FIFTH AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.19
FIFTH AMENDMENT TO CREDIT AGREEMENT
This Fifth Amendment to Credit Agreement (the “Fifth Amendment”) is made as of this 7th day of August, 2009 by and among:
XXXXX XXXXX, a New York general partnership, having its principal place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
XXXXX XXXXX INC. a Delaware corporation, having its principal place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
DRI I INC., a Delaware corporation, having its principal place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
XXXXX XXXXX INTERNATIONAL, LLC, a Delaware limited liability company, having its principal place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
XXXXX XXXXX REALTY, INC., a Delaware corporation, having its principal place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
XXXXX XXXXX HOLDINGS, INC, a Delaware corporation, having its principal place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
the LENDERS party hereto; and
BANK OF AMERICA, N.A. (f/k/a Fleet National Bank), as Issuing Bank, a national banking association having a place of business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000; and
BANK OF AMERICA, N.A. (f/k/a/ Fleet National Bank), as Administrative Agent and Collateral Agent for the Lenders, a national banking association having a place of business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000;
in consideration of the mutual covenants herein contained and benefits to be derived herefrom.
W I T N E S S E T H:
WHEREAS, on July 21, 2003, certain of the parties hereto entered into that certain Credit Agreement (as amended and in effect, the “Credit Agreement”); and
WHEREAS, the Loan Parties have requested that the Lenders amend certain provisions of the Credit Agreement as set forth herein; and
WHEREAS, Xxxxx Xxxxx International, Inc. has been converted from a Delaware corporation to a Delaware limited liability company and the parties wish to ratify and confirm its obligations under the Credit Agreement and other Loan Documents.
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NOW, THEREFORE, it is hereby agreed as follows:
1. Capitalized Terms. All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Credit Agreement.
2. Amendments to Article I. The provisions of Article I of the Credit Agreement are hereby amended as follows:
| (a) | The definition of “Applicable Margin” is hereby amended by deleting the pricing grid contained therein in its entirety and substituting the following in its stead: |
| Level |
Performance Criteria |
Prime Rate Loans | LIBO Loans | |||||
| 1 | Average Excess Availability greater than or equal to $125,000,000 | 1.25 | % | 2.25 | % | |||
| 2 | Average Excess Availability greater than or equal to $70,000,000 but less than $125,000,000 | 1.25 | % | 2.50 | % | |||
| 3 | Average Excess Availability greater than or equal to $35,000,000 but less than $70,000,000 | 1.25 | % | 2.75 | % | |||
| 4 | Average Excess Availability greater than or equal to $25,000,000 but less than $35,000,000 | 1.50 | % | 3.00 | % | |||
| 5 | Average Excess Availability less than $25,000,000 | 1.75 | % | 3.25 | % | |||
| (b) | The second sentence of the definition of “Availability Reserves” is hereby amended by adding the word “and” before clause (v), by putting a “.” at the end of clause (v) and by deleting clause (vi) in its entirety. |
| (c) | The definition of “Line Fee” is hereby amended by deleting the reference therein to “0.30%” and substituting in its stead a reference to “0.50%”. |
| (d) | The last sentence of the definition of “Material Indebtedness” is hereby deleted in its entirety and the following is substituted in its stead: |
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“In all events, “Material Indebtedness” shall include Indebtedness under the Convertible Indenture and the Senior Secured Indenture irrespective of the amounts due thereunder.”
| (e) | The definition of “Obligations” is hereby amended by deleting the parenthetical at the end thereof in its entirety and substituting the following in its stead: |
(but excluding any obligations owing to any Lender or any of their respective Affiliates in connection with the Senior Secured Indenture or the Senior Subordinated Notes).
| (f) | The definition of “Total Commitment” is hereby deleted in its entirety and the following is substituted in its stead: |
“Total Commitment” shall mean, at any time, the sum of the Commitments at such time. As of the Fifth Amendment Effective Date, the Total Commitments aggregate $225,000,000.
| (g) | The following definitions, and any and all references in the Credit Agreement thereto, are hereby deleted in their entirety: |
| (i) | “Bridge Loan” |
| (ii) | “Permanent Securities” |
| (iii) | “Xxx Transaction Financing” |
| (iv) | “Securities Repayment Reserve” |
| (v) | “Supplemental Permanent Securities” |
| (h) | The following new definitions are hereby added in appropriate alphabetical order: |
| (i) | “Existing FRN Indenture” means the Indenture dated as of December 20, 2004, among Xxxxx Xxxxx Inc., Xxxxx Xxxxx, Xxxxx Xxxxx Holdings, Inc., and each of the direct and indirect domestic subsidiaries of Xxxxx Xxxxx Inc. named in the signature pages thereto and U.S. Bank National Association, as trustee (as amended, supplemented or modified from time to time). |
| (ii) | “Fifth Amendment Effective Date” means August __, 2009. |
| (iii) | “Issuance Date” means the Fifth Amendment Effective Date. |
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| (iv) | “Senior Secured Indenture” means the Indenture dated as of August __, 2009 among Xxxxx Xxxxx Inc., Xxxxx Xxxxx, and U.S. Bank National Association, as Trustee, relating to the % Senior Secured Notes due 2015 in the aggregate original principal amount of up to $300,000,000. |
3. Amendments to Article II. The provisions of Article II of the Credit Agreement are hereby amended as follows:
| (a) | Section 2.13 of the Credit Agreement is hereby amended by deleting the reference in the second sentence thereof to “0.30%” and replacing it with a reference to “0.50%”. |
4. Amendment to Article V. Section 5.15 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its stead:
“5.15 RESERVED.”
5. Amendments to Article VI. The provisions of Article VI of the Credit Agreement are hereby amended as follows:
| (a) | Section 6.01(a) of the Credit Agreement is hereby amended by deleting clause (viii) thereof in its entirety and substituting the following in its stead: |
“(viii)(A) Indebtedness arising under the Convertible Indenture or any Permitted Refinancing thereof, and (B) Indebtedness under the Existing FRN Indenture, including Indebtedness consisting of Guarantees of such Indebtedness; provided that any Indebtedness under the Existing FRN Indenture permitted under subclause (B) of this clause (viii) is satisfied and discharged pursuant to Section 12.01 of the Existing FRN Indenture on the Fifth Amendment Effective Date;”
| (b) | Section 6.01(a) of the Credit Agreement is hereby amended by deleting clause (xi) thereof in its entirety and substituting the following in its stead: |
| “(xi) | RESERVED;” |
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| (c) | Section 6.01(a) of the Credit Agreement is hereby amended by deleting clause (xii) thereof in its entirety and substituting the following in its stead: |
“(xii) Indebtedness arising under (A) the Senior Secured Indenture and any Permitted Refinancing thereof, including Indebtedness consisting of Guarantees of the Senior Secured Indenture and any Permitted Refinancing thereof, and (B) the Senior Subordinated Notes and any Permitted Refinancing thereof, including Indebtedness consisting of Guarantees of the Senior Subordinated Notes and any Permitted Refinancing thereof; provided that, with respect to Indebtedness permitted under subclause (A) of this clause (xii), on or before the Issuance Date, the trustee and/or collateral agent under the Senior Secured Indenture and the Administrative Agent shall have entered into a letter agreement confirming the continued effectiveness of the Intercreditor Agreement, in such form and containing such terms as the Administrative Agent and such trustee or collateral agent may agree;”
| (d) | Section 6.02 of the Credit Agreement is hereby amended by deleting clause (f) thereof in its entirety and substituting the following in its stead: |
“(f) Liens to secure Indebtedness permitted by clauses (viii) and (xii)(A) of Section 6.01(a), provided that if the Loan Parties request that the Collateral Agent release its Lien on any collateral or subordinate the priority of its Lien on any collateral (other than in the Revolving Lender Priority Collateral (as defined in the Intercreditor Agreement) as to which the Collateral Agent shall not be required to provide a release or subordination of its Lien) to the Lien of the holders of such Indebtedness in such collateral, the Collateral Agent shall so release or subordinate its Lien as long as (i) the Intercreditor Agreement is in full force and effect, and (ii) no Default or Event of Default shall then exist or arise therefrom.”
| (e) | Section 6.03 of the Credit Agreement is hereby amended by deleting the second sentence of clause (b) thereof in its entirety and substituting the following in its stead: |
“Without limiting the generality of the foregoing, the Parent shall not engage in any business, and shall not own any property or assets, other than (i) acquiring and owning the capital stock of any other Loan Party, (ii) incurring Indebtedness and performing its obligations under the Existing FRN Indenture, the Senior Subordinated Notes, the Senior Secured Indenture, and any Permitted Refinancing of any of the foregoing, and/or this Agreement, (iii) incurring other obligations under the Xxx Transaction and the agreements contemplated thereby and engaging in activities contemplated therein or required thereby, and (iv) otherwise incidental to the operation of the business of a holding company.”
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| (f) | Section 6.04(c) of the Credit Agreement is hereby amended by deleting clause (i) thereof in its entirety and substituting the following in its stead: |
“(i) to pay amounts in respect of the Senior Secured Indenture, the Senior Subordinated Notes or any Permitted Refinancing of any of the foregoing, to the extent permitted hereunder, and to pay accounting, legal and other professional fees, income taxes (including pursuant to the Tax Sharing Agreement), franchise taxes, management fees permitted under Sections 6.07(e) and (f) hereof (to the extent not otherwise paid), and other general and administrative expenses incurred by the Parent for itself and the other Facility Guarantors and”
| (g) | Section 6.04(d) of the Credit Agreement is hereby amended by deleting the word “Equity” and substituting the word “equity” in its stead. |
| (h) | Section 6.06(a) of the Credit Agreement is hereby amended by deleting clause (iv)(x) thereof in its entirety and substituting the following in its stead: |
“(x) to pay amounts in respect of the Senior Secured Indenture, the Senior Subordinated Notes or any Permitted Refinancing of any of the foregoing, to the extent permitted hereunder, and to pay accounting, legal and other professional fees, income taxes (including pursuant to the Tax Sharing Agreement), franchise taxes, management fees permitted under Sections 6.07(e) and (f) hereof (to the extent not otherwise paid), and other general and administrative expenses incurred by the Parent for itself and the other Facility Guarantors and”
| (i) | Section 6.06(b)(i) of the Credit Agreement is hereby amended by deleting clauses (B) and (C) thereof in their entirety and substituting the following in their stead: |
“(B) (x) the repayment, redemption or repurchase of the Indebtedness arising under the Existing FRN Indenture, the Senior Secured Indenture or any Permitted Refinancing thereof, and (y) the repayment, redemption or repurchase of the Senior Subordinated Notes on the Issuance Date with the proceeds of equity contributions and Indebtedness issued under the Senior Secured Indenture, or (C) as long as the Payment Conditions are satisfied, the repayment, redemption or repurchase of Indebtedness
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evidenced by (1) the Convertible Indenture (other than Indebtedness repaid, redeemed or repurchased after the consummation of the Xxx Transaction), (2) Subordinated Indebtedness or (3) other Indebtedness described in Section 6.01(a)(xiii) hereof;”
| (j) | Section 6.06(b)(ii) of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its stead: |
“(ii) payment of mandatory or regularly scheduled interest and principal payments as and when due in respect of any other Indebtedness permitted hereunder, including, without limitation, on account of the Senior Secured Indenture and any Permitted Refinancing thereof;”
| (k) | Section 6.06(b)(iv) of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its stead: |
“(iv) voluntary, non-mandatory prepayments of Indebtedness on account of the Senior Secured Indenture and any Permitted Refinancing thereof (other than any Subordinated Indebtedness) as long as at such time Excess Availability shall be equal to or greater than 15% of the Borrowing Base and no Event of Default then exists or would arise therefrom.”
| (l) | Section 6.07 of the Credit Agreement is hereby amended by adding the words “(other than any Loan Party)” after the word “Affiliates” in the fourth line thereof. |
| (m) | Section 6.08 of the Credit Agreement is hereby amended by deleting the provisions of clause (i) of the proviso thereof in its entirety and substituting the following in its stead: |
“(i) the foregoing shall not apply to restrictions and conditions imposed by law or by any Loan Document, or by any document relating to the Existing FRN Indenture, the Senior Secured Indenture, the Senior Subordinated Notes or any Permitted Refinancing of any of the foregoing,”
| (n) | Section 6.09 of the Credit Agreement is hereby amended by deleting the provisions of clause (e) thereof in its entirety and substituting the following in its stead: |
“(e) the Existing FRN Indenture, the Senior Secured Indenture, the Senior Subordinated Notes or any Permitted Refinancing of any of the foregoing, if as a result thereof a Default or an Event of Default would arise hereunder.”
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6. Amendments to Schedules. To the extent that any changes in any representations, warranties, and covenants require any amendments to the schedules to the Credit Agreement or any of the other Loan Documents, such schedules are hereby updated, as evidenced by supplemental schedules (if any) annexed to this Fifth Amendment.
7. Joinder and Assumption of Obligations. Effective as of the date of this Fifth Amendment, Parent hereby acknowledges that it has received and reviewed a copy of the Credit Agreement and the other Loan Documents, and hereby:
| (a) | joins in the execution of, and becomes a party to, the Credit Agreement and the Facility Guarantee, as a Facility Guarantor thereunder, as indicated with its signature below; |
| (b) | covenants and agrees to be bound by all covenants, agreements, liabilities and acknowledgments of a Facility Guarantor under the Credit Agreement and the Facility Guarantee, after giving effect to the Fifth Amendment (other than covenants, agreements, liabilities and acknowledgments that relate solely to an earlier date), in each case, with the same force and effect as if Parent were a signatory to the Credit Agreement and the Facility Guarantee and were expressly named as a Facility Guarantor therein; |
| (c) | (i) makes all representations, warranties, and other statements of a Facility Guarantor under the Credit Agreement and the Facility Guarantee, after giving effect to the Fifth Amendment (other than representations, warranties and other statements that relate solely to an earlier date), in each case, with the same force and effect as if Parent were a signatory to the Credit Agreement and such Facility Guarantee and were expressly named as a Facility Guarantor therein, and (ii) represents that it does not, and will not (unless it complies with Section 5.14(b) of the Credit Agreement) own any Inventory, Credit Card Receivables, prescription lists or Eligible Third Party Receivables; and |
| (d) | assumes and agrees to perform all applicable duties and Obligations of the other Facility Guarantors under the Credit Agreement and the Facility Guarantee, after giving effect to the Fifth Amendment. |
8. Ratification of Loan Documents. Except as provided herein, all terms and conditions of the Credit Agreement and of the other Loan Documents remain in full force and effect. The Loan Parties each hereby ratify, confirm, and reaffirm all of the representations and warranties contained therein.
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9. Conditions to Effectiveness. This Fifth Amendment shall not be effective until each of the following conditions precedent has been fulfilled to the satisfaction of the Administrative Agent:
| (a) | This Fifth Amendment shall have been duly executed and delivered by the Loan Parties and the Required Lenders. |
| (b) | The Loan Parties shall have received proceeds under the Senior Secured Indenture (as defined in this Fifth Amendment) and proceeds from equity contributions made to the Parent in an aggregate amount sufficient to refinance in full the obligations of the Loan Parties under the Existing FRN Indenture (as defined in this Fifth Amendment) and to reduce the principal obligations of the Loan Parties under the Senior Subordinated Notes to and amount not greater than $78,000,000. |
| (c) | All corporate and shareholder action on the part of the Loan Parties necessary for the valid execution, delivery and performance by the Loan Parties of this Fifth Amendment shall have been duly and effectively taken and evidence thereof satisfactory to the Administrative Agent shall have been provided to the Administrative Agent. |
| (d) | No Default or Event of Default shall have occurred and be continuing. |
| (e) | The Loan Parties shall have executed and delivered such additional instruments, documents and agreements as the Administrative Agent may reasonably request. |
10. Miscellaneous.
| (a) | Except as expressly provided herein, all provisions of the Credit Agreement and the other Loan Documents remain in full force and effect. Without limiting the foregoing, Xxxxx Xxxxx International, LLC hereby ratifies and confirms its obligations thereunder (notwithstanding its organizational change from a corporation to a limited liability company) and ratifies and confirms its grant of a security interest in the Collateral to secure the Obligations. |
| (b) | This Fifth Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument. |
| (c) | This Fifth Amendment expresses the entire understanding of the parties with respect to the transactions contemplated hereby. No prior negotiations or discussions shall limit, modify, or otherwise affect the provisions hereof. |
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| (d) | Any determination that any provision of this Fifth Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not affect the validity, legality, or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provisions of this Fifth Amendment. |
| (e) | The Loan Parties shall pay all reasonable costs and expenses of the Agents, including, without limitation, reasonable attorneys’ fees in connection with the preparation, negotiation, execution and delivery of this Fifth Amendment. |
| (f) | The Loan Parties warrant and represent that the Loan Parties have consulted with independent legal counsel of their selection in connection with this Fifth Amendment and are not relying on any representations or warranties of the Agents or the Lenders or their counsel in entering into this Fifth Amendment. |
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have hereunto caused this Fifth Amendment to be executed and their seals to be hereto affixed as of the date first above written.
| XXXXX XXXXX | ||
| as Borrower | ||
| By: | XXXXX XXXXX INC., its General Partner | |
| By: | /s/ Xxxx X. Xxxxx | |
| Name: | Xxxx X. Xxxxx | |
| Title: | Chief Financial Officer | |
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
| Name: | Xxxxxxx X. Xxxxxxx | |
| Title: | Secretary | |
| By: | DRI I INC., its General Partner | |
| By: | /s/ Xxxx X. Xxxxx | |
| Name: | Xxxx X. Xxxxx | |
| Title: | Chief Financial Officer | |
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
| Name: | Xxxxxxx X. Xxxxxxx | |
| Title: | Secretary | |
| XXXXX XXXXX INC., as Facility Guarantor | ||
| By: | /s/ Xxxx X. Xxxxx | |
| Name: | Xxxx X. Xxxxx | |
| Title: | Chief Financial Officer | |
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
| Name: | Xxxxxxx X. Xxxxxxx | |
| Title: | Secretary | |
| DRI I INC., as Facility Guarantor | ||
| By: | /s/ Xxxx X. Xxxxx | |
| Name: | Xxxx X. Xxxxx | |
| Title: | Chief Financial Officer | |
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
| Name: | Xxxxxxx X. Xxxxxxx | |
| Title: | Secretary | |
| XXXXX XXXXX INTERNATIONAL, LLC., as Facility Guarantor | ||
| By: | /s/ Xxxxxx X. Xxxxxxxx | |
| Name: | Xxxxxx X. Xxxxxxxx | |
| Title: | Manager | |
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
| Name: | Xxxxxxx X. Xxxxxxx | |
| Title: | Manager | |
| XXXXX XXXXX REALTY, INC., as Facility Guarantor | ||
| By: | /s/ Xxxx X. Xxxxx | |
| Name: | Xxxx X. Xxxxx | |
| Title: | Chief Financial Officer | |
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
| Name: | Xxxxxxx X. Xxxxxxx | |
| Title: | Secretary | |
| XXXXX XXXXX HOLDINGS, INC., as Facility Guarantor | ||
| By: | /s/ Xxxx X. Xxxxx | |
| Name: | Xxxx X. Xxxxx | |
| Title: | Chief Financial Officer | |
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
| Name: | Xxxxxxx X. Xxxxxxx | |
| Title: | Secretary | |
| BANK OF AMERICA, N.A., | ||
| As Administrative Agent, as Collateral Agent, as Issuing Bank, as Swingline Lender and as Lender | ||
| By: | /s/ Xxxxx Xxxx | |
| Name: | Xxxxx Xxxx | |
| Title: | Managing Director | |
| Address: | ||
| 000 Xxxxxxx Xxxxxx 0xx Xxxxx | ||
| Xxxxxx, Xxxxxxxxxxxxx 00000 | ||
| Attn: Xxxxx Xxxxxxxxxxx | ||
| Telephone: | (000) 000-0000 | |
| Telecopy: | (000) 000-0000 | |
| GENERAL ELECTRIC CAPITAL CORPORATION, as Syndication Agent and Lender | ||
| By: | /s/ Xxxxx X. Xxxxxxxx | |
| Name: | Xxxxx X. Xxxxxxxx | |
| Title: | Duly Authorized Signatory | |
| Address: | 00 Xxxxxxxxx Xxxxx | |
| Xxxxxxx, XX 00000 | ||
| Telephone: | 000-000-0000 | |
| Telecopy: | 000-000-0000 |
| XXXXX FARGO RETAIL FINANCE, LLC, as Syndication Agent, as Co-Lead Arranger, and as Lender | ||
| By: | /s/ Xxxxxx Xxx | |
| Name: | Xxxxxx Xxx | |
| Title: | Assistant Vice President | |
| Address: | Xxx Xxxxxx Xxxxx, 00xx Xxxxx | |
| Xxxxxx, Xxxxxxxxxxxxx 00000 | ||
| Telephone: | 000-000-0000 | |
| Telecopy: | 000-000-0000 |
SCHEDULE 2.22(A)
DEMAND DEPOSIT ACCOUNTS
| Depository Name & Address |
Account Numbers |
Contact |
Description of | |||
| Bank of America 000 X. Xxxxx Xxxxxx Xxxxxxxxx, XX 00000-0000 |
94051 89009 | Xxxxx Xxxx, Bank of America Xxxxxxx Xxxxx, Retail Finance Group MAS-100-09-09 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 Fax: 000-000-0000 |
Main Operating Account | |||
| Bank of America 000 X. Xxxxx Xxxxxx Xxxxxxxxx, XX 00000-0000 |
93928 53387 | Xxxxx Xxxx, Bank of America Xxxxxxx Xxxxx, Retail Finance Group MAS-100-09-09 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 Fax: 000-000-0000 |
Blocked Deposit Account for Credit Card Sales from the Stores | |||
| Bank of America 000 X. Xxxxx Xxxxxx Xxxxxxxxx, XX 00000-0000 |
94277 24201 | Xxxxx Xxxx, Bank of America Xxxxxxx Xxxxx, Retail Finance Group MAS-100-09-09 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 Fax: 000-000-0000 |
Payroll Controlled Disbursement Account | |||
| Bank of America 000 X. Xxxxx Xxxxxx Xxxxxxxxx, XX 00000-0000 |
8024 1276 | Xxxxx Xxxx, Bank of America Xxxxxxx Xxxxx, Retail Finance Group MAS-100-09-09 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 Fax: 000-000-0000 |
Accounts Payable Controlled Disbursement Account | |||
| Bank of America 000 X. Xxxxx Xxxxxx Xxxxxxxxx, XX 00000-0000 |
46259 75273 | Xxxxx Xxxx, Bank of America Xxxxxxx Xxxxx, Retail Finance Group MAS-100-09-09 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 Fax: 000-000-0000 |
EEOC Settlement Account | |||
| Bank of America 000 X. Xxxxx Xxxxxx Xxxxxxxxx, XX 00000-0000 |
46287 89327 | Xxxxx Xxxx, Bank of America Xxxxxxx Xxxxx, Retail Finance Group MAS-100-09-09 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 Fax: 000-000-0000 |
Blocked Deposit Account for third party pharmacy receipts |
SCHEDULE 2.22(C)
BLOCKED ACCOUNTS
| Depository Name |
Account Number: | |
| Bank of America |
93928532809 | |
| Bank of America |
9392853387 | |
| Bank of America |
46287 89327 |
SCHEDULE 3.06
DISCLOSED MATTERS
Material Litigation
1. In November 2004, Xxxxx Xxxxx Inc. was served with a purported class action complaint, Damassia v. Xxxxx Xxxxx Inc. The lawsuit was filed in the U.S. District Court for the Southern District of New York. The complaint alleges that, from the period beginning November 1998, Xxxxx Xxxxx Inc. incorrectly gave some employees the title “Assistant Manager,” in an attempt to avoid paying these employees overtime, in contravention of the Fair Labor Standards Act and New York law. In May 2008, the court certified this case as a class action. In April 2006, Xxxxx Xxxxx Holdings, Inc. and Xxxxx Xxxxx Inc. were served with a purported class action complaint, Xxxxxxxxx v. Xxxxx Xxxxx Inc. and Xxxxx Xxxxx Holdings, Inc. The complaint alleges that, from a period beginning March 2000, Xxxxx Xxxxx Holdings, Inc. and Xxxxx Xxxxx Inc. incorrectly classified certain employees in an attempt to avoid paying overtime to such employees, thereby violating the Fair Labor Standards Act and New York law. In May 2008, the court certified this case as a class action. The complaint seeks an unspecified amount of damages. In January 2009, Xxxxx Xxxxx Holdings, Inc. announced that, without admitting liability, it has entered into a Memorandum of Understanding to settle these two class action cases for $3.5 million. The settlement is subject to the approval of the U.S. District Court for the Southern District of New York. As a result of this settlement agreement, Xxxxx Xxxxx Holdings, Inc. recorded a $3.5 million one-time, pre-tax charge for the fourth quarter ended December 27, 2008. As of March 28, 2009, Xxxxx Xxxxx Holdings, Inc. has obtained the necessary letter of credit. The Court granted final approval of the settlement on July 24, 2009.
2. In November 2007, Xxxxx Xxxxx Holdings, Inc. was served with a subpoena from the Office of the Attorney General of the State of New York. The subpoena requested information regarding Xxxxx Xxxxx Holdings, Inc.’s services to customers with limited English proficiency. Xxxxx Xxxxx Holdings, Inc. entered into an Assurance of Discontinuance with the OAG on April 21, 2009. No monetary sanctions were imposed or monetary relief agreed upon.
3. In January 2008, Xxxxx Xxxxx Holdings, Inc. was served with a subpoena from the Department of Health and Human Services, Office of the Inspector General. The subpoena seeks information relating to the operation of Xxxxx Xxxxx Holdings, Inc.’s pharmacy kiosks and information relating to a business relationship that Xxxxx Xxxxx Holdings, Inc. had with Mobility Plus, a provider of durable medical equipment. In February 2008, Xxxxx Xxxxx Holdings, Inc. received an identical subpoena from the Office of the Attorney General of the State of New York, Medicaid Fraud Control Unit. Xxxxx Xxxxx Holdings, Inc. is in the process of responding to the information requests from both entities.
4. On September 1, 2006, Xxxxxxx X. Xxxx, a former Chairman, President and Chief Executive Officer of Xxxxx Xxxxx Holdings, Inc., initiated an arbitration before the American Arbitration Association against Xxxxx Xxxxx Inc., Xxxxx Xxxxx Holdings, Inc. and Xxxxx Xxxxx Shareholders, LLC (the “respondents”). The arbitration relates to his termination in November 2005. Xx. Xxxx asserts various claims including, with respect to his employment agreement, breach of contract relating to the notice of termination provision, failure to make certain payments toward his 1998 corporate-owned life insurance policy, relief from the non-competition and non-solicitation covenants, failure to provide adequate information relating to the valuation of his profits interest and breach of the covenant of good faith and fair dealing. Other claims relate to the patent rights for Xxxxx Xxxxx Holdings, Inc.’s virtual pharmacy kiosk system and payment of an alleged deferred 2001 bonus based on any insurance recovery Xxxxx Xxxxx Holdings, Inc. may obtain on its business interruption claim in connection with the 2001 World Trade Center tragedy. On March 16, 2007, Xx. Xxxx sought leave to file an amended demand asserting additional allegations in support of his claim for breach of contract for failure to comply with the notice of termination provision in his employment agreement, and a claim for defamation. On May 17, 2007, the arbitrator issued an order granting leave to file Xx. Xxxx’x amended demand. Xx. Xxxx seeks monetary damages, declaratory relief, rescission of his employment agreement and the payment of his legal costs and fees associated with his termination and the arbitration.
On November 22, 2006, the respondents filed counterclaims and affirmative defenses against Xx. Xxxx in the arbitration, alleging that between 2000 and 2005, Xx. Xxxx was responsible for improper practices involving invoice credits and rebillings for the construction of Xxxxx Xxxxx stores, that led to overstating Xxxxx Xxxxx Holdings, Inc.’s publicly reported earnings, and that caused Xxxxx Xxxxx Holdings, Inc. to create and maintain inaccurate records and publish financial statements containing misstatements. These counterclaims were based on information uncovered as of that date by an investigation conducted by independent legal counsel and forensic accountants at the direction of the Audit Committee.
In a press release dated April 2, 2007, Xxxxx Xxxxx Holdings, Inc. disclosed that, based on new information provided to Xxxxx Xxxxx Holdings, Inc., the Audit Committee, with the assistance of independent counsel and forensic accountants, was conducting a review and investigation concerning the propriety of certain real estate transactions and related matters and whether the accounting for such transactions was proper. On April 9, 2007, the respondents sought leave to file proposed amended counterclaims based on that new information. On May 17, 2007, the arbitrator issued an order granting leave to file the amended counterclaims. The amended counterclaims seek rescission of employment agreements entered into between Xxxxx Xxxxx Holdings, Inc. and Xx. Xxxx, return of all compensation paid under the employment agreements, other compensatory and punitive damages, and legal costs and fees associated with the Audit Committee’s investigation and the arbitration.
On May 18, 2007, the independent counsel and the forensic accountants completed their review and investigation. The independent counsel concluded that Xx. Xxxx orchestrated certain real estate and other transactions that led to overstating Xxxxx Xxxxx Holdings, Inc.’s publicly reported earnings, and that caused Xxxxx Xxxxx Holdings, Inc. to create and maintain inaccurate records and publish financial statements
containing misstatements. On May 22, 2007, the Audit Committee determined, after considering the results of the review and investigation, that certain of Xxxxx Xxxxx Holdings, Inc.’s previously-issued financial statements would have to be restated. Xxxxx Xxxxx Holdings, Inc. filed the necessary restated financial statements for the periods affected.
On May 22, 2007, Xxxxx Xxxxx Holdings, Inc. received a grand jury subpoena from the United States Attorney’s Office for the Southern District of New York seeking documents relating to the allegations in the amended counterclaims discussed above. Xxxxx Xxxxx Holdings, Inc. has cooperated fully with the investigation. The SEC also requested that Xxxxx Xxxxx Holdings, Inc. provide it with information related to this matter.
On May 25, 2007, the United States Attorney’s Office for the Southern District of New York filed an application requesting that the arbitrator stay further proceedings in the arbitration, including discovery, pending further developments in its criminal investigation of Xx. Xxxx. Following briefing by the parties on the application, the arbitrator entered an order staying the arbitration proceedings. The stay has been extended from time to time.
On October 9, 2008, the United States Attorney’s Office for the Southern District of New York and the SEC announced the filing of criminal and civil securities fraud charges against Xx. Xxxx and another former executive of the Company, Xxxxxxx Xxxxxxx. In the criminal indictment, the government charges that Xx. Xxxx and Xx. Xxxxxxx engaged in a scheme, involving the credits and rebillings and real estate related transactions discussed above, to falsely inflate the income and reduce the expenses that Xxxxx Xxxxx Holdings, Inc. reported to the investing public and others. The SEC’s complaint similarly alleges that Xx. Xxxx and Xx. Xxxxxxx entered into a series of fraudulent transactions designed to boost reported income and enable Xxxxx Xxxxx Holdings, Inc. to meet quarterly and annual earnings guidance. Both proceedings are continuing.
Environmental
None.
SCHEDULE 3.09
TAXES
None.
SCHEDULE 3.12
SUBSIDIARIES
Xxxxx Xxxxx Holdings, Inc. maintains a 100% ownership interest in Xxxxx Xxxxx Inc.
Xxxxx Xxxxx Inc. maintains a 100% ownership interest in each of DRI I Inc., Xxxxx Xxxxx Realty, Inc. and Xxxxx Xxxxx International, LLC.
Xxxxx Xxxxx Inc. also has a 99% ownership interest in Xxxxx Xxxxx, a New York General Partnership. The remaining 1% interest in the Xxxxx Xxxxx Partnership is owned by DRI I Inc.
SCHEDULE 3.13
INSURANCE
Insurance Maintained By or on Behalf of Loan Parties and Subsidiaries
| Insurance Coverage |
Insurance Company |
Coverage Limit |
SIR | Current Insurance Premium |
Policy Period | ||||||
| New York w/ COMP |
NY State Ins. Fund | Fixed Dollar | N/A | $1,925,029 | 03/1/09-02/28/10 | ||||||
| New Jersey w/COMP. |
Zurich | Fixed Dollar | N/A | $123,953 | 8/17/08-8/17/09 | ||||||
| Property/Boiler |
Lexington (Primary) | $200 Million |
$ | 250,000 | $872,965 | 10/1/08-9/30/09 | |||||
| Auto |
Hartford | $1Million (single limit) | $242,562 | 10/1/08-9/30/09 | |||||||
| Umbrella |
ACE - (Primary) | $50 Million | $ | 250,000 | $760,486 | 10/1/08-9/30/09 | |||||
| Liberty ($50MM X $25MM) | $25 Million | ||||||||||
| XL AMER.($25MM X $75MM) | $25 Million | ||||||||||
| (Total) $100 Million | |||||||||||
| Director & Officer |
National Union (AIG) | (Primary)$15 Million | $ | 250,000 | $200,000 | 07/30/09-07/30/10 | |||||
| ACE ($10MM X $15MM) | $10 Million | $ | 250,000 | $68,000 | 07/30/09-07/30/10 | ||||||
| EMP. PRACTICES |
National Union - (AIG) (Primary) | $10 Million | $ | 1,000,000 | $500,000 | 07/30/09-07/30/10 | |||||
| Crime |
National Union - (AIG) | $1 Million | $ | 100,000 | $8,640 | 10/1/08-9/30/09 | |||||
| General Liability |
Columbia Casualty | $15 Million | $ | 250,000 | $844,672 | 10/1/08-9/30/09 | |||||
SCHEDULE 3.14
LABOR MATTERS
None.
SCHEDULE 3.16(B)
FEDERAL RESERVE REGULATIONS
None.
SCHEDULE 6.02
LIENS
| Debtor |
Jurisdiction |
Type of filing found |
Secured |
Collateral | Original File Date |
Original File Number |
Amdt. File Date | |||||||
| DRI I, Inc. | New York U.S. Southern District Court at New York City | Judgment | Plaintiffs - Xxxxx Xxxxxx, Xxxxxx X. Xxxxxxxxxx, Xxxxx Xxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxxx Xxxxxxxx, Stephem Camdeco as Trustees of the Allied Welfare Fund
Defendants Xxxxx Xxxxx NY Xxxxx Xxxxx, Inc. and DRI Inc. |
Amount: $15,336.94 |
11/05/2007 | 00CV094842 (AKH) |
||||||||
| Xxxxx Xxxxx | New York, Bronx County |
Judgment | Xxxxx Xxxx Corp. | Amount: $ 1,000.00 |
12/09/2005 | 000791652-01 | ||||||||
| Xxxxx Xxxxx | New York, Kings Supreme Court |
Judgment | Xxxx Xxxxx vs. Xxxxx Xxxxx, Inc. | Amount $323,091.25 |
07/06/2007 | 18669/2004 | ||||||||
| Xxxxx Xxxxx | New York, Queens County | Judgment | NY City Department of Finance | Amount $ 33.42 |
01/13/2003 | 000752038-01 | ||||||||
| Xxxxx Xxxxx | New York, Queens County | Judgment | NY City Department of Finance | Amount $ 33.42 |
01/13/2003 | 000752038-02 | ||||||||
| Xxxxx Xxxxx Inc. | New York U.S. Southern District Court at New York City | Order and Final Judgment |
Faty Ansoumana, Etal | Amount $ 320,000 |
12/31/2003 | 00-CV-00253-AKH | ||||||||
| Debtor |
Jurisdiction |
Type of filing found |
Secured |
Collateral | Original File Date |
Original File Number |
Amdt. File Date | |||||||
| Xxxxx Xxxxx Inc. | New York U.S. Southern District Court at New York City | Partial Judgment |
Xxxxx Xxxxxx, Et al. |
Amount $15,336.94 |
11/05/2004 | 00-VC-09842-AKH | ||||||||
| Xxxxx Xxxxx Inc. | New York U.S. Southern District Court at New York City | Consent and Settlement agreement |
Xxxxx Xxxxxx et al |
Specific performance plus legal fees |
01/24/2006 | 01-CV-04692-DCF | ||||||||
| Xxxxx Xxxxx Inc. | New York U.S. Southern District Court at New York City | Stipulation and Order of Settlement |
Xxxxxx Xxxxxx Sallal |
Amount $22,222.00 |
08/08/2008 | 07-CV-10346-JSR | ||||||||
| Xxxxx Xxxxx Inc. | New York U.S. Southern District Court at New York City | Stipulation and Order of Settlement |
Xxxxx Xxxxxxxxxx |
Amount $15,000.00 |
01/09/2009 | 08-CV-04039-CM | ||||||||
| Xxxxx Xxxxx Inc. | New York, New York County | State Tax Lien |
NY City Department of Finance |
Amount $6,340.90 |
01/27/2006 | 002092816-01 | ||||||||
| Xxxxx Xxxxx Inc. | New York, New York County | State Tax Lien |
NY City Department of Finance |
Amount $113.27 |
09/17/2008 | 002459294-01 | ||||||||
| Xxxxx Xxxxx Inc. | New York, New York County | State Tax Lien |
NY City Department of Finance |
Amount $113.27 |
09/17/2008 | 002459295-01 | ||||||||
| Xxxxx Xxxxx Inc. | New York, New York County | State Tax Lien |
NY City Department of Finance |
Amount $113.27 |
09/17/2008 | 002459296-01 | ||||||||
| Xxxxx Xxxxx Inc. | New York, New York County | State Tax Lien |
NY City Department of Finance |
Amount $113.27 |
09/17/2008 | 002459297-01 | ||||||||
| Xxxxx Xxxxx Inc. | New York, New York County | State Tax Lien |
NY City Department of Finance |
Amount $113.27 |
09/17/2008 | 002459298-01 | ||||||||
| Xxxxx Xxxxx Inc. | New York, New York County | State Tax Lien |
NY City Department of Finance |
Amount $482.33 |
11/26/2008 | 002487972-01 | ||||||||
| Xxxxx Xxxxx a Partnership | New York, New York County | Judgment | Tishman Speyer Properties, L.P. |
Amount $650.00 |
09/23/2003 | 00175183-01 | ||||||||
| Debtor |
Jurisdiction |
Type of filing found |
Secured |
Collateral | Original File Date |
Original File Number |
Amdt. File Date | |||||||
| Xxxxx Xxxxx a Partnership | New York, New York County | Judgment | Xxxxxx Construction Company | Amount $650.00 |
09/23/2003 | 00175183-02 | ||||||||
| Xxxxx Xxxxx | New York, New York County | Judgment | Mohamed Kwara | Amount $240.00 |
12/01/2006 | 002205254-01 | ||||||||
| Xxxxx Xxxxx etal. | New York, New York County | Judgment | City of New York | Amount $5000.00 |
07/18/2007 | 002293715-01 | ||||||||
| Xxxxx Xxxxx a Partnership | New York, New York Supreme Court | Judgment | 405 Lexington, LLC, Tishman Speyer Properties, L.P. and Xxxxxx Construction Company | Amount $650.00 |
09/23/2003 | 110178-1999 | ||||||||
| Xxxxx Xxxxx | New York, New York Supreme Court | Judgment | Mohamed Kwara | Amount $240.00 |
12/01/2006 | 112769-2006 | ||||||||
| Gristede’s Foods, Inc. | New York U.S. Southern District Court at New York City | Settlement Agreement |
UFCS Local 174 Commercial Health Care Fund | Amount $143,763.80 |
See Docket and agreement for more information |
05/02/2005 | 04-CV-07026-GEL | |||||||
| Gristede’s Foods, Inc. | New York, New York County | Judgment | Xxxxx X’Xxxx | Amount $78,991.25 |
12/07/2006 | 002207045-01 | ||||||||
| Gristede’s Foods, Inc. | New York, New York County | Judgment | Xxxxxx Towers Housing Company Inc., Marina Towrs Associates L.P. and Gateway Plaza Management Corp. | Amount $1,015.00 |
10/04/2007 | 002319945-02 | ||||||||
