1 Exhibit 4.1
REVOLVING CREDIT AGREEMENT
Dated as of July 21, 1997
REVOLVING CREDIT AGREEMENT, dated as of July 21, 1997, among PAYLESS
CASHWAYS, INC., an Iowa corporation (the "Borrower"), a debtor and
debtor-in-possession in the Case (as hereinafter defined), each of the financial
institutions from time to time party hereto as lenders (the "Lenders"), the
Underwriters (as hereinafter defined) and CANADIAN IMPERIAL BANK OF COMMERCE
(acting through one or more of its agencies, branches, or affiliates, "CIBC"),
as the issuer of standby letters of credit, FIRST BANK NATIONAL ASSOCIATION, in
its capacity as the issuer of documentary letters of credit (and not as a
lender) and CIBC, as coordinating and collateral agent (in such capacity, the
"Agent") for the Lenders, the Fronting Banks (as hereinafter defined) and the
Underwriters.
INTRODUCTORY STATEMENT
On July 21, 1997, the Borrower filed a voluntary petition with the
Bankruptcy Court initiating the Case and has continued in the possession of its
assets and in the management of its business pursuant to Sections 1107 and 1108
of the Bankruptcy Code.
The Borrower has applied to the Lenders for revolving credit and letter
of credit facilities in an aggregate principal amount not to exceed $125,000,000
(subject to the limitation set forth in Section 2.1(a) and to mandatory and
optional reductions in accordance with Sections 2.9 and 2.12).
The proceeds of the Loans will be used to provide working capital for
the Borrower, and for other general corporate purposes of the Borrower,
including for capital expenditures.
To provide security for the repayment of the Loans, the reimbursement
of any draft drawn under a Letter of Credit and the payment of the other
obligations of the Borrower hereunder and under the other Loan Documents, the
Borrower will provide to the Agent, the Lenders, the Fronting Bank and the
Underwriters the following (each as more fully described herein):
(a) an allowed administrative expense claim in the Case
pursuant to Section 364(c)(1) of the Bankruptcy Code having
priority over all administrative expenses of the kind
specified in Sections 503(b) and 507(b) of the Bankruptcy
Code;
(b) a perfected first priority Lien, pursuant to Section
364(c)(2) of the Bankruptcy Code, upon substantially all
unencumbered properties and interests in property of the
Borrower (including, with limitation, all After-Acquired
Property) and all cash and cash equivalents in the Letter of
Credit Account but excluding Consignor Property;
(c) a perfected Lien, pursuant to Section 364(c)(3) of the
Bankruptcy Code, upon all property of the Borrower (other than
the property referred to in paragraph (d)
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below that is subject to the valid and perfected Liens that
presently secure the Borrower's pre-petition Debt under
the Existing Agreements)that is subject to valid and perfected
Liens in existence on the Filing Date, junior to such valid
and perfected Liens and the Consignor Property; and
(d) a perfected first priority priming Lien, pursuant to
Section 364(d)(1)of the Bankruptcy Code, upon all property of
the Borrower (including, without limitation, accounts receiv-
able, inventory, equipment, general intangibles, intellectual
property and vehicles of the Borrower) that is subject to the
existing Liens that presently secure the Borrower's
pre-petition Debt under the Existing Agreements and any Liens
granted after the Filing Date to provide adequate protection
in respect of the Existing Agreements, which Lien in favor of
the Agent, the Lenders, the Fronting Banks and the
Underwriters shall be senior in all respects to all of such
existing Liens and to any Liens granted after the Filing Date
to provide adequate protection in respect thereof.
All of the claims and the Liens granted hereunder in the Case to the
Agent, the Lenders, the Fronting Banks and the Underwriters shall be subject to
the Carve-Out to the extent provided in Section 2.22 and to the prior rights of
(x) the Credit Card Banks under the GE Credit Program Documents with respect to
certain accounts receivable, returned merchandise and general intangibles and
(y) Commerce under the Commerce Bank Agreement with respect to certain
documents, inventory and related collateral.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
SECTION 1.1. Defined Terms.
As used in this Agreement, the following terms shall have the meanings
specified below:
"ABR Loan" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Section 2.
"Additional Credit" shall have the meaning set forth in Section 4.2(d).
"Adjusted LIBOR Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/100 of 1%) equal to the quotient of (a) the LIBOR
Rate in effect for such Interest Period divided by (b) a percentage (expressed
as a decimal) equal to 100% minus Statutory Reserves. For purposes hereof, the
term "LIBOR Rate" shall mean the rate (rounded upwards, if necessary, to the
next 1/100 of 1%) at which dollar deposits approximately equal in principal
amount to such Eurodollar Borrowing and for a maturity comparable to such
Interest Period are offered to the principal London office of the
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Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person (a
"Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"After-Acquired Property" shall have the meaning set forth in
Section 5.11.
"Agent" shall have the meaning set forth in the Introduction.
"Agreement" shall mean this Revolving Credit Agreement, as the same may
be amended, amended and restated, modified or supplemented from time to time.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the higher of (a) the rate of interest most recently announced by CIBC at its
Domestic Lending Office as its base rate; and (b) the Federal Funds Rate in
effect on such day plus 1/2 of 1%. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Rate for any reason, including the
inability or failure of the Agent to obtain sufficient quotations in accordance
with the terms hereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in CIBC's base rate or the Federal Funds
Rate shall be effective on the effective date of such change in CIBC's base rate
or the Federal Funds Rate, respectively.
"Annual Budget" shall have the meaning set forth in Section 5.1(f).
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the Agent,
substantially in the form of Exhibit E.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et seq.
"Bankruptcy Court" shall mean the United States Bankruptcy Court for
the Western District of Missouri or any other court having jurisdiction over the
Case from time to time.
"Beneficial Ownership" by a Person when used with respect to any Voting
Shares shall mean beneficial ownership by such Person of such Voting Shares as
defined in Rule 13d-3 of the Exchange Act.
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"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"Borrower" shall have the meaning set forth in the Introduction.
"Borrowing" shall mean the incurrence of Loans of a single Type made
from all the Lenders on a single date and having, in the case of Eurodollar
Loans, a single Interest Period (with any ABR Loan made pursuant to Section 2.15
being considered a part of the related Borrowing of Eurodollar Loans).
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks in New York City are required or permitted to close
(and, for a Letter of Credit, other than a day on which the relevant Fronting
Bank issuing such Letter of Credit is closed); provided, however, that when used
in connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"Business Plan" shall mean the revised financial projections of the
Borrower dated on or about June 27, 1997 and as amended from time to time in a
manner not inconsistent with the terms and provisions of this Agreement.
"Capitalized Lease" shall mean, as applied to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
"Carve-Out" shall have the meaning set forth in Section 2.22.
"Case" shall mean the Chapter 11 Case of the Borrower pending in the
Bankruptcy Court.
"Cash Collateral Order" shall have the meaning set forth in
Section 4.1(d).
"Change of Control" shall mean the occurrence of either of the
following events: (x) any Person or any Persons acting together which would
constitute a Group, together with any Affiliates thereof, shall after the
Closing Date acquire or hold Voting Shares of the Borrower such that such Person
or Group, together with such Affiliates, have Beneficial Ownership of Voting
Shares of the Borrower entitling such Person or Group, together with such
Affiliates, to exercise at least 40% of the total voting power of all classes of
Voting Shares of the Borrower; or (y) any Person or any Group of Persons,
together with any Affiliates thereof, shall succeed in having a sufficient
number of its or their nominees elected to the Board of Directors of the
Borrower such that such nominees so elected (whether new or continuing as
directors) shall constitute a majority of the Board of Directors of the
Borrower.
"CIBC" shall have the meaning set forth in the Introduction.
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"CIBC Wood Gundy" shall mean CIBC Wood Gundy Securities Corp.
"Closing Date" shall mean the date on which this Agreement has been
executed and the conditions precedent to the making of the initial Loans or the
issuance of the initial Letter of Credit set forth in Section 4.1 have been
satisfied or waived, which date shall occur promptly, but no later than 10 days,
after the entry of the Interim Order.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean the Collateral under the Security and Pledge
Agreement.
"Commerce" shall mean Commerce Bank, N.A.
"Commerce Bank Agreement" shall mean that certain Letter of Credit
Issuance and Reimbursement Agreement, dated as of November 18, 1994, as amended
by that certain First Amendment, effective as of October 3, 1996, between
Commerce and the Borrower.
"Commitment" shall mean, with respect to each Lender, its Revolving
Credit Commitment and its Standby L/C Commitment in the amount set forth
opposite its name on Annex A hereto or as may subsequently be set forth in the
Register from time to time, as the same may be reduced from time to time
pursuant to Sections 2.9 and 2.12.
"Commitment Fee" shall have the meaning set forth in Section 2.19.
"Commitment Letter" shall mean that certain Commitment Letter, dated
July 17, 1997, among the Agent, the Underwriters and the Borrower.
"Commitment Percentage" shall mean at any time, with respect to each
Lender, the percentage obtained by dividing its Commitment at such time by the
Total Commitment at such time.
"Consignor Property" shall mean goods held by the Borrower on
consignment to which it does not have title and the proceeds therefrom.
"Consummation Date" shall mean the date which is the earlier of (x) the
date on which the substantial consummation (as defined in Section 1101 of the
Bankruptcy Code) of a Reorganization Plan occurs and (y) the effective date of a
Reorganization Plan which is confirmed pursuant to an order of the Bankruptcy
Court.
"Credit Card Banks" shall mean General Electric Credit Corporation
and Monogram Credit Card Bank of Georgia.
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"Debt" of any Person means, at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under Capitalized
Leases, (v) all Debt of others secured by (or for which the holder of such Debt
has an existing right, contingent or otherwise, to be secured by) a Lien on any
asset of such Person, including (without limitation) the Synthetic Lease
Obligations, whether or not such Debt is assumed by such Person, (vi) all Debt
of others Guaranteed by such Person, directly or indirectly, or by an instrument
having the effect of assuring another's payment or performance of any Debt,
(vii) indebtedness and other obligations arising under acceptance facilities and
the face amount of all letters of credit issued for the account of such Person
and, without duplication, all drafts drawn thereunder or payment requests
honored with respect thereto, (viii) all obligations of such Person in respect
of interest rate protection agreements, foreign currency exchange agreements or
other interest or exchange rate hedging arrangements (other than fully paid
interest rate cap arrangements), (ix) all obligations of such Person under
conditional sale or other title retention agreements relating to property or
assets purchased by such Person, and (x) any withdrawal or other liability
incurred under ERISA by such Person (or, if such Person is the Borrower, the
Borrower and its ERISA Affiliates) to a Multiemployer Plan.
"Designated Collateral" shall mean (i) inventory at the 29 stores to be
closed pursuant to the Business Plan, (ii) the real estate interests at 9 of
such stores to be closed (and the 7 properties currently held for sale) and any
relaxed fixtures and equipment, which as of the Filing Date secure the Existing
Secured Obligations, (iii) the tax refund projected to be received by the
Borrower during the Case and (iv) the proceeds of the promissory notes (in the
aggregate principal amount of approximately $1,050,000) presently pledged to the
Existing Secured Lenders in connection with the prior store dispositions and
which mature on December 1, 1997.
"Disclosure Statement" shall mean the Borrower's disclosure statement
prepared in connection with the Proposed Plan.
"Documentary Letter of Credit" shall mean a documentary letter of
credit in form and substance customarily issued by the relevant Fronting Bank
from time to time and in form and substance acceptable to the Agent.
"Documentary Letter of Credit Fronting Bank" shall mean the Fronting
Bank which has committed to issue Documentary Letters of Credit hereunder.
"Documentary Letter of Credit Outstandings" shall mean, at any time,
the sum of (i) the aggregate undrawn stated amount of all Documentary Letters of
Credit then outstanding plus (ii) all amounts theretofore drawn under
Documentary Letters of Credit and not then reimbursed.
"Documentary Reserve" shall have the meaning set forth in
Section 2.2(a).
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"Dollars" and "$" shall mean lawful money of the United States of
America.
"Domestic Lending Office" shall mean initially, as to each Lender, its
office designated as such on the signature pages to this Agreement, and
thereafter, upon notice to the Borrower and the Agent, such other office of such
Lender, if any, which shall be making or maintaining ABR Loans.
"Dual Path Capital Expenditures" shall mean capital expenditures made
or accrued in connection with the Business Plan and identified as such in
Section 6.4.
"EBITDA" shall mean, for any period, the consolidated net income (or
net loss) of the Borrower for such period before deduction of "Chapter 11
expenses" (or "administrative costs reflecting Chapter 11 expenses") (excluding
extraordinary, unusual or non-recurring gains and losses or (without
duplication) special charges), plus without duplication in accordance with GAAP
the sum of (i) interest and tax expense of the Borrower for such period to the
extent deducted in determining such consolidated net income plus (ii)
depreciation and amortization expense of the Borrower for such period to the
extent deducted in determining such consolidated net income as shown on the
Borrower's consolidated statement of income for such period.
"Eligible Assignee" shall mean (i) a commercial bank having total
assets in excess of $1,500,000,000 and (ii) a finance company, insurance company
or other financial institution or fund, in each case acceptable to the Agent,
which in the ordinary course of business extends credit of the type evidenced by
the Notes and has total assets in excess of $250,000,000 and whose becoming an
assignee would not constitute a prohibited transaction under Section 4975 of
ERISA.
"Environmental Law" shall have the meaning set forth in Section 6.14(e).
"Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability under federal or state environmental laws or
regulations, or (ii) damages arising from or costs incurred by such Governmental
Authority in response to a release or threatened release of a hazardous or toxic
waste, substance or constituent, or other substance into the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which the Borrower is a member and
which is under common control within the meaning of Section 414(b) or (c) of the
Code and the regulations promulgated and rulings issued thereunder.
"Eurocurrency Liabilities" shall have the meaning assigned thereto in
Regulation D issued by the Board, as in effect from time to time.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
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"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Section 2.
"Event of Default" shall have the meaning set forth in Section 7.
"Existing Agreements" shall mean the Existing Credit Agreement and each
of the agreements listed on Schedule 1.1 hereto, the notes delivered pursuant
thereto, and all of the agreements granting security interests and liens in
property and assets of the Borrower to the Existing Lenders, including without
limitation, the security agreements, mortgages, deeds of trust and leasehold
mortgages listed on Schedule 1.1 hereto, each of which documents was executed
and delivered (to the extent party thereto) by the Borrower prior to the Filing
Date, as each may have been amended, amended and restated, modified or
supplemented from time to time.
"Existing Credit Agreement" shall mean that certain Amended and
Restated Credit Agreement, dated as of October 3, 1996, among the Borrower, the
Existing Lenders and the Agent, as amended, amended and restated, modified or
supplemented from time to time.
"Existing Credit Agreement Agent" shall mean CIBC in its capacities as
Administrative Agent and Collateral Agent under the Existing Credit Agreement.
"Existing Lenders" shall mean, collectively, those certain financial
institutions which have provided loans and other extensions of credit to the
Borrower under the Existing Agreements, together with any successors or assigns
thereof.
"Existing Secured Obligations" shall mean the Secured Obligations, as
such term is defined in the Existing Credit Agreement.
"Existing Secured Parties" shall mean the Secured Parties, as such term
is defined in the Existing Credit Agreement.
"Exit Facility" shall mean the Exit Facility referred to in Section
9.3(b).
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fees" shall mean, collectively, the Commitment Fees and the Letter of
Credit Fees, together with the other fees referred to in Section 2.18.
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"Filing Date" shall mean July 21, 1997.
"Final Order" shall have the meaning set forth in Section 4.2(d).
"Financial Officer" shall mean the Chief Financial Officer, Vice
President Finance or the Treasurer of the Borrower.
"Fronting Banks" shall mean (i) with respect to Standby Letters of
Credit, CIBC and (ii) with respect to Documentary Letters of Credit, First Bank
National Association ("First Bank"); or, in each se, such other Lender or
Lenders or financial institutions or institutions (which other financial
institution or institutions shall have been chosen by the Borrower with the
approval of the Required Lenders) as may agree with the then existing Fronting
Bank to act in such capacity.
"GAAP" shall mean generally accepted accounting principles applied on a
basis consistent with those used in preparing the financial statements referred
to in Section 3.4.
"GE Credit Program Documents" shall mean (a) the Amended and Restated
Monogram Credit Card Bank of Georgia Program Agreement, dated as of July 20,
1997, between the Borrower and Monogram Credit Card Bank of Georgia, as such
agreement may hereafter be amended, amended and restated, modified or
supplemented from time to time to the extent permitted by this Agreement,
together with any agreements entered into by the Borrower and Monogram Credit
Card Bank of Georgia, or any affiliate, in replacement of such agreement to the
extent permitted by this Agreement; and (b) the Second Amended and Restated
Commercial Credit Account Purchase and Service Program Agreement, dated as of
July 20, 1997, between the Borrower and General Electric Capital Corporation, as
such agreement may hereafter be further amended, amended and restated, modified
or supplemented from time to time to the extent permitted by this Agreement,
together with any agreement entered into by the Borrower and General Electric
Capital Corporation, or any affiliate, in replacement of such agreement to the
extent permitted by this Agreement.
"Governmental Authority" shall mean any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"Group" shall mean a "group" for purposes of Section 13(d) of the
Exchange Act.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person Directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of
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the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part); provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" shall have the meaning set forth in Section
6.14(e).
"Hedging Agreement" means that certain ISDA Master Agreement, dated as
of May 22, 1995, between CIBC and the Borrower, together with all Schedules
executed in connection therewith, as amended, amended and restated, modified or
supplemented from time to time.
"Insufficiency" shall mean, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities within the meaning of Section
4001(a)(18) of ERISA.
"Interim Order" shall have the meaning set forth in Section 4.1(c).
"Interest Payment Date" shall mean (i) as to any Eurodollar Loan, the
last day of such Interest Period, and (ii) as to all ABR Loans, the last
calendar day of each month and the date on which any ABR Loans are refinanced
with Eurodollar Loans pursuant to Section 2.11.
"Interest Period" shall mean, as to any Borrowing of Eurodollar Loans,
the period commencing on the date of such Borrowing (including as a result of a
refinancing of ABR Loans) or on the last day of the preceding Interest Period
applicable to such Borrowing and ending on the numerically corresponding day (or
if there is no corresponding day, the last day) in the calendar month that is 1,
2 or 3 months thereafter, as the Borrower may elect in the related notice
delivered pursuant to Sections 2.5(b) or 2.11; provided, however, that (i) if
any Interest Period would end on a day which shall not be a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) no Interest Period shall end later than the Termination Date.
"Investments" shall have the meaning set forth in Section 6.9.
"Lenders" shall have the meaning set forth in the Introduction.
"Letter of Credit" shall mean any irrevocable letter of credit issued
pursuant to Section 2.2, which letter of credit shall be (i) a Standby Letter of
Credit or a Documentary Letter of Credit, (ii) issued for such purposes for
which the Borrower has historically obtained letters of credit, or for such
other purposes as are reasonably acceptable to the Agent and the relevant
Fronting Bank, (iii) denominated in Dollars and (iv) otherwise in such form as
may be reasonably approved from time to time by the Agent and the relevant
Fronting Bank.
"Letter of Credit Accounts" shall mean (i) with respect to Standby
Letters of Credit, the account established by the Borrower under the sole and
exclusive control of the Agent maintained
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at the office of the Agent at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
designated as the "Payless Cashways, Inc. Standby Letter of Credit Account" and
(ii) with respect to Documentary Letters of Credit, the account established by
the Borrower under the sole and exclusive control of First Bank National
Association, maintained at the office of First Bank National Association at ▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, designated the "Payless
Cashways, Inc. Documentary Letter of Credit Account," each of which shall be
used solely for the purposes set forth in Sections 2.2(c) and 2.12.
"Letter of Credit Fees" shall mean the fees payable in respect of
Letters of Credit pursuant to Section 2.20.
"Letter of Credit Outstandings" shall mean, at any time, the aggregate
amount of all Documentary Letters of Credit Outstandings and all Standby Letters
of Credit Outstandings.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever (including any conditional sale or other
title retention agreement or any lease in the nature thereof).
"Loan" shall have the meaning set forth in Section 2.1.
"Loan Documents" shall mean this Agreement, the Notes, the Letters of
Credit, the Security and Pledge Agreement, and any other instrument or agreement
executed and delivered in connection herewith, including (without limitation)
documentation between the respective Fronting Banks and the Borrower with
respect to Letters of Credit.
"Lumberjack" shall mean Lumberjack Stores, Inc.
"Maturity Date" shall mean July 21, 1998.
"Minority Lenders" shall have the meaning set forth in Section 9.10(b).
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc. or if such company
shall cease to issue ratings, another nationally recognized statistical rating
company selected in good faith by mutual agreement of the Agent and the
Borrower.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" shall mean a Single Employer Plan, which (i)
is maintained for employees of the Borrower or an ERISA Affiliate and at least
one Person other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA
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Affiliate could have liability under Section 4064 or 4069 of ERISA in the event
such Plan has been or were to be terminated.
"Net Cash Proceeds" shall mean, with respect to any sale, lease,
transfer or other disposition of property or other assets: (a) the cash proceeds
received by the Borrower or its Subsidiary (including, without limitation, all
cash proceeds received by way of (i) deferred payment of principal pursuant to a
note or installment receivable or otherwise, but only as and when received and
(ii) receivables and other assets retained by the Borrower as part of the sales
consideration), minus (b) reasonable and customary brokerage commissions and
other reasonable and customary fees and expenses (including reasonable and
customary fees and expenses of counsel and investment bankers and reasonable and
customary inventory liquidation costs) related to such financing, sale, lease or
other disposition or issuance, minus (c) payments made to retire Debt (other
than Debt outstanding under the Existing Credit Agreement) secured by such
assets being sold or otherwise disposed of where payment of such Debt is
required in connection with such sale or disposition.
"Notes" shall mean the promissory notes of the Borrower, substantially
in the form of hereto, each payable to the order of a Lender, evidencing Loans.
"Obligations" shall mean (a) the due and punctual payment of principal
of and interest on the Loans and the Notes and the reimbursement of all amounts
drawn under Letters of Credit, and (b) the due and punctual payment of the Fees
and all other present and future, fixed or contingent, monetary obligations of
the Borrower to the Lenders, the Fronting Banks, the Underwriters and the Agent
under the Loan Documents.
"Orders" shall mean the Interim Order and the Final Order of the
Bankruptcy Court referred to in Sections 4.1(c) and 4.2(d).
"Other Taxes" shall have the meaning set forth in Section 2.17.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor agency or entity performing substantially the same functions.
"Pad Site" shall have the meaning set forth in the definition of
"Permitted Pad Sale."
"Pension Plan" shall mean a defined benefit pension or retirement plan
which meets and is subject to the requirements of Section 401(a) of the Code.
"Permitted Liens" shall mean (i) Liens imposed by law (other than
Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP; (ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than Environmental
Liens and any Lien imposed
13
under ERISA) imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP; (iii) Liens (other than
any Lien imposed under ERISA) incurred or deposits made in the ordinary course
of business (including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Debt), statutory obligations and
other similar obligations or arising as a result of progress payments under
government contracts; (iv) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and zoning and other restrictions,
charges or encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Borrower and which
do not materially detract from the value of the property to which they attach or
materially impair the use thereof to the Borrower; (v) purchase money Liens upon
or in any property acquired or held in the ordinary course of business to secure
the purchase price of such property or to secure Debt permitted by Section
6.3(iii) solely for the purpose of financing the acquisition of such property
and Capitalized Leases permitted by Section 6.3(iv) and true leases on account
of which financing statements have been filed; and (vi) extensions, renewals or
replacements of any Lien referred to in paragraphs (i) through (v) above;
provided, that the principal amount of the obligation secured thereby is not
increased and that any such extension, renewal or replacement is limited to the
property originally encumbered thereby.
"Permitted Pad Sale" shall mean any sale of that portion (any such
portion, a "Pad Site") of any real property acquired by the Borrower in excess
of the portion thereof needed for the operation of the facility located on or to
be constructed on such real property, as reasonably determined by the Borrower;
provided, that (i) the acquisition of such real property was not prohibited by
any provision of this Agreement, (ii) the aggregate acreage of all Pad Sites on
any such real property does not exceed 50% of the total acreage of such real
property and (iii) such sale is completed within twelve months of the
acquisition of such real property.
"Person" shall mean any natural person, corporation, division of a
corporation, limited liability company, limited liability partnership,
partnership, trust, joint venture, association, company, estate, unincorporated
organization or government or any agency or political subdivision thereof.
"Plan" shall mean a Single Employer Plan or a Multiemployer Plan.
"Prepayment Date" shall mean thirty (30) days after the entry of the
Interim Order by the Bankruptcy Court if the Final Order has not been entered by
the Bankruptcy Court prior to the expiration of such thirty (30) day period.
14
"Pre-Petition Payment" shall mean a payment (by way of adequate
protection or otherwise) of principal or interest or otherwise on account of any
pre-petition Debt or payables, except (i) pre-petition Debt permitted to be paid
in connection with dispositions of assets permitted under Section 6.10, (ii)
payment of employee and independent contractor compensation, vacation,
severance, health and other benefits, retiree health and Pension Plan benefits,
withholding, sales and use taxes, customer deposits and gift certificates,
amounts required to cure defaults under assumed executory contracts and leases,
operating expenses, the failure to pay which after the Filing Date would have a
material adverse effect on the Borrower's business, operations, condition
(financial or otherwise), assets or prospects, (iii) other amounts which are
necessary to be paid in the reasonable judgment of the Borrower and are
satisfactory to the Required Lenders in their judgment reasonably exercised and
(iv) other priority claims; provided, that all such amounts described in the
foregoing clauses (ii), (iii) and (iv) are paid in the ordinary course of the
Borrower's business with the prior approval of the Bankruptcy Court and do not
exceed in the aggregate the amount for such pre-petition payments set forth in
the Business Plan and (v) to the extent permitted by the Bankruptcy Court, other
pre-petition Debt or payables in an aggregate amount not to exceed $1,000,000.
"Property" shall have the meaning set forth in Section 6.14(a).
"Proposed Plan" shall have the meaning set forth in Section 4.1(f).
"Register" shall have the meaning set forth in Section 9.3(d).
"Remedial Work" shall have the meaning set forth in Section 6.14(c).
"Reorganization Plan" shall mean a plan of reorganization in the Case.
"Required Lenders" shall mean, at any time, Lenders (including CIBC)
holding Loans representing in excess of 51% of the aggregate principal amount of
such Loans outstanding or, if no such Loans are outstanding, Lenders having
Commitments representing in excess of 51% of the Total Commitment.
"Revolving Credit Commitment" shall mean the commitment of each Lender
to make Loans and to purchase a participation in Documentary Letters of Credit
issued, as set forth in Section 2.1, as the same may be increased pursuant to
Section 2.1(a) and as the same may be reduced from time to time pursuant to
Sections 2.9 and 2.12.
"S&P" shall mean Standard & Poor's Ratings Group, a division of
▇▇▇▇▇▇-▇▇▇▇, Inc., or if such company shall cease to issue ratings, another
nationally recognized statistical rating company selected in good faith by
mutual agreement of the Agent and the Borrower.
"Security and Pledge Agreement" shall have the meaning set forth in
Section 4.1(e).
15
"Single Employer Plan" shall mean a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Borrower or an ERISA Affiliate or (ii) was so maintained and in respect of which
the Borrower could have liability under Section 4069 of ERISA in the event such
Plan has been or were to be terminated.
"Standby Letter of Credit" shall mean a standby Letter of Credit in
form and substance customarily issued by the relevant Fronting Bank from time to
time and in form and substance acceptable to the Agent.
"Standby Letter of Credit Fronting Bank" shall mean the Fronting Bank
which has committed to issue Standby Letters of Credit hereunder.
"Standby Letter of Credit Outstandings" shall mean, at any time, the
sum of (i) the aggregate undrawn stated amount of all Standby Letters of Credit
then outstanding plus (ii) all amounts theretofore drawn under Standby Letters
of Credit and not then reimbursed.
"Standby L/C Commitment" shall mean the commitment of each Lender to
purchase a participation in Standby Letters of Credit issued as set forth in
Section 2.2.
"Statutory Reserves" shall mean on any date the percentage (expressed
as a decimal) established by the Board and any other banking authority which is
the then stated maximum rate for all reserves (including but not limited to any
emergency, supplemental or other marginal reserve requirements) applicable to
any member bank of the Federal Reserve System in respect of Eurocurrency
Liabilities (or any successor category of liabilities under Regulation D issued
by the Board, as in effect from time to time). Such reserve percentages shall
include, without limitation, those imposed pursuant to said Regulation. The
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in such percentage.
"Subsidiary" shall mean, with respect to any Person (herein referred to
as the "parent"), any corporation, association or other business entity (whether
now existing or hereafter organized) of which at least a majority of the
securities or other ownership interests having ordinary voting power for the
election of directors is, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"Super-Majority Lenders" shall have the meaning set forth in Section
9.10(b).
"Superpriority Claim" shall mean a claim against the Borrower in the
Case which is an administrative expense claim having priority over any or all
administrative expenses of the kind specified in Sections 503(b) or 507(b) of
the Bankruptcy Code.
16
"Synthetic Lease Banks" shall mean the banks and financial institutions
party to the Synthetic Lease Participation Agreement.
"Synthetic Lease Documents" shall mean the Participation Agreement and
the Lease, the Loan Documents and the Trust Agreement (each as defined in the
Synthetic Lease Participation Agreement) and any and all documents, agreements
and instruments related thereto, each as amended, amended and restated, modified
or supplemented to the extent permitted by this Agreement.
"Synthetic Lease Obligations" shall mean the obligations of the
Borrower under the Synthetic Lease Documents (whether or not such obligations
constitute Capital Lease obligations).
"Synthetic Lease Participation Agreement" shall mean the Participation
Agreement, dated as of February 23, 1995, among the Borrower, Wilmington Trust
Company, as Certificate Trustee, the Synthetic Lease Banks as Certificate
Purchasers and/or Lenders and BA Leasing & Capital Corporation, as
administrative agent for the Certificate Purchasers and the lenders, as amended
by Amendment No. 1, dated as of November 22, 1995, and as hereafter amended,
amended and restated, modified or supplemented to the extent permitted by this
Agreement.
"Taxes" shall have the meaning set forth in Section 2.17.
"Temporary Cash Investments" shall mean any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, in each case maturing
within one year from the date of the acquisition thereof by the Borrower, or
(ii) (x) commercial paper rated in the highest grade (A1+/P1 or its equivalent)
by S&P or ▇▇▇▇▇'▇ or (y) time deposits with, including certificates of deposit
issued by, any office located in the United States of any bank or trust company
that has capital, surplus and undivided profits aggregating at least U.S.
$500,000,000, and whose long term Debt is rated A or higher by S&P and A2 or
higher by ▇▇▇▇▇'▇, in each case maturing within 180 days from the date of
acquisition thereof by the Borrower.
"Termination Date" shall mean the earliest to occur of (i) the
Prepayment Date, (ii) the Maturity Date, (iii) the Consummation Date and (iv)
the acceleration of the Loans and the termination of the Total Commitment in
accordance with the terms hereof.
"Termination Event" shall mean (i) a "reportable event", as such term
is described in Section 4043 of ERISA and the regulations issued thereunder
(other than a "reportable event" not subject to the provision for 30-day notice
to the PBGC under Section 4043 of ERISA or such regulations) or an event
described in Section 4068 of ERISA excluding events described in Section
4043(c)(9) of ERISA or 29 CFR ss.ss.2615.21 or 2615.23 and excluding events
which would not be reasonably likely (as reasonably determined by the Agent) to
have a material adverse effect on the financial condition, operations, business,
properties or assets of the Borrower taken as a whole, or (ii) the withdrawal of
17
the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan
year in which it was a "substantial employer", as such term is defined in
Section 4001(c) of ERISA, or the incurrence of liability by the Borrower or any
ERISA Affiliate under Section 4064 of ERISA upon the termination of a Multiple
Employer Plan, or (iii) providing notice of intent to terminate a Plan pursuant
to Section 4041(c) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (iv) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA, or (v) any other
event or condition (other than the commencement of the Case and the failure to
have made any contribution accrued as of the Filing Date but not paid) which
would reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan,
or the imposition of any liability under Title IV of ERISA (other than for the
payment of premiums to the PBGC).
"Total Commitment" shall mean, at any time, the sum of the Total
Revolving Credit Commitments and the Total Standby L/C Commitments at such time.
"Total Revolving Credit Commitments" shall mean, at any time, the sum
of the Revolving Credit Commitments at such time.
"Total Standby L/C Commitments" shall mean, at any time, the sum of the
Standby L/C Commitments at such time.
"Transferee" shall have the meaning set forth in Section 2.17.
"Type" when used in respect of any Loan or Borrowing shall refer to the
rate of interest by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "rate" shall mean
the Adjusted LIBOR Rate and the Alternate Base Rate.
"Underwriters" shall mean CIBC Wood Gundy, NationsBank, N.A., ▇▇▇▇▇▇▇
▇▇▇▇▇ Credit Partners, L.P. and ▇▇▇▇▇▇ Commercial Paper Inc.
"Unused Total Commitment" shall mean, at any time, (i) the Total
Commitment less (ii) the sum of (x) the aggregate outstanding principal amount
of all Loans and (y) the aggregate Letter of Credit Outstandings.
"Voting Shares" shall mean, with respect to any Person, shares of
capital stock of any class or classes (however designated) having general voting
power for the election of the board of directors, managers or trustees of such
Person (irrespective of whether or not at the time capital stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Withdrawal Liability" shall have the meaning set forth under Part I of
Subtitle E of Title IV of ERISA.
17
"ZR&G" shall have the meaning set forth in Section 9.5.
SECTION 1.2. Terms Generally. The definitions in Section 1.1 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Sections,
Exhibits and Schedules shall be deemed references to Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall otherwise require.
Except as otherwise expressly provided herein, all accounting or financial terms
used herein shall be construed in accordance with GAAP, as in effect from time
to time; provided, however, that for purposes of determining compliance with any
covenant set forth in Section 6, such terms shall be construed in accordance
with GAAP as in effect on the date of this Agreement applied on a basis
consistent with the application used in the Borrower's audited financial
statements referred to in Section 3.4.
SECTION 2. AMOUNT AND TERMS OF CREDIT.
SECTION 2.1. Commitments of the Lenders.
(a) Each Lender severally and not jointly with the other Lenders
agrees, upon the terms and subject to the conditions herein set forth
(including, without limitation, the provisions of Section 2.27), to make
revolving credit loans (each a "Loan" and, collectively, the "Loans") to the
Borrower and to participate in Documentary Letters of Credit issued by the
Documentary Letter of Credit Fronting Bank at any time and from time to time
during the period commencing on the date hereof and ending on the Termination
Date (or the earlier date of termination of the Total Commitment) in an
aggregate principal amount not to exceed the Revolving Credit Commitment of such
Lender. At no time shall the sum of the then outstanding aggregate principal
amount of the Loans plus the then aggregate Documentary Letter of Credit
Outstandings exceed the Total Revolving Credit Commitments of $100,000,000, as
the same may be reduced from time to time pursuant to Sections 2.9 or 2.12, as
the case may be; provided, that unless and until an aggregate amount of
$20,000,000 of Net Cash Proceeds from dispositions of Designated Collateral have
been applied to the repayment of the principal amount of the Existing Secured
Obligations outstanding on the Filing Date, the Total Revolving Credit
Commitment shall not exceed $80,000,000 at any time prior to April 1, 1998 or
$55,000,000 at any time on or after April 1, 1998 (when the Total Revolving
Credit Commitment reduces to $75,000,000 pursuant to Section 2.12(a)). In
addition, at no time shall the then outstanding aggregate principal amount of
Loans exceed an amount equal to the Total Revolving Credit Commitments minus the
Documentary Reserve.
(b) Each Lender severally and not jointly with the other Lenders
agrees, upon the terms and subject to the conditions herein set forth
(including, without limitation, the provisions of Section 2.27), to participate
in Standby Letters of Credit issued by the Standby Letter of Credit Fronting
Bank for the account of the Borrower at any time and from time to time during
the period commencing on the date hereof and ending on the Termination Date (or
the earlier date of
19
termination of the Total Commitment) in an aggregate principal amount not to
exceed the Standby L/C Commitment of such Lender. At no time shall the aggregate
Standby Letters of Credit Outstandings exceed the Total Standby L/C Commitments
of $25,000,000, as the same may be reduced from time to time.
(c) Each Borrowing shall be made by the Lenders pro rata in accordance
with their respective Revolving Credit Commitments; provided, that the failure
of any Lender to make any Loan shall not in itself relieve the other Lenders of
their obligations to lend.
SECTION 2.2. Letters of Credit
(a) Upon the terms and subject to the conditions herein set
forth, the Borrower may request the Documentary Letter of Credit Fronting Bank,
at any time and from time to time after the date hereof and prior to the
Termination Date, to issue, and subject to the terms and conditions contained
herein, such Fronting Bank shall issue, for the account of the Borrower one or
more Documentary Letters of Credit; provided, that no Documentary Letter of
Credit shall be issued if, after giving effect to such issuance, the aggregate
Documentary Letter of Credit Outstandings would exceed the lesser of
$15,000,000, or, the Documentary Reserve and provided, further that no
Documentary Letter of Credit shall be issued if the Documentary Letter of Credit
Fronting Bank shall have received at least one Business Day's prior written
notice from the Agent or the Required Lenders that the conditions to such
issuance have not been met. The Borrower hereby designates $5,000,000 as the
reserve for the issuance of Documentary Letters of Credit (the "Documentary
Reserve"). The Borrower may increase or decrease the amount of the Documentary
Reserve in an amount equal to $1,000,000 or any integral multiple thereof upon
ten (10) Business Days' prior written notice to the Agent and the Documentary
Letter of Credit Fronting Bank; provided, that in no event shall the Documentary
Reserve exceed $15,000,000 or be less than the Documentary Letters of Credit
Outstanding and provided, further that if any requested increase in the
Documentary Reserve would cause the then outstanding aggregate principal amount
of the Loans to be in excess of the amount permitted pursuant to the last
sentence of Section 2.1(a), such increase shall not be effective until the then
outstanding aggregate principal amount of the Loans has been repaid to that
extent and the Documentary Letter of Credit Fronting Bank has been notified in
writing by the Agent that such increase is effective.
(b) Upon the terms and subject to the conditions herein set
forth, the Borrower may request the Standby Letter of Credit Fronting Bank, at
any time and from time to time after the date hereof and prior to the
Termination Date, to issue, and subject to the terms and conditions contained
herein, such Fronting Bank shall issue, for the account of the Borrower one or
more Standby Letters of Credit; provided, that no Standby Letter of Credit shall
be issued if after giving effect to such issuance (i) the aggregate Standby
Letter of Credit Outstandings shall exceed $25,000,000 or (ii) the aggregate
Standby Letter of Credit Outstandings would exceed the Total Standby L/C
Commitments and provided, further that no Standby Letter of Credit shall be
issued
20
if the Standby Letter of Credit Fronting Bank shall have received notice from
the Agent or the Required Lenders that the conditions to such issuance have not
been met.
(c) No Letter of Credit shall expire later than 60 days after
the Maturity Date; provided, that if any Letter of Credit shall be outstanding
on the Termination Date, the Borrower shall, at or prior to the Termination
Date, except as the Agent and the relevant Fronting Bank may otherwise agree in
writing, (i) cause all Letters of Credit which expire after the Termination Date
to be returned to the relevant Fronting Bank undrawn and marked "cancelled" or
(ii) if the Borrower is unable to do so in whole or in part, either (x) provide
a "back-to-back" letter of credit to the relevant Fronting Bank in a form
satisfactory to such Fronting Bank and the Agent (in their sole discretion),
issued by a bank satisfactory to such Fronting Bank and the Agent (in their sole
discretion), in an amount equal to 105% of the then undrawn stated amount of all
outstanding Letters of Credit issued by such Fronting Bank and/or (y) deposit
cash in the Letter of Credit Account of such Fronting Bank in an amount equal to
105% of the then undrawn stated amount of all outstanding Letters of Credit
issued by such Fronting Bank as collateral security for the Borrower's
reimbursement obligations in connection therewith, such cash to be remitted to
the Borrower upon the expiration, cancellation or other termination or
satisfaction of such reimbursement obligations. In addition, the Borrower shall
at all times maintain a minimum balance of at least $25,000 in the Letter of
Credit Account of the Documentary Letter of Credit Fronting Bank and the
Borrower hereby authorizes the Documentary Letter of Credit Fronting Bank to
debit such Letter of Credit Account to reimburse itself with respect to drafts
drawn under Documentary Letters of Credit and unpaid fees, costs and expenses
incurred by the Documentary Letter of Credit Fronting Bank in connection
therewith (whereupon the Borrower shall forthwith deposit such additional funds
in such Letter of Credit Account, if any, as shall be necessary to achieve such
minimum balance).
(d) The Borrower shall pay to each Fronting Bank, in addition
to such other fees and charges as are specifically provided for in Section 2.20
hereof, such fees and charges in connection with the issuance and processing of
the Letters of Credit issued by such Fronting Bank of the same type as are
customarily imposed by such Fronting Bank from time to time in connection with
letter of credit transactions in the amounts specified by such Fronting Bank.
(e) Drafts drawn under each Letter of Credit shall be
reimbursed by the Borrower in Dollars (i) on the same day if the relevant
Fronting Bank shall have notified the Borrower prior to 11:00 a.m. (New York
City time) and (ii) in all other cases, not later than the first Business Day
following the date of draw. Drafts drawn under each Letter of Credit shall bear
interest from the date of draw until the first Business Day following the date
of draw at a rate per annum equal to the Alternate Base Rate plus 1-1/2% and
thereafter until reimbursed in full at a rate per annum equal to the Alternate
Base Rate plus 3-1/2% (computed on the basis of the actual number of days
elapsed over any year of 360 days). The Borrower shall effect such reimbursement
(x) if such draw occurs prior to the Termination Date (or the earlier date of
termination of the Total Commitment), in cash or through a Borrowing without the
satisfaction of the conditions precedent set forth in Section 4.2 (provided that
if such draw relates to a Documentary Letter of Credit, such a Borrowing shall
only
21
be made if the Documentary Letter of Credit Bank notifies the Agent that it has
not otherwise been reimbursed by the Borrower in respect of such draw) or (y) if
such draw occurs on or after the Termination Date (or the earlier date of
termination of the Total Commitment), in cash. Each Lender agrees to make the
Loans described in clause (x) of the preceding sentence notwithstanding a
failure to satisfy the applicable lending conditions thereto or the provisions
of Sections 2.1 or 2.27 or the occurrence of the Termination Date.
(f) Immediately upon the issuance of any Letter of Credit by
any Fronting Bank, such Fronting Bank shall be deemed to have sold to each
Lender other than such Fronting Bank and each such other Lender shall be deemed
unconditionally and irrevocably to have purchased from such Fronting Bank,
without recourse or warranty, an undivided interest and participation, to the
extent of such Lender's Commitment Percentage, in such Letter of Credit, each
drawing thereunder and the obligations of the Borrower under this Agreement with
respect thereto. Upon any change in the Commitments pursuant to Section 9.3, it
is hereby agreed that with respect to all Letter of Credit Outstandings, there
shall be an automatic adjustment to the participations hereby created to reflect
the new Commitment Percentages of the assigning and assignee Lenders. Any action
taken or omitted by a Fronting Bank under or in connection with a Letter of
Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for such Fronting Bank any resulting liability to
any other Lender.
(g) In the event that a Fronting Bank makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed such amount in
full to such Fronting Bank pursuant to this Section, such Fronting Bank shall
promptly notify the Agent, which shall promptly notify each Lender of such
failure. In such case each Lender is authorized (and the Borrower does hereby so
authorize each Lender) to and shall promptly make an ABR Loan to the Borrower by
making the proceeds thereof available to the Agent in the amount of such
Lender's Commitment Percentage of such unreimbursed amount regardless of
noncompliance with the applicable conditions precedent and other restrictions on
Borrowings hereunder unless the making of such Loans are stayed by a court of
competent jurisdiction or otherwise not permitted by, or the obligation of the
Borrower to repay the same is not enforceable, under applicable law. If such
Fronting Bank so notifies the Agent, and the Agent so notifies the Lenders,
prior to 11:00 a.m. (New York City time) on any Business Day, each Lender shall
make available to the Agent the amounts required hereby, and the Agent shall
make available to the relevant Fronting Bank the total unreimbursed amount, in
each case on such Business Day and in same day funds. Notwithstanding the
failure of any Lender to make available to the Agent such Lender's Commitment
Percentage of the total Loan to be made to the Borrower, the Agent shall
promptly remit to the Fronting Bank the proceeds of such Loan in the amount of
the unreimbursed draw, in each case in Dollars and in the same day funds.
In the event that the making of any Loan is stayed by a court of
competent jurisdiction, or the Required Lenders and the Agent reasonably
determine that the making of a Loan is not permitted by, or the obligation of
the Borrower to repay the same is not enforceable under applicable law, each
22
Lender shall promptly and unconditionally pay to the Agent for the account of
the Fronting Bank the amount of such Lender's Commitment Percentage of the
unreimbursed payment and the Agent shall promptly and unconditionally pay to the
Fronting Bank the amount of such unreimbursed payment in each case in Dollars
and in the same day funds. If such Fronting Bank so notifies the Agent, and the
Agent so notifies the Lenders, prior to 11:00 a.m. (New York City time) on any
Business Day, each Lender shall make available to the Agent, and the Agent shall
make available to the relevant Fronting Bank the total unreimbursed amount in
each case on such Business Day and in same day funds.
If and to the extent such Lender shall not have so made its Commitment
Percentage of the amount of any Loan or payment available to the Agent, or the
Agent shall not have made the amount of such Loan or payment available to the
relevant Fronting Bank, such Lender agrees to pay to the Agent, and the Agent
agrees to pay to such Fronting Bank, forthwith on demand such amount, together
with interest thereon, for each day from such date until the date such amount is
paid to the party entitled thereto at the Federal Funds Rate. The failure of any
Lender to make available to the Agent its Commitment Percentage of any Loan
required to be made pursuant to this Section or any payment under any Letter of
Credit shall not relieve any other Lender of its obligation hereunder to make
available to the Agent its Commitment Percentage of such Loan or payment under
any Letter of Credit, nor shall it relieve the Agent of its obligation hereunder
to make the amount of such payment available to the relevant Fronting Bank, in
each case on the date required, as specified above, but no Lender shall be
responsible for the failure of any other Lender to make available to the Agent
such other Lender's Commitment Percentage of any such Loan or such payment.
Whenever a Fronting Bank receives a payment of a reimbursement obligation from
the Borrower as to which it has received any payments from the Lenders pursuant
to this Section, such Fronting Bank shall pay to each Lender which has paid its
Commitment Percentage thereof, in Dollars and in same day funds, an amount equal
to such Lender's Commitment Percentage thereof.
(h) First Bank in its capacity as the Documentary Letter of
Credit Fronting Bank, may terminate its obligation to issue Documentary Letters
of Credit upon forty-five days' written notice to the Agent of such termination.
Further, if (i) the Interim Order (or the Final Order, upon entry thereof) shall
cease to be in full force and effect, shall have been amended, modified, stayed,
reversed, vacated or rescinded in any respect that adversely modifies or affects
the rights of First Bank as the Documentary Letter of Credit Fronting Bank or as
entered does not grant First Bank the rights contemplated by this Agreement,
then, First Bank may immediately terminate its obligation to issue Documentary
Letters of Credit upon written notice to the Agent of such termination or (ii)
CIBC resigns as Agent, First Bank shall be deemed to have resigned as
Documentary Letter of Credit Fronting Bank, effective as of the effective date
of CIBC's resignation as Agent, unless it otherwise notifies the Borrower in
writing of its decision to remain as Documentary Letter of Credit Fronting Bank.
SECTION 2.3. Issuance. Whenever the Borrower desires a Fronting Bank
to issue a Letter of Credit, it shall give to the relevant Fronting Bank and the
Agent at least two Business Days' prior
23
written (including telegraphic, telex, facsimile or cable communication) notice
(or such shorter period as may be agreed upon by the Agent, the Borrower and
such Fronting Bank) specifying the date on which the proposed Letter of Credit
is to be issued (which shall be a Business Day), the stated amount of the Letter
of Credit so requested, the expiration date of such Letter of Credit and the
name and address of the beneficiary thereof.
SECTION 2.4. Nature of Letter of Credit Obligations Absolute.
The obligations of the Borrower to reimburse the Fronting Banks and
the Lenders for drawings made under any Letter of Credit shall be unconditional
and irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation (it being
understood that any such payment by the Borrower shall be without prejudice to,
and shall not constitute a waiver of, any rights the Borrower might have or
might acquire as a result of the payment by the relevant Fronting Bank of any
draft or the reimbursement by the Borrower thereof): (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim, setoff,
defense or other right which the Borrower may have at any time against a
beneficiary of any Letter of Credit or against the relevant Fronting Bank or any
of the Lenders, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction; (iii) any draft, demand,
certificate or other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; (iv) payment by the relevant
Fronting Bank of any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit (including without limitation, payment by the Documentary
Letter of Credit Fronting Bank in accordance with its usual practices and
procedures, subsequent to the expiry date of a Documentary Letter of Credit as
long as the Documentary Letter of Credit Fronting Bank has obtained the consent
of the Borrower thereto and has not been notified in writing by the Agent or a
Lender of the occurrence of the Termination Date); (v) any other circumstance or
happening whatsoever, which is similar to any of the foregoing; or (vi) the fact
that any Event of Default shall have occurred and be continuing.
SECTION 2.5. Making of Loans.
(a) Except as contemplated by Section 2.8, Loans shall be
either ABR Loans or Eurodollar Loans as the Borrower may request subject to and
in accordance with this Section; provided, that all Loans made pursuant to the
same Borrowing shall, unless otherwise specifically provided herein, be Loans of
the same Type. Each Lender may fulfill its Commitment with respect to any
Eurodollar Loan or ABR Loan by causing any lending office of such Lender to make
such Loan; provided, that any such use of a lending office shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
the applicable Note. Each Lender shall, subject to its overall policy
considerations, use reasonable efforts (but shall not be obligated) to select a
lending office which will not result in the payment of increased costs by the
Borrower pursuant to Section 2.14. Subject to the other provisions of this
Section and the provisions of Section 2.11,
24
Borrowings of Loans of more than one Type may be incurred at the same time;
provided, that no more than five (5) Borrowings of Eurodollar Loans may be out-
standing at any time.
(b) The Borrower shall give the Agent prior notice of each
Borrowing hereunder of at least three Business Days for Eurodollar Loans and one
Business Day for ABR Loans (except as provided in the last sentence of this
Section 2.5(b)); such notice shall be irrevocable and shall specify the amount
of the proposed Borrowing (which shall not be less than $5,000,000 in the case
of Eurodollar Loans and $1,000,000 in the case of ABR Loans) and the date
thereof (which shall be a Business Day) and shall contain disbursement
instructions. Such notice, to be effective, must be received by the Agent not
later than 12:00 noon, New York City time, on the third Business Day in the case
of Eurodollar Loans and the first Business Day in the case of ABR Loans,
preceding the date on which such Borrowing is to be made except as provided in
the last sentence of this Section 2.5(b). Such notice shall specify whether the
Borrowing then being requested is to be a Borrowing of ABR Loans or Eurodollar
Loans. If no election is made as to the Type of Loan, such notice shall be
deemed a request for Borrowing of ABR Loans. The Agent shall promptly notify
each Lender of its proportionate share of such Borrowing, the date of such
Borrowing, the Type of Borrowing or Loans being requested and the Interest
Period or Interest Periods applicable thereto, as appropriate. On the borrowing
date specified in such notice, each Lender shall make its share of the Borrowing
available at the office of the Agent at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, no later than 12:00 noon, New York City time, in immediately available
funds. Upon receipt of the funds made available by the Lenders to fund any
borrowing hereunder, the Agent shall disburse such funds in the manner specified
in the notice of borrowing delivered by the Borrower and shall use reasonable
efforts to make the funds so received from the Lenders available to the Borrower
no later than 2:00 p.m. New York City time (other than as provided in the
following sentence). With respect to ABR Loans of $10,000,000 or less, the
Lenders shall make such Borrowings available to the Borrower by 4:00 p.m., New
York City time, on the same Business Day that the Borrower gives notice to the
Agent of such Borrowing if the Agent receives such notice by 12:00 noon, New
York City time.
SECTION 2.6. Notes; Repayment of Loans. The Loans made by each Lender
shall be evidenced by a Note, duly executed on behalf of the Borrower, dated the
Closing Date or the date of the effectiveness of the applicable Assignment and
Acceptance, as the case may be, in substantially the form attached hereto as
Exhibit A, payable to the order of such Lender in an aggregate principal amount
equal to such Lender's Commitment. Loans may be repaid and reborrowed in
accordance with the provisions of this Agreement. The outstanding principal
balance of all of the Loans, as evidenced by such Notes, shall be payable on the
Termination Date. Each Note shall bear interest from the date thereof on the
outstanding principal balance thereof as set forth in Section 2.7. Each Lender
shall, and is hereby authorized by the Borrower to, endorse on the schedule
attached to each Note delivered to such Lender (or on a continuation of such
schedule attached to such Note and made a part thereof), or otherwise to record
in such Lender's internal records, an appropriate notation evidencing the date
and amount of each Loan from such Lender, each payment and prepayment of
principal of any such Loan, each payment of interest on any such
25
Loan and the other information provided for on such schedule; provided, that the
failure of any Lender to make such a notation or any error therein shall not
affect the obligation of the Borrower to repay the Loans made by such Lender in
accordance with the terms of this Agreement and the applicable Notes.
SECTION 2.7. Interest on Loans.
(a) Subject to the provisions of Section 2.8, each ABR Loan
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to the Alternate Base Rate
plus 1-1/2%.
(b) Subject to the provisions of Section 2.8, each Eurodollar
Loan shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal, during each Interest
Period applicable thereto, to the Adjusted LIBOR Rate for such Interest Period
in effect for such Borrowing plus 2-1/2%.
(c) Accrued interest on all Loans shall be payable in arrears
on each Interest Payment Date applicable thereto, at maturity (whether by
acceleration or otherwise), after such maturity on demand and (with respect to
Eurodollar Loans) upon any repayment or prepayment thereof (on the amount
prepaid).
SECTION 2.8. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or in the payment of any
other amount becoming due hereunder (including, without limitation, the
reimbursement pursuant to Section 2.2(e) of any draft drawn under a Letter of
Credit), whether at stated maturity, by acceleration or otherwise, the Borrower
shall on demand from time to time pay interest, to the extent permitted by law,
on such defaulted amount up to (but not including) the date of actual payment
(after as well as before judgment) at a rate per annum (computed on the basis of
the actual number of days elapsed over a year of 360 days) equal to (x) in the
case of Borrowings consisting of Eurodollar Loans, the Adjusted LIBOR Rate in
effect for such Borrowing plus 4-1/2% and (y) in the case of all other amounts,
the Alternate Base Rate plus 3-1/2%.
SECTION 2.9. Optional Termination or Reduction of Commitment.
Upon at least two Business Days' prior written notice to the Agent, the Borrower
may at any time in whole permanently terminate, or from time to time in part
permanently reduce, the Unused Total Commitment. Each such reduction of the
Revolving Credit Commitments or the Standby L/C Commitment, as the case may be,
shall be in the principal amount of $5,000,000 or any integral multiple thereof.
Simultaneously with each reduction or termination of the Revolving Credit
Commitment or the Standby L/C Commitment, as the case may be, the Borrower shall
pay to the Agent for the account of each Lender the Commitment Fee accrued on
the amount of the respective Commitment of such Lender so terminated or reduced
through the date thereof. Any reduction of
26
the Total Revolving Credit Commitment or the Total Standby L/C Commitment
pursuant to this Section shall be applied pro rata to reduce the Commitment of
each Lender.
SECTION 2.10. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan, the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower absent manifest
error) that reasonable means do not exist for ascertaining the applicable
Adjusted LIBOR Rate, the Agent shall, as soon as practicable thereafter, give
written or telegraphic notice of such determination to the Borrower and the
Lenders, and any request by the Borrower for a Borrowing of Eurodollar Loans
(including pursuant to a refinancing with Eurodollar Loans) pursuant to Section
2.5 or 2.11 shall be deemed a request for a Borrowing of ABR Loans. After such
notice shall have been given and until the circumstances giving rise to such
notice no longer exist, each request for a Borrowing of Eurodollar Loans shall
be deemed to be a request for a Borrowing of ABR Loans.
SECTION 2.11. Refinancing of Loans. The Borrower shall have the
right, at any time, on three Business Days' prior irrevocable notice to the
Agent (which notice, to be effective, must be received by the Agent not later
than 12:00 noon, New York City time, on the third Business Day preceding the
date of any refinancing), (x) to refinance (without the satisfaction of the
conditions set forth in Section 4 as a condition to such refinancing) any
outstanding Borrowing or Borrowings of Loans of one Type (or a portion thereof)
with a Borrowing of Loans of the other Type or (y) to continue an outstanding
Borrowing of Eurodollar Loans for an additional Interest Period, subject to the
following:
(a) as a condition to the refinancing of ABR Loans with
Eurodollar Loans and to the continuation of Eurodollar Loans for an
additional Interest Period, no Event of Default shall have occurred and
be continuing at the time of such refinancing;
(b) if less than a full Borrowing of Loans shall be
refinanced, such refinancing shall be made pro rata among the Lenders
in accordance with the respective principal amounts of the Loans
comprising such Borrowing held by the Lenders immediately prior to such
refinancing;
(c) the aggregate principal amount of Loans being refinanced
shall be at least $1,000,000; provided, that no partial refinancing of
a Borrowing of Eurodollar Loans shall result in the Eurodollar Loans
remaining outstanding pursuant to such Borrowing being less than
$5,000,000 in aggregate principal amount;
(d) each Lender shall effect each refinancing by applying the
proceeds of its new Eurodollar Loan or ABR Loan, as the case may be, to
its Loan being refinanced;
27
(e) the Interest Period with respect to a Borrowing of
Eurodollar Loans effected by a refinancing or in respect to the
Borrowing of Eurodollar Loans being continued as Eurodollar Loans shall
commence on the date of refinancing or the expiration of the current
Interest Period applicable to such continuing Borrowing, as the case
may be;
(f) a Borrowing of Eurodollar Loans may be refinanced only on
the last day of an Interest Period applicable thereto; and
(g) each request for a refinancing with a Borrowing of
Eurodollar Loans which fails to state an applicable Interest Period
shall be deemed to be a request for an Interest Period of one month.
In the event that the Borrower shall not give notice to refinance any Borrowing
of Eurodollar Loans, or to continue such Borrowing as Eurodollar Loans, or shall
not be entitled to refinance or continue such Borrowing as Eurodollar Loans, in
each case as provided above, such Borrowing shall automatically be refinanced
with a Borrowing of ABR Loans at the expiration of the then-current Interest
Period. The Agent shall, after it receives notice from the Borrower, promptly
give each Lender notice of any refinancing, in whole or part, of any Loan made
by such Lender.
SECTION 2.12. Mandatory Commitment Reduction; Commitment Termination;
Cash Collateral
(a) On April 1, 1998, the Total Commitments shall be reduced
to $100,000,000 and the Revolving Credit Commitments shall be reduced to
$75,000,000 and the Borrower shall prepay the Loans in an aggregate amount equal
to the amount, if any, by which the then outstanding aggregate principal amount
of the Loans and the Documentary Letter of Credit Outstandings exceed the
Revolving Credit Commitment as so reduced.
(b) Upon the Termination Date, the Total Commitment shall be
terminated in full and the Borrower shall pay the Loans in full and, except as
the relevant Fronting Bank may otherwise agree in writing, if any Letter of
Credit remains outstanding, (i) deposit into the Letter of Credit Account of
each Fronting Bank an amount equal to 105% of the amount by which the sum of the
aggregate Letter of Credit Outstandings in respect of Letters of Credit issued
by such Fronting Bank exceeds the amount of cash held in such Letter of Credit
Account, such cash to be remitted to the Borrower upon the expiration,
cancellation, satisfaction or other termination of such reimbursement
obligations, or (ii) otherwise comply with Section 2.2(c).
SECTION 2.13. Optional Prepayment of Loans; Reimbursement of Lenders.
(a) The Borrower shall have the right at any time and from
time to time to prepay any Loans, in whole or in part, (x) with respect to
Eurodollar Loans, upon at least three Business Days' prior written, telex or
facsimile notice to the Agent and (y) with respect to ABR Loans on the same
Business Day if written, telex or facsimile notice is received by the Agent
prior to 12:00 noon,
28
New York City time, and thereafter upon at least one Business Day's prior
written, telex or facsimile notice to the Agent; provided, that (i) with respect
to Eurodollar Loans, each such partial prepayment shall be in integral multiples
of $1,000,000, (ii) with respect to ABR Loans, each such partial prepayment
shall be in integral multiples of $1,000,000, (iii) no prepayment of Eurodollar
Loans shall be permitted pursuant to this Section 2.13(a) other than on the last
day of an Interest Period applicable thereto unless the Borrower pays breakage
costs as provided in Section 2.13(b)(i), and (iv) no partial prepayment of a
Borrowing of Eurodollar Loans shall result in the aggregate principal amount of
the Eurodollar Loans remaining outstanding pursuant to such Borrowing being less
than $5,000,000. Each notice of prepayment shall specify the prepayment date,
the principal amount of the Loans to be prepaid and in the case of Eurodollar
Loans, the Borrowing or Borrowings pursuant to which made, shall be irrevocable
and shall commit the Borrower to prepay such Loan by the amount and on the date
stated therein. The Agent shall, promptly after receiving notice from the
Borrower hereunder, notify each Lender of the principal amount of the Loans held
by such Lender which are to be prepaid, the prepayment date and the manner of
application of the prepayment.
(b) The Borrower shall reimburse each Lender on demand for any
loss incurred or to be incurred by it in the reemployment of the funds released
(i) resulting from any prepayment (for any reason whatsoever, including, without
limitation, refinancing with ABR Loans) of any Eurodollar Loan required or
permitted under this Agreement, if such Loan is prepaid other than on the last
day of the Interest Period for such Loan or (ii) in the event that after the
Borrower delivers a notice of borrowing under Section 2.5 in respect of
Eurodollar Loans, such Loans are not made on the first day of the Interest
Period specified in such notice of borrowing for any reason other than a breach
by such Lender of its obligations hereunder. Such loss shall be the amount as
reasonably determined by such Lender as the excess, if any, of (A) the amount of
interest which would have accrued to such Lender on the amount so paid or not
borrowed at a rate of interest equal to the Adjusted LIBOR Rate for such Loan,
for the period from the date of such payment or failure to borrow to the last
day (x) in the case of a payment or refinancing with ABR Loans other than on the
last day of the Interest Period for such Loan, of the then current Interest
Period for such Loan, or (y) in the case of such failure to borrow, of the
Interest Period for such Loan which would have commenced on the date of such
failure to borrow, over (B) the amount of interest which would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the London interbank market. Each Lender shall
deliver to the Borrower from time to time one or more certificates setting forth
the amount of such loss as determined by such Lender.
(c) In the event the Borrower fails to prepay any Loan on
the date specified in any prepayment notice delivered pursuant to Section
2.13(a), the Borrower on demand by any Lender shall pay to the Agent for the
account of such Lender any amounts required to compensate such Lender for any
loss incurred by such Lender as a result of such failure to prepay, including,
without limitation, any loss, cost or expenses incurred by reason of the
acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment, but without duplication
of any amounts paid under Section 2.13(b). Each Lender shall deliver to the
Borrower
29
from time to time one or more certificates setting forth the amount of such loss
as determined by such Lender.
(d) Any partial prepayment of the Loans by the Borrower
pursuant to this Section shall be applied as specified by the Borrower or, in
the absence of such specification, as determined by the Agent.
SECTION 2.14. Reserve Requirements; Change in Circumstances
(a) Notwithstanding any other provision herein, if after the
date of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Lender of
the principal of or interest on any Eurodollar Loan made by such Lender or any
fees or other amounts payable hereunder (other than changes in respect of Taxes,
Other Taxes and taxes imposed on, or measured by, the net income or overall
gross receipts or franchise taxes of such Lender by the jurisdiction in which
such Lender has its principal office or in which the applicable lending office
for such Eurodollar Loan is located or by any political subdivision or taxing
authority therein, or by any other jurisdiction or by any political subdivision
or taxing authority therein other than a jurisdiction in which such Lender would
not be subject to tax but for the execution and performance of this Agreement),
or shall impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of or
credit extended by such Lender (except any such reserve requirement which is
reflected in the Adjusted LIBOR Rate) or shall impose on such Lender or the
London interbank market any other condition affecting this Agreement or the
Eurodollar Loans made by such Lender, and the result of any of the foregoing
shall be to increase the cost to such Lender of making or maintaining any
Eurodollar Loan or to reduce the amount of any sum received or receivable by
such Lender hereunder or under the Notes (whether of principal, interest or
otherwise) by an amount deemed by such Lender to be material, then the Borrower
will pay to such Lender in accordance with paragraph (c) below such additional
amount or amounts as will compensate such Lender for such additional costs
incurred or reduction suffered.
(b) If any Lender shall have determined that the applicability
of any change in any law, rule, regulation or guideline adopted pursuant to or
arising out of the July 1988 report of the Basel Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption or effectiveness
after the date hereof of any law, rule, regulation or guideline regarding
capital adequacy, or any change in any of the foregoing or in the interpretation
or administration of any of the foregoing by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any Lending Office of such Lender) or
any Lender's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would
30
have the effect of reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a consequence of this
Agreement, the Loans made by such Lender pursuant hereto, such Lender's
Commitment hereunder or the issuance of, or participation in, any Letter of
Credit by such Lender to a level below that which such Lender or such Lender's
holding company could have achieved but for such adoption, change or compliance
(taking into account such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy) by an amount deemed by such
Lender to be material, then from time to time the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of each Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender or its holding company
as specified in paragraph (a) or (b) above, as the case may be, shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay each Lender the amount shown as due on any such certificate
delivered to it within 10 days after its receipt of the same. Any Lender
receiving any such payment shall promptly make a refund thereof to the Borrower
if the law, regulation, guideline or change in circumstances giving rise to such
payment is subsequently deemed or held to be invalid or inapplicable.
(d) Failure on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any period shall not constitute a
waiver of such Lender's right to demand compensation with respect to such period
or any other period. The protection of this Section shall be available to each
Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed.
SECTION 2.15. Change in Legality.
(a) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (x) any change in any law or regulation or in
the interpretation thereof by any Governmental Authority charged with the
administration thereof shall make it unlawful for a Lender to make or maintain a
Eurodollar Loan or to give effect to its obligations as contemplated hereby with
respect to a Eurodollar Loan or (y) at any time any Lender determines that the
making or continuance of any of its Eurodollar Loans has become impracticable as
a result of a contingency occurring after the date hereof which adversely
affects the London interbank market or the position of such Lender in such
market, then, by written notice to the Borrower, such Lender may (i) declare
that Eurodollar Loans will not thereafter be made by such Lender hereunder,
whereupon any request by the Borrower for a Eurodollar Borrowing shall, as to
such Lender only, be deemed a request for an ABR Loan unless such declaration
shall be subsequently withdrawn; and (ii) require that all outstanding
Eurodollar Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of the
effective date of such notice as provided in
31
paragraph (b) below. In the event any Lender shall exercise its rights under
clause (i) or (ii) of this paragraph (a), all payments and prepayments of
principal which would otherwise have been applied to repay the Eurodollar Loans
that would have been made by such Lender or the converted Eurodollar Loans of
such Lender shall instead be applied to repay the ABR Loans made by such Lender
in lieu of, or resulting from the conversion of, such Eurodollar Loans.
(b)For purposes of this Section 2.15, a notice to the Borrower
by any Lender pursuant to paragraph (a) above shall be effective, if lawful, and
if any Eurodollar Loans shall then be outstanding, on the last day of the
then-current Interest Period, otherwise, such notice shall be effective on the
date of receipt by the Borrower.
SECTION 2.16. Pro Rata Treatment, etc. All payments and repayments
of principal and interest in respect of the Loans (except as provided in
Sections 2.14 and 2.15) shall be made pro rata among the Lenders in accordance
with the then outstanding principal amount of the Loans and/or participations in
Letter of Credit Outstandings and all outstanding undrawn Letters of Credit (and
the unreimbursed amount of drawn Letters of Credit) hereunder and all payments
of Commitment Fees and Letter of Credit Fees (other than those payable to a
Fronting Bank) shall be made pro rata among the Lenders in accordance with their
Commitments. All payments by the Borrower hereunder and under the Notes shall be
(i) net of any tax applicable to the Borrower and (ii) made in Dollars in
immediately available funds at the office of the Agent by 12:00 noon, New York
City time, on the date on which such payment shall be due. Interest in respect
of any Loan hereunder shall accrue from and including the date of such Loan to
but excluding the date on which such Loan is paid in full or converted to a Loan
of a different Type
SECTION 2.17. Taxes.
(a) Any and all payments by the Borrower hereunder and under
the Notes shall be made free and clear of and without deduction for any and all
current or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding (i) taxes imposed on or
measured by the net income or overall gross receipts of the Agent or any Lender
(or any transferee or assignee thereof, including a participation holder (any
such entity being called a "Transferee")) and franchise taxes imposed on the
Agent or any Lender (or Transferee) by the United States or any jurisdiction
under the laws of which the Agent or any such Lender (or Transferee) is
organized or in which the applicable lending office of any such Lender (or
Transferee) is located or any political subdivision thereof or by any other
jurisdiction or by any political subdivision or taxing authority therein other
than a jurisdiction in which the Agent or such Lender would not be subject to
tax but for the execution and performance of this Agreement and (ii) taxes,
levies, imposts, deductions, charges or withholdings ("Amounts") with respect to
payments hereunder or under the Notes to a Lender (or Transferee) in accordance
with laws in effect on the later of the date of this Agreement and the date such
Lender (or Transferee) becomes a Lender (or Transferee, as the case may be), but
not excluding, with respect to such Lender (or Transferee), any
32
increase in such Amounts solely as a result of any change in such laws occurring
after such later date or any Amounts that would not have been imposed but for
actions (other than actions contemplated by this Agreement or the Notes) taken
by the Borrower after such later date (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to the Lenders (or any
Transferee) or the Agent, (i) the sum payable shall be increased by the amount
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) such Lender (or
Transferee) or the Agent (as the case may be) shall receive an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant taxing authority or other Governmental Authority
in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any current or
future stamp or documentary taxes or any other excise or property taxes,
charges, assessments or similar levies that arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c)The Borrower will indemnify each Lender (or Transferee) and
the Agent for the full amount of Taxes and Other Taxes paid by such Lender (or
Transferee) or the Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date any Lender (or
Transferee) or the Agent, as the case may be, makes written demand therefor. If
a Lender (or Transferee) or the Agent shall become aware that it is entitled to
receive a refund in respect of Taxes or Other Taxes as to which it has been
indemnified by the Borrower pursuant to this Section, it shall promptly notify
the Borrower of the availability of such refund and shall, within 30 days after
receipt of a request by the Borrower, apply for such refund at the Borrower's
expense. If any Lender (or Transferee) or the Agent receives a refund in respect
of any Taxes or Other Taxes as to which it has been indemnified by the Borrower
pursuant to this Section, it shall promptly notify the Borrower of such refund
and shall, within 30 days after receipt of a request by the Borrower (or
promptly upon receipt, if the Borrower has requested application for such refund
pursuant hereto), repay such refund to the Borrower (to the extent of amounts
that have been paid by the Borrower under this Section with respect to such
refund plus interest that is received by the Lender (or Transferee) or the Agent
as part of the refund), net of all out-of-pocket expenses of such Lender (or
Transferee) or the Agent and without additional interest thereon; provided, that
the Borrower, upon the request of such Lender (or Transferee) or the Agent,
agrees to return such refund (plus penalties, interest or other charges) to such
Lender (or Transferee) or the Agent in the event such Lender (or Transferee) or
the Agent is required to repay such refund. Nothing contained in this subsection
(c) shall require any Lender (or Transferee) or the Agent to
33
make available any of its tax returns (or any other information relating to its
taxes that it deems to be confidential).
(d) Within 30 days after the date of any payment of Taxes or
Other Taxes withheld by the Borrower in respect of any payment to any Lender (or
Transferee) or the Agent, the Borrower will furnish to the Agent, at its address
referred to on the signature pages hereof, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.
(f) Each Lender (or Transferee) that is organized under the
laws of a jurisdiction outside the United States shall, if legally able to do
so, prior to the immediately following due date of any payment by the Borrower
hereunder, deliver to the Borrower such certificates, documents or other
evidence, as required by the Code or Treasury Regulations issued pursuant
thereto, including (A) Internal Revenue Service Form W-8 or W-9 and (B) Internal
Revenue Service Form 1001 or Form 4224 and any other certificate or statement of
exemption required by Treasury Regulation Section 1.1441-1, 1.1441-4 or
1.1441-6(c) or any subsequent version thereof or successors thereto, properly
completed and duly executed by such Lender (or Transferee) establishing that
such payment is (i) not subject to United States Federal withholding tax under
the Code because such payment is effectively connected with the conduct by such
Lender (or Transferee) of a trade or business in the United States or (ii)
totally exempt from United States Federal withholding tax or subject to a
reduced rate of such tax under a provision of an applicable tax treaty. Unless
the Borrower and the Agent have received forms or other documents satisfactory
to them indicating that such payments hereunder or under the Notes are not
subject to United States Federal withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, the Borrower or the Agent shall
withhold taxes from such payments at the applicable statutory rate.
(g) The Borrower shall not be required to pay any additional
amounts to any Lender (or Transferee) in respect of United States Federal
withholding tax pursuant to subsection (a) above if the obligation to pay such
additional amounts would not have arisen but for a failure by such Lender (or
Transferee) to comply with the provisions of subsection (f) above.
(h) Any Lender (or Transferee) claiming any additional amounts
payable pursuant to this Section shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document requested
by the Borrower or to change the jurisdiction of its applicable lending office
if the making of such a filing or change would avoid the need for or reduce the
amount of any such additional amounts that may thereafter accrue and would not,
in the sole reasonable determination of such Lender, be otherwise materially
disadvantageous to such Lender (or Transferee).
34
SECTION 2.18. Certain Fees. The Borrower shall pay to the Agent, for
the respective accounts of the Agent, the Underwriters and the Lenders, the fees
set forth in that certain letter, dated July 17, 1997, among the Agent, the
Underwriters and the Borrower.
SECTION 2.19. Commitment Fee. The Borrower shall pay to the Lenders
a commitment fee (the "Commitment Fee") for the period commencing on the date
the Commitment Letter is executed to the Termination Date or the earlier date of
the termination in full of the Commitment, computed (on the basis of the actual
number of days elapsed over a year of 360 days) at the rate of one-half of one
percent (1/2%) per annum on the average daily Unused Total Commitment. Such
Commitment Fee, to the extent then accrued, shall be payable (x) monthly, in
arrears, on the last calendar day of each month, (y) on the Termination Date and
(z) as provided in Section 2.9, upon any reduction or termination in whole or in
part of the Total Commitment.
SECTION 2.20. Letter of Credit Fees. The Borrower shall pay with
respect to each Letter of Credit (i) to the Agent on behalf of the Lenders a fee
calculated (on the basis of the actual number of days elapsed over a year of 360
days) at the rate of (x) two and one-half (2-1/2%) per annum on the daily
average Letter of Credit Outstandings and (ii) to each Fronting Bank, such
Fronting Bank's fees for issuance, amendments and processing referred to in
Section 2.2. In addition, the Borrower agrees to pay each Fronting Bank for its
account a fronting fee, if required by such Fronting Bank in respect of each
Letter of Credit issued by such Fronting Bank, for the period from and including
the date of issuance of such Letter of Credit to and including the date of
termination of such Letter of Credit, computed at a rate, and payable at times,
to be determined by such Fronting Bank, the Borrower and the Agent. Accrued fees
described in clause (i) of the first sentence of this paragraph in respect of
each Letter of Credit shall be due and payable monthly in arrears on the last
calendar day of each month and on the Termination Date, or such earlier date as
the Total Commitment is terminated. Accrued fees described in clause (ii) of the
first sentence of this paragraph in respect of each Letter of Credit shall be
payable at times to be determined by the relevant Fronting Bank, the Borrower
and the Agent.
SECTION 2.21. Nature of Fees. All Fees shall be paid on the dates due,
in immediately available funds, to the Agent for the respective accounts of the
Agent and the Lenders, as provided herein and in the letter described in Section
2.18. Once paid, none of the Fees shall be refundable under any circumstances.
SECTION 2.22. Priority and Liens. The Borrower hereby covenants,
represents and warrants that, upon entry of the Interim Order (i) pursuant to
Section 364(c)(1) of the Bankruptcy Code, the Obligations of the Borrower
hereunder and under the other Loan Documents shall at all times constitute
allowed administrative expense claims in the Case having priority over all
administrative expenses of the kind specified in Sections 503(b) or 507(b) of
the Bankruptcy Code, (ii) pursuant to Section 364(c)(2) of the Bankruptcy Code,
the Obligations of the Borrower hereunder and under the other Loan Documents
shall at all times be secured by a perfected first priority Lien
35
on all unencumbered property of the Borrower (including, without limitation, all
After-Acquired Property ) and all cash maintained in the Letter of Credit
Account and any direct investments of the funds contained therein, (iii)
pursuant to Section 364(c)(3) of the Bankruptcy Code, the Obligations of the
Borrower hereunder and under the Loan Documents shall be secured by a perfected
Lien upon all property of the Borrower (other than the property that is subject
to existing Liens that presently secure the obligations of the Borrower under
the Existing Agreements, as to which the Lien in favor of the Agent and the
Lenders will be as described in clause (iv) of this sentence) that is subject to
valid and perfected Liens in existence on the Filing Date, junior to such valid
and perfected Liens, and (iv) pursuant to Section 364(d)(1) of the Bankruptcy
Code, the Obligations of the Borrower hereunder and under the Loan Documents
shall be secured by a perfected first priority, senior priming Lien on all
property of the Borrower (including, without limitation, accounts receivable,
inventory, equipment, general intangibles, intellectual property and vehicles
and the proceeds thereof) that is subject to existing Liens that presently
secure the Borrower's pre-petition Indebtedness under the Existing Agreements
and any Liens granted after the Filing Date to provide adequate protection in
respect of the Existing Agreements, subject in each case, only to, in the event
of the occurrence and during the continuance of an Event of Default or an event
that would constitute an Event of Default with the giving of notice or lapse of
time or both, (x) the payment of allowed and unpaid professional fees and
disbursements thereafter incurred by the Borrower and any statutory committee
appointed in the Case in an aggregate amount not in excess of $3,500,000 and (y)
the payment of unpaid fees pursuant to 28 U.S.C. ss.1930 (collectively, the
"Carve-Out"); provided, that following the Termination Date amounts in the
Letter of Credit Account shall not be subject to the Carve-Out and (z) the prior
rights (i) of the Credit Card Banks under the GE Credit Program Documents with
respect to certain accounts receivable, returned merchandise and general
intangibles financed thereunder and (ii) Commerce under the Commerce Bank
Agreement with respect to certain documents, inventory and related collateral.
The Lenders agree that so long as no Event of Default or event which with the
giving of notice or lapse of time or both would constitute an Event of Default
shall have occurred, the Borrower shall be permitted to pay compensation and
reimbursement of expenses allowed and payable under 11 U.S.C. ss. 330 and 11
U.S.C. ss. 331, as the same may be due and payable, and the same shall not
reduce the Carve-Out.
SECTION 2.23. Right of Set-Off. Subject to the provisions of Section
7.1, upon the occurrence and during the continuance of any Event of Default, the
Agent, each Fronting Bank and each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law and without further
order of or application to the Bankruptcy Court, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and any and all other indebtedness at any time owing by the Agent,
such Fronting Bank and such Lender to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or hereafter
existing under the Loan Documents, irrespective of whether or not such Lender
shall have made any demand under any Loan Document and although such obligations
may be unmatured. Each Lender, each Fronting Bank and the Agent agrees promptly
to notify the Borrower after any such set-off and application made by such
Lender, such Fronting Bank or by the Agent, as the case may be; provided, that
the failure to give such notice shall not affect the validity of such
36
set-off and application. The rights of each Lender, each Fronting Bank and the
Agent under this Section are in addition to other rights and remedies which such
Lender, such Fronting Bank and the Agent may have upon the occurrence and during
the continuance of any Event of Default.
SECTION 2.24. Security Interest in Letter of Credit Accounts.
Pursuant to Section 364(c)(2) of the Bankruptcy Code, the Borrower hereby
assigns and pledges to the Agent, for its benefit and for the ratable benefit of
the Lenders, and hereby grants to the Agent and the Fronting Banks, for their
respective benefits and for the ratable benefit of the Lenders, a first priority
security interest, senior to all other Liens, if any, in all of the Borrower's
right, title and interest in and to the Letter of Credit Accounts and any direct
investment of the funds contained therein. A Fronting Bank's security interest
in the Letter of Credit Account maintained by it shall be prior to the security
interest in favor of the Agent and the Lenders, and shall not be subject to the
rights of any person other than the Agent, the Lenders and the Borrower so long
as there are any Letter of Credit Outstanding or such Fronting Bank is obligated
to issue Letters of Credit.
SECTION 2.25. Payment of Obligations. Upon the maturity (whether by
acceleration or otherwise) of any of the Obligations under this Agreement or any
of the other Loan Documents of the Borrower, the Lenders and the Fronting Banks
shall be entitled to immediate payment of such obligations without further
application to or order of the Bankruptcy Court.
SECTION 2.26. No Discharge; Survival of Claims. The Borrower agrees
that (i) its obligations hereunder shall not be discharged by the entry of an
order confirming a Plan of Reorganization Plan (and the Borrower, pursuant to
Section 1141(d)(4) of the Bankruptcy Code, hereby waives any such discharge) and
(ii) the Superpriority Claim granted to the Agent, the Fronting Banks and the
Lenders pursuant to the Order and described in Section 2.22 and the Liens
granted to the Agent and the Documentary Letter of Credit Fronting Bank pursuant
to the Order and described in Sections 2.22 and 2.24 shall not be affected in
any manner by the entry of an order confirming a Reorganization Plan.
SECTION 2.27. Use of Cash Collateral. Notwithstanding anything to the
contrary contained herein (other than the provisions of Sections 2.2(e) and (g)
which make this Section inapplicable), the Borrower shall not be permitted (i)
to request a Borrowing under Section 2.5 or request the issuance of a Letter of
Credit under Section 2.3 unless the Bankruptcy Court shall have entered the Cash
Collateral Order or (ii) to request a Borrowing under Section 2.5 unless the
Borrower shall at that time have used all cash collateral subject to the Cash
Collateral Order for the purposes described in Section 3.10.
SECTION 2.28. Existing Secured Obligations. For the express benefit
of the Existing Lenders, (i) the Borrower hereby confirms that it is validly and
justly indebted to the Existing Lenders in the full amount of the Existing
Secured Obligations, without defenses, offsets, claims or counterclaims with
respect to the Existing Secured Obligations, or with respect to the transactions
37
contemplated thereby, of any kind whatsoever and (ii) the Borrower hereby
expressly releases and discharges the Existing Lenders and the Existing Lenders'
direct and indirect Subsidiaries and Affiliates, together with each of their
present and former shareholders, present and former officers, directors, agents
and employees and present and each of their former attorneys, advisors or
consultants whether presently or formerly retained by attorneys for the Existing
Lenders or by the Existing Lenders themselves, and the predecessors, successors
and assigns of all or any of them (collectively, the "Releasees") from any and
all manners of action, claims, causes of action, suits, proceedings, debts,
dues, sums of money, accounts, accountings, reckonings, demands, liabilities,
losses, damages, acts, omissions, misfeasances, malfeasances, promises, breaches
of contract, breaches of duty, breaches of relationship, and all other
controversies of every type, kind, nature, description or character (all of the
foregoing, collectively, the "Claims") whatsoever, whether known or unknown,
foreseen or unforeseen, liquidated or unliquidated, and whether based upon facts
now known or unknown, direct or derivative, in law, admiralty, equity or
bankruptcy, against the Releasees, or any of them, which the Borrower or the
Borrower's Affiliates and the predecessors, successors or assigns of any or all
of them, ever jointly or individually had, now have or hereafter can, shall or
may have for, upon, or by reason of any matter, cause or thing whatsoever from
the beginning of the world to (and with effect from) the dates on which the
respective Orders are entered, directly or indirectly arising from or relating
in any way to any and all transactions, relationships, or dealings relating in
any way, directly or indirectly, to the Existing Agreements, as well as any
agreements entered into, or notes, or other documents executed, in connection
with the Existing Agreements, or as an adjunct or supplement thereto, and any
prior agreements under which the Existing Lenders (or any of them or their
respective predecessors or successors) made loans or extended credit or any
services or accommodations of any type or kind whatsoever to or on behalf of the
Borrower; provided, that the Borrower reserves all of its rights and claims
against any party other than the Releasees.
SECTI0N 2.29. Assumption of Hedging Agreement. The Hedging Agreement
is hereby assumed by the Borrower in accordance with Section 365 of the
Bankruptcy Code.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to make Loans and to participate in
Letters of Credit hereunder and to induce the Fronting Banks to issue Letters of
Credit hereunder, the Borrower represents and warrants as follows:
SECTION 3.1. Organization and Authority. The Borrower (i) is a
corporation duly organized and validly existing under the laws of the State of
Iowa and is duly qualified as a foreign corporation and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on the financial condition, operations, business, properties or
assets of the Borrower; (ii) has the requisite corporate power and authority to
effect the transactions contemplated hereby and by the other Loan Documents to
which it is a party, and (iii) has all requisite corporate
38
power and authority and the legal right to own, pledge, mortgage and operate its
properties, and to conduct its business as now or currently proposed to be
conducted.
SECTION 3.2. Due Execution. The execution, delivery and performance
by the Borrower of each of the Loan Documents to which it is a party (i) are
within the Borrower's corporate powers, have been duly authorized by all
necessary corporate action, including the consent of shareholders where
required, and do not (A) contravene the charter or by-laws of the Borrower, (B)
violate any law (including, without limitation, the Securities Exchange Act of
1934) or regulation (including, without limitation, Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System), or any order or decree of
any court or governmental instrumentality, (C) violate or result in a breach of,
or constitute a default under, any material indenture, mortgage or deed of trust
entered into after the Filing Date or any material lease, agreement or other
instrument entered into after the Filing Date binding on the Borrower or any of
its properties, or (D) result in or require the creation or imposition of any
Lien upon any of the property of the Borrower other than the Liens granted
pursuant to this Agreement; and do not require the consent, authorization by or
approval of or notice to or filing or registration with any Governmental
Authority other than the entry of the Orders and the Cash Collateral Order. This
Agreement has been duly executed and delivered by the Borrower. This Agreement
is, and each of the other Loan Documents to which the Borrower is a party, when
delivered hereunder or thereunder, will be, a legal, valid and binding
obligation of the Borrower, enforceable against the Borrower, in accordance with
its terms.
SECTION 3.3. Statements Made. The information that has been delivered
in writing by the Borrower to the Agent, the Underwriters or to the Bankruptcy
Court in connection with any Loan Document, and any financial statement
delivered pursuant hereto or thereto (other than to the extent that any such
statements constitute projections), contains no untrue statement of a material
fact and does not omit to state a material fact necessary to make such
statements not misleading; and, to the extent that any such information
constitutes projections, such projections were prepared in good faith on the
basis of assumptions, methods, data, tests and information believed by the
Borrower to be reasonable at the time such projections were furnished.
SECTION 3.4. Financial Statements. The Borrower has furnished the
Lenders with copies of (i) the audited consolidated financial statements of the
Borrower and Lumberjack for the fiscal year ended November 30, 1996, accompanied
by an unqualified opinion of KPMG Peat Marwick LLP and (ii) the unaudited
consolidated financial statements of the Borrower and Lumberjack for the six
month period ended May 31, 1997. Such financial statements present fairly the
financial condition, the results of operations and cash flows of the Borrower
and Lumberjack on a consolidated basis as of such dates and for such periods;
such balance sheets and the notes thereto disclose all liabilities, direct or
contingent, of the Borrower and Lumberjack as of the dates thereof required to
be disclosed by GAAP, and such financial statements were prepared in a manner
consistent with GAAP, subject (in the case of such six month statements) to
normal year end adjustments. No material adverse change in the operations,
business, properties, assets, prospects
39
or condition (financial or otherwise) of the Borrower, taken as a whole, has
occurred from that set forth in the Business Plan other than (x) those which
customarily occur and as a result of events leading up to and following the
commencement of a proceeding under Chapter 11 of the Bankruptcy Code and (y) the
commencement of the Case (it being understood that any non-cash restructuring
and other non-cash charges to be reflected on the Borrower's 1997 consolidated
financial statements will not in themselves be deemed to constitute such a
material adverse change).
SECTION 3.5. Ownership. As of the date hereof, Lumberjack, which
is wholly-owned by the Borrower and is the only direct or indirect Subsidiary of
the Borrower, is inactive and has no significant assets.
SECTION 3.6. Liens. Except for Liens existing on the Filing Date as
reflected on Schedule 3.6, there are no Liens of any nature whatsoever on any
assets of the Borrower other than: (i) Liens granted pursuant to the Existing
Agreements; (ii) Permitted Liens; (iii) Liens permitted pursuant to Section
6.1(ii); and (iv) Liens in favor of the Agent, the Fronting Banks and the
Lenders. The Borrower is not a party to any contract, agreement, lease or
instrument the performance of which, either unconditionally or upon the
happening of an event, will result in or require the creation of a Lien on any
assets of the Borrower or otherwise result in a violation of this Agreement
other than the Liens granted to the Agent, the Fronting Banks and the Lenders as
provided for in this Agreement.
SECTION 3.7. Compliance with Law.
(a) (i) The operations of the Borrower comply in all material
respects with all Environmental Laws; (ii) to the Borrower's knowledge, none of
the operations of the Borrower is the subject of any Federal or state
investigation evaluating whether any remedial action involving a material
expenditure by the Borrower is needed to respond to a release of any Hazardous
Substance into the environment; and (iii) to the Borrower's knowledge, the
Borrower does not have any material contingent liability in connection with any
release of any Hazardous Substance into the environment.
(b) The Borrower is not, to the best of its knowledge, in
violation of any law, rule or regulation, or in default with respect to any
judgment, writ, injunction or decree of any Governmental Authority the violation
of which, or a default with respect to which, would have a material adverse
effect on the financial condition, operations, business, properties or assets of
the Borrower.
SECTION 3.8. Insurance. All policies of insurance of any kind or
nature owned by or issued to the Borrower, including, without limitation,
policies of life, fire, theft, product liability, public liability, property
damage, other casualty, employee fidelity, workers' compensation, employee
health and welfare, title, property and liability insurance, are in full force
and effect and
40
are of a nature and provide such coverage as is sufficient and as is customarily
carried by companies of the size and character of the Borrower.
SECTION 3.9. The Orders. On the date of the making of the initial
Loans or the issuance of the initial Letters of Credit hereunder, whichever
first occurs, the Interim Order will have been entered and will not have been
amended, modified, stayed, reversed, vacated or rescinded. On the date of the
making of any Loan or the issuance of any Letter of Credit, the Interim Order or
the Final Order, as the case may be, shall have been entered and shall not have
been amended, modified, stayed, reversed, vacated or rescinded. Upon the
maturity (whether by the acceleration or otherwise) of any of the Obligations of
the Borrower hereunder and under the other Loan Documents, the Lenders shall,
subject to the provisions of Section 7.1, be entitled to immediate payment of
such Obligations, and to enforce the remedies provided for hereunder, without
further application to or order by the Bankruptcy Court.
SECTION 3.10. Use of Proceeds. The proceeds of the Loans shall
be used (i) for general working capital of the Borrower and (ii) for other
general corporate purposes of the Borrower (including, among such general
corporate purposes, the making of Capital Expenditures, subject to the
limitations provided for in Section 6.4).
SECTION 3.11. Litigation. Except as set forth on Schedule 3.11, there
are no unstayed actions, suits or proceedings pending or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any of its
properties, before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which is reasonably
likely to be determined adversely to the Borrower and, if so determined
adversely to the Borrower, would have a material adverse effect on its financial
condition, business, properties, prospects, operations or assets.
SECTION 4. CONDITIONS OF LENDING
SECTION 4.1. Conditions Precedent to Initial Loans and Initial Letter
of Credit. The obligation of the Lenders to make the initial Loans or of the
relevant Fronting Bank to issue the initial Letter of Credit, whichever may
occur first, is subject to the following conditions precedent:
(a) Supporting Documents. The Agent shall have received:
(i) a copy of the Borrower's certificate of
incorporation, as amended, certified as of
a recent date by the Secretary of State of
Iowa;
(ii) a certificate of the Secretary of State of
Iowa, dated as of a recent date, as to the
good standing of the Borrower and as to the
charter documents on file in the office of
the Secretary of State; and
41
(iii) a certificate of the Secretary or an
Assistant Secretary of the Borrower dated
the date of the initial Loans or the
initial Letter of Credit hereunder,
whichever first occurs, and certifying
(A) that attached thereto is a true and
complete copy of the by-lawsof the Borrower
as in effect on the date of such
certification, (B) that attached thereto
is a true and complete copy of resolutions
adopted by the Board of Directors of
the Borrower authorizing the Borrowings and
the issuance of Letters of Credit
hereunder, the execution, delivery and
performance in accordance with their
respective terms of this Agreement,
the Notes, the other Loan Documents
and any other documents required
required or contemplated hereunder or
thereunder and the granting of the security
interest in the Letter of Credit Accounts
contemplated hereby, (C) that the
certificate of incorporation of the
Borrower has not been amended since the
date of the last amendment thereto
indicated on the certificate of the
Secretary of State furnished pursuant to
clause (i) above and (D) as to the
incumbency and specimen signature of each
officer of the Borrower executing this
Agreement, the Notes and the other Loan
Documents or any other document delivered
by it in connection herewith or therewith
(such certificate to contain a
certification by another officer of the
Borrower as to the incumbency and signature
of the officer signing the certificate
referred to in this clause (iii).
(b) Notes. On or before the date of the making of the
initial Loans or the issuance of the initial Letter of Credit
hereunder, whichever first occurs, the Agent shall have received Notes
executed on behalf of the Borrower, dated the Closing Date, payable to
the order of each of the Lenders, in substantially the form of Exhibit
A and in an amount equal to such Lender's Commitment.
(c) Interim Order. At the time of the making of the initial
Loans or at the time of the issuance of the initial Letter of Credit,
whichever first occurs, the Agent, the Fronting Banks and the Lenders
shall have received a certified copy of an order of the Bankruptcy
Court in substantially the form of Exhibit B (the "Interim Order")
approving the Loan Documents and granting the Superpriority Claim
status and priming and other Liens described in Section 2.22 which (i)
shall have been entered upon an application or motion of the Borrower
reasonably satisfactory in form and substance to the Agent, on such
prior notice to such parties (including the Existing Lenders) as may be
reasonably satisfactory to the Agent not later than fifteen (15) days
following the commencement of the Case, (ii) authorize extensions of
credit in amounts satisfactory to the Agent, (iii) provide for adequate
protection in favor of the Existing Lenders, as set forth in Section
4.1(d), (iv) approve the payment by the Borrower of all of the Fees set
forth in Section 2.18, (v) shall be in full force and effect, and (vi)
shall not have been amended, modified, stayed, reversed, vacated or
42
rescinded in any respect without the prior written consent of the Agent
and the Required Lenders and, if the Interim Order is the subject of a
pending appeal in any respect, neither the making of such Loans nor the
issuance of such Letter of Credit nor the performance by the Borrower
of any of its Obligations hereunder or under the Loan Documents or
under any other instrument or agreement referred to herein shall be the
subject of a presently effective stay pending appeal.
(d) Cash Collateral Order. At the time of the making of the
initial Loans or at the time of the issuance of the initial Letter of
Credit, whichever first occurs, the Agent and the Lenders shall have
received a certified copy of an order or orders of the Bankruptcy Court
in form and substance reasonably satisfactory to the Agent (the "Cash
Collateral Order") pursuant to Section 363(c)(2)(B) of the Bankruptcy
Code (which Cash Collateral Order may be embodied in the Interim Order
and the Final Order) authorizing the use by the Borrower of any cash
collateral in which any Existing Lender under any Existing Agreements
may have an interest and providing for (w) the payments of current
pre-petition and post-petition interest, letter of credit and other
fees and amounts owing to the Existing Credit Agreement Agent and the
other Existing Secured Parties, whether arising pre-petition or
post-petition (including, without limitation, cash management fees,
overdraft repayments and reasonable fees and disbursements of counsel
and other advisors), at the applicable non-default rate or rates
provided for pursuant to or in connection with the Existing Credit
Agreement and any other Existing Secured Obligations, (x) a priority
claim as contemplated by Section 507(b) of the Bankruptcy Code, (y) the
application of the Net Cash Proceeds of dispositions of Designated
Collateral to the permanent repayment of the loans and other extensions
of credit outstanding pursuant to the Existing Agreements in the order
set forth therein, and (z) a Lien on substantially all of the assets of
the Borrower having a priority junior to the priming and other Liens
granted in favor of the Agent and the Lenders hereunder and under the
other Loan Documents (including, without limitation, on all
After-Acquired Property ), which Cash Collateral Order shall be in full
force and effect and shall not have been amended, modified, stayed,
reversed, vacated or rescinded in any respect without the prior written
consent of the Agent and the Required Lenders.
(e) Security and Pledge Agreement. The Borrower shall have
duly executed and delivered to the Agent a Security and Pledge
Agreement in substantially the form of Exhibit C (the "Security and
Pledge Agreement").
(f) Plan of Reorganization. The Agent and the Underwriters
shall have received evidence satisfactory to them that the Borrower has
filed with the Bankruptcy Court (i) a plan of reorganization
satisfactory in form and substance to the Agent and the Underwriters
(the "Proposed Plan") and (ii) the Disclosure Statement satisfactory in
form and substance to the Agent and the Underwriters.
43
(g) First Day Orders. All of the "first day orders" entered by
the Bankruptcy Court at the time of the commencement of the Case shall
be reasonably satisfactory in form and substance to the Agent.
(h) Opinion of Counsel to the Borrower. The Agent and the
Lenders shall have received the favorable written opinion of counsel to
the Borrower reasonably acceptable to the Agent, dated the date of the
initial Loans or the issuance of the initial Letter of Credit,
whichever first occurs, substantially in the form of Exhibits D-1 and
D-2.
(i) Payment of Fees. The Borrower shall have paid to the
Agent, the Lenders and the Underwriters the then unpaid balance of all
accrued and unpaid Fees owed under and pursuant to this Agreement and
the letter referred to in Section 2.18.
(j) Corporate and Judicial Proceedings. All corporate and
judicial proceedings and all instruments and agreements in connection
with the transactions among the Borrower, the Agent and the Lenders
contemplated by this Agreement shall be reasonably satisfactory in form
and substance to the Agent, and the Agent shall have received all
information and copies of all documents and papers, including records of
corporate and judicial proceedings, which the Agent may have reasonably
requested in connection therewith, such documents and papers where
appropriate to be certified by proper corporate, governmental or
judicial authorities.
(k) Information. The Agent shall have received such
information (financial or otherwise) as may be reasonably requested by
the Agent or the Underwriters.
(l) Compliance with Laws. The Borrower shall have granted the
Agent access to and the right to inspect all reports, audits and other
internal information of the Borrower relating to environmental matters,
and any third party verification of certain matters relating to
compliance with Environmental Laws requested by the Agent, and the
Agent shall be reasonably satisfied that the Borrower is in compliance
in all material respects with all applicable Environmental Laws and be
satisfied with the costs of maintaining such compliance.
(m) Closing Documents. The Agent shall have received all
documents (including security documents granting the liens in favor of
the Agent contemplated hereby) required by this Agreement reasonably
satisfactory in form and substance to the Agent and, in the case of the
issuance of a Letter of Credit, the relevant Fronting Bank shall have
received all documents it requires in connection with its agreement to
issue Letters of Credit hereunder in form and substance reasonably
satisfactory to such Fronting Bank.
44
SECTION 4.2. Conditions Precedent to Each Loan and Each Letter of
Credit. The obligation of the Lenders to make each Loan and of the relevant
Fronting Bank to issue each Letter of Credit, including the initial Loan and the
initial Letter of Credit, is subject to the following conditions precedent:
(a) Notice. The Agent shall have received a notice with
respect to such borrowing or issuance, as the case may be, as required
by Section 2.
(b) Representations and Warranties. All representations and
warranties contained in this Agreement and the other Loan Documents or
otherwise made in writing in connection herewith or therewith shall be
true and correct in all material respects on and as of the date of each
Borrowing or the issuance of each Letter of Credit hereunder with the
same effect as if made on and as of such date except to the extent such
representations and warranties expressly relate to an earlier date.
(c) No Default. On the date of each Borrowing hereunder or the
issuance of each Letter of Credit, the Borrower shall be in compliance
with all of the terms and provisions set forth herein to be observed or
performed and no Event of Default or event which upon notice or lapse
of time or both would constitute an Event of Default shall have
occurred and be continuing.
(d) Orders. The Interim Order shall be in full force and
effect and shall not have been amended, modified, stayed, reversed,
vacated or rescinded in any respect without the prior written consent
of the Agent and the Required Lenders; provided, that at the time of
the making of any Loan or the issuance of any Letter of Credit the
aggregate amount of either of which, when added to the sum of the
principal amount of all Loans then outstanding and the Letter of Credit
Outstandings, would exceed the amount thereof which was authorized by
the Bankruptcy Court in the Interim Order (collectively, the
"Additional Credit"), the Agent and each of the Lenders shall have
received a certified copy of a final order of the Bankruptcy Court in
substantially the form of Exhibit B (the "Final Order"), which, in any
event, shall have been entered by the Bankruptcy Court no later than 30
days after the entry of the Interim Order, and at the time of the
extension of any Additional Credit the Final Order shall be in full
force and effect, and shall not have been amended, modified, stayed,
reversed, vacated or rescinded in any respect without the prior written
consent of the Agent and the Required Lenders; and if either the
Interim Order or the Final Order is the subject of a pending appeal in
any respect, neither the making of the Loans nor the issuance of any
Letter of Credit nor the performance by the Borrower of any of its
respective obligations under any of the Loan Documents shall be the
subject of a presently effective stay pending appeal.
45
(e) Cash Collateral Order. The Cash Collateral Order shall be
in full force and effect and shall not have been amended, modified,
stayed, reversed, vacated or rescinded in any respect without the prior
written consent of the Agent and the Required Lenders.
(f) Payment of Fees. The Borrower shall have paid to the Agent
and the Underwriters the then unpaid balance of all accrued and unpaid
Fees then payable under and pursuant to this Agreement and the letter
referred to in Section 2.18.
(g) Amendments to Proposed Plan and Disclosure Statement.
Any proposed amendment to the Proposed Plan or the Disclosure Statement
to be filed with the Bankruptcy Court shall be satisfactory in form
and substance to the Agent and the Underwriters.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrower that the conditions specified in this Section have been
satisfied or waived at that time.
SECTION 5. AFFIRMATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the relevant Letter of Credit Account,
or the face amount of the relevant back-to-back letters of credit delivered, in
each case pursuant to Section 2.2(c)), or any amount shall remain outstanding
under any Note or unpaid under this Agreement, the Borrower agrees that, unless
the Required Lenders shall otherwise consent in writing, it will:
SECTION 5.1. Financial Statements, Reports, etc. The Borrower shall
deliver to the Agent and each of the Fronting Banks and the Lenders (or, in the
case of the weekly report delivered pursuant to Section 5.1 (g), deliver to the
Agent for distribution to the Fronting Banks and the Lenders):
(a) as soon as available and in any event within 90 days after
the end of each fiscal year, the Borrower's consolidated balance sheet
as of the end of such fiscal year and related consolidated statements
of income and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous year, the
consolidated statement of the Borrower to be audited for the Borrower
by independent public accountants of recognized national standing
acceptable to the Required Lenders and accompanied by an opinion of
such accountants (which shall not be qualified in any material respect
other than with respect to the Case);
(b) as soon as available and in any event within 45 days after
the end of each of the first three fiscal quarters and within 90 days
after the end of the fourth fiscal quarter of each fiscal year, the
Borrower's consolidated balance sheet as of the end of such quarter and
46
related consolidated statements of income and cash flows for such
fiscal quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of
the Borrower's previous fiscal year, together with a comparison of such
results to the relevant portion of the Annual Budget, each certified by
a Financial Officer as fairly presenting the financial condition and
results of operations of the Borrower on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end
audit adjustments;
(c) concurrently with any delivery of financial statements
under (a) or (b) above, (i) a certificate of a Financial Officer,
certifying such statements (A) certifying that no Event of Default or
event which upon notice or lapse of time or both would constitute an
Event of Default has occurred, or, if such an Event of Default or event
has occurred, specifying the nature, the period of existence and extent
thereof and any corrective action taken or proposed to be taken with
respect thereto and (B) setting forth computations in reasonable detail
satisfactory to the Agent demonstrating whether the Borrower was in
compliance with the provisions of Sections 6.4, 6.5, 6.9 and 6.10 on
the date of such financial statements and (ii) a certificate of such
accountants accompanying the audited consolidated financial statements
delivered under (a) above certifying that, in the course of the regular
audit of the business of the Borrower, such accountants have obtained
no knowledge that an Event of Default has occurred and is continuing,
or if, in the opinion of such accountants, an Event of Default has
occurred and is continuing, specifying the nature thereof and all
relevant facts with respect thereto;
(d) within 15 Business Days of the end of each fiscal month
(or, in the case of the fiscal month ending on November 29, 1997, no
later than December 26, 1997), commencing with the fiscal month ending
on August 2, 1997, a consolidated balance sheet of the Borrower,
related statement of income and cash flows showing the financial
condition of the Borrower and the results of operations as of the close
of such fiscal month and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the
corresponding month and the corresponding portion of the Borrower's
previous fiscal year, together with a comparison of such results to the
relevant portion of the Annual Budget;
(e) as soon as practicable, and in any event within 45 days of
the Closing Date, a pro forma statement of the Borrower's financial
condition as of the Filing Date in form, scope and detail reasonably
satisfactory to the Agent and the Underwriters;
(f) within 45 days after the commencement of each fiscal year,
a forecast of the financial condition and results of operations of the
Borrower, by month, for the four fiscal quarters commencing with such
quarter (the "Annual Budget"), and not later than 45 days after the
commencement of each of the first three quarters of each fiscal year of
the Borrower, a narrative discussion by management of the Borrower of
the financial condition
47
and results of operations of the Borrower for the period covered by the
Annual Budget (or the balance of such fiscalyear, as the case may be),
and, in the case of the second and third fiscal quarters, a reforecast
by month for the balance of such fiscal year in all instances in form,
scope and detail satisfactory to the Agent and the Underwriters;
(g) on the third Business Day of each week, a flash report
reflecting sales and gross margins as of the last Business Day of the
preceding week in form, scope and detail reasonably satisfactory to the
Agent and the Underwriters;
(h) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by it with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of or all the functions of
said commission, or with any national securities exchange, as the case
may be;
(i) as soon as available and in any event (A) within 30 days
after the Borrower or any of its ERISA Affiliates knows or has reason
to know that any Termination Event described in clause (i) of the
definition of Termination Event with respect to any Single Employer
Plan of the Borrower or such ERISA Affiliate has occurred and (B)
within 10 days after the Borrower or any of its ERISA Affiliates knows
or has reason to know that any other Termination Event with respect to
any such Plan has occurred, a statement of a Financial Officer of the
Borrower describing such Termination Event and the action, if any,
which the Borrower or such ERISA Affiliate proposes to take with
respect thereto;
(j) promptly and in any event within 10 days after receipt
thereof by the Borrower or any of its ERISA Affiliates from the PBGC
copies of each notice received by the Borrower or any such ERISA
Affiliate of the PBGC's intention to terminate any Single Employer Plan
of the Borrower or such ERISA Affiliate or to have a trustee appointed
to administer any such Plan;
(k) promptly and in any event within 30 days after the filing
thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Single Employer Plan of the Borrower or any of its
ERISA Affiliates;
(l) within 10 days after notice is given or required to be
given to the PBGC under Section 302(f)(4)(A) of ERISA of the failure of
the Borrower or any of its ERISA Affiliates to make timely payments to
a Plan, a copy of any such notice filed and a statement of a Financial
Officer of the Borrower setting forth (A) sufficient information
necessary to determine the amount of the lien under Section 302(f)(3),
(B) the reason for the failure to make the required payments and (C)
the action, if any, which the Borrower or any of its ERISA Affiliates
proposed to take with respect thereto;
48
(m) promptly and in any event within 10 days after receipt
thereof by the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor, a copy of each notice received by the Borrower or any
ERISA Affiliate concerning (A) the imposition of Withdrawal Liability
by a Multiemployer Plan, (B) the determination that a Multiemployer
Plan is, or is expected to be, in reorganization within the meaning of
Title IV of ERISA, (C) the termination of a Multiemployer Plan within
the meaning of Title IV of ERISA, or (D) the amount of liability
incurred, or which may be incurred, by the Borrower or any ERISA
Affiliate in connection with any event described in clause (A), (B) or
(C) above;
(n) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
the Borrower, or compliance with the terms of any material loan or
financing agreements as the Agent, any Fronting Bank or any Lender may
reasonably request; and
(o) furnish to the Agent and its counsel and the Underwriters
promptly after the same is available, copies of all pleadings, motions,
applications, judicial information, financial information and other
documents filed by or on behalf of the Borrower with the Bankruptcy
Court in the Case, or distributed by or on behalf of the Borrower to
any official committee appointed in the Case.
SECTION 5.2. Corporate Existence. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its corporate
existence, material rights, licenses, permits and franchises and comply in all
material respects with all laws and regulations applicable to it.
SECTION 5.3. Insurance. (a) Keep its material properties insured
at all times with financially sound and reputable insurance companies, against
such risks as is customary with companies of the same or similar size in the
same or similar businesses; provided, that such insurance shall (i) insure the
property of the Borrower (other than motor vehicles) against all risk of
physical damage including, without limitation, loss by fire, explosion, theft
and such other casualties as may be reasonably satisfactory to the Agent, but in
no event in an amount less than the replacement cost value thereof, and (ii)
insure the Borrower, the Agent and the Lenders against comprehensive general and
automobile liability in an amount not less than $1,000,000 per occurrence under
primary insurance policies, with not less than $45,000,000 per occurrence
coverage under umbrella insurance policies for personal injury, bodily injury
and property damage relating to the Borrower's property and operations, such
policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the Agent. All such insurance shall, within twenty
days after the Closing Date (i) contain a breach of warranty clause in favor of
the Agent and the Lenders in all physical damage insurance policies and have a
severability of interest clause in all liability insurance policies, (ii)
provide that no cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after written notice
to the
49
Agent thereof, (iii) name the Agent as loss payee for physical damage insurance
with respect to property as to which a Lien has been granted, with the right to
adjust the same (provided, that with respect to property to which a Lien
permitted hereunder has been granted to another creditor, such other creditor
may also be named as loss payee, with payment to be made as their interests may
appear) and name the Agent and the Lenders as additional insureds for liability
insurance, with the Agent having the right to adjust the same, (iv) state that
neither the Agent nor the Lenders shall be responsible for premiums,
commissions, club calls, assessments or advances, (v) contain a waiver of all
rights of set-off, counterclaim, deduction or subrogation against the Agent and
the Lenders and (vi) be reasonably satisfactory in all other respects (including
deductibles) to the Agent with respect to physical damage exposures.
(b) The Borrower will furnish to the Agent, on or prior to the date
which is twenty days after the Closing Date, a schedule, a copy of which is
annexed as Schedule 5.3, describing all insurance maintained by the Borrower,
which schedule shall set forth, for each insurance policy, the policy number,
the scope of coverage, the policy limits and deductibles, the insurer (and
reinsurers, if applicable) and the expiration date.
(c) The Borrower will furnish to the Agent, original certificates of
insurance complying with the requirements of this Section set forth above and
containing signatures of duly authorized representatives of the insurer, on or
prior to the date which is twenty days after the Closing Date and at all times
prior to policy termination, cessation or cancellation.
(d) The Borrower shall maintain such other insurance or self insurance
as may be required by law.
SECTION 5.4. Obligations and Taxes. Pay all its material obligations
arising after the Filing Date promptly and in accordance with their terms and
pay and discharge promptly all material taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in respect of
its property arising after the Filing Date, before the same shall become in
default, as well as all material lawful claims for labor, materials and supplies
or otherwise arising after the Filing Date which, if unpaid, might become a Lien
or charge upon such properties or any part thereof; provided, that the Borrower
shall not be required to pay and discharge or to cause to be paid and discharged
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings (if
the Borrower shall have set aside on its books adequate reserves therefor).
SECTION 5.5. Notice of Event of Default, etc. Promptly give to the
Agent notice in writing of any Event of Default or the occurrence of any event
or circumstance which with the passage of time or giving of notice or both would
constitute an Event of Default.
SECTION 5.6. Access to Books and Records. Maintain or cause to be
maintained at all times true and complete books and records of the financial
operations of the Borrower; and provide
50
the Agent and its representatives access to all such books and records during
regular business hours, in order that the Agent may examine and make abstracts
from such books, accounts, records and other papers for the purpose of verifying
the accuracy of the various reports delivered by the Borrower to the Agent, the
Fronting Banks or the Lenders pursuant to this Agreement or for otherwise
ascertaining compliance with this Agreement; and at any reasonable time and from
time to time during regular business hours, upon reasonable notice, permit the
Agent and any agents or representatives (including, without limitation,
appraisers) thereof to visit the properties of the Borrower and to conduct
examinations of and to monitor the Collateral held by the Agent and the Fronting
Banks.
SECTION 5.7. Business Plan. As soon as practicable, furnish to the
Lenders and the Fronting Banks all material modifications to the Business Plan,
and make its senior officers available to discuss the same with the Agent and
its advisors upon the Agent's reasonable request.
SECTION 5.8. Maintenance of Concentration and Other Accounts. Continue
to maintain (a) all of its significant operating accounts and demand deposit
accounts used for paying and receiving purposes in the ordinary course of
business and (b) its concentration accounts with the financial institutions
where such accounts are presently located (or at such other financial
institutions acceptable to the Agent).
SECTION 5.9. Customer Charge Sales. Continue to maintain a
"Project Card" and commercial credit receivables sales and administration
program with the Credit Card Banks pursuant to the GE Credit Program Documents
or a similar program (it being understood that a program shall not be deemed to
be dissimilar solely by virtue of the fact that the Borrower shall act as the
administrator or "servicer" of the receivables thereunder) with another Person,
in each case on terms and conditions which are, in the aggregate, not materially
less favorable to the Borrower nor materially more restrictive than those
provided for in the GE Credit Program Documents as in effect on the Closing Date
(except for changes in such terms and conditions which are acceptable to the
Agent and the Required Lenders in their judgment reasonably exercised).
SECTION 5.10 Lender Meetings. From time to time as requested by the
Agent or the Required Lenders, participate, and cause the chief financial
officer to be available for and to participate in, a meeting of the Agent and
the Lenders to be held, at reasonable intervals, at locations and at times
requested by the Agent and the Required Lenders and reasonably satisfactory to
the Borrower.
SECTION 5.11. After-Acquired Properties. If the Borrower acquires any
interest in any real property including without limitation a leasehold interest
(each such property or interest, an "After-Acquired Property"), promptly, but in
any event within 30 days, provide written notice thereof to the Agent, setting
forth with specificity a description of such property or interest acquired, the
location of the interest, any structures or improvements thereon and an
appraisal or its good faith
51
estimate of the current fair market value of such property or interest. The
Agent shall provide notice to the Borrower of whether it intends to direct the
Borrower (and, if requested by the Majority Lenders, the Agent shall direct the
Borrower) to grant and record a mortgage or deed of trust on such After-Acquired
Property. In such event, the Borrower shall promptly execute and deliver to the
Agent a mortgage or deed of trust substantially in the form of Exhibits G-1 and
G-2 to the Existing Credit Agreement, respectively (with such changes as may be
deemed appropriate by the Agent's local real estate counsel for the state in
question), together with such other documents or instruments as the Agent shall
reasonably require, including (without limitation) a Title Policy, a Survey, a
Phase I environmental report and an opinion of the Agent's local real estate
counsel. The Borrower shall pay all reasonable fees and expenses, including
attorneys' fees and expenses or the allocated charges and premiums, in
connection with its obligation under this Section. If at any time after the date
hereof, any existing Lien or sale-leaseback arrangement which prevents the
further mortgaging of any real property of the Borrower, shall for any reason no
longer prevent such further mortgaging, then such property shall also be deemed
an After-Acquired Property for purposes of this Section.
SECTION 6. NEGATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of the amount of cash then held in the relevant Letter of Credit Account,
or the face amount of the relevant back-to-back letters of credit delivered, in
each case pursuant to Section 2.2(c)) or any amount shall remain outstanding
under any Note or unpaid under this Agreement, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not (and will not apply to the
Bankruptcy Court for authority to):
SECTION 6.1. Liens. Incur, create, assume or suffer to exist any
Lien on any asset now owned or hereafter acquired by the Borrower, other than
(i) Liens which were existing on the Filing Date as reflected on Schedule 3.6
hereto and other Liens incurred in accordance with the Existing Credit Agreement
which are to be set forth on Schedule 3.6 within 20 days, Liens of the same type
as (and no more extensive than) those granted pursuant to the GE Credit Program
Documents in favor of another Person replacing the Credit Card Banks in
providing the Borrower's "Project Card" and commercial credit receivables sales
and administration program in accordance with Section 5.9 and Liens granted
pursuant to the Existing Agreements; (ii) Liens in favor of the Existing Lenders
granted as adequate protection pursuant to the Orders or the Cash Collateral
Order, which Liens are junior to the Liens contemplated hereby in favor of the
Agent and the Lenders; provided, that the Interim Order and the Final Order
provide that the holder of such junior Liens shall not be permitted to take any
action to foreclose with respect to, or otherwise realize upon, such junior
Liens so long as any amounts shall remain outstanding hereunder or under the
Notes or any Commitment shall be in effect; (iii) Permitted Liens; and (iv)
Liens in favor of the Agent and the Lenders and the Fronting Banks.
SECTION 6.2. Merger, etc. Consolidate or merge with or into another
Person.
52
SECTION 6.3. Capital Expenditures. Contract, create, incur, assume
or suffer to exist any Debt, except for (i) Debt under this Agreement, (ii) Debt
incurred prior to the Filing Date (including Debt outstanding under Capitalized
Leases as in effect on the Filing Date), (iii) Debt incurred subsequent to the
Filing Date- secured by purchase money Liens (exclusive of Debt outstanding
under Capitalized Leases) in an aggregate amount not to exceed $5,000,000, (iv)
Debt outstanding under Capitalized Leases entered into after the Filing Date to
the extent permitted by Section 6.4, (v) Debt arising from Investments that are
permitted hereunder, and (vi) Debt incurred under the GE Credit Program
Documents and any other agreements permitted under Section 5.9.
SECTION 6.4 Capital Expenditures. Directly or indirectly, make an
expenditures or incur any obligations for fixed or capital assets (including,
but not limited to (x) payments on account of any mortgages, Liens or security
interests permitted pursuant to Section 6.1 (iii), but only to the extent
covered by clause (v) of the definition of Permitted Liens and (y) goodwill
associated with any permitted capital expenditure that would otherwise
constitute an Investment, and the Borrower will not incur any obligations in
respect of capital leases, in excess in the aggregate for the Borrower and its
Subsidiary for all such expenditures and obligations, during the fiscal year
ending November 1997 of $69,000,000 or of the following amounts during each of
the fiscal quarters set forth below:
Fiscal Quarter Ending Total Amount
--------------------- -------------
February 1998 $21,000,000
May 1998 $17,000,000
provided, that if the aggregate amount of all Dual Path Capital Expenditures or
all other capital expenditures during any fiscal period of the Borrower set
forth above (after the application of all Dual Path Capital Expenditures or
other capital expenditures, respectively, during such fiscal period, first to
amounts available for such purposes for such fiscal period pursuant to the
operation of this proviso) shall be less than the respective amounts set forth
in the table below for such fiscal period, then the amount of the capital
expenditures for the immediately succeeding fiscal period shall be increased by
an amount equal to the unutilized portion of Dual Path Capital Expenditures for
such prior fiscal period and, in the case of all other capital expenditures, by
an amount equal to the lesser of (x) an amount equal to such unutilized portion
and (y) 50% of the amount of capital expenditures for such prior fiscal period.
53
Dual Path
Capital
Period Expenditures Other
--------------------- ------------ -----------
Fiscal Year ending
November 1997 $36,800,000 $32,200,000
Fiscal Quarter ending
February 1998 $15,800,000 $ 5,200,000
Fiscal Quarter ending
May 1998 $ 9,700,000 $ 7,300,000
In the event that the Borrower shall sell (or has sold), or shall
receive (or has received) insurance proceeds in connection with the destruction
of, a fixed or capital asset owned by it and shall, within six months after the
sale or 24 months after the destruction of such fixed or capital asset, purchase
or enter into a capital lease with respect to a substantially similar fixed or
capital asset as a replacement for such sold or destroyed fixed or capital
asset, then for purposes of determining compliance with this Section, only that
portion of the purchase price or Capitalized Lease obligation paid, incurred or
accrued by the Borrower for such replacement fixed or capital asset in excess of
the sale price or insurance proceeds, as the case may be, of the sold or
destroyed similar fixed or capital asset shall be used in determining such
compliance with this Section.
Notwithstanding anything to the contrary contained in this Section,
there shall be excluded from the determination of the amount of capital
expenditures made in any fiscal period, capital expenditures made during any
such fiscal period to the extent of an amount equal to the net cash proceeds
received during such fiscal period from any Permitted Pad Sales of real property
acquired by the Borrower. For purposes of this Section, (i) all obligations
incurred under a Capitalized Lease shall be deemed(a) to have been incurred on
the date of execution of such lease and (ii) the amount of obligations incurred
with respect to a Capitalized Lease on such date of execution of the lease shall
be the capitalized amount thereof determined in accordance with GAAP.
SECTION 6.5. EBITDA. Permit cumulative EBITDA for each period
commencing on June 1, 1997 and ending on the quarterly dates listed below to be
less than the amount specified opposite such period:
54
Fiscal Quarter Ending EBITDA
--------------------- -----------
August 1997 $15,700,000
November 1997 $25,300,000
February 1998 $27,900,000
May 1998 $47,400,000
SECTION 6.6. Chapter 11 Claims. Incur, create, assume, suffer to
exist or permit any other Super-Priority Claim which is pari passu with or
senior to the claims of the Agent and the Lenders and the Fronting Banks
hereunder, except for the Carve-Out.
SECTION 6.7. Dividends; Capital Stock. Declare or pay, directly or
indirectly, any dividends or make any other distribution or payment, whether in
cash, property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of capital stock (or any options,
warrants, rights or other equity securities or agreements relating to any
capital stock), or set apart any sum for the aforesaid purposes.
SECTION 6.8. Transactions with Affiliates. Sell or transfer any
property or assets to, or otherwise engage in any other transactions with, any
of its Affiliates other than in the ordinary course of business at prices and on
terms and conditions not less favorable to the Borrower than could be obtained
on an arm's-length basis from unrelated third parties.
SECTION 6.9. Investments, Loans and Advances. Purchase, hold or
acquire any capital stock, evidences of Debt or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment in, any other Person by the Borrower or Lumberjack (all of the
foregoing, "Investments"), except, in the case of the Borrower, for (i) the
ownership by the Borrower of Lumberjack as in effect on the Filing Date, (ii)
Temporary Cash Investments, and (iii) existing Investments set forth on Schedule
6.9.
SECTION 6.10. Disposition of Assets. Sell or otherwise dispose of
any assets (including, without limitation, the capital stock of Lumberjack),
except for (i) sales of inventory, fixtures and equipment in the ordinary course
of business for fair value and sales of customer receivables pursuant to the GE
Credit Program Documents or any similar program entered into in accordance with
Section 5.9, (ii) sales of closed stores, sales of inventory located at such
closed stores and sales or other dispositions of assets related thereto,
including (without limitation) sales listed on Schedule 6.10 and Permitted Pad
Sales, in each case to the extent such sales or dispositions are for fair value
for cash and the Net Cash Proceeds thereof are applied to the repayment of the
Debt secured thereby, and (iii) sales or other dispositions of assets having a
fair market value not exceeding $2,000,000 in the aggregate.
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SECTION 6.11. Nature of Business. Modify or alter in any material
manner the nature and type of its business as conducted at or prior to the
Filing Date or the manner in which such business is conducted (except as
required by the Bankruptcy Code).
SECTION 6.12. Accounting Changes. Make any significant change in its
accounting treatment or financial reporting practices except as required by GAAP
or change its fiscal year or the method of determining its fiscal quarter ends.
SECTION 6.13. Sale/Lease-Backs. Enter into any arrangements, directly
or indirectly, with any Person, whereby the Borrower shall sell or transfer any
property, whether now owned or hereafter acquired, used or useful in its
business, in connection with the rental or lease of the property so sold or
transferred.
SECTION 6.14. Environmental Matters. (a) Use, generate, manufacture,
produce, store, release, discharge or dispose of on, under or about any real
property owned or leased (other than any such leased property which constitutes
a minor part of a larger piece of property over which the Borrower has any
control (such as a lease of a small number of parking places in a large parking
lot)) by the Borrower (all such owned or leased real property, being hereinafter
called the "Property"), or transport to or from the Property, any Hazardous
Substance, or (to the extent within the Borrower's control) permit any other
Person to do so, where such could reasonably be expected to have a material
adverse effect on the business, operations, condition (financial or otherwise),
assets or prospects of the Borrower.
(b) The Borrower shall keep and maintain the Property in
compliance with any Environmental Law (as defined below) where the failure to do
so could reasonably be expected to have a materially adverse effect on the
business, operations, condition (financial or otherwise), assets or prospects of
the Borrower.
(c) In the event that any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind or
nature (the "Remedial Work") with respect to any portion of the Property is
required to be performed by the Borrower under any applicable local, state or
federal law or regulation, any judicial order, or by any Governmental Authority
or any other Person because of, or in connection with, any current or future
presence, suspected presence, release or suspected release of a Hazardous
Substance in or into the air, soil, groundwater or surface water at, on, under
or within the Property (or any portion thereof) which could reasonably be
expected to have a materially adverse effect on the business, operations,
condition (financial or otherwise), assets or prospects of the Borrower, the
Borrower (i) shall promptly notify the Agent in writing, (ii) shall, as soon as
practicable, commence and thereafter diligently prosecute to completion, all
such Remedial Work and (iii) shall provide the Agent with the results of such
investigations, studies and samplings as may be requested by the Agent.
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(d) The Borrower will defend, indemnify and hold harmless the
Agent, and the Lenders, and their respective employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under any Environmental Law
applicable to the operations of the Borrower or the Property, or any orders,
requirements or demands of Governmental Authorities or any other Person related
thereto, including, without limitation, attorneys' and consultants' fees,
investigation and laboratory fees, response costs, court costs and litigation
expenses, except to the extent that any of the foregoing arise solely out of the
gross negligence or willful misconduct of the party seeking indemnification
therefor, as determined by a final order or judgment of a court of competent
jurisdiction. This indemnity shall continue in full force and effect regardless
of the termination of this Agreement and the payment and performance of the
Obligations.
(e) As used herein, (i) "Environmental Law" means any federal,
state or local law, statute, ordinance, or regulation now or hereafter in effect
pertaining to health, safety, industrial hygiene, or environmental conditions,
including, without limitation, regulations promulgated under the Resource
Conservation and Recovery Act (42 U.S.C. ▇▇.▇▇. 6901 et seq.) and (ii) the term
"Hazardous Substance" means those substances included within the definitions of
"hazardous substances", "hazardous materials", "toxic substances" or "solid
waste" under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. ss.9601 et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. ss.6901 et seq. and the
Hazardous Materials Transportation Act, 49 U.S.C. ss.1801 et seq., the Toxic
Substance Control Act, 15 U.S.C. ss.2601 et seq., the Clean Water Act, 33 U.S.C.
ss.1251 et seq., and the Clean Air Act, 42 U.S.C. ss.7401 et seq. and in the
regulations promulgated pursuant to said laws, and such other substances,
materials and wastes which are or become regulated under applicable local, state
or federal law, or which are classified as hazardous or toxic under federal,
state, or local laws or regulations or any other substance which may give rise
to liability under any Environmental Laws.
(f) In the event the Agent determines that any representation
hereunder may be incorrect or that the Borrower has failed to comply with any
covenant under this Section in any material respect, the Borrower upon request
shall undertake such investigations, studies, samplings and testings relative to
Hazardous Substance at the property in question as the Agent may request.
SECTION 7. EVENTS OF DEFAULT
SECTION 7.1. Events of Default. In the case of the happening of any
of the following events and the continuance thereof beyond the applicable period
of grace if any (each, an "Event of Default"):
(a) any material representation or warranty made by the
Borrower in this Agreement or in any other Loan Document or in connection with
this Agreement or with the execution and delivery of the Notes or any of the
other Loan Documents or the credit extensions hereunder or
57
any material statement or representation made in any report, financial
statement, certificate or other document furnished by the Borrower to the Agent,
the Lenders or the Fronting Banks under or in connection with this Agreement or
any of the other Loan Documents, shall prove to have been false or misleading in
any material respect when made or delivered; or
(b) default shall be made in the payment of any principal of
or interest on the Loans or any other amounts payable by the Borrower hereunder
(including, without limitation, any Fees or reimbursement or cash
collateralization obligations in respect of Letters of Credit), when and as the
same shall become due and payable, whether at the due date thereof (including,
without limitation, the Prepayment Date) or at a date fixed for prepayment
thereof or by acceleration thereof or otherwise; or
(c) default shall be made by the Borrower in the due
observance or performance of any covenant, condition or agreement contained in
Section 6 (and such default shall continue unremedied (x) after notice to the
Borrower in the case of Section 6.10 and (y) for more than five (5) days after
notice to the Borrower in the case of Sections 5.11, 6.13 and 6.14); or
(d) default shall be made by the Borrower in the due
observance or performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms of this Agreement or any of the
other Loan Documents and such default shall continue unremedied for more than
ten (10) days (or such default shall continue unremedied for more than thirty
(30) days in the case of Sections 5.2 and 5.4) or
(e) the Case shall be dismissed or converted to a case under
Chapter 7 of the Bankruptcy Code, a trustee under Chapter 7 or Chapter 11 of the
Bankruptcy Code shall be appointed in the Case and the order appointing such
trustee shall not be reversed or vacated within 30 days after the entry thereof;
or an application shall be filed by the Borrower for the approval of any other
Super-Priority Claim (other than the Carve-Out) in the Case which is pari passu
with or senior to the claims of the Agent, the Fronting Banks and the Lenders
against the Borrower hereunder, or there shall arise or be granted any such pari
passu or senior Super-Priority Claim; or
(f) the Bankruptcy Court shall enter an order or orders
granting relief from the automatic stay applicable under Section 362 of the
Bankruptcy Code to the holder or holders of any security interest to permit
foreclosure (or the granting of a deed in lieu of foreclosure or the like) on
any assets of the Borrower which have a value in excess of $500,000 in the
aggregate; or
(g) a Change of Control shall have occurred; or
(h) any material provision of any Loan Document shall, for any
reason, cease to be valid and binding on the Borrower, or the Borrower shall so
assert in any pleading filed in any court; or
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(i) an order of the Bankruptcy Court shall be entered in the
Case appointing an examiner with enlarged powers relating to the operation of
the business of the Borrower (i.e., powers beyond those set forth in Section
1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code and such order shall not be reversed or vacated within 30 days
after the entry thereof; or
(j) an order of the Bankruptcy Court shall be entered (i)
reversing, amending, supplementing, staying for a period in excess of 10 days,
vacating or otherwise modifying either of the Orders (without the prior written
consent of the Agent and the Required Lenders) or (ii) terminating the use of
cash collateral by the Borrower pursuant to the Cash Collateral Order; or
(k) any judgment or order as to a post-petition liability or
Debt for the payment of money in excess of $1,000,000 shall be rendered against
the Borrower and the enforcement thereof shall not be subject to the automatic
stay or any other applicable stay; or
(l) any non-monetary judgment or order with respect to a
post-petition event shall be rendered against the Borrower which does or would
reasonably be expected to (i) cause a material adverse change in the financial
condition, business, prospects, operations or assets of the Borrower, (ii) have
a material adverse effect on the ability of the Borrower to perform its
obligations under any Loan Document, or (iii) have a material adverse effect on
the rights and remedies of the Agent, the Fronting Banks or any Lender under any
Loan Document, and there shall be any period of 10 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect; or
(m) the Borrower shall make any Pre-Petition Payments other
than as permitted under the Orders or the Cash Collateral Order to the extent
authorized by the Bankruptcy Court; or
(n) any Termination Event described in clauses (iii) or (iv)
of the definition of such term shall have occurred and shall continue unremedied
for more than 10 days and the sum (determined as of the date of occurrence of
such Termination Event) of the Insufficiency of the Plan in respect of which
such Termination Event shall have occurred and be continuing and the
Insufficiency of any and all other Plans with respect to which such a
Termination Event (described in such clauses (iii) or (iv)) shall have occurred
and then exist is equal to or greater than $3,000,000; or
(o) (i) the Borrower or any ERISA Affiliate thereof shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (ii) the Borrower or such ERISA
Affiliate does not have reasonable grounds to contest such Withdrawal Liability
and is not in fact contesting such Withdrawal Liability in a timely and
appropriate manner, and (iii) the amount of such Withdrawal Liability specified
in such notice, when
59
aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with Withdrawal Liabilities (determined as of
the date of such notification), exceeds $5,000,000 or requires payments
exceeding $500,000 per annum in excess of the annual payments made with respect
to such MultiEmployer Plans by the Borrower or such ERISA Affiliate for the plan
year immediately preceding the plan year in which such notification is received;
or
(p) the Borrower or any ERISA Affiliate thereof shall have
been notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of Title IV
of ERISA, if as a result of such reorganization or termination the aggregate
annual contributions of the Borrower and its ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such Multiemployer
Plans for the plan years that include the date hereof by an amount exceeding
$2,000,000; or
(q) the Borrower or any ERISA Affiliate shall have committed a
failure described in Section 302(f)(1) of ERISA (other than the failure to make
any contribution accrued and unpaid as of the Filing Date) and the amount
determined under Section 302(f)(3) of ERISA is equal to or greater than
$2,000,000; or
(r) it shall be determined (whether by the Bankruptcy Court or
by any other judicial or administrative forum) that the Borrower is liable for
the payment of claims arising out of any failure to comply (or to have complied)
with applicable environmental laws or regulations, the payment of which will
have a material adverse effect on the financial condition, business, properties,
operations or assets of the Borrower;
then, and in every such event and at any time thereafter during the continuance
of such event, and without further order of or application to the Bankruptcy
Court, the Agent may, and at the request of the Required Lenders shall, by
notice to the Borrower (with a copy to counsel for the Official Creditors'
Committee appointed in the Case and to the United States Trustee for the Western
District of Missouri), take one or more of the following actions, at the same or
different times (provided, that with respect to clause (iv) below and the
enforcement of Liens or other remedies with respect to the Collateral under
clause (v) below, the Agent shall provide the Borrower (with a copy to counsel
for the Official Creditors' Committee appointed in the Case and to the United
States Trustee for the Western District of Missouri) with five (5) Business
Days' written notice prior to taking the action contemplated thereby and
provided, further, that upon receipt of notice referred to in the immediately
preceding clause with respect to the accounts referred to in clause (iv) below,
the Borrower may continue to make ordinary course disbursements from such
accounts (other than the Letter of Credit Accounts) but may not withdraw or
disburse any other amounts from such accounts): (i) terminate forthwith the
Total Commitment; (ii) declare the Loans then outstanding to be forthwith due
and payable, whereupon the principal of the Loans, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan
60
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower, anything contained herein or in any other Loan Document
to the contrary notwithstanding; (iii) require the Borrower upon demand to
forthwith deposit in the respective Letter of Credit Accounts cash in the
respective amounts equal to the sum of 105% of the then outstanding Standby and
Documentary Letters of Credit and, to the extent the Borrower shall fail to
furnish such funds as demanded by the Agent, the Agent shall be authorized to
debit or cause to be debited the account of the Borrower maintained with the
Agent, any Fronting Bank or any Lender in such amount; (iv) set-off or request
to be set-off amounts in the Letter of Credit Accounts or any other accounts
maintained with the Agent, any Fronting Bank or any Lender and apply or cause
such amounts to be applied to the obligations of the Borrower hereunder and
under the other Loan Documents; and (v) exercise any and all remedies under the
Loan Documents and under applicable law available to the Agent, the Fronting
Banks and the Lenders. In the case of any exercise of the right of set-off with
respect to Letter of Credit Accounts, such right may be exercised only to pay
unreimbursed draws under, and unpaid fees, costs and expenses incurred in
connection with, any Letters of Credit issued by the Fronting Bank in the name
of which Fronting Bank such Letter of Credit Account is maintained, except to
the extent that the balance of a Letter of Credit Account exceeds 105% of the
Letter of Credit Outstanding that pertain to such Letter of Credit Account. Any
such excess amount may be applied to other Obligations.
SECTION 8. THE AGENT
SECTION 8.1. Administration by Agent. The general administration
of the Loan Documents shall be by the Agent. Each Lender hereby irrevocably
authorizes the Agent, at its discretion, to take or refrain from taking such
actions as agent on its behalf and to exercise or refrain from exercising such
powers under this Agreement, the Notes and the other Loan Documents as are
delegated by the terms hereof or thereof, as appropriate, together with all
powers reasonably incidental thereto (including the release of Collateral in
connection with any transaction that is expressly permitted by the Loan
Documents). The Agent shall have no duties or responsibilities except as set
forth in this Agreement and the remaining Loan Documents.
SECTION 8.2. Advances and Payments.
(a) On the date of each Loan, the Agent shall be authorized
(but not obligated, except pursuant to Section 2.2(g)) to advance, for the
account of each of the Lenders, the amount of the Loan to be made by it in
accordance with its Commitment hereunder. Should the Agent do so, each of the
Lenders agrees forthwith to reimburse the Agent in immediately available funds
for the amount so advanced on its behalf by the Agent, together with interest at
the Federal Funds Rate if not so reimbursed on the date due from and including
such date but not including the date of reimbursement.
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(b) Any amounts received by the Agent in connection with this
Agreement or the Notes (other than amounts to which the Agent is entitled
pursuant to Sections 2.18, 8.6, 9.5 and 9.6), the application of which is not
otherwise provided for in this Agreement shall be applied, first, in accordance
with each Lender's Commitment Percentage to pay accrued but unpaid Commitment
Fees or Letter of Credit Fees, and second, in accordance with each Lender's
Commitment Percentage to pay accrued but unpaid interest on, and the principal
balance outstanding of, each Note and all unreimbursed Letter of Credit
drawings. All amounts to be paid to a Lender by the Agent shall be credited to
that Lender, after collection by the Agent, in immediately available funds
either by wire transfer or deposit in that Lender's correspondent account with
the Agent, as such Lender and the Agent shall from time to time agree.
SECTION 8.3. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower, including, but not limited to, a secured claim under Section 506
of the Bankruptcy Code or other security or interest arising from, or in lieu
of, such secured claim and received by such Lender under any applicable
bankruptcy, insolvency or other similar law, or otherwise, obtain payment in
respect of its Obligations as a result of which the unpaid portion of the
principal amount of its Obligations is proportionately less than the unpaid
portion of the principal amount of the Obligations of any other Lender: (a) it
shall promptly purchase, at par (and shall be deemed to have thereupon
purchased), from such other Lender, a participation in the Obligations of such
other Lender, so that the aggregate unpaid principal amount of each Lender's
Obligations and its participation in Obligations of the other Lenders shall be
in the same proportion to the aggregate unpaid principal amount of all
Obligations then outstanding as the principal amount of its Obligations prior to
the obtaining of such payment was to the principal amount of all Obligations
outstanding prior to the obtaining of such payment and (b) such other
adjustments shall be made from time to time as shall be equitable to ensure that
the Lenders share such payment pro rata; provided, that if any such non-pro rata
payment is thereafter recovered or otherwise set aside such purchase of
participations shall be rescinded (without interest) and provided further that
all references to "Obligations" in this Section shall mean all Obligations other
than pursuant to Sections 2.14, 2.18, 8.6, 9.5 and 9.6 and any incremental
Obligations arising pursuant to Section 2.15. The Borrower expressly consents to
the foregoing arrangements and agrees that any Lender holding (or deemed to be
holding) a participation in the unpaid principal amount of an Obligation may
exercise any and all rights of banker's lien, setoff (subject, in each case, to
the same notice requirements as pertain to clause (iv) of the remedial
provisions of Section 7.1) or counterclaim with respect to any and all moneys
owing by the Borrower to such Lender, as fully as if such Lender held a Note and
was the original obligee thereon, in the amount of such participation.
SECTION 8.4. Agreement of Required Lenders. Upon any occasion
requiring or permitting an approval, consent, waiver, election or other action
on the part of the Required Lenders, action shall be taken by the Agent for and
on behalf or for the benefit of all Lenders upon the direction of the Required
Lenders, and any such action shall be binding on all Lenders.
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SECTION 8.5. Liability of Agent.
(a) The Agent, when acting on behalf of the Lenders, may
execute any of its respective duties under this Agreement by or through any of
its respective officers, agents, and employees, and neither the Agent nor its
directors, officers, agents, employees or Affiliates shall be liable to the
Lenders or any of them for any action taken or omitted to be taken in good
faith, or be responsible to the Lenders or to any of them for the consequences
of any oversight or error of judgment, or for any loss, unless the same shall
happen through its gross negligence or willful misconduct. The Agent and its
respective directors, officers, agents, employees and Affiliates shall in no
event be liable to the Lenders or to any of them for any action taken or omitted
to be taken by them pursuant to instructions received by them from the Required
Lenders or in reliance upon the advice of counsel selected by it. Without
limiting the foregoing, neither the Agent, nor any of its respective directors,
officers, employees, agents or Affiliates shall be responsible to any Lender for
the due execution, validity, genuineness, effectiveness, sufficiency, or
enforceability of, or for any statement, warranty, or representation in, this
Agreement, any other Loan Document or any related agreement, document or order,
or shall be required to ascertain or to make any inquiry concerning the
performance or observance by the Borrower of any of the terms, conditions,
covenants, or agreements of this Agreement or any of the Loan Documents.
(b) Neither the Agent nor any of its respective directors,
officers, employees, agents or Affiliates shall have any responsibility to the
Borrower on account of the failure or delay in performance or breach by any
Lender or by the Borrower of any of its Obligations under this Agreement or the
Notes or any of the other Loan Documents or in connection herewith or therewith.
(c) The Agent, in its capacity as Agent hereunder, shall be
entitled to rely on any communication, instrument, or document reasonably
believed by the Agent to be genuine or correct and to have been signed or sent
by a person or persons believed by the Agent to be the proper person or persons,
and the Agent shall be entitled to rely on advice of legal counsel, independent
public accountants, and other professional advisers and experts selected by the
Agent.
SECTION 8.6. Reimbursement and Indemnification. Each Lender agrees
(i) to reimburse (x) the Agent and the Fronting Banks for such Lender's
Commitment Percentage of any expenses and fees incurred by the Agent or the
Fronting Banks (as the case may be) for the benefit of the Lenders under or in
connection with this Agreement, the Notes and any of the Loan Documents
including, without limitation, counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Lenders, and any other
expense incurred in connection with the operations or enforcement hereof or
thereof not reimbursed by the Borrower and (y) the Agent and the Fronting Banks
for such Lender's Commitment Percentage of any expenses of the Agent or the
Fronting Banks (as the case may be) incurred for the benefit of the Lenders that
the Borrower has agreed to reimburse pursuant to Section 9.5 and has failed so
to reimburse and (ii) to indemnify and hold harmless the Agent and the Fronting
Banks and any of their respective directors, officers,
63
employees, agents or Affiliates, on demand, in the amount of its Commitment
Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against any of them in any way relating to or arising out of this
Agreement, the Notes or any of the other Loan Documents or any action taken or
omitted by it or any of them under this Agreement, the Notes or any of the other
Loan Documents to the extent not reimbursed by the Borrower (except such as
shall result from their respective gross negligence or willful misconduct).
SECTION 8.7. Rights of Agent. It is understood and agreed that CIBC
shall have the same rights and powers hereunder (including the right to give
such instructions) as the other Lenders and may exercise such rights and powers,
as well as its rights and powers under other agreements and instruments to which
it is or may be party, and engage in other transactions with the Borrower, as
though it were not the Agent of the Lenders under this Agreement.
SECTION 8.8. Independent Lenders. Each Lender acknowledges that it
has decided to enter into this Agreement and to make the Loans hereunder based
on its own analysis of the transactions contemplated hereby and of the
creditworthiness of the Borrower and agrees that the Agent shall bear no
responsibility therefor.
SECTION 8.9. Notice of Transfer. The Agent may deem and treat a Lender
party to this Agreement as the owner of such Lender's portion of the Loans for
all purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Lender in accordance with Section 9.3 shall have been
received by the Agent.
SECTION 8.10. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent, which shall be reasonably satisfactory to the Borrower. If no successor
Agent shall have been so appointed by the Required Lenders and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation, the retiring Agent may, on behalf of the Lenders, appoint
a successor Agent, which shall be a commercial bank organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of a least $100,000,000, which shall be reasonably
satisfactory to the Borrower. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement, except that CIBC shall remain obligated to
First Bank in its capacity as Documentary Letter of Credit Bank with respect to
Documentary Letters of Credit issued during the period that CIBC was the Agent.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 8 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
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SECTION 9. MISCELLANEOUS
SECTION 9.1. Notices. Notices and other communications provided for
herein shall be in writing (including telegraphic, telex, facsimile or cable
communication) and shall be mailed, telegraphed, telexed, transmitted, cabled or
delivered to the Borrower at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer, to First Bank, so
long as it shall be the Documentary Letter of Credit Bank, at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Fax No.
▇▇▇-▇▇▇-▇▇▇▇) and ▇▇▇▇▇▇▇ ▇▇▇▇▇, Letter of Credit Department (Fax No.
▇▇▇-▇▇▇-▇▇▇▇), and to any Lender, any other Fronting Bank or the Agent, at its
address set forth on the signature pages of this Agreement, or such other
address as such party may from time to time designate by giving written notice
to the other parties hereunder. All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the fifth Business Day after the date when sent by
registered or certified mail, postage prepaid, return receipt requested, if by
mail; or when delivered to the telegraph company, charges prepaid, if by
telegram; or when receipt is acknowledged, if by any telegraphic communications
or facsimile equipment of the sender; in each case addressed to such party as
provided in this Section 9.1 or in accordance with the latest unrevoked written
direction from such party; provided, that in the case of notices to the Agent,
notices pursuant to the preceding sentence and pursuant to Section 2 shall be
effective only when received by the Agent.
SECTION 9.2. Survival of Agreement, Representations and Warranties,etc.
All warranties, representations and covenants made by the Borrower herein or in
any certificate or other instrument delivered by it or on its behalf in
connection with this Agreement shall be considered to have been relied upon by
the Lenders and the Fronting Banks and shall survive the making of the Loans
herein contemplated and the issuance and delivery to the Lenders of the Notes,
regardless of any investigation made by any Lender or Fronting Bank or on its
behalf and shall continue in full force and effect so long as any amount due or
to become due hereunder is outstanding and unpaid and so long as the Commitments
have not been terminated.
SECTION 9.3. Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Agent, the Fronting Banks, the Lenders and the
Underwriters and their respective successors and assigns. The Borrower may not
assign or transfer any of its rights or obligations hereunder without the prior
written consent of all of the Lenders and, in the case of its rights and
obligations with respect to Letters of Credit, the relevant Fronting Bank. Each
Lender may sell participations to any Person in all or part of any Loan, or all
or part of its Note or Commitment, in which event, without limiting the
foregoing, the provisions of Sections 2.14 and 2.17 shall inure to the benefit
of each purchaser of a participation (provided that such participant shall look
solely to the seller of such participation for such benefits and the Borrower's
liability, if any, under Sections 2.14 and 2.17 shall not be increased as a
result of the sale of any such participation) and the pro rata
65
treatment of payments, as described in Section 2.16, shall be determined as if
such Lender had not sold such participation. In the event any Lender shall sell
any participation, such Lender shall retain the sole right and responsibility to
enforce the obligations of the Borrower relating to the Loans including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement (provided that such Lender may grant its participant
the right to consent to such Lender's execution of amendments, modifications or
waivers which (i) reduce any Fees payable hereunder to the Lenders, (ii) reduce
the amount of any scheduled principal payment on any Loan or reduce the
principal amount of any Loan or the rate of interest payable hereunder or (iii)
extend the maturity of the Borrower's obligations hereunder). The sale of any
such participation shall not alter the rights and obligations of the Lender
selling such participation hereunder with respect to the Borrower.
(b) Each Lender may assign to one or more Lenders or Eligible
Assignees all or a portion of its interests, rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the same portion of the related Loans at the time owing to it and the related
Note held by it); provided, that (i) each such assignment shall be of the same
percentage of all of the assigning Lender's rights and obligations in respect of
(A) its Revolving Credit Commitment, its Standby L/C Commitment and its Loans
and (B) its commitment with respect to the Exit Facility (as defined in the
Commitment Letter), (ii) other than in the case of an assignment to a Person at
least 50% owned by the assignor Lender, or by a common parent of both, or to
another Lender, the Agent must give its respective prior written consent, which
consent will not be unreasonably withheld, (iii) the aggregate amount of the
Commitment and/or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Agent) shall, unless otherwise agreed to in
writing by the Borrower and the Agent, in no event be less than $5,000,000 (or
$1,000,000 in the case of an assignment between Lenders) and (iv) the parties to
each such assignment shall execute and deliver to the Agent, for its acceptance
and recording in the Register (as defined below), an Assignment and Acceptance
with blanks appropriately completed, together with any Note subject to such
assignment and a processing and recordation fee of $3,500 (for which the
Borrower shall have no liability). The Agent shall advise the Fronting Banks
that it has received such Assignment and Acceptance and shall provide a copy
thereof to each of the Fronting Banks. Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be within ten Business Days after the
execution thereof (unless otherwise agreed to in writing by the Agent), (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (B) the Lender thereunder shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).
66
(c) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any of the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any of the other Loan Documents; (ii) such Lender assignor
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or the performance or observance by
the Borrower of any of its obligations under this Agreement or any of the other
Loan Documents or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement and
the other Loan Documents, together with copies of the financial statements
referred to in Section 3.4 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such Lender assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms thereto, together with such
powers as are reasonably incidental hereof; and (vi) such assignee agrees that
it will perform in accordance with their terms all obligations that by the terms
of this Agreement are required to be performed by it as a Lender.
(d) The Agent shall maintain at its office a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the Commitments of, and principal
amount of the Loans owing to, each Lender from time to time (the "Register").
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Borrower, the Agent and the Lenders shall treat each Person the
name of which is recorded in the Register as a Lender hereunder for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and the assignee thereunder, together with any Note
subject to such assignment and the fee payable in respect thereto, the Agent
shall, if such Assignment and Acceptance has been completed with blanks
appropriately filled: (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt written
notice thereof to the Borrower (together with a copy thereof). Within five
Business Days after receipt of notice, the Borrower, at its own expense, shall
execute and deliver to the Agent, in exchange for the surrendered Note, a new
Note to the order of such assignee in an amount equal to the Commitment and/or
Loans
67
assumed by it pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained Commitments and/or Loans hereunder, a new Note to the order
of the assigning Lender in an amount equal to the Commitment and/or Loans
retained by it hereunder. Such new Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of the surrendered Note. Thereafter, such
surrendered Note shall be marked canceled and returned to the Borrower.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.3, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided, that prior to any such disclosure,
each such assignee or participant or proposed assignee or participant shall
agree in writing to be bound by the provisions of Section 9.4.
(g) The Borrower hereby agrees, to the extent set forth in the
Commitment Letter, to actively assist and cooperate with the Agent and the
Underwriters in connection with their efforts to sell participations herein (as
described in Section 9.3(a)) and to assign to one or more Lenders or Eligible
Assignees a portion of its interests, rights and obligations under this
Agreement (as set forth in Section 9.3(b)).
SECTION 9.4. Confidentiality. Each Lender agrees to keep any
information delivered or made available by the Borrower to it confidential from
anyone other than persons employed or retained by such Lender who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided, that nothing herein shall prevent any Lender
from disclosing such information (i) to any other Lender, (ii) to any other
person if reasonably incidental to the administration of the Loans, (iii) upon
the order of any court or administrative agency, (iv) upon the request or demand
of any regulatory agency or authority, (v) which has been publicly disclosed
other than as a result of a disclosure by the Agent or any Lender which is not
permitted by this Agreement, (vi) in connection with any litigation to which the
Agent, any Lender, or their respective Affiliates may be a party to the extent
reasonably required, (vii) to the extent reasonably required in connection with
the exercise of any remedy hereunder, (viii) to such Lender's legal counsel and
independent auditors, and (ix) to any actual or proposed participant or assignee
of all or part of its rights hereunder subject to the proviso in Section 9.3(f).
SECTION 9.5. Expenses. Whether or not the transactions hereby
contemplated shall be consummated, the Borrower agrees to pay all reasonable
out-of-pocket expenses incurred by the Agent (including, but not limited to, the
reasonable fees and disbursements of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special
counsel for the Agent ("ZR&G"), any other counsel that the Agent or the
Underwriters shall retain and any third-party consultants, accountants and
auditors advising the Agent, the Underwriters or ZR&G, including (without
limitation) Ernst & Young LLP, financial
68
advisors to ZR&G) and the Fronting Banks (including, but not limited to, the
reasonable fees and disbursements of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special counsel for
the Documentary Letter of Credit Fronting Bank) in connection with the
preparation, execution, delivery and administration of this Agreement, the Notes
and the other Loan Documents, the making of the Loans and the issuance of the
Letters of Credit, the perfection of the Liens contemplated hereby, the
syndication of the transactions contemplated hereby, the reasonable and
customary costs, fees and expenses of the Agent in connection with its monthly
and other periodic field audits, monitoring of assets and publicity expenses
and, following the occurrence of an Event of Default, all reasonable
out-of-pocket expenses incurred by the Lenders, the Fronting Banks and the Agent
in the enforcement or protection of the rights of any one or more of the
Lenders, the Fronting Banks or the Agent in connection with this Agreement, the
Notes or the other Loan Documents including, but not limited to, the reasonable
fees and disbursements of any counsel for the Lenders, the Fronting Banks or the
Agent. Such payments shall be made on the date of the Interim Order and
thereafter on demand upon delivery of a statement setting forth such costs and
expenses. Whether or not the transactions hereby contemplated shall be
consummated, the Borrower agrees to reimburse the Agent and the Underwriters for
the expenses set forth in the Commitment Letter, and the reimbursement
provisions thereof are hereby incorporated herein by reference. The obligations
of the Borrower under this Section shall survive the termination of this
Agreement and/or the payment of the Loans.
SECTION 9.6. Indemnity. The Borrower agrees to indemnify and hold
harmless the Agent, the Underwriters, the Fronting Banks and the Lenders and
their respective directors, officers, employees, agents and Affiliates (each, an
"Indemnified Party") from and against any and all expenses, losses, claims,
damages and liabilities incurred by such Indemnified Party arising out of claims
made by any Person in any way relating to the transactions contemplated hereby,
but excluding therefrom all expenses, losses, claims, damages, and liabilities
arising out of or resulting from the gross negligence or willful misconduct of
such Indemnified Party.
SECTION 9.7. CHOICE OF LAW. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND BY THE BANKRUPTCY CODE.
SECTION 9.8. No Waiver. No failure on the part of the Agent or
any of the Lenders to exercise, and no delay in exercising, any right, power or
remedy hereunder or under the Notes or any of the other Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
69
SECTION 9.9. Extension of Maturity. Should any payment of principal
of or interest on the Notes or any other amount due hereunder become due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, in the case of principal,
interest shall be payable thereon at the rate herein specified during such
extension.
SECTION 9.10. Amendments, etc.
(a) No modification, amendment or waiver of any provision of
this Agreement, the Notes or the Security and Pledge Agreement, and no consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Lenders, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given; provided, that no such modification or amendment
shall without the written consent of all of the Lenders (i) increase the
Commitment of a Lender (it being understood that a waiver of an Event of Default
shall not constitute an increase in the Commitment of a Lender), (ii) reduce the
principal amount of any Loan or the rate of interest payable thereon, or extend
any date for the payment of interest hereunder or reduce any Fees payable
hereunder or extend the final maturity of the Borrower's obligations hereunder;
(iii) amend or modify any provision of this Agreement which provides for the
unanimous consent or approval of the Lenders, (iv) amend this Section 9.10 or
the definition of Required Lenders, (v) amend or modify the Super-Priority Claim
status of the Lenders contemplated by Section 2.22 or (vi) release all or any
substantial portion of the Liens granted to the Agent hereunder, under the
Orders or under any of the Loan Documents. No such amendment or modification may
adversely affect the rights and obligations of the Agent or any Fronting Bank
hereunder without its prior written consent. No notice to or demand on the
Borrower shall entitle the Borrower to any other or further notice or demand in
the same, similar or other circumstances. Each holder of a Note shall be bound
by any amendment, modification, waiver or consent authorized as provided herein,
whether or not a Note shall have been marked to indicate such amendment,
modification, waiver or consent and any consent by a Lender, or any holder of a
Note, shall bind any Person subsequently acquiring a Note, whether or not a Note
is so marked. No amendment to this Agreement shall be effective against the
Borrower unless signed by the Borrower.
(b) Notwithstanding anything to the contrary contained in
Section 9.10(a), in the event that the Borrower requests that this Agreement or
any of the other Loan Documents be modified or amended in a manner which would
require the unanimous consent of all of the Lenders and such modification or
amendment is agreed to by the Super-Majority Lenders (as hereinafter defined),
then with the consent of the Borrower and the Super-Majority Lenders, the
Borrower and the Super-Majority Lenders shall be permitted to amend the
Agreement without the consent of the Lender or Lenders which did not agree to
the modification or amendment requested by the Borrower (such Lender or Lenders,
collectively the "Minority Lenders") to provide for (w) the termination of the
Commitment of each of the Minority Lenders, (x) the addition to this Agreement
of one or more other financial institutions (each of which shall be an Eligible
Assignee), or an increase in the
70
Commitment of one or more of the Super-Majority Lenders, so that the Total
Commitment after giving effect to such amendment shall be in the same amount as
the Total Commitment immediately before giving effect to such amendment, (y) if
any Loans are outstanding at the time of such amendment, the making of such
additional Loans by such new financial institutions or Super-Majority Lender or
Lenders, as the case may be, as may be necessary to repay in full the
outstanding Loans of the Minority Lenders immediately before giving effect to
such amendment and (z) such other modifications to this Agreement as may be
appropriate. As used herein, the term "Super-Majority Lenders" shall mean, at
any time, Lenders, including CIBC, holding Loans representing at least 80% of
the aggregate principal amount of the Loans outstanding, or if no Loans are
outstanding, Lenders, including CIBC, having Commitments representing at least
80% of the Total Commitment.
SECTION 9.11. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 9.12. Headings. Section headings used herein are for
convenience only and are not to affect the construction of or be taken into
consideration in interpreting this Agreement.
SECTION 9.13. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall constitute an
original, but all of which taken together shall constitute one and the same
instrument.
SECTION 9.14. Prior Agreements. This Agreement and the other Loan
Documents represent the entire agreement of the parties with regard to the
subject matter hereof and the terms of any letters and other documentation
entered into between the Borrower and any Lender or the Agent prior to the
execution of this Agreement which relate to Loans to be made hereunder shall be
replaced by the terms of this Agreement (except as otherwise expressly provided
herein with respect to the Commitment Letter and the Fee Letter including,
without limitation, the Borrower's agreement actively to assist the Agent and
the Underwriters in the syndication of the transactions contemplated hereby
referred to in Section 9.3(g) and including also the provisions of Section
2.22); provided, that the obligations of the Agent and the Underwriters under
the Commitment Letter with respect to the Exit Facility shall survive the
execution and delivery of this Agreement.
SECTION 9.15. Further Assurances. Whenever and so often as
reasonably requested by the Agent, the Borrower will promptly execute and
deliver or cause to be executed and delivered all such other and further
instruments, documents or assurances, and promptly do or cause to be done all
such other and further things as may be necessary and reasonably required in
order to vest further
71
and more fully in the Agent, all rights, interests, powers, benefits, privileges
and advantages conferred or intended to be conferred by this Agreement and the
other Loan Documents.
SECTION 9.16. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT,
THE FRONTING BANKS AND EACH LENDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.17. Termination of Revolving and Swingline Commitments Under
Existing Credit Agreement. The Borrower hereby confirms, for the express
benefit of the Revolving Lenders and the Swingline Lenders under the Existing
Credit Agreement, that any and all commitments of such Lenders to extend credit
under the Existing Credit Agreement have been terminated.
72
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and the year first written.
PAYLESS CASHWAYS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------
Title: Sr. Vice President
CANADIAN IMPERIAL BANK OF COMMERCE,
as Coordinating and Collateral Agent and as the
Standby Letter of Credit Fronting Bank
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------------
Title: Assistant General Manager
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
CIBC WOOD GUNDY SECURITIES CORP.,
as an Underwriter
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------------
Title: Authorized Signatory
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
CIBC INC.,
as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------------
Title: Director
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
73
NATIONSBANK, N.A.,
as a Lender and an Underwriter
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Title: Senior Vice President
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ COMMERCIAL PAPER INC. ,
as a Lender and an Underwriter
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
-----------------------------------------------
Title: Authorized Signatory
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ SACHS CREDIT PARTNERS, L.P.,
as a Lender and an Underwriter
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------------
Title: Authorized Signer
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
CARGILL FINANCIAL SERVICES CORPORATION,
as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
Title: Vice President
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
74
▇▇▇ ▇▇▇▇▇▇ AMERICAN CAPITAL
PRIME RATE INCOME TRUST, as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Title: Senior Vice President & Director
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FIRST BANK NATIONAL ASSOCIATION,
as the Documentary Letter of Credit Fronting
Bank and not as a Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
Title: Vice President
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
i
REVOLVING CREDIT AGREEMENT
TABLE OF CONTENTS
Page No.
INTRODUCTORY STATEMENT.........................................................1
SECTION 1. DEFINITIONS..................................................2
SECTION 1.1. Defined Terms..........................................2
SECTION 1.2. Terms Generally.......................................18
SECTION 2. AMOUNT AND TERMS OF CREDIT..................................18
SECTION 2.1. Commitments of the Lenders............................18
SECTION 2.2 Letters of Credit ....................................19
SECTION 2.3 Issuance..............................................22
SECTION 2.4 Nature of Letter of Credit Obligations Absolute.......23
SECTION 2.5. Making of Loans.......................................23
SECTION 2.6. Notes; Repayment of Loans.............................24
SECTION 2.7. Interest on Loans.....................................25
SECTION 2.8. Default Interest......................................25
SECTION 2.9. Optional Termination or Reduction of Commitment.......25
SECTION 2.10. Alternate Rate of Interest............................26
SECTION 2.11. Refinancing of Loans..................................26
SECTION 2.12. Mandatory Commitment Reduction; Commitment
Termination; Cash Collateral...................27
SECTION 2.13. Optional Prepayment of Loans; Reimbursement of
Lenders........................................27
SECTION 2.14. Reserve Requirements; Change in Circumstances.........29
SECTION 2.15. Change in Legality....................................30
SECTION 2.16. Pro Rata Treatment, etc...............................31
SECTION 2.17. Taxes.................................................31
SECTION 2.18. Certain Fees..........................................34
SECTION 2.19. Commitment Fee........................................34
SECTION 2.20. Letter of Credit Fees.................................34
SECTION 2.21. Nature of Fees........................................34
SECTION 2.22. Priority and Liens....................................34
SECTION 2.23. Right of Set-Off......................................35
SECTION 2.24. Security Interest in Letter of Credit Accounts........36
SECTION 2.25. Payment of Obligations................................36
SECTION 2.26. No Discharge; Survival of Claims......................36
SECTION 2.27. Use of Cash Collateral................................36
SECTION 2.28. Existing Secured Obligations..........................36
SECTION 2.29. Assumption of Hedging Agreement.......................37
ii
SECTION 6.14. Environmental Matters.................................55
SECTION 7. EVENTS OF DEFAULT.........................................56
SECTION 7.1. Events of Default.....................................56
SECTION 8. THE AGENT.................................................60
SECTION 8.1. Administration by Agent...............................60
SECTION 8.2. Advances and Payments.................................60
SECTION 8.3. Sharing of Setoffs....................................61
SECTION 8.4. Agreement of Required Lenders.........................61
SECTION 8.5. Liability of Agent....................................62
SECTION 8.6. Reimbursement and Indemnification.....................62
SECTION 8.7. Rights of Agent.......................................63
SECTION 8.8. Independent Lenders...................................63
SECTION 8.9. Notice of Transfer....................................63
SECTION 8.10. Successor Agent.......................................63
SECTION 9. MISCELLANEOUS.............................................64
SECTION 9.1. Notices...............................................64
SECTION 9.2. Survival of Agreement, Representations
and Warranties, etc............................64
SECTION 9.3. Successors and Assigns................................64
SECTION 9.4. Confidentiality.......................................67
SECTION 9.5. Expenses..............................................67
SECTION 9.6. Indemnity.............................................68
SECTION 9.7. CHOICE OF LAW.........................................68
SECTION 9.8. No Waiver.............................................68
SECTION 9.9. Extension of Maturity.................................69
SECTION 9.10. Amendments, etc. .....................................69
SECTION 9.11. Severability..........................................70
SECTION 9.12. Headings..............................................70
SECTION 9.13. Execution in Counterparts.............................70
SECTION 9.14. Prior Agreements......................................70
SECTION 9.15. Further Assurances....................................70
SECTION 9.16. WAIVER OF JURY TRIAL..................................71
SECTION 9.17. Termination of Revolving and Swingline Commitments
Under Existing Credit Agreement................71
iii
Annex A Commitment Amount and Percentage of each Lender
Schedule 1.1 Existing Agreements
Schedule 3.6 Pre-Petition Liens
Schedule 3.11 Litigation
Schedule 5.3 Insurance
Schedule 6.9 Existing Investments
Schedule 6.10 Assets for Sale
Exhibit A Form of Promissory Notes
Exhibit B Form of Interim Order
Exhibit C Form of Security and Pledge Agreement
Exhibit D-1 Form of Opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Weary
& ▇▇▇▇▇▇▇▇ LLP
Exhibit D-2 Form of Opinion of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
Exhibit E Form of Assignment and Acceptance
COVER
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REVOLVING CREDIT AGREEMENT
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Among
PAYLESS CASHWAYS, INC., a Debtor-in-Possession,
as Borrower,
THE LENDERS, THE UNDERWRITERS AND
THE FRONTING BANKS PARTY HERETO,
and
CANADIAN IMPERIAL BANK OF COMMERCE,
as Coordinating and Collateral Agent
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Dated as of July 21, 1997
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