
consistently with prior periods to fairly reflect the Consolidated
financial condition of the Credit Parties at the close of, and its results
of operations for, the periods in question;
(b) timely provide the Administrative Agent with those financial
reports, statements, and schedules required by this Article 5 or otherwise,
each of which reports, statements and schedules shall be prepared, to the
extent applicable, in accordance with GAAP applied consistently with prior
periods to fairly reflect in all material respects the Consolidated
financial condition of the Credit Parties at the close of, and the results
of operations for, the period(s) covered therein;
(c) at all times, keep accurate current records of the Collateral
including, without limitation, accurate current stock, cost, and sales
records of its Inventory, accurately and sufficiently itemizing and
describing the kinds, types, and quantities of Inventory and the cost and
selling prices thereof;
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(d) at all times, retain independent certified public accountants who
are reasonably satisfactory to the Administrative Agent (Deloitte & Touche
LLP or any other nationally recognized accounting firm being acceptable)
and instruct such accountants to fully cooperate with, and be available to,
the Administrative Agent to discuss the Credit Parties' financial
performance, financial condition, operating results, controls, and such
other matters, within the scope of the retention of such accountants, as
may be raised by the Administrative Agent.
(e) not change any Credit Party's fiscal year without furnishing the
Administrative Agent with at least ninety (90) days prior written notice
thereof.
5.2 Access To Records. (a) Each Credit Party shall accord the
Administrative Agent with access from time to time during normal business hours
and, as long as no Event of Default exists, upon reasonable prior notice, as the
Administrative Agent may reasonably require to all properties owned by or over
which any Credit Party has control. Subject to the provisions of Section 5.9(d)
hereof, the Administrative Agent shall have the right (as long as no Event of
Default exists, upon reasonable prior notice), and each Credit Party will permit
the Administrative Agent from time to time as Administrative Agent may
reasonably request, to examine, inspect, copy, and make extracts from any and
all of the Credit Parties' books, records, electronically stored data, papers,
and files relating to the financial condition of such Credit Party or to the
Collateral and in connection therewith, each Credit Party shall make all of that
Credit Party's copying facilities available to the Administrative Agent.
(b) Subject to the provisions of Section 5.2(a), each Credit Party hereby
authorizes the Administrative Agent to:
(i) inspect, copy, duplicate, review, cause to be reduced to hard
copy, run off, draw off, and otherwise use any and all computer or
electronically stored information or data which relates to the financial
condition of such Credit Party or to the Collateral, or any service bureau,
contractor, accountant, or other person, and directs any such service
bureau, contractor, accountant, or other person fully to cooperate with the
Administrative Agent with respect thereto; and
(ii) during the existence of a Cash Control Event, verify at any time
the Collateral or any portion thereof, including verification with account
debtors, and/or with each Credit Party's computer billing companies,
collection agencies, and accountants and to sign the name of each Credit
Party on any notice to each Credit Party's account debtors or verification
of the Collateral.
(c) The Administrative Agent from time to time may designate one or more
representatives to exercise the Administrative Agent's rights under this Section
5.2 as fully as if the Administrative Agent were doing so.
5.3 Immediate Notice To Administrative Agent. (a) The Lead Borrower shall
provide the Administrative Agent with written notice promptly upon the
occurrence of any of the following events, which written notice shall be with
reasonable particularity as to the facts and circumstances in respect of which
such notice is being given:
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(i) any change in any Credit Party's President, chief executive
officer, chief operating officer, and chief financial officer (without
regard to the title(s) actually given to the Persons discharging the duties
customarily discharged by officers with those titles);
(ii) any cessation of any Credit Party's making of payment, in the
ordinary course, to any of its creditors (other than its cessation of
making of such payments on account of a dispute with such creditor), which
would have a Material Adverse Effect;
(iii) any failure by any Credit Party to pay rent at any of that
Credit Party's locations, which failure continues for more than three (3)
days following the last day on which such rent was payable and which
failure is likely to have a Material Adverse Effect, unless such rent is
being disputed by the Credit Parties in good faith and the Credit Parties
have established adequate reserves therefor in accordance with GAAP;
(iv) any event which the Lead Borrower determines to have a Material
Adverse Effect;
(v) the occurrence of any Default;
(vi) any intention on the part of any Credit Party to discharge that
Credit Party' s present independent accountants or any withdrawal or
resignation by such independent accountants from their acting in such
capacity (as to which, see Subsection 5.1(d)); and
(vii) any litigation which, if determined adversely to any Credit
Party, would have a Material Adverse Effect.
(b) The Lead Borrower shall:
(i) provide the Administrative Agent, when so distributed, with
copies of any materials distributed to the shareholders of the Lead
Borrower;
(ii) provide the Administrative Agent:
(A) when filed, copies of all filings with the SEC; and
(B) when received, copies of all correspondence from the SEC,
other than routine non-substantive general communications from the
SEC.
(iii) add the Administrative Agent as an addressee on all investor
mailing lists maintained by each Credit Party; and
(iv) provide the Administrative Agent, when received by any Credit
Party, with a copy of any management letter or similar communications from
any accountant of any Credit Party.
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5.4 Borrowing Base Certificate. The Lead Borrower shall provide the
Administrative Agent with a Borrowing Base Certificate (in the form of Exhibit
D, as such form may be revised from time to time by the Administrative Agent)(a
"Borrowing Base Certificate") weekly on Wednesday of each week (or if not a
Business Day, the next succeeding Business Day) as of the close of business on
the immediately preceding Saturday. Such Certificate may be sent to the
Administrative Agent by facsimile transmission, provided that the original
thereof is forwarded to the Administrative Agent on the date of such
transmission.
5.5 Monthly Reports. Monthly, the Lead Borrower shall provide the
Administrative Agent with original counterparts of the following (each in such
form as the Administrative Agent from time to time may reasonably specify):
(a) those reports described in Schedule 5.5, at the times set forth in
such Schedule;
(b) within thirty (30) days following the end of each fiscal month
(except for any month which corresponds to the end of a fiscal quarter of
the Credit Parties), an internally prepared financial statement of the
Credit Parties' Consolidated financial condition and the results of its
operations for, the period ending with the end of the subject month, which
financial statement shall include, at a minimum, a balance sheet, income
statement, cash flow and comparison of same store sales for the
corresponding month of the then immediately previous year, as well as to
the Credit Parties' business plan or most recent forecast.
5.6 Quarterly Reports. Quarterly, within forty-five (45) days following the
end of each of the Credit Parties' fiscal quarters, the Lead Borrower shall
provide the Administrative Agent with the following:
(a) an original counterpart of a management prepared financial
statement of the Credit Parties for the period from the beginning of the
Credit Parties' then current fiscal year through the end of the subject
fiscal quarter, with comparative information for the same period of the
previous fiscal year, which statement shall include, at a minimum, a
balance sheet, income statement, statement of changes in shareholders'
equity, and cash flows and comparisons for the corresponding fiscal quarter
of the then immediately previous fiscal year, as well as to the Credit
Parties' business plan or most recent forecast;
(b) the officer's compliance certificate described in Section 5.8; and
(c) the Credit Parties' 10Q report filed with the SEC.
5.7 Annual Reports. Annually, within ninety (90) days following the end of
the Credit Parties' fiscal year, the Lead Borrower shall furnish the
Administrative Agent with the following:
(a) an original signed counterpart of the Credit Parties' Consolidated
annual financial statement, which statement shall have been prepared by,
and bear the unqualified opinion of, the Lead Borrower's independent
certified public
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accountants reasonably acceptable to the Administrative Agent (Deloitte &
Touche LLP or another nationally recognized accounting firm being
acceptable) (i.e., said statement shall be "certified" by such accountants)
and shall include, at a minimum (with comparative information for the then
prior fiscal year) a balance sheet, income statement, statement of changes
in shareholders' equity, cash flows, and schedules of consolidation; and
(b) the Credit Parties' 10K report filed with the SEC.
5.8 Officers' Certificates. The Lead Borrower shall cause either the Lead
Borrower's President or its Chief Financial Officer, in each instance, to
provide such Person's Certificate with those monthly, quarterly, and annual
statements to be furnished pursuant to this Agreement, which Certificate shall:
(a) indicate that the subject statement was prepared in accordance
with GAAP consistently applied and presents fairly in all material respects
the Consolidated financial condition of the Credit Parties at the close of,
and the results of the Credit Parties' operations and cash flows for, the
period(s) covered, subject, however to the following:
(i) usual year end adjustments and the absence of footnotes (this
exception shall not be included in the Certificate which accompanies such
annual statement); and
(ii) material Accounting Changes (in which event, such Certificate
shall include a schedule (in reasonable detail) of the effect of each such
Material Accounting Change) not previously specifically taken into account
in the determination of the financial performance covenant imposed pursuant
to Section 5.11;
(b) indicate either that (i) no Default exists, or (ii) if such an
event has occurred, its nature (in reasonable detail) and the steps (if
any) being taken or contemplated by the Credit Parties to be taken on
account thereof.
(c) include calculations concerning the Credit Parties' compliance
(or failure to comply) at the date of the subject statement with the
financial performance covenant included in Section 5.11 (whether or not a
Covenant Compliance Event then exists).
5.9 Inventories, Appraisals, And Audits. (a) The Administrative Agent, at
the reasonable expense of the Credit Party, may participate in and/or observe
each physical count and/or inventory of so much of the Collateral as consists of
Inventory which is undertaken on behalf of any Credit Party.
(b) The Credit Parties, at their own expense, shall cause not less than one
(1) physical inventory of each of their locations to be undertaken in each
twelve (12) month period during which this Agreement is in effect and shall
cause cycle counts to be undertaken in a
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manner consistent with their practices in effect on the Closing Date (or such
other procedures as may be reasonably satisfactory to the Administrative Agent).
(i) The Lead Borrower shall provide the Administrative Agent with a
copy of the preliminary results of each such physical inventory and cycle
count within thirty (30) days following the completion of such inventory.
(ii) The Lead Borrower, within forty-five (45) days following the
completion of such physical inventory or cycle count, shall provide the
Administrative Agent with a reconciliation of the results of each such
physical inventory or cycle count and shall post such results to the Credit
Parties' perpetual inventory system and, as applicable to the Credit
Parties' other financial books and records .
(iii) The Administrative Agent, in its reasonable discretion, if any
Event of Default exists, may cause such additional inventories to be taken
as the Administrative Agent reasonably determines (each, at the expense of
the Credit Parties).
(c) The Administrative Agent may obtain appraisals of the Collateral, from
time to time conducted by such appraisers as are reasonably satisfactory to the
Administrative Agent. The first two (2) such appraisals conducted during any
fiscal year of the Borrowers (plus any such appraisals conducted during the
continuance of an Event of Default) shall be at the Credit Parties' expense.
(d) The Administrative Agent may conduct commercial finance field
examinations of the Credit Parties' books and records from time to time. The
first two (2) such field examinations conducted during any fiscal year of the
Borrowers (plus any such field examinations conducted during the continuance of
an Event of Default) shall be at the Credit Parties' expense.
5.10 Additional Financial Information. (a) In addition to all other
information required to be provided pursuant to this Article 5, the Lead
Borrower promptly shall provide the Administrative Agent with such other and
additional information concerning the Credit Parties, the Collateral, the
operation of the Credit Parties' business, and the Credit Parties' financial
condition, including original counterparts of financial reports and statements,
as the Administrative Agent may from time to time reasonably request from the
Lead Borrower.
(b) The Lead Borrower may provide the Administrative Agent, from time to
time hereafter, with updated forecasts of the Credit Parties' anticipated
performance and operating results.
(c) In all events, the Lead Borrower, no later than thirty (30) days after
the end of each of the Credit Parties' fiscal years, shall provide the
Administrative Agent with an updated and extended forecast which shall go out at
least through the end of that fiscal year and shall include an income statement,
balance sheet, and statement of cash flow, by month, each
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Consolidated (with consolidating schedules) and each prepared in conformity with
GAAP and consistent with the Credit Parties' then current practices.
(d) Each Credit Party recognizes that all inventories, analysis, financial
information, and other materials which the Administrative Agent may obtain,
develop, or receive with respect to the Credit Parties are confidential to the
Administrative Agent and that, except as otherwise provided herein, no Credit
Party is entitled to receipt of any of such inventories, analysis, financial
information, and other materials, nor copies or extracts thereof or therefrom.
Notwithstanding the foregoing, as long as no Event of Default exists, the
Administrative Agent shall furnish the Lead Borrower with a copy of each
appraisal obtained by the Administrative Agent.
5.11 Financial Performance Covenants. (a) If a Covenant Compliance Event
exists, commencing with the fiscal month ending immediately prior to the date of
the Covenant Compliance Event for which a financial statement has been delivered
to the Administrative Agent pursuant to Section 5.5(b), the Credit Parties shall
not permit their Operating Cash Flow for the periods set forth below (as
determined from the Lead Borrower's most recently delivered financial statements
with respect to such period), as of the last day of such period, to be less than
the amount set forth below opposite such period.
Operating
Period Cash Flow
------ -----------------
for the three months ended
May 5, 2001 $ 20,000,000.00
for the four months ended
June 2, 2001 $ 20,000,000.00
for the five months ended
July 7, 2001 $ 20,000,000.00
for the six months ended
August 4, 2001 $ 50,000,000.00
for the seven months ended
September 1, 2001 $ 50,000,000.00
for the eight months ended
October 6, 2001 $ 50,000,000.00
for the nine months ended
November 3, 2001 $ 80,000,000.00
for the ten months ended
December 1, 2001 $ 80,000,000.00
for the eleven months ended
January 5, 2002 $ 80,000,000.00
for the twelve months ended
February 2, 2002 $ 150,000,000.00
thereafter, at the end of each of
the Lead Borrower's fiscal months,
for the 12-months most recently
ended $ 150,000,000.00
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(b) Compliance with such financial performance covenant shall be made as if
no Material Accounting Changes had been made (other than any Material Accounting
Changes specifically taken into account in the setting of such covenants). The
Administrative Agent may determine the Credit Parties' compliance with such
covenants based upon financial reports and statements provided by the Lead
Borrower to the Administrative Agent as well as by reference to interim
financial information provided to the Administrative Agent.
(c) Prior to the receipt of the Borrower's financial statements for the
month ended May 5, 2001, the Credit Parties shall not permit Availability to be
less than $40,000,000.00.
SECTION 6
USE OF COLLATERAL
6.1 Use Of Inventory Collateral. (a) No Credit Party shall engage in:
(i) any sale of the Inventory other than for fair consideration in
the conduct of the Credit Parties' business in the ordinary course or as
permitted under this Agreement;
(ii) sales or other dispositions in bulk other than in connection
with any store closings and sales of Diversion Inventory, provided that in
no event shall Inventory sold in bulk as a result of store closings after
the Closing Date, other than the Initial Store Closings, exceed, in the
aggregate, twenty percent (20%) of the Cost of the Credit Parties'
Inventory, other than Inventory that will be sold in connection with the
Initial Store Closings, existing as of the Closing Date; and
(iii) sales of any Collateral in breach of any provision of this
Agreement.
(b) No sale of Inventory shall be on consignment, approval, or under any
other circumstances such that such Inventory may be returned to a Credit Party
without the consent of the Administrative Agent (with the exception of the
Credit Parties' customary return policy applicable to the return of inventory
purchased by the Credit Parties' retail customers in the ordinary course).
6.2 Inventory Quality. All Inventory now owned or hereafter acquired by
each Credit Party and at the time included in the Borrowing Base is and will be
of good and merchantable quality and free from defects (other than defects
within customary trade tolerances).
6.3 Adjustments and Allowances. Each Credit Party may grant such allowances
or other adjustments to that Credit Party's account debtors (exclusive of
extending the time for payment of any Account, which shall not be done without
first obtaining the Administrative Agent's prior written consent in each
instance, which consent shall not be unreasonably delayed or withheld) as that
Credit Party may reasonably deem to accord with
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sound business practice, provided, however, the authority granted the Credit
Parties pursuant to this Section 6.3 may be limited or terminated by the
Administrative Agent at any time during the existence of an Event of Default in
the Administrative Agent's reasonable discretion.
6.4 Validity of Accounts.
(a) The amount of each Account shown on the books, records, and invoices of
the Credit Parties represented as owing by each account debtor is and will be
the correct amount actually owing by such account debtor and shall have been
fully earned by performance by the Credit Parties.
(b) No Credit Party has any knowledge of any impairment of the validity or
collectibility of any of the Accounts included in the Borrowing Base. The Lead
Borrower shall notify the Administrative Agent of any such impairment
immediately after any Credit Party becomes aware of any such impairment.
(c) Except for Permitted Encumbrances and Standby L/Cs permitted hereunder,
no Credit Party shall post any bond to secure any Credit Party's performance
under any agreement to which any Credit Party is a party nor cause any surety,
guarantor, or other third party obligee to become liable to perform any
obligation of any Credit Party (other than to the Administrative Agent) in the
event of any Credit Party's failure so to perform.
6.5 Notification to Account Debtors. The Administrative Agent shall have
the right, during the existence of a Cash Control Event or an Event of Default,
to notify any of the Credit Parties' account debtors to make payment directly to
the Administrative Agent and to collect all amounts due on account of the
Collateral.
SECTION 7
CASH MANAGEMENT; PAYMENT OF LIABILITIES
7.1 Depository Accounts.
(a) Schedule 7.1 lists all present DDA's as of the Closing Date and
includes, with respect to each depository (i) the name and address of that
depository; (ii) the account number(s) of the account(s) maintained with such
depository; and (iii) a contact person (with telephone and facsimile number) at
such depository.
(b) The Lead Borrower shall deliver the following to the Administrative
Agent, as a condition to the effectiveness of this Agreement:
(i) Notification, executed on behalf of each Credit Party, to each
depository institution with which any DDA is maintained (other than any
Exempt DDA and any Blocked Account), in the form of Exhibit G, with such
changes as are acceptable to the Administrative Agent.
(ii) A Blocked Account Agreement with any depository institution at
which a Blocked Account is required to be maintained;
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(c) No Credit Party will establish any DDA hereafter (other than an Exempt
DDA) unless, contemporaneous with such establishment, the Lead Borrower delivers
the following to the Administrative Agent:
(i) Notification to the depository at which such DDA is established
if the same would have been required pursuant to Section 7.1(b)(i) if the
subject DDA were open at the execution of this Agreement.
(ii) A Blocked Account Agreement executed on behalf of the depository
at which such DDA is established if the same would have been required
pursuant to Section 7.1(b)(ii) if the subject DDA were open at the
execution of this Agreement.
7.2 Credit Card Receipts.
(a) Schedule 7.2 describes all arrangements to which any Credit Party is a
party as of the Closing Date with respect to the payment to that Credit Party of
the proceeds of credit card charges for sales by that Credit Party.
(b) The Lead Borrower shall deliver to the Administrative Agent, as a
condition to the effectiveness of this Agreement, notifications, executed on
behalf of each Credit Party, to each of each Credit Party's credit card
clearinghouses and processors (in the form of Exhibit H, with such changes as
are acceptable to the Administrative Agent), which notice provides that payment
of all credit card charges submitted by that Credit Party to that clearinghouse
or other processor and any other amount payable to that Credit Party by such
clearinghouse or other processor shall, during the existence of a Cash Control
Event, be directed to the Blocked Accounts, the Concentration Account or as
otherwise designated from time to time by the Administrative Agent. No Credit
Party shall change such direction or designation except upon and with the prior
written consent of the Administrative Agent.
7.3 The Concentration, Blocked, and Operating Accounts.
(a) The following checking accounts have been or will be established (and
are so referred to herein):
(i) The "Concentration Account" (so referred to herein): Established
by the Administrative Agent with Fleet.
(ii) The "Blocked Accounts" (so referred to herein): Established by
the Lead Borrower with those financial institutions described on Schedule
7.3.
(iii) The "Operating Account" (so referred to herein): Established by
the Lead Borrower with Fleet (Account No. 9428400778).
(b) The contents of each DDA and of the Blocked Accounts constitutes
Collateral and Proceeds of Collateral and amounts realized from Capital Events
and/or casualty insurance proceeds relating to Collateral payable to the
Administrative Agent pursuant to Section 2.11(c)(ii). The contents of the
Concentration Account constitutes the Administrative
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Agent's property and shall be applied to the Liabilities in accordance with the
provisions of Section 7.5 hereof.
(c) The Credit Parties shall pay all fees and charges of, and maintain such
impressed balances as may be required by the depository in which any account is
opened as required hereby (even if such account is opened by and/or is the
property of the Administrative Agent).
7.4 Proceeds and Collections.
(a) All Receipts and all cash proceeds of any sale or other disposition of
Inventory and Accounts of each Credit Party:
(i) Constitute Collateral and proceeds of Collateral.
(ii) During the existence of a Cash Control Event, shall be held in
trust by the Credit Parties for the Administrative Agent.
(iii) During the existence of a Cash Control Event, shall not be
commingled with any of any Credit Party's other funds.
(iv) During the existence of a Cash Control Event, shall be deposited
and/or transferred only to the Blocked Accounts or the Concentration
Account.
(b) During the existence of a Cash Control Event, the Lead Borrower shall
cause the ACH or wire transfer to the Blocked Accounts or the Concentration
Account, no less frequently than daily (and whether or not there is then an
outstanding balance in the Loan Account) of the following:
(i) The then collected funds in each DDA (other than any Blocked
Account or any Exempt DDA), each such transfer to be net of any minimum
balance, not to exceed $10,000.00, as may be required to be maintained in
the subject DDA by the bank at which such DDA is maintained).
(ii) The proceeds of all credit card charges not otherwise provided
for pursuant hereto.
Telephone advice (confirmed by written notice) shall be provided to the
Administrative Agent on each Business Day on which any such transfer is made.
(c) Whether or not any Liabilities are then outstanding, during the
existence of a Cash Control Event, the Lead Borrower shall cause the ACH or wire
transfer to the Concentration Account, no less frequently than daily on each
Business Day, of all collected funds in each Blocked Account, net of such
minimum balance, not to exceed $250,000.00, as may be required to be maintained
in the Blocked Account by the depository which the Blocked Account is
maintained.
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(d) In the event that, notwithstanding the provisions of this Section 7.4,
during the existence of a Cash Control Event, any Credit Party receives or
otherwise has dominion and control of any Receipts, or any proceeds or
collections of any Collateral or proceeds from Capital Events and/or casualty
insurance proceeds relating to Collateral, such Receipts, proceeds, and
collections shall be held in trust by that Credit Party for the Administrative
Agent and shall not be commingled with any of that Credit Party's other funds or
deposited in any account of any Credit Party other than as instructed by the
Administrative Agent.
7.5 Payment of Liabilities.
(a) During the existence of a Cash Control Event (or, at other times, as
the Lead Borrower may direct), on each Business Day, the Administrative Agent
shall apply the then collected balance of the Concentration Account (net of fees
charged, and of such impressed balances as may be required by the bank at which
the Concentration Account is maintained), as of the day of receipt of such
collected funds, first, towards the Swing Line Loans and second, towards the
unpaid balance of the Loan Account and all other Liabilities, in the order
specified in Section 2.11(c) and subject to the provisions of Section 2.11(e).
(b) All deposits to the Concentration Account and other payments to the
Administrative Agent are subject to clearance and collection.
(c) The Administrative Agent shall transfer to the Operating Account any
surplus in the Concentration Account remaining after the application towards the
Liabilities referred to in Section 7.5(a), above (less those amount which are to
be netted out, as provided therein) provided, however, in the event that
(i) any Default exists; and
(ii) one or more L/Cs are then outstanding,
then the Administrative Agent may establish a funded reserve of up to 103% of
the aggregate Stated Amounts of such L/Cs. Such funded reserve shall either be
(i) returned to the Lead Borrower provided that no Default exists or (ii)
applied towards the Liabilities during the existence of any Event of Default
described in Section 10.10 or acceleration during the existence of any other
Event of Default.
SECTION 8
GRANT OF SECURITY INTEREST
8.1 Grant of Security Interest. To secure their prompt, punctual, and
faithful performance of all and each of the Liabilities, each Credit Party
hereby grants to the Administrative Agent, for its benefit and the ratable
benefit of the other Secured Parties, a continuing security interest in and to,
and assigns to the Administrative Agent, for its benefit and the ratable benefit
of the other Secured Parties, all of such Credit Party's right, title and
interest (whether now owned or hereafter acquired or arising) in and to the
following (all of which, together with any other property in which the
Administrative Agent may in the future be granted a security interest, is
referred to herein as the "Collateral"):
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(a) all Accounts;
(b) all Inventory;
(c) all Letter-of-Credit Rights arising from or relating to the Credit
Parties' Accounts or Inventory;
(d) all Payment Intangibles arising from, relating to, or constituting
proceeds of the Credit Parties' Accounts or Inventory;
(e) all Supporting Obligations arising from, relating to, or constituting
proceeds of the Credit Parties' Accounts or Inventory;
(f) all Instruments arising from, relating to, or constituting proceeds of
the Credit Parties' Accounts or Inventory;
(g) all Documents relating to the Credit Parties' Inventory;
(h) the Operating Account, the Concentration Account, each Blocked Account
and all other Deposit Accounts in which any monies deposited therein arise from,
relate to or constitute proceeds of the Credit Parties' Accounts or Inventory;
(i) money, cash, and policies and certificates of insurance, in each case,
arising from, relating to, or constituting proceeds of the Credit Parties'
Accounts or Inventory;
(j) all insurance proceeds, refunds, and premium rebates, including,
without limitation, proceeds of fire and credit insurance, constituting proceeds
of the Credit Parties' Inventory and Accounts;
(k) all Prescription Lists;
(l) all Pharmacy Accounts;
(m) all liens, guaranties, rights, remedies, and privileges relating or
pertaining to any Credit Parties' Inventory or Accounts, including the right of
stoppage in transit; and
(n) all cash Proceeds of or substitutions to any of the foregoing.
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8.2 Extent and Duration of Security Interest. The security interest created
and granted herein is in addition to, and supplemental of, any security interest
previously granted by any Credit Party to the Administrative Agent and shall
continue in full force and effect applicable to all Liabilities until both (a)
all Liabilities have been paid and/or satisfied in full and (b) the security
interest created herein is specifically terminated in writing by a duly
authorized officer of the Administrative Agent; provided, however, that the
Administrative Agent shall release the security interest granted in Inventory
and Prescription Lists which are sold or otherwise disposed of by the Credit
Parties in connection with store closings expressly permitted hereunder and
consistent with the Credit Parties' business plan provided to the Administrative
Agent that do not otherwise cause a Default under Sections 4.29 or 6.1(iii). The
Administrative Agent will terminate the security interest created hereunder
promptly upon payment in full, in cash, of all the Liabilities and the
termination and release of the Secured Parties' obligations hereunder and under
the other Loan Documents.
SECTION 9
ADMINISTRATIVE AGENT AS CREDIT PARTIES' ATTORNEY-IN-FACT
9.1 Appointment as Attorney-In-Fact. Each Credit Party hereby irrevocably
constitutes and appoints the Administrative Agent (acting through any of its
officers) as that Credit Party's true and lawful attorney, with full power of
substitution, during the existence of an Event of Default, to convert the
Collateral into cash at the sole risk, cost, and expense of that Credit Party,
but for the sole benefit of the Secured Parties. The rights and powers granted
the Administrative Agent by this appointment include but are not limited to the
right and power to:
(a) Prosecute, defend, compromise, or release any action relating to the
Collateral.
(b) Sign change of address forms to change the address to which each Credit
Party's mail is to be sent to such address as the Administrative Agent shall
designate; receive and open each Credit Party's mail; remove any Receivables
Collateral and Proceeds of Collateral therefrom and turn over the balance of
such mail either to the Lead Borrower or to any trustee in bankruptcy or
receiver of the Lead Borrower, or other legal representative of a Credit Party
whom the Administrative Agent determines to be the appropriate person to whom to
so turn over such mail.
(c) Endorse the name of the relevant Credit Party in favor of the
Administrative Agent upon any and all checks, drafts, notes, acceptances, or
other items or instruments which are proceeds of Accounts and Inventory; sign
and endorse the name of the relevant Credit Party on, and receive as secured
party, any of the Collateral, any invoices, schedules of Collateral, freight or
express receipts, or bills of lading, storage receipts, warehouse receipts, or
other documents of title respectively relating to the Collateral.
(d) Sign the name of the relevant Credit Party on any notice to that Credit
Party's account debtors or verification of the Receivables Collateral; sign the
relevant Credit Party's name on any Proof of Claim in Bankruptcy against account
debtors, and on notices of lien, claims of mechanic's liens, or assignments or
releases of mechanic's liens securing the Accounts.
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(e) Take all such action as may be necessary to obtain the payment of any
letter of credit and/or banker's acceptance relating to Accounts and Inventory
of which any Credit Party is a beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver, alter or
supply Inventory, if necessary to fulfill in whole or in part the purchase order
of any customer of each Credit Party.
9.2 No Obligation to Act. The Administrative Agent shall not be obligated
to do any of the acts or to exercise any of the powers authorized by Section 9.1
herein, but if the Administrative Agent elects to do any such act or to exercise
any of such powers, it shall not be accountable for more than it actually
receives as a result of such exercise of power, and shall not be responsible to
any Credit Party for any act or omission to act except for any act or omission
to act as to which there is a final determination made in a judicial proceeding
(in which proceeding the Administrative Agent has had an opportunity to be
heard) which determination includes a specific finding that the subject act or
omission to act had been grossly negligent or in actual bad faith.
SECTION 10
EVENTS OF DEFAULT
The occurrence of any event described in this Article 10 respectively shall
constitute an "Event of Default" herein. Upon the occurrence of any Event of
Default described in Section 10.10, any and all Liabilities shall become due and
payable without any further act on the part of the Administrative Agent. During
the existence of any other Event of Default, the Administrative Agent may, and
on the instruction of the Majority Lenders as provided in Section 13.1(b) shall,
declare any and all Liabilities to be immediately due and payable. The existence
of any Event of Default shall also constitute, without notice or demand, a
default under all other agreements between any Secured Party and any Credit
Party and instruments and papers heretofore, now, or hereafter given to any
Secured Party by any Credit Party.
Events of Default:
10.1 Failure to Pay Loans. The failure by any Credit Party to pay when due
any principal of the Revolving Credit (including, without limitation, any
reimbursement for any drawing under any L/C) or any Term Loan.
10.2 Failure to Make Other Payments. The failure by any Credit Party to pay
within two (2) Business Days when due (or upon demand, if payable on demand) any
interest on, or fees in respect of, the Revolving Credit (including, without
limitation, L/C fees), any Term Loan or any other payment Liability (other than
any payment liability on account of the principal of the Loans).
10.3 Failure to Perform Covenant Or Liability (No Grace Period). The
failure by any Credit Party to promptly, punctually, faithfully and timely
perform, discharge, or comply with any covenant or Liability included in
Sections 4.6, 4.7, 4.8, 4.11, 4.13, 4.19, 4.20, 4.27, 4.28, 4.29, 4.30, 4.31,
4.33, 5.11, 6.1 or 7.4 hereof.
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10.4 Failure to Perform Covenant or Liability (Grace Period). The failure
by the Credit Parties to promptly, punctually, faithfully and timely perform,
discharge, or comply with any covenants under any Loan Document or any other
Liabilities in each case not described in Sections 10.1, 10.2 or 10.3, which
failure continues for thirty (30) days after (i) the Lead Borrower's receipt of
written notice from the Administrative Agent or (ii) the breach of any such
covenant or Liabilities.
10.5 Misrepresentation. The determination by the Administrative Agent that
any representation or warranty at any time made by any Credit Party to the
Administrative Agent or any Lender was not true or complete in all material
respects when given or deemed given.
10.6 Acceleration of Other Debt; Breach of Lease.
(a) The occurrence of any event such that any Indebtedness of any Credit
Party in excess of $10,000,000.00 (other than Indebtedness under this Agreement)
could be accelerated (whether or not the subject creditor takes any action on
account of such occurrence).
(b) The termination of any Lease as the result of a default thereunder,
which termination individually or in the aggregate with all other Lease
terminations after the date hereof could reasonably be expected to have a
Material Adverse Effect.
10.7 Uninsured Casualty Loss. The occurrence of any uninsured loss, theft,
damage, or destruction of or to any material portion of the Collateral in excess
of $2,000,000.00 in any fiscal year of the Credit Parties.
10.8 Attachment; Judgment; Restraint of Business.
(a) The service of process upon any Secured Party or any Participant
seeking to attach, by trustee or other process, funds in excess of $2,000,000.00
of any Credit Party on deposit with, or assets of any Credit Party in the
possession of, the Secured Party or such Participant unless contested in good
faith by the Credit Party in appropriate proceedings.
(b) The entry of any judgment against any Credit Party, which, when
aggregated with all other such judgments against all Credit Parties exceeds
$2,000,000.00 (unless adequately insured by a solvent unaffiliated insurance
company that has acknowledged coverage), and which judgment is not satisfied (if
a money judgment), bonded, or appealed from (with execution or similar process
stayed) within thirty (30) days of its entry.
(c) The entry of any order or the imposition of any other process having
the force of law, the effect of which is to restrain in any material way the
conduct by any Credit Party of its business in the ordinary course and which has
a Material Adverse Effect.
10.9 Business Failure. Any act by, against, or relating to any Credit
Party, or its property or assets, which act constitutes the determination, by
any Credit Party, to initiate a program of substantial or total
self-liquidation; application for, consent to, or sufferance of the appointment
of a receiver, trustee, or other person, pursuant to court action or otherwise,
over all, or any part of any Credit Party's property; the granting of any trust
mortgage or execution of an assignment for the benefit of the creditors of any
Credit Party, or the occurrence of any other
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voluntary or involuntary liquidation or extension of debt agreement for any
Credit Party; the offering by or entering into by any Credit Party of any
composition, extension, or any other arrangement seeking relief from or
extension of the debts of any Credit Party; or the initiation of any judicial or
non-judicial proceeding or agreement by, against, or including any Credit Party
which seeks or intends to accomplish a reorganization or arrangement with
creditors; and/or the initiation by or on behalf of any Credit Party of the
liquidation or winding up of all or any substantial part of any Credit Party's
business or operations; provided that if any of the foregoing is commenced
against a Credit Party, no Event of Default shall be deemed to have arisen
hereunder if such action is timely contested in good faith by that Credit Party
by appropriate proceedings and is terminated or dismissed within sixty (60) days
of when commenced.
10.10 Bankruptcy. The failure by any Credit Party to generally pay the
debts of that Credit Party as they mature; adjudication of bankruptcy or
insolvency relative to any Credit Party; the entry of an order for relief or
similar order with respect to any Credit Party in any proceeding pursuant to the
Bankruptcy Code or any other federal bankruptcy law; the filing of any
complaint, application, or petition by any Credit Party initiating any matter in
which any Credit Party is or may be granted any relief from the debts of that
Credit Party pursuant to the Bankruptcy Code or any other insolvency statute or
procedure; the filing of any complaint, application, or petition against any
Credit Party initiating any matter in which that Credit Party is or may be
granted any relief from the debts of that Credit Party pursuant to the
Bankruptcy Code or any other insolvency statute or procedure, which complaint,
application, or petition is not timely contested in good faith by that Credit
Party by appropriate proceedings or, if so contested, is not dismissed within
sixty (60) days of when filed.
10.11 Indictment - Forfeiture. The indictment of, or institution of any
legal process or proceeding against, any Credit Party, under any Applicable Law
where the relief, penalties, or remedies sought or available include the
forfeiture of any property of any Credit Party and/or the imposition of any stay
or other order, the effect of which would reasonably be expected to have a
Material Adverse Effect.
10.12 Challenge to Loan Documents.
(a) Any challenge by or on behalf of any Credit 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 material terms or which
seeks to void, avoid, limit, or otherwise adversely affect any security interest
created by, in or under any Loan Document or any payment made pursuant thereto.
(b) Any determination by any court or any other judicial or government
authority that any Loan Document is not enforceable strictly in accordance with
the subject Loan Document's material terms or which voids, avoids, limits, or
otherwise adversely affects any security interest created by any Loan Document
or any payment made pursuant thereto.
10.13 Change in Control. Any Change in Control.
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SECTION 11
RIGHTS AND REMEDIES UPON DEFAULT
11.1 Acceleration. During the existence of any Event of Default as
described in Section 10.10, the Commitments shall be terminated and all
Liabilities of the Credit Parties to the Secured Parties shall be immediately
due and payable. During the existence of any Event of Default other than as
described in Section 10.10, the Administrative Agent may (and on the issuance of
Notice(s) of Acceleration, the Administrative Agent shall) terminate the
Commitments and declare all Liabilities of the Credit Parties to the Secured
Parties to be immediately due and payable, and may exercise all of the
Administrative Agent's Rights and Remedies as the Administrative Agent from time
to time thereafter determines as appropriate.
11.2 Rights of Enforcement. During the existence of any Event of Default,
the Administrative Agent shall have all of the rights and remedies of a secured
party upon default under the UCC, in addition to which the Administrative Agent
shall have all and each of the following rights and remedies:
(a) To give notice to any bank at which any DDA or Blocked Account is
maintained and in which Proceeds of Collateral are deposited, to turn over such
Proceeds directly to the Administrative Agent.
(b) To collect the Receivables Collateral with or without the taking of
possession of any of the Collateral.
(c) To take possession of all or any portion of the Collateral.
(d) To sell, lease, or otherwise dispose of any or all of the Collateral,
in its then condition or following such preparation or processing as the
Administrative Agent deems advisable and with or without the taking of
possession of any of the Collateral.
(e) To conduct one or more going out of business sales which include the
sale or other disposition of the Collateral, subject to the rights of lessors
under any Leases and applicable law.
(f) To apply the Proceeds of the Collateral in reduction of the
Liabilities.
(g) To exercise all or any of the rights, remedies, powers, privileges, and
discretions under all or any of the Loan Documents.
11.3 Sale of Collateral.
(a) Any sale or other disposition of the Collateral may be at public or
private sale upon such terms and in such manner as the Administrative Agent
deems advisable, having due regard to compliance with any statute or regulation
which might affect, limit, or apply to the Administrative Agent's disposition of
the Collateral.
(b) The Administrative Agent, in the exercise of the Administrative Agent's
Rights and Remedies during the existence of an Event of Default, may conduct one
or more
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going out of business sales, in the Administrative Agent's own right or by one
or more agents and contractors. Such sale(s) may be conducted upon any premises
owned, leased, or occupied by any Credit Party, subject to the rights of lessors
under any Leases and applicable law.
(c) Unless the Collateral is perishable or threatens to decline speedily in
value, or is of a type customarily sold on a recognized market (in which event
the Administrative Agent shall provide the Lead Borrower with such notice as may
be practicable under the circumstances), the Administrative Agent shall give the
Lead Borrower at least ten (10) days prior written notice of the date, time, and
place of any proposed public sale, and of the date after which any private sale
or other disposition of the Collateral may be made. Each Credit Party agrees
that such written notice shall satisfy all requirements for notice to that
Credit Party which are imposed under the UCC or other applicable law with
respect to the exercise of the Administrative Agent's rights and remedies upon
default.
(d) The Administrative Agent and any Lender may purchase the Collateral, or
any portion of it at any sale held under this Article.
(e) If any of the Collateral is sold, leased, or otherwise disposed of by
the Administrative Agent on credit, the Liabilities shall not be deemed to have
been reduced as a result thereof unless and until payment is finally received
thereon by the Administrative Agent.
(f) The Administrative Agent shall apply the proceeds of the Administrative
Agent's exercise of its rights and remedies upon default pursuant to this
Article 11 in accordance with Sections 13.6 and 13.7.
11.4 Occupation of Business Location. In connection with the Administrative
Agent's exercise of the Administrative Agent's rights under this Article 11,
during the existence of an Event of Default, the Administrative Agent may enter
upon, occupy, and use any premises owned or occupied by any Credit Party,
subject to the rights of lessors under any Leases existing on the Closing Date
and applicable law, and may exclude each Credit Party from such premises or
portion thereof as may have been so entered upon, occupied, or used by the
Administrative Agent. The Administrative Agent shall not be required to remove
any of the Collateral from any such premises upon the Administrative Agent's
taking possession thereof, and may render any Collateral unusable to the Credit
Parties. In no event shall the Administrative Agent be liable to any Credit
Party for use or occupancy by the Administrative Agent of any premises pursuant
to this Article 11, nor for any charge (such as wages for any Credit Party's
employees and utilities) incurred in connection with the Administrative Agent's
exercise of the Administrative Agent's Rights and Remedies. To the extent any
Credit Party enters into after the Closing Date any Lease or financing of any
owned or leased real property, (i) if such property is to be used as a
warehouse, such Credit Party will ensure that the lessor or mortgagee thereunder
agrees in writing for the benefit of the Administrative Agent to allow the
Administrative Agent (or its designees) to access such property in the exercise
of its rights under this Section 11 and, (ii) if such property is to be used as
a store location or a warehouse, in either case holding Inventory valued in
excess of $5,000,000.00, such Credit Party will use good faith efforts such that
the lessor or mortgagee thereunder agrees in writing for the benefit of the
Administrative Agent not to interfere with the Administrative Agent's exercise
of its rights under this Section 11 to the
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extent that such lessor or mortgagee has rights to the Inventory which have
priority over the Collateral Interests of the Administrative Agent in the
Collateral.
11.5 Grant of Nonexclusive License. Each Credit Party hereby grants to the
Administrative Agent a royalty free nonexclusive irrevocable license during the
existence of an Event of Default and subject to the rights of any third Person
(including, without limitation, any lessor under a Lease) and Applicable Law (a)
to use, apply, and affix any trademark, trade name, logo, or the like in which
any Credit Party now or hereafter has rights, such license being with respect to
the Administrative Agent's exercise of the rights hereunder including, without
limitation, in connection with any completion of the sale or other disposition
of Inventory, and (b) to use any or all furniture, fixtures and equipment
located at any of the stores or other leased facilities of the Credit Parties in
connection with any completion of the sale or other disposition of Inventory,
and (c) to use any or all intellectual property, general intangibles (including,
without limitation, the Credit Parties' trade names), books, records, and
information relating to the Collateral and/or to the operation of each Credit
Party's business, and all rights of access to such books, records, and
information, and all property in which such books, records, and information are
stored, recorded, and maintained, and other assets of each Credit Party.
11.6 Assembly of Collateral. The Administrative Agent may require any
Borrower to assemble the Collateral and make it available to the Administrative
Agent at the Credit Parties' sole risk and expense at a place or places which
are reasonably convenient to both the Administrative Agent and the Lead
Borrower.
11.7 Rights and Remedies. The rights, remedies, powers, privileges, and
discretions of the Administrative Agent under this Agreement (herein, the
"Administrative Agent's Rights and Remedies") shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have. No delay or
omission by the Administrative Agent in exercising or enforcing any of the
Administrative Agent's Rights and Remedies shall operate as, or constitute, a
waiver thereof. No waiver by the Administrative Agent of any Event of Default or
of any default under any other agreement shall operate as a waiver of any other
default hereunder or under any other agreement. No single or partial exercise of
any of the Administrative Agent's Rights or Remedies, and no express or implied
agreement or transaction of whatever nature entered into between the
Administrative Agent and any person, at any time, shall preclude the other or
further exercise of the Administrative Agent's Rights and Remedies. No waiver by
the Administrative Agent of any of the Administrative Agent's Rights and
Remedies on any one occasion shall be deemed a waiver on any subsequent
occasion, nor shall it be deemed a continuing waiver. The Administrative Agent's
Rights and Remedies may be exercised at such time or times and in such order of
preference as the Administrative Agent may determine. The Administrative Agent's
Rights and Remedies may be exercised without resort or regard to any other
source of satisfaction of the Liabilities.
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SECTION 12
FUNDINGS AND DISTRIBUTIONS
12.1 Funding Procedures. Subject to Section 12.2:
(a) The Administrative Agent shall advise each Revolving Credit Lender, no
later than 1:30 PM Boston time on a date on which any Revolving Credit Loan
(other than a Swing Line Loan) is to be made on that date. Such advice, in each
instance, may be by telephone or facsimile transmission, provided that if such
advice is by telephone, it shall be confirmed in writing. Advice of a Revolving
Credit Loan shall include the amount of and interest rate applicable to the
subject Revolving Credit Loan.
(b) Subject to that Revolving Credit Lender's Revolving Credit Commitment,
each Revolving Credit Lender, by no later than the end of business on the day on
which the subject Revolving Credit Loan (including any Permissible OverLoan) is
to be made, shall Transfer that Revolving Credit Lender's Revolving Credit
Commitment Percentage of the subject Revolving Credit Loan to the Administrative
Agent.
(c) No later than 11:00 AM Boston time on the Closing Date, each Term Loan
Lender shall transfer to the Administrative Agent that Term Loan Lender's Term
Loan Commitment Percentage of the Total Term Loan Commitment and the
Administrative Agent shall make available to the Lead Borrower no later than
1:00 PM Boston time on such day the full amount of such Term Loan Commitments so
received.
12.2 Swing Line Loans.
(a) In the event that, when a Revolving Credit Loan is requested, the
aggregate unpaid balance of the Swing Line Loan is less than the Swing Line Loan
Ceiling, then the Swing Line Lender may advise the Administrative Agent that the
Swing Line Lender has determined to include up to the amount of the requested
Revolving Credit Loan as part of the Swing Line Loan. In such event, the Swing
Line Lender shall Transfer the amount of the requested Revolving Credit Loan to
the Administrative Agent.
(b) The Swing Line Loan shall be converted to a Revolving Credit Loan in
which all Revolving Credit Lenders participate as follows:
(i) At any time and from time to time, the Swing Line Lender may
advise the Administrative Agent that all, or any part of the Swing Line
Loan is to be converted to a Revolving Credit Loan in which all Revolving
Credit Lenders participate.
(ii) At the initiation of a Liquidation, the then entire unpaid
principal balance of the Swing Line Loan shall be converted to a Revolving
Credit Loan in which all Revolving Credit Lenders participate.
In either such event, the Administrative Agent shall advise each Revolving
Credit Lender of such conversion as if, and with the same effect as if such
conversion were the making of a Revolving Credit Loan as provided in Section
12.1.
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(c) The Swing Line Lender, in separate capacities, may also be the
Administrative Agent and a Revolving Credit Lender.
(d) The Swing Line Lender, in its capacity as Swing Line Lender, is not a
Revolving Credit Lender for any of the following purposes:
(i) Except as otherwise specifically provided in the relevant
Section, any distribution pursuant to Section 13.6.
(ii) Determination of whether the requisite Revolving Credit
Commitments have Consented to action requiring such Consent.
12.3 Administrative Agent's Covering of Funding.
(a) Each Lender shall make available to the Administrative Agent, as
provided herein, that Lender's Revolving Credit Commitment Percentage and Term
Loan Percentage of the following:
(i) Each Revolving Credit Loan (including any Permissible OverLoan),
up to the maximum amount of that Revolving Credit Lender's Revolving Credit
Commitment.
(ii) Up to the maximum amount of that Revolving Credit Lender's
Revolving Credit Commitment of each L/C Drawing (to the extent that such
L/C Drawing is not "covered" by a Revolving Credit Loan as provided
herein).
(iii) Each Term Loan up to the maximum amount of that Term Loan
Lender's Term Loan Commitment.
(b) In all circumstances, the Administrative Agent may:
(i) Assume that each Revolving Credit Lender, subject to Sections
2.5 and 12.3(a), timely shall make available to the Administrative Agent
that Revolving Credit Lender's Revolving Credit Commitment Percentage of
each Revolving Credit Loan (including any Permissible OverLoan), notice of
which is provided pursuant to Section 12.1.
(ii) Assume that each Term Loan Lender, subject to Section 12.3(a),
timely shall make available to the Administrative Agent that Term Loan
Lender's Term Loan Percentage of any Term Loan, notice of which is provided
pursuant to Section 12.1.
(iii) In reliance upon such assumption, make available the
corresponding amount to the Borrowers.
(iv) Assume that each Lender timely shall pay, and shall make
available, to the Administrative Agent all other amounts which that Lender
is
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obligated to so pay and/or make available hereunder or under any of the
Loan Documents.
(c) In the event that, in reliance upon any of such assumptions, the
Administrative Agent makes available a Revolving Credit Lender's Revolving
Credit Commitment Percentage of one or more Revolving Credit Loans (including
any permissible OverLoan), a Term Loan Lender's Term Loan Percentage of any Term
Loan, or any other amount to be made available hereunder or under any of the
Loan Documents, which amount a Lender (a "Delinquent Lender") fails to provide
to the Administrative Agent within one (1) Business Day of written notice of
such failure, then:
(i) The amount which had been made available by the Administrative
Agent is an "Administrative Agent's Cover" (and is so referred to herein).
(ii) All interest paid by the Borrowers on account of the Loan or
coverage of the subject L/C Drawing which consist of the Administrative
Agent's Cover shall be retained by the Administrative Agent until the
Administrative Agent's Cover, with interest, has been paid.
(iii) The Delinquent Lender shall pay to the Administrative Agent, on
demand, interest at a rate equal to the prevailing federal funds rate on
any Administrative Agent's Cover in respect of that Delinquent Lender.
(iv) The Administrative Agent shall have succeeded to all rights to
payment to which the Delinquent Lender otherwise would have been entitled
hereunder in respect of those amounts paid by or in respect of the
Borrowers on account of the Administrative Agent's Cover together with
interest until it is repaid. Such payments shall be deemed made first
towards the amounts in respect of which the Administrative Agent's Cover
was provided and only then towards amounts in which the Delinquent Lender
is then participating. For purposes of distributions to be made pursuant to
Section 12.4(a) (which relates to ordinary course distributions) or Section
13.6 (which relates to distributions of proceeds of a Liquidation) below,
amounts shall be deemed distributable to a Delinquent Lender (and
consequently, to the Administrative Agent to the extent to which the
Administrative Agent is then entitled) at the highest level of distribution
(if applicable) at which the Delinquent Lender would otherwise have been
entitled to a distribution.
(v) Subject to Subsection 12.3(c)(iv), the Delinquent Lender shall
be entitled to receive any payments from the Borrowers to which the
Delinquent Lender is then entitled, provided however there shall be
deducted from such amount and retained by the Administrative Agent any
interest to which the Administrative Agent is then entitled on account of
Section 12.3(c)(ii), above.
(d) A Delinquent Lender shall not be relieved of any obligation of such
Delinquent Lender hereunder (all and each of which shall constitute continuing
obligations on the part of any Delinquent Lender).
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(e) A Delinquent Lender may cure its status as a Delinquent Lender by
paying the Administrative Agent the aggregate of the following:
(i) The Administrative Agent's Cover (to the extent not previously
repaid by the Borrowers and retained by the Administrative Agent in
accordance with Subsection 12.3(c)(iv), above) with respect to that
Delinquent Lender.
Plus
(ii) The aggregate of the amount payable under Subsection
12.3(c)(iii), above (which relates to interest to be paid by that
Delinquent Lender).
Plus
(iii) All such costs and expenses as may be incurred by the
Administrative Agent in the enforcement of the Administrative Agent's
rights against such Delinquent Lender.
12.4 Ordinary Course Distributions. (This Section 12.4 applies, and sets
forth rights and obligations amongst the Lenders only, unless the provisions of
Section 13.6 (which relates to distributions in the event of a Liquidation)
become operative).
(a) Weekly, on such day as may be set from time to time by the
Administrative Agent (or more frequently at the Administrative Agent's option)
the Administrative Agent and each Lender shall settle up on amounts advanced
under the Revolving Credit and collected funds received in the Concentration
Account or otherwise paid by the Borrowers.
(b) The Administrative Agent shall distribute to the Swing Line Lender and
to each Lender, such Person's respective pro rata share of interest payments on
the Loans when actually received and collected by the Administrative Agent. For
purposes of calculating interest due to a Lender, that Lender shall be entitled
to receive interest on the actual amount contributed by that Lender towards the
principal balance of the Loans outstanding during the applicable period covered
by the interest payment made by the Borrowers. Any net principal reductions to
the Loans received by the Administrative Agent in accordance with the Loan
Documents during such period shall not reduce such actual amount so contributed,
for purposes of calculation of interest due to that Lender, until the
Administrative Agent has distributed to that Lender its pro rata share thereof.
(c) The Administrative Agent shall distribute (i) Early Termination Fees to
the applicable Lenders pro rata based upon their Revolving Credit Commitment
Percentage or their Term Loan Percentage, as the case may be, (ii) L/C fees and,
except as otherwise provided in Section 2.16, Line Fees paid on account of the
Revolving Credit to the Revolving Credit Lenders pro rata based upon their
Revolving Credit Commitment Percentages and (iii) any fees payable under Section
2.25 to the applicable Lenders, pro rata, based upon the Commitments of such
Lender as of the date on which the Lead Borrower provides notice of its election
to extend the Maturity Date.
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(d) No Lender shall have any interest in, or right to receive any part of,
the Commitment Fee or the Agent's Fee to be paid by the Borrowers to the
Administrative Agent pursuant to this Agreement. Each Lender shall be paid such
fees upon becoming a Lender hereunder as may be agreed between such Lender and
the Arranger.
(e) Any amount received by the Administrative Agent as reimbursement for
any cost or expense (including without limitation, attorneys' reasonable fees)
shall be distributed by the Administrative Agent to that Person which is
entitled to such reimbursement as provided in this Agreement (and if such
Person(s) is (are) the Lenders, pro rata based upon their respective Term Loan
Percentages, Revolving Credit Commitment Percentages or Total Commitment
Percentages, as the case may be, at the date on which the expense, in respect of
which such reimbursement is being made, was incurred).
(f) Each distribution pursuant to this Section 12.4 is subject to Section
12.3(c), above.
SECTION 13
ACCELERATION AND LIQUIDATION
13.1 Acceleration Notices.
(a) The Administrative Agent may give the Lenders a Notice of Acceleration
at any time during the existence of an Event of Default.
(b) The Majority Lenders may give the Administrative Agent a Notice of
Acceleration at any time during the existence of an Event of Default. Such
notice may be by multiple counterparts.
13.2 Acceleration. Unless stayed by judicial or statutory process, the
Administrative Agent shall accelerate the time for payment of the Liabilities
and declare the Liabilities immediately due and payable in full within a
commercially reasonable time following:
(a) The Administrative Agent's giving of a Notice of Acceleration to the
Lenders as provided in Section 13.1(a).
(b) The Administrative Agent's receipt of a Notice of Acceleration from the
Majority Lenders, in compliance with Section 13.1(b).
13.3 Initiation of Liquidation. Unless stayed by judicial or statutory
process, a Liquidation shall be initiated by the Administrative Agent within a
commercially reasonable time following acceleration of the Liabilities.
13.4 Actions at and Following Initiation of Liquidation.
(a) At the initiation of a Liquidation:
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(i) The unpaid principal balance of the Swing Line Loan (if any)
shall be converted, pursuant to Section 12.2(b)(ii), to a Revolving Credit
Loan in which all Revolving Credit Lenders participate.
(ii) The Administrative Agent and the Revolving Credit Lenders shall
"net out" each Revolving Credit Lender's respective contributions towards
the Revolving Credit Loans, so that each Revolving Credit Lender holds that
Revolving Credit Lender's Revolving Credit Commitment Percentage of the
Revolving Credit Loans and advances.
(b) Following the initiation of a Liquidation, each Revolving Credit
Lender shall contribute, towards any L/C thereafter honored and not
immediately reimbursed by the Borrowers, that Revolving Credit Lender's
Revolving Credit Commitment Percentage of such honoring.
13.5 Administrative Agent's Conduct of Liquidation.
(a) Any Liquidation shall be conducted by the Administrative Agent, with
the advice and assistance of the Lenders.
(b) The Administrative Agent may establish one or more Nominees to "bid in"
or otherwise acquire ownership to any Post Foreclosure Asset, provided that the
Administrative Agent may "bid in" for any such assets only at such prices as may
be directed by the Majority Lenders.
(c) The Administrative Agent shall manage the Nominee and manage and
dispose of any Post Foreclosure Assets with a view towards the realization of
the economic benefits of the ownership of the Post Foreclosure Assets and in
such regard, the Administrative Agent and/or the Nominee may operate, repair,
manage, maintain, develop, and dispose of any Post Foreclosure Asset in such
manner as the Administrative Agent determines as appropriate under the
circumstances.
(d) The Administrative Agent may decline to undertake or to continue taking
a course of action or to execute an action plan (whether proposed by the
Administrative Agent or any Lender) unless indemnified to the Administrative
Agent's satisfaction by the Lenders against any and all liability and expense
which may be incurred by the Administrative Agent by reason of taking or
continuing to take that course of action or action plan.
(e) Each Secured Party shall execute all such instruments and documents not
inconsistent with the provisions of this Agreement as the Administrative Agent
and/or the Nominee reasonably may request with respect to the creation and
governance of any Nominee, the conduct of the Liquidation, and the management
and disposition of any Post Foreclosure Asset.
13.6 Distribution of Liquidation Proceeds. (a) During the existence of an
Event of Default, the Administrative Agent may establish one or more reasonably
funded reserve accounts into which proceeds of the conduct of any Liquidation
may be deposited in anticipation of future expenses which may be incurred by the
Administrative Agent in the exercise of rights
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as a secured creditor of the Credit Parties and prior claims which the
Administrative Agent reasonably anticipates may need to be paid.
(b) The Administrative Agent shall distribute the net proceeds of
Liquidation in accordance with the relative priorities set forth in Section
13.7.
(c) Each Lender, on the written request of the Administrative Agent and/or
any Nominee, not more frequently than once each month, shall reimburse the
Administrative Agent and/or any Nominee, pro rata, for any cost or expense
reasonably incurred by the Administrative Agent and/or the Nominee in the
conduct of a Liquidation, which amount is not covered out of current proceeds of
the Liquidation, which reimbursement shall be paid over to and distributed by
the Administrative Agent.
13.7 Relative Priorities to Proceeds of Liquidation. The relative
priorities to the proceeds of a Liquidation are as follows:
(a) To the Administrative Agent as reimbursement for all reasonable third party
costs and expenses incurred by the Administrative Agent and to Lenders' Special
Counsel and to any funded reserve established pursuant to Section 13.6(a); and
then
(b) To the Swing Line Lender, on account of any Swing Line Loans not
converted to Revolving Credit Loans pursuant to Section 13.4(a)(i); and then
(c) To the Lenders (other than any Delinquent Lender), pro rata, to the
unpaid principal balance of the Revolving Credit and the Term Loans; and then
(d) To the Lenders (other than any Delinquent Lender), pro rata, to accrued
interest on the Revolving Credit and the Term Loans; and then
(e) To the Lenders (other than any Delinquent Lender), pro rata, to those
fees distributable hereunder to the Lenders; and then
(f) To any Delinquent Lenders, pro rata to amounts to which such Revolving
Credit Lenders otherwise would have been entitled pursuant to Sections 13.7(c),
13.7(d) or 13.7(e); and then
(g) To any applicable Lenders, pro rata, to the extent of the Early
Termination Fee; and then
(h) To any other Liabilities then outstanding (including, without
limitation on account of any claims then threatened or asserted against any
Secured Party for which the Credit Parties are obligated to provide an
indemnity).
(i) To the Lead Borrower or whoever may be lawfully entitled thereto.
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SECTION 14
THE ADMINISTRATIVE AGENT
14.1 Appointment of the Administrative Agent.
(a) Each of the Lenders and the Issuer appoints and designates Fleet Retail
Finance Inc. as the "Administrative Agent" hereunder and under the Loan
Documents.
(b) Each of the Lenders and the Issuer authorizes the Administrative Agent:
(i) To execute those of the Loan Documents and all other instruments
relating thereto to which the Administrative Agent is a party.
(ii) To take such action on behalf of the Lenders and the Issuer and
to exercise all such powers as are expressly delegated to the
Administrative Agent hereunder and in the Loan Documents and all related
documents, together with such other powers as are reasonably incident
thereto.
14.2 Responsibilities of Administrative Agent; Other Agents.
(a) The Administrative Agent shall not have any duties or responsibilities
to, or any fiduciary relationship with, any Secured Party except for those
expressly set forth in this Agreement.
(b) Neither the Administrative Agent nor any of its Affiliates shall be
responsible to any Secured Party for any of the following:
(i) Any recitals, statements, representations or warranties made by
any Credit Party or any other Person.
(ii) Any appraisals or other assessments of the assets of any Credit
Party or of any other Person responsible for or on account of the
Liabilities.
(iii) The value, validity, effectiveness, genuineness, enforceability,
or sufficiency of this Agreement, the other Loan Documents or any other
document referred to or provided for therein.
(iv) Any failure by any Credit Party or any other Person (other than
the Administrative Agent) to perform its obligations under the Loan
Documents.
(c) The Administrative Agent may employ attorneys, accountants, and other
professionals and agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such attorneys, accountants, and other
professionals or agents or attorneys-in-fact selected by the Administrative
Agent with reasonable care. No such attorney, accountant, other professional,
agent, or attorney-in-fact shall be responsible for any action taken or omitted
to be taken by any other such Person.
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(d) Neither the Administrative Agent, nor any of its directors, officers,
or employees shall be responsible for any action taken or omitted to be taken by
any other of them in connection herewith in reliance upon advice of its counsel
nor, in any other event except for any action taken or omitted to be taken as to
which a final judicial determination has been or is made (in a proceeding in
which such Person has had an opportunity to be heard) that such Person had acted
in a grossly negligent manner, in actual bad faith, or in willful misconduct.
(e) The Administrative Agent shall not have any responsibility in any event
for more funds than the Administrative Agent actually receives and collects.
(f) The Administrative Agent, in its separate capacity as a Lender, shall
have the same rights and powers hereunder as any other Lender.
(g) The Arranger, the Syndication Agent, the Documentation Agent and the
Co-Agents, in their respective capacities as such, shall have no duties or
responsibilities, and shall incur no liability, under this Agreement and the
other Loan Documents.
14.3 Concerning Distributions by the Administrative Agent.
(a) The Administrative Agent in the Administrative Agent's reasonable
discretion based upon the Administrative Agent's determination of the likelihood
that additional payments will be received, expenses incurred, and/or claims made
by third parties to all or a portion of such proceeds, may delay the
distribution of any payment received on account of the Liabilities.
(b) The Administrative Agent may disburse funds prior to determining that
the sums which the Administrative Agent expects to receive have been finally and
unconditionally paid to the Administrative Agent. If and to the extent that the
Administrative Agent does disburse funds and it later becomes apparent that the
Administrative Agent did not then receive a payment in an amount equal to the
sum paid out, then any Lender to whom the Administrative Agent made the funds
available, on demand from the Administrative Agent, shall refund to the
Administrative Agent the sum paid to that person.
(c) If, in the opinion of the Administrative Agent, the distribution of any
amount received by the Administrative Agent might involve the Administrative
Agent in liability, or might be prohibited hereby, or might be questioned by any
Person, then the Administrative Agent may refrain from making distribution until
the Administrative Agent's right to make distribution has been adjudicated by a
court of competent jurisdiction.
(d) The proceeds of any Lenders exercise of any right of, or in the nature
of, set-off shall be deemed, First, to the extent that a Lender is entitled to
any distribution hereunder, to constitute such distribution and Second, shall be
shared with the other Lenders as if distributed pursuant to (and shall be deemed
as distributions under) Section 13.7.
(e) Each Lender recognizes that the crediting of the Borrowers with the
"proceeds" of any transaction in which a Post Foreclosure Asset is acquired is a
non-cash transaction and that, in consequence, no distribution of such
"proceeds" will be made by the Administrative Agent to any Lender.
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(f) In the event that (x) a court of competent jurisdiction shall adjudge
that any amount received and distributed to the Lenders by the Administrative
Agent is to be repaid or disgorged or (y) the Majority Lenders determine to
effect such repayment or disgorgement, then each Lender to which any such
distribution shall have been made shall repay, to the Administrative Agent which
had made such distribution, that Lender's pro rata share of the amount so
adjudged or determined to be repaid or disgorged.
14.4 Dispute Resolution. Any dispute among the Lenders, the Issuer, the
Administrative Agent and/or any other Secured Party concerning the
interpretation, administration, or enforcement of the financing arrangements
contemplated by this or any other Loan Document or the interpretation or
administration of this or any other Loan Document which cannot be resolved
amicably shall be resolved in the United States District Court for the District
of New York, sitting in New York or in the Supreme Court of New York County, New
York, to the jurisdiction of which courts each of the Lenders and the Issuer
hereby submits.
14.5 Distributions of Notices and of Documents. The Administrative Agent
will forward to each Lender, promptly after the Administrative Agent's receipt
thereof, a copy of each notice or other document furnished to the Administrative
Agent pursuant to this Agreement, including monthly, quarterly, and annual
financial statements received from the Lead Borrower pursuant to Article 5 of
this Agreement, other than any of the following:
(a) Routine communications associated with requests for Revolving Credit
Loans and/or the issuance of L/Cs.
(b) Routine or nonmaterial communications.
(c) Any notice or document of which the Administrative Agent has knowledge
that such notice or document had been forwarded to the Lenders other than by the
Administrative Agent.
14.6 Confidential Information.
(a) Each Lender will maintain, as confidential, all of the following:
(i) Proprietary approaches, techniques, and methods of analysis
which are applied by the Administrative Agent in the administration of the
credit facility contemplated by this Agreement.
(ii) Proprietary forms and formats utilized by the Administrative
Agent in providing reports to the Lenders pursuant hereto, which forms or
formats are not of general currency.
(b) Nothing included herein shall prohibit the disclosure of any such
information as may be required to be provided by judicial process or by
regulatory authorities having jurisdiction over any party to this Agreement.
14.7 Reliance By Administrative Agent. The Administrative Agent shall be
entitled to rely upon any certificate, notice or other document (including any
cable, telegram,
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telex, or facsimile) reasonably believed by the Administrative Agent to be
genuine and correct and to have been signed or sent by or on behalf of the
proper person or persons, and upon advice and statements of attorneys,
accountants and other experts selected by the Administrative Agent. As to any
matters not expressly provided for in this Agreement, any Loan Document, or in
any other document referred to therein, the Administrative Agent shall in all
events be fully protected in acting, or in refraining from acting, in accordance
with the applicable Consent required by this Agreement. Instructions given with
the requisite Consent shall be binding on all Lenders.
14.8 Non-Reliance on Administrative Agent and Other Lenders.
(a) Each Lender represents to all other Lenders and to the Administrative
Agent that such Lender:
(i) Independently and without reliance on any representation or act
by Administrative Agent or by any other Lender, and based on such documents
and information as that Lender has deemed appropriate, has made such
Lender's own appraisal of the financial condition and affairs of the Credit
Parties and decision to enter into this Agreement.
(ii) Has relied upon that Lender's review of the Loan Documents by
that Lender and by counsel to that Lender as that Lender deemed appropriate
under the circumstances.
(b) Each Lender agrees that such Lender, independently and without reliance
upon Administrative Agent or any other Lender, and based upon such documents and
information as such Lender shall deem appropriate at the time, will continue to
make such Lender's own appraisals of the financial condition and affairs of the
Credit Parties when determining whether to take or not to take any discretionary
action under this Agreement.
(c) The Administrative Agent, in the discharge of that Administrative
Agent's duties hereunder, shall not be required to make inquiry of, or to
inspect the properties or books of, any Person.
(d) Except for notices, reports, and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder (as to which, see Section 14.5), the Administrative Agent shall not
have any affirmative duty or responsibility to provide any Secured Party with
any credit or other information concerning any Person, which information may
come into the possession of Administrative Agent or any Affiliate of the
Administrative Agent.
(e) Each Lender, at such Lender's request, shall have reasonable access to
all nonprivileged documents in the possession of the Administrative Agent, which
documents relate to the Administrative Agent's performance of its duties
hereunder.
(f) Each Lender understands that ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ is acting as legal
counsel to Fleet National Bank, Fleet Retail Finance and Fleet Securities, Inc.
in this transaction in their respective capacities hereunder.
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14.9 Indemnification. Without limiting the liabilities of the Credit
Parties under this Agreement or any of the other Loan Documents, each Lender
shall indemnify the Administrative Agent, pro rata based upon their respective
Total Commitment Percentages for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including reasonable attorneys' fees and
expenses and other out-of-pocket expenditures) which may at any time be imposed
on, incurred by, or asserted against the Administrative Agent and in any way
relating to or arising out of this Agreement or any other Loan Document or any
documents contemplated by or referred to therein or the transactions
contemplated thereby or the enforcement of any of terms hereof or thereof or of
any such other documents, provided, however, no Lender shall be liable for any
of the foregoing to the extent that any of the foregoing arises from any action
taken or omitted to be taken by the Administrative Agent as to which a final
judicial determination has been or is made (in a proceeding in which the
Administrative Agent has had an opportunity to be heard) that the Administrative
Agent had acted in a grossly negligent manner, in actual bad faith, or in
willful misconduct.
14.10 Resignation of Administrative Agent.
(a) The Administrative Agent may resign at any time by giving sixty (60)
days prior written notice thereof to the Lenders. Upon receipt of any such
notice of resignation, the Majority Lenders shall have the right to appoint a
successor to such Administrative Agent, which shall be a Lender (and if no Event
of Default has occurred, with the consent of the Lead Borrower, not to be
unreasonably withheld and, in any event, deemed given by the Lead Borrower if no
written objection is provided by the Lead Borrower to the (resigning)
Administrative Agent within seven (7) Business Days notice of such proposed
appointment). If a successor Administrative Agent shall not have been so
appointed and accepted such appointment within thirty (30) days after the giving
of notice by the resigning Administrative Agent, then the resigning
Administrative Agent may appoint a successor Administrative Agent, which shall
be a bank or finance company where the making or administration of commercial
loans is a significant part of the ordinary course of its business and which has
a combined capital and surplus in excess of $300,000,000.00. The consent of the
Lead Borrower otherwise required by this Section 14.10(a) shall not be required
if an Event of Default has occurred.
(b) Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor shall thereupon
succeed to, and become vested with, all the rights, powers, privileges, and
duties of the (resigning) Administrative Agent so replaced, and the (resigning)
Administrative Agent shall be discharged from the (resigning) Administrative
Agent's duties and obligations hereunder, other than on account of any
responsibility for any action taken or omitted to be taken by the (resigning)
Administrative Agent as to which a final judicial determination has been or is
made (in a proceeding in which the (resigning) Person has had an opportunity to
be heard) that such Person had acted in a grossly negligent manner or in bad
faith.
(c) After any retiring Administrative Agent's resignation, the provisions
of this Agreement and of all other Loan Documents shall continue in effect for
the retiring Person's benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Administrative Agent.
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SECTION 15
ACTION BY ADMINISTRATIVE AGENT - CONSENTS - AMENDMENTS - WAIVERS
15.1 Administration of Credit Facilities.
(a) Except as otherwise specifically provided in this Agreement, the
Administrative Agent may take any action with respect to the credit facility
contemplated by the Loan Documents as the Administrative Agent determines to be
appropriate, provided, however, the Administrative Agent is not under any
affirmative obligation to take any action which it is not required by this
Agreement or the Loan Documents specifically to so take.
(b) Except as specifically provided in the following Sections of this
Agreement, whenever a Loan Document or this Agreement provides that action may
be taken or omitted to be taken in an Administrative Agent's discretion, the
Administrative Agent shall have the sole right to take, or refrain from taking,
such action without, and notwithstanding, any vote of the Lenders:
Action Described in Section Type of Consent Required
--------------------------- ------------------------
15.2 Majority Lenders
15.3 Supermajority Revolving Credit Lenders
15.4 Unanimous Consent
15.5 Swing Line Lender Consent
15.6 Consent of Issuer
15.7 Consent of the Administrative Agent
(c) The rights granted to the Lenders in those sections referenced in
Section 15.1(b) shall not otherwise limit or impair the Administrative Agent's
exercise of its discretion under the Loan Documents.
15.2 Actions Requiring or on Direction of Majority Lenders. Except as
otherwise provided in this Agreement, the Consent or direction of the Majority
Lenders is required for any amendment, waiver, or modification of any Loan
Document.
15.3 Actions Requiring or on Direction Of Supermajority Revolving Credit
Lenders. The Swing Line Loan Ceiling may not be increased to an amount in excess
of $40,000,000.00 (or such greater amount to which such Swing Line Loan Ceiling
has been previously increased in accordance with the provisions of this Section
15.3 without the Consent of the Supermajority Revolving Credit Lenders.
15.4 Actions Requiring or Directed by Unanimous Consent. None of the
following may take place except with the Consent of each Lender directly
adversely affected thereby or with Unanimous Consent (as set forth below):
(a) Any increase in any Lender's Commitment, Term Loan Percentage or
Revolving Credit Commitment Percentage (other than by reason of the application
of Section 15.10 (which deals with NonConsenting Lenders) or Section 16.1 (which
deals with assignments
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and participations)) requires the consent of the Majority Lenders and each
Lender whose Commitment, Term Loan Percentage and/or Revolving Credit Commitment
Percentage is being so increased.
(b) Any decrease in any interest rate or fee payable to the Lenders on
account of the Loans requires Unanimous Consent.
(c) Any extension of the Maturity Date (other than pursuant to Section
2.25) requires Unanimous Consent.
(d) Any permanent forgiveness of all or any portion of any payment
Liability requires the consent of the Majority Lenders and each Lender to whom
such a forgiven payment Liability is owed.
(e) Any decrease in any interest rate or fee payable under any of the Loan
Documents (other than any Agent's Fee (for which the consent of the
Administrative Agent shall also be required) and of any fee provided for by the
Fee Letter (which may be amended by written agreement between the Lead Borrower
on the one hand, and the Administrative Agent on the other)) requires Unanimous
Consent.
(f) Any release of a material portion of the Collateral (except as
otherwise required or provided for in the Loan Documents or to facilitate a
Liquidation) requires Unanimous Consent.
(g) Any amendment of the definition of the terms "Borrowing Base" or of any
definition of any component thereof, such that more credit would be available to
the Borrowers, based on the same assets, as would have been available to the
Borrowers immediately prior to such amendment requires Unanimous Consent, it
being understood, however, that:
(i) The foregoing shall not limit the adjustment by the
Administrative Agent of any Reserve in the Administrative Agent's
administration of the Revolving Credit as otherwise permitted by this
Agreement.
(ii) The foregoing shall not prevent the Administrative Agent, in its
administration of the Revolving Credit, from restoring any component of the
Borrowing Base which had been lowered by the Administrative Agent back to
the value of such component, as stated in this Agreement or to an
intermediate value.
(h) Any release of any Person obligated on account of the Liabilities
requires Unanimous Consent.
(i) The making of any Revolving Credit Loan which, when made, exceeds
Availability and is not a Permissible OverLoan requires Unanimous Consent,
provided, however,
(i) no Consent shall be required in connection with the making of
any Revolving Credit Loan to "cover" any honoring of a drawing under any
L/C; and
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(ii) each Lender recognizes that subsequent to the making of a
Revolving Credit Loan which does not constitute a Permissible OverLoan, the
unpaid principal balance of the Loan Account (other than with respect to
the Term Loans) may exceed the Borrowing Base on account of changed
circumstances beyond the control of the Administrative Agent (such as a
drop in collateral value).
(j) The waiver of the obligation of the Borrowers to reduce the unpaid
principal balance of Revolving Credit Loans under the Revolving Credit to an
amount which does not exceed a Permissible OverLoan or to eliminate an OverLoan
requires Unanimous Consent.
(k) Any amendment of this Article 15 requires Unanimous Consent.
(l) Amendment of any of the following Definitions requires Unanimous
Consent:
"Appraised Inventory Liquidation Value"
"Appraised Inventory Percentage"
"Majority Lenders"
"Permissible OverLoan"
"Supermajority Revolving Credit Lenders"
"Unanimous Consent"
15.5 Actions Requiring Swing Line Lender Consent. No action, amendment, or
waiver of compliance with, any provision of the Loan Documents or of this
Agreement which directly affects the Swing Line Lender may be undertaken without
the Consent of the Swing Line Lender.
15.6 Actions Requiring Issuer Consent. No action, amendment, or waiver of
compliance with, any provision of the Loan Documents or of this Agreement which
directly affects the Issuer may be undertaken without the Consent of the Issuer.
15.7 Actions Requiring Administrative Agent's Consent.
(a) No action, amendment, or waiver of compliance with, any provision
of the Loan Documents or of this Agreement which affects the Administrative
Agent in its capacity as Administrative Agent may be undertaken without the
written consent of the Administrative Agent.
(b) No action referenced herein which affects the rights, duties,
obligations, or liabilities of the Administrative Agent shall be effective
without the written consent of the Administrative Agent.
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15.8 Miscellaneous Actions.
(a) Notwithstanding any other provision of this Agreement, no single Lender
independently may exercise any right of action or enforcement against or with
respect to any Credit Party.
(b) The Administrative Agent shall be fully justified in failing or
refusing to take action under this Agreement or any Loan Document on behalf of
any Secured Party unless the Administrative Agent shall first
(i) receive such clear, unambiguous, written instructions as the
Administrative Agent deems appropriate from the required parties; and
(ii) be indemnified to the Administrative Agent's satisfaction by the
Secured Parties against any and all liability and expense which may be
incurred by the Administrative Agent by reason of taking or continuing to
take any such action, unless such action had been grossly negligent, in
willful misconduct, or in bad faith.
(c) The Administrative Agent may establish reasonable procedures for the
providing of direction and instructions from the Lenders to the Administrative
Agent, including its reliance on multiple counterparts, facsimile transmissions,
and time limits within which such direction and instructions must be received in
order to be included in a determination of whether the requisite percentage of
Lenders has provided its direction, Consent, or instructions.
15.9 Actions Requiring Lead Borrower's Consent.
(a) The Lead Borrower's consent is required for any amendment of this
Agreement, except that each of the following Articles of this Agreement may be
amended without the consent of the Lead Borrower or any other Credit Party:
Section Title of Section
------- ----------------
12 Revolving Credit Fundings and Distributions to Lenders
14.1 The Administrative Agent
15 Action by Administrative Agent - Consents - Amendments -
Waivers (other than 15.8(a), 15.8(b), 15.9 and 15.10)
(b) Subject to Section 15.9(c), Section 15.4 (Unanimous Consent) may not be
amended without the consent of the Lead Borrower:
(c) The Lead Borrower's consent to the amendment of those provisions
referenced in Section 15.9(b)
(i) Shall be deemed given unless written objection is made, within
seven (7) Business Days following the Administrative Agent's giving notice
to the Lead Borrower of the proposed amendment; and
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(ii) shall not be required during the existence of any Event of
Default.
15.10 NonConsenting Lender.
(a) In the event that a Lender (in this Section 15.10, a "NonConsenting
Lender") does not provide its Consent to a proposal by the Administrative Agent
to take action which requires consent under this Article 15, then subject to the
prior consent of the Administrative Agent, one or more Lenders who provided
Consent to such action may require the assignment, without recourse and in
accordance with the procedures outlined in Section 16.1, below, of the
NonConsenting Lender's commitment hereunder on fifteen (15) days written notice
to the Administrative Agent and to the NonConsenting Lender.
(b) At the end of such fifteen (15) days, and provided that the
NonConsenting Lender delivers the Note held by the NonConsenting Lender to the
Administrative Agent, the Lenders who have given such written notice shall
Transfer the following to the NonConsenting Lender:
(i) Such NonConsenting Lender's pro rata share of the principal and
interest of the Loans to the date of such assignment.
(ii) All fees distributable hereunder to the NonConsenting Lender to
the date of such assignment.
(iii) Any out-of-pocket costs and expenses for which the NonConsenting
Lender is entitled to reimbursement from the Borrowers.
(c) In the event that the NonConsenting Lender fails to deliver to the
Administrative Agent the Note(s) held by the NonConsenting Lender as provided in
Section 15.10(b), then:
(i) The amount otherwise to be Transferred to the NonConsenting
Lender shall be Transferred to the Administrative Agent and held by the
Administrative Agent, without interest, to be turned over to the
NonConsenting Lender upon delivery of the Note(s) held by that
NonConsenting Lender.
(ii) The Note(s) held by the NonConsenting Lender shall have no force
or effect whatsoever.
(iii) The NonConsenting Lender shall cease to be a "Lender".
(iv) The Lender(s) which have Transferred the amount to the
Administrative Agent as described above shall have succeeded to all rights
and become subject to all of the obligations of the NonConsenting Lender as
"Lender".
(d) In the event that more than one (1) Lender wishes to require such
assignment, the NonConsenting Lender's commitment hereunder shall be divided
among such Lenders, pro rata based upon their respective Term Loan Percentages
or Revolving Credit
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Commitment Percentages, as the case may be, with the Administrative Agent
coordinating such transaction.
(e) The Administrative Agent shall coordinate the retirement of the Note(s)
held by the NonConsenting Lender and the issuance of Notes to those Lenders
which "take-out" such NonConsenting Lender, provided, however, no processing fee
otherwise to be paid as provided in Section 16.2(b) shall be due under such
circumstances.
SECTION 16
ASSIGNMENTS BY LENDERS
16.1 Assignments and Assumptions.
(a) Except as provided herein, each Lender (in this Section 16.1(a), an
"Assigning Lender") may assign to one or more Eligible Assignees (in this
Section 16.1(a), each an "Assignee Lender") all or a portion of that Lender's
interests, rights and obligations under this Agreement and the Loan Documents
(including all or a portion of its Commitment) and the same portion of the Loans
at the time owing to it, and of the Note held by the Assigning Lender, provided
that:
(i) The Administrative Agent (and, if no Event of Default then
exists, the Lead Borrower) shall have given its prior written consent to
such assignment, which consent shall not be unreasonably withheld, but may
be withheld if the proposed assignment would result in any resulting
Lender's having a Dollar Commitment of less than the "minimum hold" amount
specified in Section 16.1(a)(iii), provided that any assignment complying
with all other terms of this Section 16(a) to a Person then a Lender or an
affiliate thereof shall not be subject to the prior consent of the Lead
Borrower.
(ii) Each such assignment shall be of a constant, and not a varying,
percentage of all the Assigning Lender's rights and obligations under this
Agreement; provided that a Lender that is both a Revolving Credit Lender
and a Term Loan Lender may treat its Revolving Credit Commitment and its
Term Loan separately for purposes of assignments.
(iii) Following the effectiveness of such assignment, the Assigning
Lender's Commitment (if not an assignment of all of the Assigning Lender's
Commitment) shall not be less than $10,000,000.00.
(b) Notwithstanding the foregoing, at any time when no Default or Event of
Default exists, Fleet Retail Finance Inc. may not assign any of its Commitment
if, following the effectiveness of such assignment, the Administrative Agent's
Commitment is less than $60,000,000.
16.2 Assignment Procedures. (This Section 16.2 describes the procedures to
be followed in connection with an assignment effected pursuant to this Article
16 and permitted by Section 16.1).
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(a) The parties to such an assignment shall execute and deliver to the
Administrative Agent, for recording in the Register, an Assignment and
Acceptance substantially in the form of Exhibit E, (an "Assignment and
Acceptance").
(b) The Assigning Lender shall deliver to the Administrative Agent, with
such Assignment and Acceptance, the Note held by the subject Assigning Lender
and the Administrative Agent's processing fee of $3,500.00, provided, however,
no such processing fee shall be due where the Assigning Lender is one of the
Lenders (or an affiliate thereof) at the initial execution of this Agreement.
(c) The Administrative Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Lenders and of the Term Loan
Percentage and/or Revolving Credit Commitment Percentage of each Lender. The
Register shall be available for inspection by the Lenders at any reasonable time
and from time to time upon reasonable prior notice. In the absence of manifest
error, the entries in the Register shall be conclusive and binding on all
Lenders. The Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as a "Lender" hereunder for all purposes of
this Agreement.
(d) The Assigning Lender and Assignee Lender, directly between themselves,
shall make all appropriate adjustments in payments for periods prior to the
effective date of an Assignment and Assumption.
16.3 Effect of Assignment.
(a) From and after the effective date specified in an Assignment and
Acceptance which has been executed, delivered, and recorded (which effective
date the Administrative Agent may delay by up to five (5) Business Days after
the delivery of such Assignment and Acceptance):
(i) The Assignee Lender:
(B) Shall be a party to this Agreement and the Loan Documents
(and to any amendments thereof) as fully as if the Assignee Lender
had executed each.
(C) Shall have the rights of a Lender hereunder to the extent
of the Term Loan Percentage and/or Revolving Credit Commitment
Percentage assigned by such Assignment and Acceptance.
(ii) The Assigning Lender shall be released from the Assigning
Lender's obligations under this Agreement and the Loan Documents to the
extent of the Commitment assigned by such Assignment and Acceptance.
(iii) The Administrative Agent shall undertake to obtain and
distribute replacement Notes to the subject Assigning Lender and Assignee
Lender.
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(b) By executing and delivering an Assignment and Acceptance, the parties
thereto confirm to and agree with each other and with all parties to this
Agreement as to those matters which are set forth in the subject Assignment and
Acceptance.
SECTION 17
NOTICES
17.1 Notice Addresses. All notices, demands, and other communications made
in respect of any Loan Document (other than a request for a loan or advance or
other financial accommodation under the Revolving Credit) shall be made to the
following addresses, each of which may be changed upon seven (7) days written
notice to all others given by certified mail, return receipt requested:
If to the Administrative Agent:
Fleet Retail Finance Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lead Borrower
And All Credit Parties:
ShopKo Stores, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇, S.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
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ShopKo Stores, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
17.2 Notice Given.
(a) Except as otherwise specifically provided herein, notices shall be
deemed made and correspondence received, as follows (all times being local to
the place of delivery or receipt):
(i) By mail: the sooner of when actually received or three (3) days
following deposit in the United States mail, postage prepaid.
(ii) By recognized overnight express delivery: the Business Day
following the day when sent.
(iii) By Hand: If delivered on a Business Day after 9:00 AM and no
later than 4:00 PM, when delivered. Otherwise, at the opening of the then next
Business Day.
(iv) By Facsimile transmission (which must include a header on which
the party sending such transmission is indicated): If sent on a Business Day
after 9:00 AM and no later than 4:00 PM, one (1) hour after being sent.
Otherwise, at the opening of the then next Business Day.
(b) Rejection or refusal to accept delivery and inability to deliver
because of a changed address or facsimile number for which no due notice was
given shall each be deemed receipt of the notice sent.
SECTION 18
TERMINATION
18.1 Termination of Revolving Credit. The Revolving Credit shall remain in
effect (subject to suspension as provided in Section 2.5(g) hereof) until the
Termination Date.
18.2 Actions on Termination.
(a) On the Termination Date, the Borrowers shall pay the Administrative
Agent (whether or not then due), in immediately available funds, all Liabilities
then due and owing, including, without limitation: the following:
(i) The entire balance of the Loan Account (including the unpaid
principal balance of the Term Loans, the Revolving Credit Loans, and the
Swing Line Loan).
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(ii) Any then remaining installments of the Agent's Fee.
(iii) Any payments due on account of the indemnification obligations
included in Section 2.11(f).
(iv) Any accrued and unpaid Unused Fee.
(v) Any applicable portion of the Early Termination Fee.
(vi) All unreimbursed costs and expenses (including legal expenses)
of the Administrative Agent and of Lenders' Special Counsel for which each
Credit Party is responsible.
(b) On the Termination Date, the Borrowers shall also shall make such
arrangements concerning any L/Cs then outstanding as are reasonably satisfactory
to the Administrative Agent (such as cash collateralizing such L/Cs in an amount
equal to 103% of the undrawn face amount thereof in a manner reasonably
acceptable to the Administrative Agent).
(c) Until such payment (Section 18.2(a)) and arrangements concerning L/Cs
(Section 18.2(b)), all provisions of this Agreement, other than those included
in Article 2 which place any obligation on the Administrative Agent or any
Revolving Credit Lender to make any loans or advances or to provide any
financial accommodations to any Borrower, shall remain in full force and effect
until all Liabilities shall have been paid in full.
(d) The release by the Administrative Agent of the Collateral Interests
granted the Administrative Agent by the Credit Parties hereunder may be upon
such conditions and indemnifications as the Administrative Agent may reasonably
require.
SECTION 19
GUARANTY
19.1 Guaranty.
(a) Each of the Guarantors unconditionally and irrevocably guarantees the
due and punctual payment and performance by the Borrowers of the Liabilities.
Each of the Guarantors further agrees that the Liabilities may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
it will remain bound upon this guaranty notwithstanding any extension or renewal
of any of the Liabilities. The Liabilities of the Guarantors shall be joint and
several.
(b) Each of the Guarantors waives presentation to, demand for payment from
and protest to the Borrowers or any other Guarantor, and also waives notice of
protest for nonpayment. The obligations of the Guarantors hereunder shall not be
affected by (i) the failure of any Secured Party to assert any claim or demand
or to enforce any right or remedy against any Borrower or any other Guarantor
under the provisions of this Agreement or any other Loan Document or otherwise;
(ii) any extension or renewal of any provision hereof or thereof; (iii) any
rescission, waiver, compromise, acceleration, amendment or modification of any
of the terms or
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provisions of any of the Loan Documents; (iv) the release, exchange, waiver or
foreclosure of any security held by any Secured Party; (v) the failure of any
Secured Party to exercise any right or remedy against any other Guarantor; (vi)
the release or substitution of any Guarantor or any other guarantor or (vii) any
bankruptcy, insolvency, reorganization, arrangement, adjustment, composition,
liquidation or the like of any Borrower or any Guarantor including, but not
limited to, (x) any Secured Party's election, in any proceeding instituted under
the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy
Code, (y) any borrowing or grant of an Encumbrance by the Borrower or any
Guarantor as debtor-in-possession, under Section 364 of the Bankruptcy Code, or
(z) the disallowance of all or any portion of any Secured Party's claim(s) for
repayment of the Liabilities under Section 502 of the Bankruptcy Code.
(c) Each of the Guarantors further agrees that this guaranty constitutes a
guaranty of performance and of payment when due and not just of collection, and
waives any right to require that any resort be had by any Secured Party to any
security held for payment of the Liabilities or to any balance of any deposit,
account or credit on the books of any Secured Party in favor of any Credit Party
other than the Guarantor or any other Person.
(d) Each of the Guarantors hereby waives any defense that it might have
based on a failure to remain informed of the financial condition of any Borrower
and of any other Guarantor and any circumstances affecting the ability of any
Borrower to perform under this Agreement.
(e) Each Guarantor's guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the obligations, the Notes or any
other instrument evidencing any Liabilities, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to the obligations which might otherwise constitute a
defense to this Guaranty. None of the Secured Parties makes any representation
or warranty in respect to any such circumstances or shall have any duty or
responsibility whatsoever to any Guarantor in respect of the management and
maintenance of the obligations.
(f) Subject to the provisions of Article 10, upon the Liabilities becoming
due and payable (by acceleration or otherwise), the Secured Parties shall be
entitled to immediate payment of such Liabilities by the Guarantors upon written
demand by the Administrative Agent.
19.2 No Impairment of Guaranty. The obligations of the Guarantors hereunder
shall not be subject to any reduction, limitation, impairment or termination for
any reason, including, without limitation, any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense or
set-off, counterclaim, recoupment, or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Liabilities. Without limiting
the generality of the foregoing, the obligations of the Guarantors hereunder
shall not be discharged or impaired or otherwise affected by the failure of any
Secured Party to assert any claim or demand or to enforce any remedy under this
Agreement or any other agreement, by any waiver or modification of any provision
thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Liabilities, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of
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the Guarantors or would otherwise operate as a discharge of the Guarantors as a
matter of law, unless and until the Liabilities are paid in full.
19.3 Subrogation. Upon payment by any Guarantor of any sums to any Secured
Party hereunder, all rights of such Guarantor against any Borrower arising as a
result thereof by way of right of subrogation or otherwise, shall in all
respects be subordinate and junior in right of payment to the prior final and
indefeasible payment in full of all the Liabilities. If any amount shall be paid
to such Guarantor for the account of any Borrower, such amount shall be held in
trust for the benefit of the Secured Parties and shall forthwith be paid to the
Administrative Agent to be credited and applied to the Liabilities, whether
matured or unmatured.
19.4 Credit Agreement. Each of the Guarantors acknowledges that it has read
the Loan Documents and agrees to perform and observe all of the terms and
provisions herein and therein applicable thereto.
19.5 Maximum Guaranteed Amount. Without in any way limiting each
Guarantor's obligations under this Agreement and the other Loan Documents as a
"Credit Party," the maximum dollar amount of any Guarantor's payment obligation
under this guaranty shall not exceed the greater of (i) the actual dollar amount
of the recovery by the Administrative Agent upon a Liquidation of the Collateral
owned by such Guarantor and (ii) the difference between (a) the Cost value of
the Collateral owned by such Guarantor on the date on which a Default occurs
under this Agreement which results in an uninterrupted period of time from the
time of occurrence of such Default to a Liquidation of such Collateral during
which one or more Defaults or Events of Default exist unwaived and uncured
continuously under this Agreement plus the Cost value of any Collateral
transferred (whether by sale, intercompany transfer or otherwise) to such
Guarantor after such date and (b) repayments of the Loans directly from the
Proceeds of Collateral owned by such Guarantor after the date of occurrence of
such Default. Moreover, notwithstanding any other provision of this Guaranty to
the contrary, if the obligations of any Guarantor hereunder would otherwise be
held or determined by a court of competent jurisdiction in any action or
proceeding involving any state corporate law or any state or Federal bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other law
affecting the rights of creditors generally, to be void, invalid or
unenforceable to any extent on account of the amount of such Guarantor's
liability under this Guaranty, then notwithstanding any other provision of this
Guaranty to the contrary, the amount of such liability shall, without any
further action by such Guarantor or any other Person, be automatically limited
and reduced to the highest amount which is valid and enforceable as determined
in such action or proceeding.
SECTION 20
MISCELLANEOUS
20.1 Protection of Collateral. The Administrative Agent has no duty as to
the collection or protection of the Collateral beyond the safe custody of such
of the Collateral as may come into the possession of the Administrative Agent.
20.2 Publicity. The Administrative Agent may issue one "tombstone" notice
of the establishment of the credit facility contemplated by this Agreement and
may make reference
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to each Credit Party (and may utilize any logo or other distinctive symbol
associated with each Credit Party with the Lead Borrower's consent, which will
not be unreasonably withheld) in connection with any advertising, promotion, or
marketing undertaken by the Administrative Agent.
20.3 Successors and Assigns. This Agreement shall be binding upon the
Credit Parties and their respective representatives, successors, and assigns and
shall enure to the benefit of the Administrative Agent, the Issuer and each
Lender and their respective successors and permitted assigns, provided, however,
no trustee or other fiduciary appointed with respect to any Credit Party shall
have any rights hereunder, and provided further that no Credit Party may assign
or otherwise transfer any of its rights or obligations hereunder. In the event
that the Administrative Agent, the Issuer or any Lender assigns or transfers its
rights under this Agreement, the assignee shall thereupon succeed to and become
vested with all rights, powers, privileges, and duties of such assignor
hereunder and such assignor shall thereupon be discharged and relieved from its
duties and obligations hereunder.
20.4 Severability. Any determination that any provision of this Agreement
or any application thereof is invalid, illegal, or unenforceable in any respect
in any instance shall not affect the validity, legality, or enforceability of
such provision in any other instance, or the validity, legality, or
enforceability of any other provision of this Agreement.
20.5 Amendments; Course of Dealing.
(a) This Agreement and the other Loan Documents incorporate all discussions
and negotiations between each Credit Party and the Administrative Agent, the
Issuer and each Lender, either express or implied, concerning the matters
included herein and in such other instruments, any custom, usage, or course of
dealings to the contrary notwithstanding. No such discussions, negotiations,
custom, usage, or course of dealings shall limit, modify, or otherwise affect
the provisions thereof. Notwithstanding the foregoing, Sections 2, 3, and 4 of
the Commitment Letter shall survive the execution and delivery of this Agreement
and the closing of the transactions contemplated hereby. No failure by the
Administrative Agent, the Issuer or any Lender to give notice to the Lead
Borrower of any Credit Party's having failed to observe and comply with any
warranty or covenant included in any Loan Document shall constitute a waiver of
such warranty or covenant or the amendment of the subject Loan Document.
(b) Each Credit Party may undertake any action otherwise prohibited hereby,
and may omit to take any action otherwise required hereby, upon and with the
express prior written consent of the Administrative Agent. Subject to Article
15, no consent, modification, amendment, or waiver of any provision of any Loan
Document shall be effective unless executed in writing by or on behalf of the
party to be charged with such modification, amendment, or waiver (and if such
party is the Administrative Agent then by a duly authorized officer thereof).
Any modification, amendment, or waiver provided by the Administrative Agent
shall be in reliance upon all representations and warranties theretofore made to
the Administrative Agent by or on behalf of the Credit Parties (and any
guarantor, endorser, or surety of the Liabilities) and consequently may be
rescinded in the event that any of such representations or warranties was not
true and complete in all material respects when given.
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(c) Each reference in the Loan Documents to the exercise of discretion or
the like by the Administrative Agent, the Issuer or any Lender shall be to such
Person's exercise of its judgment, in good faith, based upon such Person's
consideration of any such factors as the Administrative Agent, the Issuer or
that Lender, determines as having a material bearing on credit risks associated
with the providing of Loans and financial accommodations to the Borrowers,
taking into account information of which that Person then has actual knowledge.
The burden of establishing the failure of the Administrative Agent, the Issuer
or any Lender to have acted in a reasonable manner in such Person's exercise of
such discretion shall be the Borrowers'.
20.6 Power of Attorney. In connection with all powers of attorney included
in this Agreement, each Credit Party hereby grants unto the Administrative Agent
(acting through any of its officers) full power to do any and all things
necessary or appropriate during the existence of an Event of Default in
connection with the exercise of such powers as fully and effectually as that
Credit Party might or could do, hereby ratifying all that said attorney shall do
or cause to be done by virtue of this Agreement. No power of attorney set forth
in this Agreement shall be affected by any disability or incapacity suffered by
any Credit Party and each shall survive the same. All powers conferred upon the
Administrative Agent by this Agreement, being coupled with an interest, shall be
irrevocable until this Agreement is terminated by a written instrument executed
by a duly authorized officer of the Administrative Agent.
20.7 Application of Proceeds. The proceeds of any collection, sale, or
disposition of the Collateral, or of any other payments received hereunder,
shall be applied towards the Liabilities in such order and manner as the
Administrative Agent determines in its sole discretion, consistent, however,
with Sections 13.6 and 13.7 and any other applicable provisions of this
Agreement. The Credit Parties shall remain liable for any deficiency remaining
following such application.
20.8 Increased Costs. If, as a result of any change in any Requirement of
Law, or of the interpretation or application thereof by any court or by any
governmental or other authority or entity charged with the administration
thereof, whether or not having the force of law, which:
(a) subjects any Lender to any taxes or changes the basis of taxation, or
increases any existing taxes, on payments of principal, interest or other
amounts payable by any Borrower to the Administrative Agent, the Issuer or any
Lender under this Agreement (except for taxes on the Administrative Agent, the
Issuer or any Lender based on net income or capital imposed by the jurisdictions
in which the principal or lending offices of the Administrative Agent, the
Issuer or that Lender are located);
(b) imposes, modifies or deems applicable any reserve, cash margin, special
deposit or similar requirements against assets held by, or deposits in or for
the account of or loans by or any other acquisition of funds by the relevant
funding office of any Lender;
(c) imposes on the Issuer or any Lender any other condition with respect to
any Loan Document; or
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(d) imposes on the Issuer or any Lender a requirement to maintain or
allocate capital in relation to the Liabilities; and the result of any of the
foregoing, in the Issuer's or such Lender's reasonable opinion, is to increase
the cost to the Issuer or that Lender of making or maintaining any loan, advance
or financial accommodation or to reduce the income receivable by the Issuer or
that Lender in respect of any loan, advance or financial accommodation by an
amount which the Issuer or that Lender deems to be material, then upon written
notice from the Administrative Agent, from time to time, to the Lead Borrower
(such notice to set out in reasonable detail the facts giving rise to and a
summary calculation of such increased cost or reduced income and such
calculation to be consistent with the manner by which such increased costs would
be calculated for the Lender's similar customers), the Borrowers shall forthwith
pay to the Administrative Agent, for the benefit of the subject Lender, within
thirty (30) days after receipt of such notice, that amount which shall
compensate the Issuer or the subject Lender for such additional cost or
reduction in income.
20.9 Costs and Expenses of the Administrative Agent.
(a) The Credit Parties shall pay from time to time on demand all Costs of
Collection and all reasonable costs, expenses, and disbursements (including
reasonable attorneys' fees and expenses) which are incurred by the
Administrative Agent in connection with the preparation, negotiation, execution,
delivery, administration, interpretation, amendment, modification and
enforcement of this Agreement and of any other Loan Documents, and all other
reasonable costs, expenses, and disbursements which may be incurred connection
with or in respect to the credit facility contemplated hereby or which otherwise
are incurred with respect to the Liabilities.
(b) The Credit Parties shall pay from time to time on demand all reasonable
costs and expenses (including reasonable attorneys' fees and expenses) incurred,
during the existence of any Event of Default, by the Administrative Agent and by
the Lenders to Lenders' Special Counsel.
(c) Each Credit Party authorizes the Administrative Agent to pay all such
fees and expenses set forth in (a) and (b) above and, in the Administrative
Agent's discretion, to add such fees and expenses to the Loan Account.
(d) The undertaking on the part of each Credit Party in this Section 20.9
shall survive payment of the Liabilities and/or any termination, release, or
discharge executed by the Administrative Agent in favor of any Credit Party,
other than a termination, release, or discharge which makes specific reference
to this Section 20.9.
20.10 Copies and Facsimiles. Each Loan Document and all documents and
papers which relate thereto which have been or may be hereinafter furnished to
the Administrative Agent or any Lender may be reproduced by that Lender or by
the Administrative Agent by any photographic, microfilm, xerographic, digital
imaging, or other process, and such Person making such reproduction may destroy
any document so reproduced. Any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business). Any facsimile which
bears proof of transmission shall
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be binding on the party which or on whose behalf such transmission was initiated
and likewise shall be so admissible in evidence as if the original of such
facsimile had been delivered to the party which or on whose behalf such
transmission was received.
20.11 Governing Law. This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the law of the State of New York.
20.12 Consent to Jurisdiction.
(a) Each Credit Party agrees that any legal action, proceeding, case, or
controversy against any Credit Party with respect to any Loan Document may be
brought in the Supreme Court of New York in New York County or in the United
States District Court, District of New York, sitting in New York, New York, as
the Administrative Agent may elect in the Administrative Agent's sole
discretion. By execution and delivery of this Agreement, each Credit Party, for
itself and in respect of its property, accepts, submits, and consents generally
and unconditionally, to the jurisdiction of the aforesaid courts.
(b) Each Credit Party WAIVES personal service of any and all process upon
it, and irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the Lead Borrower at the Lead
Borrower's address for notices as specified herein, such service to become
effective five (5) Business Days after such mailing.
(c) Each Credit Party WAIVES any objection based on forum non conveniens
and any objection to venue of any action or proceeding instituted under any of
the Loan Documents and consents to the granting of such legal or equitable
remedy as is deemed appropriate by the Court.
(d) Nothing herein shall affect the right of the Administrative Agent to
bring legal actions or proceedings in any other competent jurisdiction.
(e) Each Credit Party agrees that any action commenced by any Credit Party
asserting any claim arising under or in connection with this Agreement or any
other Loan Document shall be brought solely in the Supreme Court of New York in
New York County or in the United States District Court, District of New York,
sitting in New York, New York, and that such Courts shall have exclusive
jurisdiction with respect to any such action.
20.13 Indemnification. Each Credit Party shall indemnify, defend, and hold
the Administrative Agent, the Issuer, the Arranger, the Syndication Agent, the
Documentation Agent, the Co-Agents and each Lender and any Participant and any
of their respective employees, officers, attorneys or agents (each, an
"Indemnified Person") harmless of and from any claim brought or threatened
against any Indemnified Person by any Credit Party, any guarantor or endorser of
the Liabilities, or any other Person (as well as from reasonable attorneys'
fees, expenses, and disbursements in connection therewith) on account of the
Term Loans, the Revolving Credit, this Agreement or any other Loan Document, any
transaction contemplated hereby or thereby, or relationship of the Credit
Parties or of any other guarantor or
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endorser of the Liabilities, in each case including all costs, expenses,
liabilities, and damages as may be suffered by any Indemnified Person in
connection with (w) the administration or enforcement of the Loan Documents; (x)
the Collateral; (y) the occurrence of any Event of Default; or (z) the exercise
of any rights or remedies under any of the Loan Documents (each of claims which
may be defended, compromised, settled, or pursued by the Indemnified Person with
counsel of the Indemnified Person's selection, but at the expense of the Credit
Parties) other than any claim as to which a final determination is made in a
judicial proceeding (in which the Administrative Agent and any other Indemnified
Person has had an opportunity to be heard), which determination includes a
specific finding that the Indemnified Person seeking indemnification had acted
in a grossly negligent manner or in actual bad faith. This indemnification shall
survive payment of the Liabilities and/or any termination, release, or discharge
executed by the Administrative Agent in favor of the Credit Parties, other than
a termination, release, or discharge duly executed on behalf of the
Administrative Agent which makes specific reference to this Section 20.13 as
being released or terminated.
20.14 Rules of Construction. The following rules of construction shall be
applied in the interpretation, construction, and enforcement of this Agreement
and of the other Loan Documents:
(a) Words in the singular include the plural and words in the plural
include the singular.
(b) Titles, headings (indicated by being underlined or shown in SMALL
CAPITALS) and any Table of Contents are solely for convenience of reference, do
not constitute a part of the instrument in which included, and do not affect
such instrument's meaning, construction, or effect.
(c) The words "includes" and "including" are not limiting.
(d) Text which follows the words "including, without limitation" (or
similar words) is illustrative and not limitational.
(e) Text which is shown in italics (except for parenthesized italicized
text), shown in bold, shown IN ALL CAPITAL LETTERS, or in any combination of the
foregoing, shall be deemed to be conspicuous.
(f) The words "may not" are prohibitive and not permissive.
(g) Any reference to a Person's "knowledge" (or words of similar import)
are to such Person's knowledge assuming that such Person has undertaken
reasonable and diligent investigation with respect to the subject of such
"knowledge" (whether or not such investigation has actually been undertaken).
(h) Terms which are defined in one section of any Loan Document are used
with such definition throughout the instrument in which so defined.
(i) The symbol "$" refers to United States Dollars.
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(j) Unless limited by reference to a particular Section or provision, any
reference to "herein", "hereof", or "within" is to the entire Loan Document in
which such reference is made.
(k) References to "this Agreement" or to any other Loan Document is to the
subject instrument as amended to the date on which application of such reference
is being made.
(l) Except as otherwise specifically provided, all references to time are
to Boston time.
(m) In the determination of any notice, grace, or other period of time
prescribed or allowed hereunder:
(i) Unless otherwise provided (A) the day of the act, event, or
default from which the designated period of time begins to run shall not be
included and the last day of the period so computed shall be included
unless such last day is not a Business Day, in which event the last day of
the relevant period shall be the then next Business Day and (B) the period
so computed shall end at 5:00 PM on the relevant Business Day.
(ii) The word "from" means "from and including".
(iii) The words "to" and "until" each mean "to, but excluding".
(iv) The word "through" means "to and including".
(n) The Loan Documents shall be construed and interpreted in a harmonious
manner and in keeping with the intentions set forth in Section 20.15 hereof,
provided, however, in the event of any inconsistency between the provisions of
this Agreement and any other Loan Document, the provisions of this Agreement
shall govern and control.
20.15 Intent. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of all Collateral Interests created by any Credit Party to
secure the Liabilities be broadly construed in favor of the Administrative
Agent.
(c) All Collateral Interests created in favor of the Administrative Agent
at any time and from time to time by any Credit Party shall secure all
Liabilities, whether now existing or contemplated or hereafter arising.
(d) Unless otherwise explicitly provided herein, the Administrative Agent's
consent to any action of any Credit Party which is prohibited unless such
consent is given may be given or refused by the Administrative Agent in its sole
discretion.
20.16 Participations. Each Lender may sell participations to one or more
financial institutions (each, a "Participant") in that Lender's interests herein
provided that in no
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event shall any Participant under any such participation have any right to
participate in the approval by a requisite number or proportion of the Lenders
of any action including to make any instruction following the happening of a
Default or Event of Default such as to issue a Notice of Acceleration or
commence a Liquidation, or to approve any amendment or waiver of any provision
of any Loan Document except to the extent that such amendment or waiver would
reduce the principal of, or rate or interest on, the Loans or any fees payable
hereunder, or postpone the date of the final maturity of the Loans. No such sale
of a participation shall relieve a Lender from that Lender's obligations
hereunder nor obligate the Administrative Agent to any Person other than a
Lender.
20.17 Right of Set-Off. Any and all deposits or other sums at any time
credited by or due to any Credit Party from the Administrative Agent, the Issuer
or any Lender or any Participant or from any Affiliate of any of the foregoing,
and any cash, securities, instruments or other property of any Credit Party in
the possession of any of the foregoing, whether for safekeeping or otherwise
(regardless of the reason such Person had received the same) shall at all times
constitute security for all Liabilities and for any and all obligations of each
Credit Party to the Administrative Agent, the Issuer and such Lender or any
Participant or such Affiliate and may be applied or set off against the
Liabilities and against such obligations at any time an Event of Default exists,
whether or not such are then due and whether or not other collateral is then
available to the Administrative Agent, the Issuer or that Lender.
20.18 Pledges. Nothing included in this Agreement shall prevent or limit
any Lender from pledging all or any portion of that Lender's interest and rights
under this Agreement, provided, however, neither such pledge nor the enforcement
thereof shall release the pledging Lender from any of its obligations hereunder
or under any of the other Loan Documents.
20.19 Maximum Interest Rate. Regardless of any provision of any Loan
Document, none of the Administrative Agent, the Issuer or any Lender shall be
entitled to contract for, charge, receive, collect, or apply as interest on any
Liability, any amount in excess of the maximum rate imposed by Applicable Law.
Any payment which is made which, if treated as interest on a Liability would
result in such interest's exceeding such maximum rate shall be held, to the
extent of such excess, as additional collateral for the Liabilities as if such
excess were "Collateral."
20.20 Waivers.
(a) The Credit Parties make each of the waivers included in Section
20.20(b), below, knowingly, voluntarily, and intentionally, and understands that
the Administrative Agent, the Issuer and each Lender, in establishing the
facilities contemplated hereby and in providing loans and other financial
accommodations to or for the account of the Borrowers as provided herein,
whether not or in the future, is relying on such waivers.
(b) EACH CREDIT PARTY RESPECTIVELY WAIVES THE FOLLOWING:
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(i) Except as otherwise specifically required hereby, notice of
non-payment, demand, presentment, protest and all forms of demand and
notice, both with respect to the Liabilities and the Collateral.
(ii) Except as otherwise specifically required hereby, the right to
notice and/or hearing prior to the Administrative Agent's exercising of the
Administrative Agent's rights upon default.
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN
WHICH THE ADMINISTRATIVE AGENT, THE ISSUER OR ANY LENDER IS OR BECOMES A
PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE
ADMINISTRATIVE AGENT, THE ISSUER OR ANY LENDER OR IN WHICH THE
ADMINISTRATIVE AGENT, THE ISSUER OR ANY LENDER IS JOINED AS A PARTY
LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF, ANY
RELATIONSHIP AMONGST OR BETWEEN ANY CREDIT PARTY OR ANY OTHER PERSON AND
THE ADMINISTRATIVE AGENT, THE ISSUER OR ANY LENDER (EACH OF WHOM LIKEWISE
WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH CASE OR CONTROVERSY).
(iv) Any defense, counterclaim, set-off, recoupment, or other basis
on which the amount of any Liability, as stated on the books and records of
the Administrative Agent, could be reduced or claimed to be paid otherwise
than in accordance with the tenor of and written terms of such Liability.
(v) Any claim to consequential, special, or punitive damages.
20.21 Additional Waivers.
(a) Except as otherwise provided in Section 19.5, the Liabilities are the
joint and several obligations of each Credit Party. To the fullest extent
permitted by applicable law, the obligations of each Credit Party hereunder
shall not be affected by (i) the failure of the Administrative Agent, the Issuer
or any Lender to assert any claim or demand or to enforce or exercise any right
or remedy against any other Credit Party under the provisions of this Agreement,
any other Loan Document or otherwise, (ii) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of, this
Agreement, any other Loan Document, or any other agreement, including with
respect to any other Credit Party of the Liabilities 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 Administrative Agent.
(b) The obligations of each Credit Party hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason (other than
the indefeasible payment in full in cash of the Liabilities), including any
claim of waiver, release, surrender, alteration or compromise of any of the
Liabilities, 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 Liabilities or otherwise. Without limiting the
generality of the foregoing,
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the obligations of each Credit Party hereunder shall not be discharged or
impaired or otherwise affected by the failure of any 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, willful or otherwise, in the
performance of the Liabilities, or by any other act or omission that may or
might in any manner or to any extent vary the risk of any Credit Party or that
would otherwise operate as a discharge of any Credit Party as a matter of law or
equity (other than the indefeasible payment in full in cash of all the
Liabilities).
(c) To the fullest extent permitted by applicable law, each Credit Party
waives any defense based on or arising out of any defense of any other Credit
Party or the unenforceability of the Liabilities or any part thereof from any
cause, or the cessation from any cause of the liability of any other Credit
Party, other than the indefeasible payment in full in cash of all the
Liabilities. The Administrative Agent may, at its election, foreclose on any
security held by it 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 Liabilities, make any other accommodation with any other Credit
Party, or exercise any other right or remedy available to them against any other
Credit Party, without affecting or impairing in any way the liability of any
Credit Party hereunder except to the extent that all the Liabilities have been
indefeasibly paid in full in cash. To the fullest extent permitted by applicable
law, each Credit 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 Credit Party against any other Credit Party, as the case may be, or any
security.
(d) Upon payment by any Credit Party of any Liabilities, all rights of such
Credit Party against any other Credit 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
indefeasible payment in full in cash of all the Liabilities. In addition, any
indebtedness of any Credit Party now or hereafter held by any other Credit Party
is hereby subordinated in right of payment to the prior payment in full of the
Liabilities. No Credit Party will demand, ▇▇▇ for, or otherwise attempt to
collect any such indebtedness. If any amount shall erroneously be paid to any
Credit Party on account of (a) such subrogation, contribution, reimbursement,
indemnity or similar right or (b) any such indebtedness of any Credit Party,
such amount shall be held in trust for the benefit of the Administrative Agent,
the Issuer and the Lenders and shall forthwith be paid to the Administrative
Agent to be credited against the payment of the Liabilities, whether matured or
unmatured, in accordance with the terms of the Loan Documents.
20.22 Confidentiality. The Administrative Agent, the Issuer and the Lenders
agree to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to their and their Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection
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with the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Lead
Borrower or (h) to the extent such Information (1) becomes publicly available
other than as a result of a breach of this Section or (2) becomes available to
the Administrative Agent, the Issuer or any Lender on a nonconfidential basis
from a source other than the Credit Parties. For the purposes of this Section,
the term "Information" means all information received from the Credit Parties
relating to their businesses, other than any such information that is available
to the Administrative Agent, the Issuer or any Lender on a nonconfidential basis
prior to disclosure by the Credit Parties. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
[signature pages to follow]
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"LEAD BORROWER":
SHOPKO STORES, INC.
ATTEST:
By: By:
------------------------------ ------------------------------
Name: Name:
------------------------------ ------------------------------
Title: Title:
------------------------------ ------------------------------
"BORROWERS":
SHOPKO STORES, INC.
ATTEST:
By: By:
------------------------------ ------------------------------
Name: Name:
------------------------------ ------------------------------
Title: Title:
------------------------------ ------------------------------
PAMIDA, INC.
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
"GUARANTORS":
PAMIDA HOLDINGS CORPORATION
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
128
SVS TRUCKING, INC.
By:
-------------------------------
Print Name:
-------------------------
Title:
-----------------------------
SKO HOLDINGS, INC.
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
SHOPKO VENTURES-DULUTH, INC.
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
SHOPKO PROPERTIES, INC.
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
▇▇▇▇-▇▇▇▇▇▇▇, INCORPORATED
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
SEAWAY IMPORTING COMPANY
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
129
PAMIDA TRANSPORTATION COMPANY
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
P.M. PLACE STORES COMPANY
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
PLACE'S ASSOCIATES' EXPANSION, LLC,
a Missouri Limited Liability Company,
By: P.M. Place Stores Company,
a Missouri Corporation,
Sole Member and Manager
By:
----------------------------
Print Name:
--------------------
Title:
-------------------------
130
"ADMINISTRATIVE AGENT":
FLEET RETAIL FINANCE INC.
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
"ISSUER":
FLEET NATIONAL BANK
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
"LENDERS"
FLEET RETAIL FINANCE INC.
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, N.A.
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BANK
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
133
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
134
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST)
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
135
FOOTHILL CAPITAL CORPORATION
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
136
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
137
GMAC BUSINESS CREDIT, LLC
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
138
GMAC COMMERCIAL CREDIT LLC
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
139
▇▇▇▇▇▇ FINANCIAL INC.
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
140
JPMORGAN BUSINESS CREDIT CORP.
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------
141
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:
-------------------------------
Print Name:
------------------------
Title:
-----------------------------