1
Exhibit 10.19
FIFTH AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
PETSMART, INC.,
CERTAIN LENDERS
AND
BANK OF AMERICA, N.A.
AS ADMINISTRATIVE LENDER
AND
XXXXX FARGO BANK, N.A.
AS DOCUMENTATION AGENT
DATED AS OF APRIL 13, 0000
XXXX XX XXXXXXX SECURITIES LLC,
AS LEAD ARRANGER AND BOOK MANAGER
2
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS ............................................................... 1
Section 1.1 Definitions ............................................................... 1
Section 1.2 Accounting and Other Terms ................................................ 17
ARTICLE 2 AMOUNTS AND TERMS OF ADVANCES ............................................. 17
Section 2.1 Advances .................................................................. 17
Section 2.2 Making Advances ........................................................... 18
Section 2.3 Fees ...................................................................... 19
Section 2.4 Reduction of Commitment ................................................... 21
Section 2.5 Prepayment and Repayment of Advances ...................................... 21
Section 2.6 Interest on Advances ...................................................... 22
Section 2.7 Computations and Manner of Payments ....................................... 23
Section 2.8 Yield Protection .......................................................... 24
Section 2.9 Reimbursement ............................................................. 24
Section 2.10 LIBOR Lending Offices ..................................................... 25
Section 2.11 Calculation of LIBOR Rate ................................................. 25
Section 2.12 Conditions Precedent to the Increase of the Commitment .................... 25
ARTICLE 3 LETTERS OF CREDIT 27
Section 3.1 Letter of Credit Commitment; Reimbursement ................................ 27
Section 3.2 Standard of Care .......................................................... 28
Section 3.3 Expenses of the Issuing Bank .............................................. 29
Section 3.4 Obligations of the Company Absolute ....................................... 29
article 4 CONDITIONS PRECEDENT ...................................................... 30
Section 4.1 Conditions Precedent to Effectiveness ..................................... 30
Section 4.2 Conditions Precedent to All Advances ...................................... 32
Section 4.3 Conditions Precedent to Issuance of Letters of Credit ..................... 32
Section 4.4 Conditions Precedent to Conversions and Continuations ..................... 33
ARTICLE 5 REPRESENTATIONS AND WARRANTIES ............................................ 33
Section 5.1 Organization and Qualification ............................................ 33
Section 5.3 Conflicting Agreements and Other Matters .................................. 34
Section 5.4 Financial Statements ...................................................... 34
Section 5.5 Litigation ................................................................ 34
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Section 5.6 Compliance with Applicable Laws Regulating the Incurrence of Indebtedness.. 34
Section 5.7 Licenses, Title to Properties, and Related Matters ........................ 35
Section 5.8 Outstanding Indebtedness .................................................. 35
Section 5.9 Taxes ..................................................................... 35
Section 5.10 ERISA ..................................................................... 35
Section 5.12 Disclosure ................................................................ 36
Section 5.13 Year 2000 ................................................................. 36
Section 5.14 Labor Relations ........................................................... 37
Section 5.15 Common Enterprise ......................................................... 37
Section 5.16 Survival of Representations and Warranties ................................ 37
ARTICLE 6 COVENANTS ................................................................. 37
Section 6.1 Financial Covenants ....................................................... 38
Section 6.2 Indebtedness .............................................................. 38
Section 6.3 Liens ..................................................................... 38
Section 6.4 Licenses and Material Agreements .......................................... 39
Section 6.5 Liquidation, Dispositions of Assets, Merger, Consolidation ................ 39
Section 6.6 Restricted Payments ....................................................... 40
Section 6.7 Investments ............................................................... 40
Section 6.8 Acquisitions .............................................................. 41
Section 6.9 Business .................................................................. 41
Section 6.10 Compliance with Applicable Laws ........................................... 41
Section 6.11 Insurance ................................................................. 42
Section 6.12 Inspection Rights ......................................................... 42
Section 6.13 Records and Books of Account; Changes in GAAP ............................. 42
Section 6.14 Reporting Requirements .................................................... 42
Section 6.15 Use of Proceeds ........................................................... 44
Section 6.16 Transactions with Affiliates .............................................. 44
Section 6.17 Environmental Law Compliance .............................................. 44
Section 6.18 Indirect Foreign Subsidiaries ............................................. 45
Section 6.19 Year 2000 ................................................................. 45
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PAGE
Section 6.20 Further Assurances ........................................................ 45
Section 6.21 Material Subsidiaries ..................................................... 46
Section 6.22 Landlord's Waivers ........................................................ 46
ARTICLE 7 EVENTS OF DEFAULT ......................................................... 46
Section 7.1 Events of Default ......................................................... 46
Section 7.2 Remedies upon Default ..................................................... 49
Section 7.3 Cumulative Rights ......................................................... 49
Section 7.4 Waivers ................................................................... 49
Section 7.5 Expenditures .............................................................. 50
Section 7.6 Control ................................................................... 50
ARTICLE 8 THE ADMINISTRATIVE LENDER ................................................. 50
Section 8.1 Authorization and Action .................................................. 50
Section 8.2 Administrative Lender's Reliance, Etc ..................................... 51
Section 8.3 Bank of America, N.A. and Affiliates ...................................... 51
Section 8.4 Lender Credit Decision .................................................... 51
Section 8.5 Indemnification by Lenders ................................................ 51
Section 8.6 Successor Administrative Lender ........................................... 52
Section 8.7 Notice of Default ......................................................... 52
Section 8.8 Documentation Agent ....................................................... 53
ARTICLE 9 CHANGES IN CIRCUMSTANCES .................................................. 53
Section 9.1 LIBOR Basis Determination Inadequate ...................................... 53
Section 9.2 Illegality ................................................................ 53
Section 9.3 Increased Costs ........................................................... 54
Section 9.4 Base Rate Advances Rather than LIBOR Advances ............................. 55
ARTICLE 10 MISCELLANEOUS ............................................................. 55
Section 10.1 Amendments and Waivers .................................................... 55
Section 10.2 Notices ................................................................... 55
Section 10.3 Parties in Interest ....................................................... 56
Section 10.4 Assignments and Participations ............................................ 57
Section 10.5 Sharing of Payments ....................................................... 58
Section 10.6 Right of Set-off .......................................................... 58
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PAGE
Section 10.7 Costs, Expenses and Taxes ................................................. 58
Section 10.8 Indemnification by Company ................................................ 60
Section 10.9 Rate Provision ............................................................ 61
Section 10.10 Severability .............................................................. 61
Section 10.11 Exceptions to Covenants ................................................... 61
Section 10.12 Counterparts .............................................................. 62
Section 10.13 No Novation ............................................................... 62
Section 10.14 Purchase by Lenders ....................................................... 62
Section 10.15 Designated Senior Indebtedness ............................................ 62
Section 10.16 Governing Law; Waiver of Jury Trial ....................................... 62
Section 10.17 Entire Agreement .......................................................... 63
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TABLE OF CONTENTS
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PAGE
SCHEDULES AND EXHIBITS:
Schedule 1.1(a) LIBOR Lending Offices
Schedule 5.1 Subsidiaries
Schedule 5.5 Litigation
Schedule 5.8 Existing Indebtedness, Contingent Liabilities and Liens
Schedule 5.11 Environmental Matters
Schedule 6.7 Existing Investments
Exhibit A Promissory Note
Exhibit B Quarterly Compliance Certificate
Exhibit C Investment Policy
Exhibit D Subsidiary Guaranty
Exhibit E Pledge Agreement
Exhibit F Assignment and Acceptance
Exhibit G Security Agreement
Exhibit H Intercreditor Agreement
Exhibit I Borrowing Base Certificate
7
FIFTH AMENDED AND RESTATED
CREDIT AGREEMENT
THIS FIFTH AMENDED AND RESTATED CREDIT AGREEMENT is dated as of April
13, 2000, among PETsMART, Inc., a Delaware corporation (the "Company"), the
Lenders from time to time party hereto, and Bank of America, N.A., a national
banking association, individually and as Administrative Lender (in such latter
capacity, the "Administrative Lender").
WITNESSETH:
The Company, certain of the Lenders (the "Prior Lenders") and the
Administrative Lender are parties to that certain Fourth Amended and Restated
Credit Agreement, dated as of April 16, 1999, as amended by that certain First
Amendment to Fourth Amended and Restated Credit Agreement, dated as of August 6,
1999, and that certain Second Amendment to Fourth Amended and Restated Credit
Agreement, dated as of November 12, 1999 (said Fourth Amended and Restated
Credit Agreement, as amended, the "Prior Credit Agreement").
The Company and the Lenders desire to amend and restate the Prior
Credit Agreement in its entirety to, among other things, amend certain covenants
therein and extend the maturity of the Commitment.
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
parties hereto agree that the Prior Credit Agreement shall be amended and
restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. As used in this Agreement, the following terms
have the respective meanings indicated below (such meanings to be applicable
equally to both the singular and plural forms of such terms):
"Acquisition" shall mean any transaction pursuant to which the Company
or any Subsidiary, (i) whether by means of purchase or other acquisition of
stock or other securities or other equity participation or interest, (A)
acquires more than 50% of the equity interest in any Person pursuant to a
solicitation by the Company or such Subsidiary of tenders of equity securities
of such Person, or through one or more negotiated block, market, private or
other transactions not involving a tender offer, or a combination of any of the
foregoing, (B) makes any corporation a Subsidiary, or causes any corporation,
other than a Subsidiary, to be merged into the Company or any Subsidiary, or
agrees to purchase all or substantially all of the assets of any corporation,
pursuant to a merger, purchase of assets or other reorganization providing for
the delivery or issuance to the holders of such corporation's then outstanding
securities, in exchange for such securities, of cash or securities of the
Company or any Subsidiary, or any combination thereof, or (ii) purchases all or
substantially all of the business or assets of any Person or of any operating
division of any Person.
1.
8
"Acquisition Consideration" shall mean the consideration given by the
Company or any Subsidiary for an Acquisition, including but not limited to the
fair market value of any cash, property, stock or services given, and the amount
of any Indebtedness assumed.
"Acquisition Subsidiary" shall mean any Subsidiary (i) formed solely
for the purpose of consummating an Acquisition, (ii) capitalized with the
minimum requirements of Law, and (iii) which is merged out of existence
immediately upon the consummation of the applicable Acquisition.
"Advance" means an advance made by a Lender to the Company pursuant to
Section 2.1 hereof, including, without limitation any Refinancing Advance, and
any Advance made under Section 3.1(d) hereof.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with another Person.
"Administrative Lender" means Bank of America, N.A., a national banking
association, in its capacity as Administrative Lender hereunder, or any
successor Administrative Lender appointed pursuant to Section 8.6 hereof.
"Administrative Lender Fee Letter" shall have the meaning given to such
term in Section 2.3(b) hereof.
"Agreement" means this Fifth Amended and Restated Credit Agreement, as
hereafter amended, modified, or supplemented in accordance with its terms.
"Applicable Law" means (i) in respect of any Person, all provisions of
constitutions, statutes, laws, ordinances, rules, regulations and orders of
governmental bodies, or regulatory agencies applicable to such Person, and all
orders and decrees of all courts and arbitrators in proceedings or actions to
which the Person in question is a party and (ii) in respect of contracts made or
performed in the State of Texas, "Applicable Law" shall also mean the laws of
the United States of America, including, without limiting the foregoing, 12 USC
Sections 85 and 86, as amended to the date hereof and as the same may be amended
at any time and from time to time hereafter, and any other statute of the United
States of America now or at any time hereafter prescribing the maximum rates of
interest on loans and extensions of credit, and the laws of the State of Texas,
including, without limitation, Chapter 303 of the Texas Finance Code, as
amended, and any other statute of the State of Texas now or at any time
hereafter prescribing maximum rates of interest on loans and extensions of
credit, provided however, that the parties hereto agree pursuant to Texas
Finance Code Section 346.004 that the provisions of Chapter 346 of Texas Finance
Code, as amended, shall not apply to this Agreement, the Advances, the Notes or
Letters of Credit hereunder.
"Applicable Margin" shall mean the following per annum percentages,
applicable in the following situations:
2.
9
LIBOR Base Rate
Applicability Margin Margin
------------- ------ ------
(i) If the Fixed Charges Coverage Ratio is equal to or greater than 1.75 to 1 1.750% 0.250%
(ii) If the Fixed Charges Coverage Ratio is less than 1.75 to 1 but is equal to 2.000% 0.500%
or greater than 1.50 to 1
(iii) If the Fixed Charges Coverage Ratio is less than 1.50 to 1 2.250% 0.750%
The Applicable Margin payable by the Company on the Advances
outstanding hereunder shall be subject to reduction or increase, as applicable
and as set forth in the table above, on a quarterly basis according to the Fixed
Charges Coverage Ratio; provided, that each adjustment in the Applicable Margin
shall be effective as of the fifth day following the date of receipt by the
Administrative Lender of the financial statements required pursuant to Section
6.14(a) or 6.14(b) hereof, as appropriate. If financial statements of the
Company (and corresponding Quarterly Compliance Certificate setting forth the
Fixed Charges Coverage Ratio) are not received by the Administrative Lender by
the fifth day following the date required pursuant to Section 6.14(a) or 6.14(b)
hereof, as appropriate, the Applicable Margin shall be determined as if the
Fixed Charges Coverage Ratio is less than 1.50 to 1 until such time as such
financial statements and Quarterly Compliance Certificate are received. The
Applicable Margin from and including the date hereof to the date of the initial
adjustment to be made therein as provided above shall be determined as if the
Fixed Charges Coverage Ratio were less than 1.50 to 1. The LIBOR Margin shall
apply to LIBOR Advances, and the Base Rate Margin shall apply to Base Rate
Advances.
"Applicable Rate" means, as to any Advance, the rate of interest
payable with respect to such Advance, as determined herein.
"Applicable Rent Reserve" means, at the time in question, the sum of
(a)(i) the total yearly rent payable by the Company and its Domestic
Subsidiaries for the ground or building leases for all of their stores located
in the United States divided by (ii) the total number of the Company's and
Domestic Subsidiaries' stores located in the United States, divided by (iii) 12
months, times (iv) 4 months, times (v) the number of stores located in the
United States for which the Company or a Domestic Subsidiary has not delivered
to the Administrative Lender a Landlord's Waiver and (b) the product of (i)
$1,000,000 multiplied by (ii) the number of warehouses and distribution centers
leased by the Company and its Domestic Subsidiaries and located in the United
States for which the Company or a Domestic Subsidiary has not delivered to the
Administrative Lender a Landlord's Waiver..
"Auditor" means Deloitte & Touche LLP, or other independent certified
public accountants selected by the Company and reasonably acceptable to the
Administrative Lender.
"Bank of America" means Bank of America, N.A., a national banking
association.
"Base Rate" means, for any day, a per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate on such day, or (b) the Applicable Margin
plus the higher of (i) the sum of
3.
10
(x) 0.50% plus (y) the Federal Funds Rate on such day or (ii) the Prime Rate on
such day. The Base Rate shall be adjusted automatically without notice to the
Company as of the opening of business on the effective date of each change in
the Prime Rate or Federal Funds Rate, as the case may be, to account for such
change.
"Base Rate Advance" means any Advance bearing interest based upon the
Base Rate.
"Borrowing Base" means, at the time in question, (i) 60% of the cost of
the Inventory located in the United States of the Company and its Domestic
Subsidiaries, minus (ii) the Applicable Rent Reserve.
"Borrowing Base Certificate" means a certificate, submitted by the
Company to the Administrative Lender, substantially in the form of Exhibit I
hereto, certifying as to the level of the Borrowing Base at the time in
question.
"Business Day" means a day of the year, other than a Saturday or
Sunday, on which banks are (a) open for the transaction of business in Concord,
California, New York, New York, and Los Angeles, California, and, (b) with
respect to any LIBOR Advance, for the transaction of international business
(including dealings in U.S. Dollar deposits) in London, England.
"Capital Expenditures" means the aggregate amount of all purchases or
acquisitions of items considered to be capital items under GAAP, and in any
event shall include the aggregate amount of items leased or acquired under
Capital Leases at the cost of the item, and the acquisition of realty, tools,
equipment, and fixed assets, and any deferred costs associated with any of the
foregoing.
"Capital Leases" means capital leases and subleases, as defined in
accordance with GAAP.
"Capitalization" means Total Debt plus Stockholder's Equity.
"Cash Collateral" means cash or time deposits with, and certificates of
deposit and banker's acceptances issued by, the Administrative Lender which is
subject to a fully perfected, first priority Lien in favor of the Administrative
Lender.
"Cash Equivalents" means investments (directly or through a money
market fund) in (a) certificates of deposit, repurchase agreements, and other
interest bearing deposits or accounts with United States commercial banks having
a combined capital and surplus of at least $100,000,000, or with insurance
companies whose debt obligations have one of the three highest ratings
obtainable from S&P or Xxxxx'x, which certificates, repurchase agreements,
deposits, and accounts mature within one year from the date of investment, (b)
obligations issued or unconditionally guaranteed by the United States
government, or issued by an agency thereof and backed by the full faith and
credit of the United States government, which obligations mature within one year
from the date of investment, (c) direct obligations issued by any state or
political subdivision of the United States, which mature within one year from
the date of investment and have the highest rating obtainable from S&P or
Xxxxx'x on the date of investment, and (d) commercial paper which has one of the
three highest ratings obtainable from S&P or Xxxxx'x.
4.
11
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease or transfer of all or substantially all of the Company's assets
to any Person or group (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended), (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the acquisition
by any Person or group (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) of a direct or indirect majority in
interest (more than 50%) of the voting power of the voting stock of the Company
by way of merger or consolidation or otherwise, or (iv) the first day on which a
majority of the members of the board of directors of the Company are not
Continuing Directors.
"Collateral" means any collateral in which a Lien is granted by any
Person to the Administrative Lender to secure the Obligation.
"Collateral Document" means any document under which a Lien in
Collateral is granted and any document related thereto.
"Commitment" means, as to the Lenders, $70,000,000, and, as to each
initial Lender, the amount set forth opposite the name of such Lender on the
signature pages hereof, as such amount may be increased in accordance with
Section 2.12 hereof, and as reduced from time to time pursuant to Section 2.4
hereof or pursuant to an assignment pursuant to Section 10.4 hereof.
"Company" means PETsMART, Inc., a Delaware corporation.
"Contingent Liability" means, as to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or obligation of any other Person in any
manner, whether directly or indirectly, including without limitation any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase Property or services for the
purpose of assuring the owner of such Indebtedness of its payment, or (c) to
maintain the solvency, working capital, equity, cash flow, fixed charge or other
coverage ratio, or any other financial condition of the primary obligor so as to
enable the primary obligor to pay any Indebtedness or to comply with any
agreement relating to any Indebtedness or obligation.
"Continuing Directors" means, as of any date of determination, any
member of the board of directors of the Company who (i) was a member of such
board of directors on the date hereof or (ii) was nominated for election or
elected to such board of directors with the affirmative vote of a majority of
the Continuing Directors who were members of such board of directors at the time
of such nomination or election.
"Convertible Subordinated Notes" means convertible subordinated notes
issued by the Company and dated November 7, 1997 and November 14, 1997.
"Debt Ratio" means, as of any date of determination, for the Company
and its Subsidiaries, on a consolidated basis, the ratio of (a) Total Debt as of
the date of determination plus (i) the sum of lease expense pursuant to
Operating Leases (such lease expense to be in an amount equal to the product of
lease expense pursuant to Operating Leases for the four fiscal
5.
12
quarters immediately preceding the date of determination multiplied by eight)
minus (ii) cash and Cash Equivalents in aggregate amount in excess of
$50,000,000 to (b) EBITDA for the four fiscal quarters immediately preceding the
date of determination, plus lease expense pursuant to Operating Leases for the
four fiscal quarters immediately preceding the date of determination.
"Debtor Relief Law" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief law affecting the rights of creditors generally from time to time
in effect.
"Default" means any event specified in Section 7.1 hereof, whether or
not any requirement in connection with such event for the giving of notice,
lapse of time, or happening of any further condition has been satisfied.
"Dividend" means, as to any Person, any declaration or payment of any
dividend (other than a stock dividend) on, or the making of any pro rata
distribution, loan, advance, or investment to or in any holder (in its capacity
as a shareholder) of, any shares of capital stock of such Person.
"Domestic Subsidiary" means any Subsidiary of the Company other than a
Foreign Subsidiary. For the purposes of (i) calculating the Borrowing Base and
the Applicable Rent Reserve and (ii) determining which Subsidiaries shall
deliver to the Administrative Lender a Security Agreement only, PETsMART Direct,
Inc. and its direct Subsidiaries shall not be considered Domestic Subsidiaries.
"EBITDA" means, for the Company and its Subsidiaries, calculated on a
consolidated basis in accordance with GAAP, the sum of (a) net profit before
Taxes (but excluding from the calculation thereof (i) the effect of one-time
charges to operating income with respect to the costs related to Pooling
Acquisitions by the Company; provided that such costs shall not, together with
the aggregate Acquisition Consideration (other than capital stock of the
Company) and Capital Expenditures paid or incurred in connection with
Acquisitions during each fiscal year, exceed 15% of Tangible Net Worth during
each fiscal year, (ii) the effect of one-time charges to operating income with
respect to costs and expenses relating to that certain severance package for
Xxxxx Xxxxx in the amount of $1,526,000, and (iii) the effect of the Pet City
Holding Charges incurred during the second, third and fourth fiscal quarters of
fiscal year 1999), plus (b) depreciation and amortization expense, and other
non-cash items deducted in the calculation of net operating income (including
any loss on the Company's investment in XXXxXXXX.xxx), plus (c) interest expense
(including interest expense pursuant to Capital Leases), net of interest and
other investment income, plus (d) any net extraordinary losses included in the
calculation of net operating income, minus (e) any net extraordinary gains
included in the calculation of net operating income.
"Eligible Assignee" means (a) a Lender, (b) an Affiliate of a Lender,
and (c) any other Person approved by both the Administrative Lender and, unless
an Event of Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 10.4(a) hereof, the Company, such approval
not to be unreasonably withheld or delayed by the Company or the Administrative
Lender and such approval to be deemed given by the Company if no objection is
received by the assigning Lender and the Administrative Lender from the Company
6.
13
within two Business Days after notice of such proposed assignment has been
provided by the assigning Lender to the Company; provided, however, that neither
the Company nor any of its Affiliates shall qualify as an Eligible Assignee.
"Environmental Law" means any Law, permit, consent, approval, license,
award, or other authorization or requirement of any Tribunal relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, publicly owned treatment works, septic system, or
land, or otherwise relating to pollution or to the protection of health or the
environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of the Company or any of its
Subsidiaries, or is under common control with the Company or any of its
Subsidiaries, within the meaning of Section 414(b) or (c) of the Internal
Revenue Code of 1986, as amended, and the regulations and rulings issued
thereunder.
"ERISA Event" means (a) a reportable event, within the meaning of
Section 4043 of ERISA, unless the 30-day notice requirement with respect thereto
has been waived by the PBGC, (b) the provision by the administrator of any Plan
of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of
ERISA (including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA), (c) the cessation of operations at a facility in the
circumstances described in Section 4068(f) of ERISA, (d) the withdrawal by the
Company, any Subsidiary, or an ERISA Affiliate from a Multiple Employer Plan
during a Plan year for which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA, (e) the failure by the Company, any Subsidiary, or
any ERISA Affiliate to make a payment to a Plan required under Section 302 of
ERISA, (f) the adoption of an amendment to a Plan requiring the provision of
security to such Plan, pursuant to Section 307 of ERISA, or (g) the institution
by the PBGC of proceedings to terminate a Plan, pursuant to Section 4042 of
ERISA, or the occurrence of any event or condition that constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, a Plan.
"Event of Default" means any of the events specified in Section 7.1 of
this Agreement, provided there has been satisfied any requirement in connection
therewith for the giving of notice, lapse of time, or happening of any further
condition.
"Federal Funds Rate" means, 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 date on such
transactions received by the Administrative Lender from three federal funds
brokers of recognized standing selected by it.
7.
14
"Fixed Charges Coverage Ratio" means, for the Company and its
Subsidiaries determined on a consolidated basis and calculated for the four
fiscal quarters ending on the date of calculation, the ratio of (a) EBITDA plus
lease payments payable pursuant to Operating Leases, to (b) lease payments
payable pursuant to Operating Leases, plus all principal, interest, and other
amounts payable with respect to Total Debt, plus all Restricted Payments other
than Dividends.
"Foreign Subsidiary" means any Subsidiary of the Company which is not
organized under the laws of any state of the United States of America or the
District of Columbia.
"GAAP" means generally accepted accounting principles applied on a
consistent basis. Application on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period, except for new
developments or statements promulgated by the Financial Accounting Standards
Board.
"Hazardous Materials" means all materials subject to any Environmental
Law, including without limitation materials listed in 49 C.F.R. Section 172.101,
Hazardous Substances, explosive or radioactive materials, hazardous or toxic
wastes or substances, petroleum or petroleum distillates, asbestos, or material
containing asbestos.
"Hazardous Substances" means hazardous waste as defined in the Clean
Water Act, 33 U.S.C. Section 1251 et seq., the Comprehensive Environmental
Response Compensation and Liability Act as amended by the Superfund Amendments
and Reauthorization Act, 42 U.S.C. Section 9601 et seq. ("CERCLA"), the Resource
Conservation Recovery Act, 42 U.S.C. Section 6901 et seq., and the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq. ("RCRA")
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, any Lender is then
permitted to charge on the Obligation. If the maximum rate of interest which,
under Applicable Law, any Lender is permitted to charge on the Obligation shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to the
Company. For purposes of determining the Highest Lawful Rate under Applicable
Law, the applicable rate ceiling shall be (i) the weekly rate ceiling described
in and computed in accordance with the provisions of Chapter 303.301 of the
Texas Finance Code, or (ii) if the parties subsequently contract as allowed by
Applicable Law, either the annualized ceiling or quarterly ceiling computed
pursuant to Chapter 303.302 of the Texas Finance Code.
"Indebtedness" means (a) all obligations, contingent or otherwise,
which in accordance with GAAP are required to be classified on the balance sheet
as liabilities, and in any event including Capital Leases, Contingent
Liabilities that are required to be disclosed and quantified in notes to
consolidated financial statements in accordance with GAAP, and liabilities
secured by any Lien on any Property, regardless of whether such secured
liability is with or without recourse, (b) to the extent not otherwise included
in the foregoing subsection (a), all obligations under Interest Hedge
Agreements, all indebtedness for borrowed money, and all reimbursement
obligations with respect to outstanding letters of credit, and (c) to the extent
not otherwise included in the foregoing subsections (a) or (b), all obligations
as lessee under any "tax retention
8.
15
operating lease" or similar lease pursuant to which the lessee has an obligation
upon termination or expiration of the lease to purchase the property covered
thereby in an amount equal to the lessor's Indebtedness related to such
property.
"Insufficiency" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities within the meaning of Section 4001(a)(18) of
ERISA.
"Intercreditor Agreement"means the intercreditor agreement,
substantially in the form of Exhibit H hereto, executed by the Lenders under
this Agreement and the lenders and holders under the Lease Credit Facilities.
"Interest Hedge Agreements" shall mean any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options, puts and
warrants, as the same may be amended or modified and in effect from time to
time, and any and all cancellations, buy backs, reversals, terminations or
assignments of any of the foregoing.
"Interest Period" means, for any LIBOR Advance, the period beginning on
the date the Advance is made and ending one, two, three or six months thereafter
(as the Company shall select).
"Inventory" has the meaning assigned to such term in the UCC.
"Inventory Collateral Release Event" means (i) the receipt by the
Administrative Lender of a Quarterly Compliance Certificate and related
financial statements indicating that for the three consecutive fiscal quarters
ending on the fiscal quarter or fiscal year, as appropriate, for which such
Quarterly Compliance Certificate is delivered (a) the Debt Ratio for such three
consecutive fiscal quarters was less than or equal to 5.00 to 1 and (b) the
Fixed Charges Coverage Ratio was greater than or equal to 1.50 to 1 for such
three consecutive fiscal quarters, (ii) the attainment by the Company of a
rating of BB or better by S&P or Ba2 or better by Moody's, and (iii) the vote to
release the Collateral by the Required Collateral Lenders.
"Investment" means any acquisition of all or substantially all assets
of any Person, or any direct or indirect purchase or other acquisition of, or a
beneficial interest in, capital stock or other securities of any other Person,
or any direct or indirect loan, advance (other than advances to employees for
moving and travel expenses, drawing accounts, and similar expenditures in the
ordinary course of business), or capital contribution to or investment in any
other Person, including without limitation the incurrence or sufferance of
Indebtedness or accounts receivable of any other Person that are not current
assets or do not arise from sales to that other Person in the ordinary course of
business, which is not an Acquisition.
"Investment Policy" means the investment policy of the Company adopted
by the board of directors of the Company and in effect on the date of this
Agreement as set forth on Exhibit C, and any amendments and modifications
thereto that are approved in writing by the Majority Lenders.
9.
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"Issuing Bank" means Bank of America or any other Lender designated by
the Company and acceptable to the Administrative Lender, as issuer of any Letter
of Credit.
"Landlord's Waiver" means each landlord waiver executed by a lessor of
real property leased by the Company or one of its Subsidiaries on which
Collateral is located, in form and substance reasonably satisfactory to the
Administrative Lender.
"Lease Credit Facilities" means (i) the Amended and Restated Lease,
dated as of April 18, 1997, between Arizona Funding Company and the Company,
(ii) the Lease Agreement, dated as of July 6, 1995, between First Security Bank,
National Association, not individually but solely as Owner Trustee under the
1995-1 Pet Stores Trust and the Company, (iii) the Lease Agreement, dated as of
September 5, 1996, between First Security Bank, National Association, not
individually but solely as Owner Trustee under the 1996-1 Pet Stores Trust and
the Company, (iv) the Lease Agreement, dated as of April 18, 1997, among First
Security Bank, National Association, not individually but solely as Owner
Trustee under the 1997-1 Pet Stores Trust and the Company, and (v) the Lease
Agreement, dated as of April 13, 2000, among First Security Bank, National
Association, not individually but solely as Owner Trustee under the 2000-1 PETM
Construction Trust and the Company, and all other documents executed pursuant to
any of the above agreements.
"Lease Credit Facilities Obligations" means all present and future
obligations, indebtedness (including any reimbursement obligations) and
liabilities, and all renewals and extensions of all or any part thereof, of the
Company to any lender or holder or any affiliate of any lender or holder arising
from, by virtue of, or pursuant to any of the Lease Credit Facilities and any
and all renewals and extensions thereof or any part thereof, or future
amendments thereto, all interest accruing on all or any part thereof and
attorneys' fees incurred by each lender or holder for the administration,
execution of waivers, amendments and consents, and in connection with any
restructuring, workouts or in the enforcement or the collection of all or any
part thereof, whether such obligations, indebtedness and liabilities are direct,
indirect, fixed, contingent, joint, several or joint and several.
"Lenders" means the Lenders listed on the signature pages hereof, and
each Eligible Assignee that hereafter becomes a party hereto pursuant to Section
10.4 hereof or pursuant to an amendment to this Agreement or Section 2.12
hereof, for so long as each is owed any portion of the Obligation or is
obligated under any portion of the Commitment.
"Letter of Credit" means any Trade Letter of Credit or Standby Letter
of Credit issued pursuant to Article III hereof.
"Letter of Credit Commitment" means $35,000,000, as reduced from time
to time pursuant to Section 2.4 hereof.
"LIBOR Advance" means an Advance which the Company requests to be made
as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with
the provisions of Section 2.2 hereof.
"LIBOR Basis" means a simple per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the
Applicable Margin. The
10.
17
LIBOR Basis shall, with respect to LIBOR Advances subject to reserve or deposit
requirements, be subject to premiums therefor assessed by each Lender, which are
payable directly to each Lender. Once determined, the LIBOR Basis shall remain
unchanged during the applicable Interest Period.
"LIBOR Lending Office" means, with respect to a Lender, the office
designated as its LIBOR Lending Office on Schedule 1.1(a) attached hereto, and
such other office of the Lender or any of its affiliates hereafter designated by
notice to the Company and the Administrative Lender.
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR Rate" shall mean, for any LIBOR Advance
for any Interest Period therefor, the rate per annum (to be rounded upwards to
the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates.
"License" means, as to any Person, any license, permit, certificate of
need, authorization, certification, accreditation, franchise, approval, or grant
of rights by any Tribunal or third person necessary or appropriate for such
Person to own, maintain, or operate its business or Property, unless the failure
to obtain, retain, or comply with same would not constitute a Material Adverse
Change.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien, or charge of any kind, including without limitation any agreement to give
or not to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement or other similar form of public notice
under the Applicable Laws of any jurisdiction (except for the filing of a
financing statement or notice in connection with an operating lease).
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation conducted or threatened by or before any Tribunal, including
without limitation proceedings, claims, lawsuits, and/or investigations under or
pursuant to any environmental, occupational, safety and health, antitrust,
unfair competition, securities, Tax, or other Applicable Law, or under or
pursuant to any contract, agreement, or other instrument.
"Loan Papers" means this Agreement, the Notes, Letters of Credit, any
Subsidiary Guaranty, any Pledge Agreement, any Security Agreement, applications
and agreements for Letters of Credit, any Interest Hedge Agreement with any
Lender or any Affiliate of any Lender, any fee letters, and all other documents,
instruments, agreements, or certificates executed or delivered by any Person in
connection with this Agreement or as security for the Obligation hereunder.
11.
18
"Majority Lenders" means any combination of three or more Lenders
having at least 51% of the aggregate amount of outstanding Advances plus
liabilities with respect to outstanding Letters of Credit; provided, however,
that if no Advances and Letters of Credit are outstanding, such term means any
combination of three or more Lenders having Specified Percentages equal to at
least 51%; provided further, in each case, if there are three or fewer Lenders,
then "Majority Lenders" shall mean all of such Lenders.
"Material Adverse Change" means any circumstance or event that is or
would reasonably be expected to (a) be material and adverse to the financial
condition, business operations, prospects, or Properties of the Company and its
Subsidiaries as a whole or (b) materially and adversely affect the validity or
enforceability of any of the Loan Papers.
"Material Subsidiary" means each Subsidiary of the Company (a) the
gross revenues of which for the then most recent completed four fiscal quarters
constituted (or, with respect to any such Subsidiary acquired during such fiscal
quarters, would have constituted had the gross revenues of such Subsidiary been
included for such period) 5% or more of the consolidated gross revenues of the
Company and its Subsidiaries for such period, (b) the assets of which as of the
end of any fiscal quarter constituted 5% or more of the consolidated assets of
the Company and its Subsidiaries as of the end of such fiscal quarter, or (c)
the EBITDA (if calculated with respect to such Subsidiary only) for the then
most recently completed four fiscal quarters constituted (or, with respect to
any such Subsidiary acquired during such fiscal quarters, would have constituted
had the EBITDA of such Subsidiary been included for such period) 5% or more of
the consolidated EBITDA of the Company and its Subsidiaries for such period.
"Maturity Date" means April 13, 2003, or such earlier date that the
Commitment is terminated.
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, any Lender is permitted to charge on the Obligation.
"Monthly Date" means the first day of each month during the term of
this Agreement.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Company, any Subsidiary, 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, such plan being maintained pursuant to one or more
collective bargaining agreements.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Company, any Subsidiary, or any ERISA Affiliate and at least one Person other
than the Company, any Subsidiary, and any ERISA Affiliate, or (b) was so
maintained and in respect of which the Company, any Subsidiary, or any ERISA
Affiliate could have liability under Section 4064 or 4069 of ERISA in the event
such plan has been or were to be terminated.
12.
19
"Negative Pledge" means any agreement, contract or arrangement whereby
any Person is prohibited from, or would otherwise be in default as a result of,
creating, assuming, incurring or suffering to exist, directly or indirectly, any
Lien on any of its assets other than Capital Leases permitted hereunder.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
other disposition of any asset by or of any Person (including any capital stock
owned by such Person), the amount of cash received by such Person in connection
with such transaction after deducting therefrom the aggregate, without
duplication, of the following amounts to the extent properly attributable to
such transaction or to any asset that may be the subject thereof: (i) reasonable
brokerage commissions, legal fees, finder's fees, financial advisory fees, fees
for solvency opinions, accounting fees, underwriting fees, investment banking
fees, survey, title insurance, appraisals, notaries and other similar
commissions and fees, and expenses, in each case, to the extent paid, payable or
reimbursed by such Person; (ii) filing, recording or registration fees or
charges or similar fees or charges paid by such Person; (iii) without
duplication, taxes paid or payable by such Person or any shareholder, partner or
member of such Person to governmental taxing authorities as a result of such
sale or other disposition (after taking into account any available tax credits
or deductions or any tax sharing arrangements); and (iv) payment of the
outstanding principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Obligation) that is secured by a Lien on the asset
in question, to the extent required pursuant to the documentation evidencing
such Indebtedness.
"Net Income" means net profit (or loss) after taxes of the Company and
its Subsidiaries, on a consolidated basis, determined in accordance with GAAP.
"Net Worth" means, for the Company and its Subsidiaries on a
consolidated basis, determined in accordance with GAAP, the sum of (a) capital
stock taken at stated or par value, plus (b) capital surplus, plus (c) retained
earnings less treasury stock, plus or minus, as the case may be, the effect of
foreign currency exchanges.
"Note" means each promissory note of the Company evidencing Advances
and obligations owing hereunder to a Lender, in substantially the form of
Exhibit A attached hereto, payable to the order of such Lender and in a maximum
principal amount equal to such Lender's Specified Percentage of the Commitment.
"Obligation" means all present and future obligations, indebtedness
(including the Reimbursement Obligations) and liabilities, and all renewals and
extensions of all or any part thereof, of the Company and its Subsidiaries to
any Lender or any Affiliate of any Lender arising from, by virtue of, or
pursuant to this Agreement, any of the other Loan Papers and any and all
renewals and extensions thereof or any part thereof, or future amendments
thereto, all interest accruing on all or any part thereof and attorneys' fees
incurred by each Lender for the administration, execution of waivers, amendments
and consents, and in connection with any restructuring, workouts or in the
enforcement or the collection of all or any part thereof, whether such
obligations, indebtedness and liabilities are direct, indirect, fixed,
contingent, joint, several or joint and several.
"Operating Leases" mean operating leases, as defined in accordance with
GAAP.
13.
20
"Payment Date" means the last day of the Interest Period for any
Advance and the Maturity Date.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
agency or entity performing substantially the same functions.
"Person" means an individual, limited liability company, partnership,
joint venture, corporation, trust, Tribunal, unincorporated organization, and
government, or any department, agency, or political subdivision thereof.
"Pet City Holdings Charges" means the operating losses, store closure
costs and restructuring charges incurred for the period beginning on the first
day of fiscal year 1999 through the date of the Pet City Stock Transfer and a
non-cash charge for Pet City Holdings plc not to exceed for all such losses,
costs and charges $39,000,000 in aggregate amount.
"Pet City Stock Transfer" means the sale of all of the capital stock of
Pet City Holdings plc.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledge Agreement" means one or more pledge agreements, executed by the
Company or any Domestic Subsidiary, as appropriate, granting a first priority
Lien in (a) 100% of the issued and outstanding equity interests of each Domestic
Subsidiary which is a Material Subsidiary, and (b) 65% of the issued and
outstanding equity interests of any direct Foreign Subsidiary of the Company or
of a Domestic Subsidiary, which such Foreign Subsidiary is a Material
Subsidiary, substantially in the form of Exhibit E hereto, as any such agreement
may be amended, modified, restated or extended from time to time.
"Pooling Acquisition" means any business combination constituting an
Acquisition which is accounted for on a pooling of interests basis under GAAP.
"Prime Rate" means a fluctuating rate per annum as shall be in effect
from time to time equal to the rate of interest announced or published by Bank
of America as its prime rate, and which may not necessarily be the lowest
interest rate charged by Bank of America.
"Prohibited Transaction" has the meaning specified therefor in Section
4975 of the Internal Revenue Code of 1986, as amended, or Section 406 of Title I
of ERISA.
"Property" means all types of real, personal, tangible, intangible, or
mixed property, whether owned in fee simple or leased.
"Quarterly Compliance Certificate" means a certificate of an officer of
the Company acceptable to the Administrative Lender, in the form of Exhibit B
hereto, (a) certifying that such individual has no knowledge that a Default or
Event of Default has occurred and is continuing, or if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action being taken or proposed to be taken with respect thereto, and (b)
setting forth detailed calculations with respect to the covenants described in
Section 6.1 hereof.
14.
21
"Quarterly Date" means the first Business Day of each February, May,
August and November during the term of this Agreement, commencing May 1, 2000.
"Refinancing Advance" means any Advance which is used to pay the
principal amount (or any portion thereof) of an Advance at the end of its
Interest Period and which, after giving effect to such application, does not
result in an increase in the aggregate amount of outstanding Advances.
"Reimbursement Obligations" means, at any date of determination, the
sum of (a) the maximum aggregate amount which is then available to be drawn
under all Letters of Credit plus (b) the aggregate amount of all drawings under
Letters of Credit which have not been reimbursed by the Company or refinanced by
Advances.
"Related Business" means the business of providing pet food, pet
supplies and accessories and related pet services, and activities incidental
thereto.
"Release Date" means the date on which the Notes have been paid, all
other Obligations due and owing have been paid and performed in full, and the
Commitment has been terminated.
"Required Collateral Lenders" means any combination of lenders and
holders under this Agreement and the Lease Credit Facilities having at least
66-2/3% of outstanding loans and advances under all such credit facilities plus
liabilities with respect to outstanding letters of credit; provided, however,
that if no advances, loans, and letters of credit are outstanding, any
combination of such lenders and holders having commitments to loan and advance
under such credit facilities equal to at least 66-2/3%.
"Restricted Payments" means, collectively, (a) Dividends, (b) as to any
Person, any purchase, redemption or other acquisition or retirement for value of
any shares of capital stock of such Person and (c) any prepayment of principal,
interest, premium or penalty on all or any of the Convertible Subordinated Notes
or any defeasance, redemption, purchase, repurchase or other acquisition or
retirement for value, in whole or in part, of all or any of the Convertible
Subordinated Notes.
"Rights" means rights, remedies, powers, and privileges.
"S&P" means Standard & Poor's Ratings Group, a Division of XxXxxx-Xxxx,
Inc., a New York corporation.
"Security Agreement" means one or more security agreements executed by
the Company or any Domestic Subsidiary, granting a first priority Lien in the
Collateral covered thereby, substantially in the form of Exhibit G hereto, as
any such agreement may be amended, modified, restated or extended from time to
time.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, other than a Multiple Employer Plan.
"Solvent" means, with respect to any Person, that on such date (a) the
fair value of the Property of such Person is greater than the total amount of
liabilities, including without
15.
22
limitation Contingent Liabilities of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's Property would constitute an unreasonably
small capital.
"Specified Percentage" means, as to any Lender, the percentage
indicated beside its name on the signature pages hereof, or as adjusted or
specified (a) in a notice by the Administrative Lender to the Company in
connection with an assignment pursuant to Section 10.4 hereof, (b) in an
amendment to this Agreement or (c) pursuant to Section 2.12 hereof.
"Standby Letter of Credit" means any Letter of Credit issued under the
Letter of Credit Commitment other than a Trade Letter of Credit.
"Stockholder's Equity" means stockholder's equity of the Company and
its Subsidiaries as from time to time stated and described in the consolidated
financial statements and consolidated balance sheets provided to the Lenders by
the Company and prepared under GAAP.
"Subordinated Debt" means any Indebtedness of the Company or its
Subsidiaries which shall have been and continues to be validly and effectively
subordinated to the prior payment in full of the Obligation on terms and
documentation approved in writing by the Majority Lenders.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of:
(A) the outstanding capital stock having voting power to elect
a majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency),
(B) the interest in the capital or profits of such partnership
or joint venture, or
(C) the beneficial interest of such trust or estate,
is at the time directly or indirectly owned by such Person, by such
Person and one or more of its Subsidiaries or by one or more of such Person's
Subsidiaries.
"Subsidiary Guaranty" means any guaranty executed by one or more
Subsidiaries, guaranteeing payment and performance of the Obligation,
substantially in the form of Exhibit D hereto, as such agreement may be amended,
modified, renewed or extended from time to time.
"Tangible Net Worth" means with respect to the Company and its
Subsidiaries on a consolidated basis, as of any date of determination, the
excess of (a) Net Worth over (b) the sum, without duplication, of unamortized
debt discount and expense, goodwill, trademarks, trade names, patents, deferred
charges and other intangible assets and any write-up of the value of
16.
23
assets after January 31, 2000; all determined in accordance with GAAP, including
the making of appropriate deductions for minority interest (if any) in
Subsidiaries.
"Taxes" means all taxes, assessments, imposts, fees, or other charges
at any time imposed by any Applicable Laws or Tribunal.
"Total Debt" means, as of the date of determination, determined for the
Company and its Subsidiaries on a consolidated basis, the sum (without
duplication) of (a) all principal and interest owing under the Loan Papers, (b)
all Indebtedness evidenced by a promissory note, bond, debenture or otherwise
representing borrowed money, (c) all Capital Leases, and (d) all Contingent
Liabilities; provided, however, "Total Debt" shall not include any of the Lease
Credit Facilities Obligations.
"Total Liabilities" means the amount of total liabilities of the
Company and its Subsidiaries which would be shown in accordance with GAAP
consistently applied on a consolidated balance sheet and which in any event
shall include (without duplication):
(I) all guaranties and all debt, obligations and liabilities
secured by any Lien upon any property owned by Company or any Subsidiary even
though it has not assumed or became liable for the payment of same; and
(II) Capital Leases.
"Trade Letter of Credit" means any Letter of Credit issued under the
Letter of Credit Commitment in support of obligations incurred in the ordinary
course of business for the purchase of goods and services.
"Tribunal" means any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision, agency, department,
commission, board, bureau, or instrumentality of a governmental body.
"UCC" means the Uniform Commercial Code of Texas, as amended.
"Withdrawal Liability" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.2 Accounting and Other Terms. All accounting terms used in
this Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP consistently applied on a consolidated basis for the
Company and its Subsidiaries, unless otherwise expressly stated herein.
References herein to one gender shall be deemed to include all other genders.
ARTICLE 2
AMOUNTS AND TERMS OF ADVANCES
SECTION 2.1 Advances. Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make Advances to the Company until the
Maturity Date in an aggregate
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outstanding amount not to exceed such Lender's Specified Percentage of the
Commitment less its Specified Percentage of the aggregate amount of all
Reimbursement Obligations then outstanding (assuming compliance with all
conditions to drawing). Subject to Section 2.9 hereof, the Company may borrow,
repay, and reborrow in accordance with this Agreement. Notwithstanding any
provision of any Loan Papers to the contrary, in no event shall the aggregate
Advances outstanding plus all outstanding Reimbursement Obligations exceed the
lesser of (i) the Commitment or (ii) the Borrowing Base. Any Advance shall, at
the option of the Company as provided in Section 2.2 hereof (and, in the case of
LIBOR Advances, subject to availability and to the provisions of Article IX
hereof), be a Base Rate Advance or a LIBOR Advance; provided that there shall
not be outstanding to any Lender, at any one time, more than ten LIBOR Advances.
On the Maturity Date unless sooner paid as provided herein, the outstanding
Advances shall be repaid in full.
SECTION 2.2 Making Advances.
(a) In the case of Base Rate Advances, the Company shall give
the Administrative Lender irrevocable written notice, or irrevocable telephonic
notice followed immediately by written notice (provided, however, that the
Company's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given), of its intention to borrow or reborrow a Base
Rate Advance hereunder. Notice shall be given to the Administrative Lender prior
to 10:00 a.m. Concord, California time, on the day of such Borrowing. Such
notice of borrowing shall specify the requested funding date, which shall be a
Business Day, and the amount of the proposed aggregate Base Rate Advances to be
made by Lenders.
(b) In the case of LIBOR Advances, the Company shall give the
Administrative Lender at least three Business Days' irrevocable written notice,
or irrevocable telephonic notice followed immediately by written notice
(provided, however, that the Company's failure to confirm any telephonic notice
in writing shall not invalidate any notice so given), of its intention to borrow
or reborrow a LIBOR Advance hereunder. Notice shall be given to the
Administrative Lender prior to 10:00 a.m., Concord, California time, in order
for such Business Day to count toward the minimum number of Business Days
required. LIBOR Advances shall in all cases be subject to availability and to
Article IX hereof. For LIBOR Advances, the notice of borrowing shall specify the
requested funding date, which shall be a Business Day, the amount of the
proposed aggregate LIBOR Advances to be made by Lenders and the Interest Period
selected by the Company, provided that no such Interest Period shall extend past
the Maturity Date, or prohibit or impair the Company's ability to comply with
Section 2.5 hereof.
(c) Subject to Sections 2.1 and 2.9 hereof, at least three
Business Days prior to each Payment Date for a LIBOR Advance, the Company shall
give the Administrative Lender irrevocable written notice, or irrevocable
telephonic notice followed immediately by written notice (provided, however,
that the Company's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given), specifying whether all or a portion of such
LIBOR Advance outstanding on the Payment Date (i) is to be repaid and then
reborrowed in whole or in part as a LIBOR Advance, (ii) is to be repaid and then
reborrowed in whole or in part as a Base Rate Advance, or (iii) is to be repaid
and not reborrowed; provided, however, notwithstanding anything in this
Agreement to the contrary, if on any Payment Date a Default
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shall exist, such LIBOR Advance may only be reborrowed as a Base Rate Advance.
Upon such Payment Date, such LIBOR Advance shall, subject to the provisions
hereof, be so repaid and, as applicable, reborrowed.
(d) The aggregate amount of Base Rate Advances to be made by
the Lenders on any day shall be in a principal amount which is at least $500,000
and which is an integral multiple of $100,000; provided, however, that such
amount may equal the unused amount of the Commitment or the amount of any draw
under any Letter of Credit. The aggregate amount of LIBOR Advances having the
same Interest Period and to be made by the Lenders on any day shall be in a
principal amount which is at least $1,000,000 and which is an integral multiple
of $100,000.
(e) The Administrative Lender shall promptly notify the
Lenders of each notice received from the Company pursuant to this Section.
Failure of the Company to give any notice in accordance with Section 2.2(c)
hereof shall result in a repayment of any such existing Advance on the
applicable Payment Date by a Refinancing Advance which is a Base Rate Advance.
Each Lender shall, not later than 1:00 p.m., Concord, California time, on the
date of any Advance that is not a Refinancing Advance, deliver to the
Administrative Lender, at its address set forth herein, such Lender's Specified
Percentage of such Advance in immediately available funds in accordance with the
Administrative Lender's instructions. On the date of any Advance hereunder, the
Administrative Lender shall, subject to satisfaction of the conditions set forth
in Article IV, promptly disburse the amounts made available to the
Administrative Lender by the Lenders by (i) transferring such amounts by wire
transfer pursuant to the Company's instructions, or (ii) in the absence of such
instructions, crediting such amounts to the account of the Company maintained
with the Administrative Lender. All Advances shall be made by each Lender
according to its Specified Percentage.
(f) Unless a Lender shall have notified the Administrative
Lender prior to the date of any Advance that it will not make available its
Specified Percentage of the Advance, the Administrative Lender may assume that
such Lender has made the appropriate amount available in accordance with
subsection (a) above, and the Administrative Lender may, in reliance upon such
assumption, make available to the Company a corresponding amount. If and to the
extent any Lender shall not have made such amount available to the
Administrative Lender, the Lender and Company severally agree to repay to the
Administrative Lender forthwith on demand such corresponding amount together
with interest thereon, from the date such amount is made available to the
Company until the date such amount is repaid to the Administrative Lender, at
(i) in the case of the Company, the Base Rate, and (ii) in the case of such
Lender, the Federal Funds Rate.
(g) The failure by any Lender to make available its Specified
Percentage of an Advance hereunder shall not relieve any other Lender of its
obligation, if any, to make available its Specified Percentage of any Advance.
In no event, however, shall any Lender be responsible for the failure of any
other Lender to make available any portion of an Advance.
SECTION 2.3 Fees.
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(a) Subject to Section 10.9 hereof, the Company agrees to pay
to the Administrative Lender, for the ratable account of the Lenders, a
commitment fee (which shall be payable quarterly in arrears on each Quarterly
Date and on the Maturity Date) based on the daily average unused portion of the
Commitment (subject to Section 10.9 hereof, computed on the basis of a 360-day
year for the actual number of days elapsed) at the following per annum
percentages, applicable in the following situations:
Applicability Percentage
------------- ----------
(A) If the Fixed Charges Coverage Ratio is greater than or equal to 1.75 to 1 0.375%
(B) If the Fixed Charges Coverage Ratio is less than 1.75 to 1 but is equal 0.375%
to or greater than 1.50 to 1
(C) If the Fixed Charges Coverage Ratio is less than 1.50 to 1 0.500%
For purposes of calculation of the commitment fee, Letters of Credit
outstanding from time to time will reduce the unused portion of the Commitment.
The commitment fee shall be subject to reduction or increase, as applicable and
as set forth above, on a quarterly basis according to the performance of the
Company as tested by the Fixed Charges Coverage Ratio. Any such increase or
decrease in such fee shall be effective on the fifth day following the date of
receipt by the Administrative Lender of the financial statements required
pursuant to Section 6.14(a) or 6.14(b) hereof, as appropriate. If such financial
statements are not received by the fifth day following the date required, the
commitment fee shall be determined as if the Fixed Charges Coverage Ratio is
less than 1.50 to 1 until such time as such financial statements are received.
From and including the date hereof to the date of the initial adjustment of the
commitment fee to be made as provided above, the percentage shall be 0.50%.
(b) The Company agrees to pay to the Administrative Lender for
its account and for the ratable account of the Lenders, the fees provided for in
the letter agreement dated as of the Agreement Date, between the Company and the
Administrative Lender on the date and in the amounts specified therein (the
"Administrative Lender Fee Letter").
(c) The Company agrees to pay to the Administrative Lender,
for the ratable account of the Lenders, a letter of credit fee on the average
daily amount for drawing under all outstanding Trade Letters of Credit, from the
date of issuance of the initial Trade Letter of Credit through the date of
termination of the final Trade Letter of Credit, at the rate of 0.625% per
annum, payable in arrears on each Quarterly Date and on the later of the
Maturity Date or the date of termination of the final Trade Letter of Credit.
(d) The Company agrees to pay to the Administrative Lender,
for the ratable account of the Lenders, a per annum letter of credit fee on the
average daily amount for drawing under all outstanding Standby Letters of
Credit, from the date of issuance of the initial Standby Letter of Credit
through the date of termination of the final Standby Letter of Credit, at a rate
equal to the then Applicable Margin in effect for LIBOR Advances from time to
time, payable in arrears on each Quarterly Date and on the later of the Maturity
Date or the date of termination of the final Standby Letter of Credit.
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(E) The Company agrees to pay to the Administrative Lender,
for the sole account of the Issuing Bank, an issuance fee (which shall be
payable quarterly in arrears on each Quarterly Date and on the Maturity Date)
equal to 0.125% per annum of the average daily amount available for drawing
under all outstanding Letters of Credit.
SECTION 2.4 Reduction of Commitment.
(a) The Company shall have the right from time to time, upon
notice to the Administrative Lender not later than 1:00 p.m. (Concord,
California time), three Business Days in advance, to reduce the Commitment (and
the Letter of Credit Commitment, if applicable), in whole or in part; provided,
however, that (i) the Company shall pay the accrued commitment fee on the amount
of such reduction, (ii) any partial reduction (A) that results in a repayment of
Base Rate Advances shall be in an aggregate amount which is at least $500,000
and which is an integral multiple of $100,000 and (B) that results in a
repayment of LIBOR Advances shall be in an aggregate amount which is at least
$1,000,000 and which is in an integral multiple of $100,000 and (iii) no
voluntary reduction in the Commitment shall cause any LIBOR Advance to be repaid
prior to the last day of its Interest Period unless the costs provided for in
Section 2.9 hereof are paid as set forth in Section 2.9 hereof.
(b) Upon any reduction of the Commitment pursuant to this
Section, the Company shall immediately make a repayment of Advances in
accordance with Section 2.5 hereof. The Company shall reimburse each Lender for
any loss or out-of-pocket expense incurred by each Lender in connection with any
such payment, as set forth in Section 2.9 hereof, to the extent applicable. The
Company shall not have any right to rescind any termination or reduction. Once
reduced or terminated, the Commitment may not be increased or reinstated.
(c) On the Maturity Date, the Commitment shall automatically
reduce to zero.
SECTION 2.5 Prepayment and Repayment of Advances.
(a) The principal amount of any Base Rate Advance may be
prepaid in full or in part at any time, without penalty, upon telephonic notice
(to be promptly followed by written notice) to the Administrative Lender not
later than 11:00 a.m., Concord, California time on the date of prepayment. LIBOR
Advances may be voluntarily prepaid upon three Business Days' prior telephonic
notice (to be promptly followed by written notice) to the Administrative Lender,
but only so long as the Company concurrently reimburses the Lenders in
accordance with Section 2.9 hereof. Any notice of prepayment shall be
irrevocable.
(b) If any Advances are outstanding at the time the Company or
any of its Subsidiaries receives Net Cash Proceeds from the sale or disposition
by the Company or any of its Subsidiaries of any assets (including any capital
stock of any Subsidiary) (other than sales or dispositions permitted under
Sections 6.5(b)(i) and 6.5(b)(ii) hereof), the Company shall, within two days of
such receipt, apply the Net Cash Proceeds to the prepayment of Base Rate
Advances; provided that, (i) if, at the time of such receipt, only LIBOR
Advances are outstanding, or (ii) if a portion of the Net Cash Proceeds remains
after prepaying all Base Rate Advances as set out above and any LIBOR Advances
are outstanding, the Company shall, within two days of such receipt, deliver the
Net Cash Proceeds to the Administrative Lender, and the
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Administrative Lender shall apply the Net Cash Proceeds to the payment of such
LIBOR Advances on the Payment Dates for such LIBOR Advances.
(c) On or before the date of any reduction of the Commitment,
the Company shall prepay outstanding Advances in an amount necessary to reduce
the sum of outstanding Advances and Reimbursement Obligations to an amount not
greater than the Commitment as so reduced pursuant to Section 2.4 hereof. To the
extent that at any time the aggregate principal amount of Advances and
Reimbursement Obligations outstanding hereunder exceed the Borrowing Base then
in effect, the Company shall automatically repay Advances in an amount equal to
such excess. The Company shall first prepay all Base Rate Advances and shall
thereafter prepay LIBOR Advances. To the extent that any prepayment requires
that a LIBOR Advance be repaid on a date other than a Payment Date, the Company
shall reimburse each Lender in accordance with Section 2.9 hereof.
(d) Any prepayment of a LIBOR Advance shall be (i) in an
aggregate amount of at least $1,000,000 and which is an integral multiple of
$100,000 and (ii) accompanied by (A) interest accrued on the principal amount
being prepaid and (B) amounts due in accordance with Section 2.9 hereof. Any
voluntary partial prepayment of a Base Rate Advance shall be in a principal
amount of $100,000 or an integral multiple thereof.
(e) The unpaid principal amount of the Base Rate Advances
shall be due and payable on the Maturity Date.
(f) The principal amount of each LIBOR Advance hereunder shall
be due and payable on its Payment Date, which principal payment may be made by
means of a Refinancing Advance.
(g) On the date of any reduction of the Commitment pursuant to
Section 2.4 hereof, including the Maturity Date, the (i) aggregate amount of the
Advances outstanding on such date of reduction in excess of the Commitment (as
then reduced) minus (ii) all outstanding Reimbursement Obligations shall be due
and payable, which principal payment may not be made by means of Refinancing
Advances.
(h) All telephonic notices under Article III hereof shall be
made to Bank of America, N.A., Attn: Xxxxx Xxxxxxxx, 0000 Xxxxxxx Xxxxxxxxx,
Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000, (000) 000-0000, or such other
person as the Administrative Lender may from time to time specify in accordance
with Section 10.2 hereof.
SECTION 2.6 Interest on Advances.
(a) Subject to Section 10.9 hereof, Base Rate Advances shall
bear interest at the lesser of (a) the Highest Lawful Rate and (b) the Base Rate
as in effect from time to time. Accrued interest on each Base Rate Advance shall
be computed on the basis of a year of 365 or 366 days, as applicable, for the
number of days actually elapsed, and shall be due and payable in arrears on each
Quarterly Date and on the Maturity Date. If the amount of interest payable
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for the account of any Lender on any interest payment date in respect of any
Base Rate Advance would exceed the Maximum Amount, the amount of interest
payable on such interest payment date shall be automatically reduced to the
Maximum Amount. If the amount of interest payable for the account of any Lender
in respect of any interest computation period is reduced pursuant to the
immediately preceding sentence and the amount of interest payable for its
account in respect of any subsequent interest computation period would be less
than the Maximum Amount, then the amount of interest payable for its account in
respect of such subsequent interest computation period shall be automatically
increased to such Maximum Amount; provided that at no time shall the aggregate
amount by which interest paid for the account of any Lender has been increased
pursuant to this sentence exceed the aggregate amount by which interest paid for
its account has theretofore been reduced pursuant to the immediately preceding
sentence.
(b) Subject to Section 10.9 hereof, each LIBOR Advance shall
bear interest at a rate per annum equal to the LIBOR Basis for such Advance. The
Administrative Lender, whose determination shall be conclusive, shall determine
the LIBOR Basis on the second Business Day prior to the applicable funding date
and shall notify the Company and the Lenders of such LIBOR Basis. Interest on
each LIBOR Advance shall be computed on the basis of a 360-day year for the
actual number of days elapsed, and shall be payable in arrears on the applicable
Payment Date and on the Maturity Date; provided, however, that if the Interest
Period for such Advance exceeds three months, interest shall also be due and
payable in arrears on the last Business Day before the date which is three
months after the initial date of such Interest Period.
(c) If the Company fails to give the Administrative Lender
timely notice of its selection of a LIBOR Basis or an Interest Period for a
LIBOR Advance, or if for any reason a determination of a LIBOR Basis for any
Advance is not timely concluded due to the fault of the Company, the Base Rate
shall apply to the applicable Advance.
(d) With respect to each Advance, all past due principal and
interest shall, upon notice by the Administrative Lender to the Company, bear
interest at the lesser of (i) the Applicable Rate as in effect from time to
time, plus 2% or (ii) the Highest Lawful Rate, and shall be due and payable on
demand.
SECTION 2.7 Computations and Manner of Payments.
(a) The Company shall make each payment hereunder and under
the other Loan Papers not later than 1:00 p.m. (Concord, California time) on the
day when due in same day funds to the Administrative Lender, for the ratable
account of the Lenders unless otherwise specifically provided herein, at the
Administrative Lender's office at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxxx,
Xxxxxxxxxx 00000-0000, for credit to commercial loan FTA #3750836479, reference:
PETsMART, Inc. No later than the end of each day when each payment hereunder is
made, the Company shall notify Xxxxx Xxxxxxxx, or such other person as the
Administrative Lender may from time to time specify.
(b) Unless the Administrative Lender shall have received
notice from the Company prior to the date on which any payment is due hereunder
that the Company will not make payment in full, the Administrative Lender may
assume that such payment is so made on such date and may, in reliance upon such
assumption, make distributions to the Lenders. If and to the extent the Company
shall not have made such payment in full, each Lender shall repay to the
Administrative Lender forthwith on demand the applicable amount distributed,
together with
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interest thereon at the Federal Funds Rate, from the date of distribution until
the date of repayment. The Company hereby authorizes each Lender, if and to the
extent payment is not made when due hereunder, to charge the amount so due
against any account of the Company with such Lender.
(c) Subject to Section 10.9 hereof, all computations of fees
hereunder shall be made on the basis of a year of 360 days, for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such fee is payable. All payments under the Loan Papers
shall be made in United States dollars, and without set-off, counterclaim, or
other defense.
(d) Whenever any payment to be made hereunder or under any
other Loan Papers shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day, unless such
Business Day falls in another calendar month, in which case payment shall be
made on the preceding Business Day. Any extension of time shall be included in
the computation of interest or fees, if applicable.
SECTION 2.8 Yield Protection.
(a) If any Lender determines that compliance with any
Applicable Law (including without limitation existing and future Applicable
Laws), or any guideline or request from any central bank or other Tribunal
(whether or not having the force of Applicable Law) affects or would affect the
amount of capital required or expected to be maintained by such Lender or any of
its Affiliates, and that the amount of such capital is increased by or based
upon the existence of any Commitment, Advance, or Letter of Credit (or similar
commitments, loans or letters of credit), then, upon demand by such Lender, the
Company shall immediately pay to such Lender, from time to time as specified,
additional amounts sufficient to compensate it or any of its Affiliates for the
reduction in rate of return on such Lender's or Affiliate's capital below that
which such Lender or Affiliate could have achieved but for such compliance,
guideline or request, to the extent that such Lender or Affiliate reasonably
determines such increase in capital to be allocable to the existence or
maintenance of or any participation in any Commitment, Advance, or Letter of
Credit; provided, however, the Company shall have no obligation to repay or
reimburse any Lender or Affiliate thereof for costs incurred more than 180 days
before the date of such demand.
(b) Provided that notice shall have been given to the Company
of the reasons therefor and in reasonable detail, determinations by any Lender
for purposes of this Section shall be conclusive, absent manifest error.
SECTION 2.9 Reimbursement. Whenever any Lender shall sustain or incur
any losses or reasonable out-of-pocket expenses in connection with (a) failure
by the Company to borrow any LIBOR Advance after having given notice of its
intention to borrow in accordance with Section 2.2 hereof (whether by reason of
the Company's election not to proceed or the non-fulfillment of any of the
conditions set forth in Article IV hereof), (b) failure by the Company to prepay
any LIBOR Advance after having given notice of its intention to prepay in
accordance with Section 2.6 hereof, or (c) any prepayment for any reason of any
LIBOR Advance in whole or in part (including a prepayment pursuant to Sections
2.5, 7.2, 9.3(b) and 10.9 hereof), the Company
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agrees to pay to any such Lender, upon its demand, an amount sufficient to
compensate such Lender for all such losses, costs and out-of-pocket expenses,
subject to Section 10.9 hereof. Such Lender's good faith determination of the
amount of such losses, costs or out-of-pocket expenses, calculated in its usual
fashion, absent manifest error, shall be binding and conclusive. Such losses
shall include, without limiting the generality of the foregoing, lost profits
and reasonable expenses incurred by such Lender in connection with the
re-employment of funds prepaid, repaid, converted or not borrowed, converted or
paid, as the case may be. Upon request of the Company, such Lender shall provide
a certificate setting forth the amount to be paid to it by the Company hereunder
and calculations therefor.
SECTION 2.10 LIBOR Lending Offices. Each Lender's initial LIBOR Lending
Office is set forth opposite its name on the signature pages hereto. Each Lender
shall have the right at any time and from time to time to designate a different
office of itself or of any Affiliate as such Lender's LIBOR Lending Office, and
to transfer any outstanding LIBOR Advance to such LIBOR Lending Office. No such
designation or transfer shall result in any liability on the part of the Company
for increased costs or expenses resulting solely from such designation or
transfer (except any such transfer which is made by a Lender pursuant to Section
9.2 or 9.3 hereof, or otherwise for the purpose of complying with Applicable
Law). Increased costs for expenses resulting from a change in Applicable Law
occurring subsequent to any such designation or transfer shall be deemed not to
result solely from such designation or transfer.
SECTION 2.11 Calculation of LIBOR Rate. The provisions of this
Agreement relating to calculation of the LIBOR Rate are included only for the
purpose of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate, it being understood that each Lender
shall be entitled to fund and maintain its funding of all or any part of a LIBOR
Advance as it sees fit.
SECTION 2.12 Conditions Precedent to the Increase of the Commitment.
Upon written request by the Company to the Administrative Lender and the Lenders
not less than ten Business Days prior to the proposed effective date of the
proposed increase (or, in the case of each proposed Lender, such lesser notice
as any proposed Lender is willing to accept), the Commitment shall, subject to
the further terms and conditions set forth below, increase to a maximum of
$95,000,000 in the manner set forth below:
(a) On any date of proposed increase in the Commitment, the
representations and warranties contained in Article V hereof are true and
correct on such date, as though made on and as of such date, except to the
extent expressly made only as of a prior date;
(b) On any date of proposed increase in the Commitment, no
Default or Event of Default shall exist on any such date, and no Default or
Event of Default would result from such increase in the Commitment and the
subsequent Advance to the Company up to the amount of the Commitment (as
increased);
(c) On any date of proposed increase in the Commitment, there
shall have occurred no Material Adverse Change since January 31, 1999 (other
than the Pet City Holding Charges);
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(d) On any date of proposed increase in the Commitment, the
sum of all Advances and Reimbursement Obligations outstanding (after giving
effect to any proposed Advance to be made on such date) shall not exceed the
Commitment (as increased);
(e) Upon satisfaction of each of the conditions precedent in
this Section 2.12, the Company shall be entitled to increase the Commitment not
more than three times, in an aggregate amount for such increases not to exceed
$25,000,000. Each Lender electing to participate in such Commitment increase
shall accept any allocation amount designated by the Company and the
Administrative Lender that is equal to or less than its Specified Percentage of
the Commitment increase;
(f) Notwithstanding anything herein or in any other Loan Paper
to the contrary, the Company and the Administrative Lender may agree to add
other creditors or increase the Specified Percentage of one or more Lenders (if
acceptable to such Lenders) in connection with any such proposed increase if one
or more of the existing Lenders does not elect to increase its respective
portions of the Commitment in an amount equal to such Lender's Specified
Percentage of the requested Commitment increase;
(g) Each of the proposed increases shall be in an aggregate
minimum amount of $10,000,000 and $5,000,000 multiples thereof;
(h) Each Lender (including any new Lenders party hereto) shall
have received a Promissory Note evidencing its Specified Percentage of the
Commitment, as adjusted, and the Company, each of its Subsidiaries and each
Lender agrees to execute any and all such documents deemed necessary by the
Administrative Lender in order to effectuate this Section 2.12 (whether
affirmation of guaranties, other documents or otherwise);
(i) On the date of any increase in the Commitment, the
Administrative Lender shall deliver to each Lender evidence of new Specified
Percentages adjusted to give effect to the increase in the Commitment, and any
reallocation required in order for each Lender to have its Specified Percentage
(as adjusted) of the Advances;
(j) On or prior to the date of increase, each new Lender being
added to this Agreement shall deliver to the Company and the Administrative
Lender documentation acceptable to the Administrative Lender evidencing such new
Lender's acceptance of this Agreement and all the other Loan Papers in form and
substance reasonably acceptable to the Administrative Lender (and making such
Lender a party to this Agreement and the other Loan Papers);
(k) The Administrative Lender shall have received a pro-forma
Compliance Certificate in form and substance acceptable to the Administrative
Lender and demonstrating compliance with the terms of this Agreement and the
Loan Papers for one full year after the date of such proposed increase;
(l) The Administrative Lender on behalf of each Lender shall
have received all amendments to any Loan Papers as the Administrative Lender
shall deem reasonably necessary; and
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(m) With respect to each increase in the Commitment, on the
date of such increase, the Administrative Lender shall deliver to the Company
notice of the cost of any LIBOR breakage or other loss incurred by any Lender as
a result of such increase and any reallocation among the Lenders, and the
Company shall pay such costs on the date of such increase in immediately
available funds to the Administrative Lender on behalf of such Lenders.
(n) No Lender shall be obligated to increase the dollar amount
of its share of the Commitment without its written consent in its sole
discretion. In connection with any increase to the Commitment in accordance with
the terms of this Section 2.12, each existing Lender (regardless of whether such
Lender is participating in such increase) agrees to execute any and all
agreements requested by the Administrative Lender to effectuate the intent of
this Section 2.12. Notwithstanding anything contained herein to the contrary,
the limitations placed upon assignments set forth in Section 11.4 hereof shall
not apply to proposed increases pursuant to this Section.
ARTICLE 3
LETTERS OF CREDIT
SECTION 3.1 Letter of Credit Commitment; Reimbursement.
(a) Subject to the terms and conditions hereof, and in
reliance upon subsection (b) below, the Issuing Bank agrees, from time to time
until the Maturity Date, to issue one or more Letters of Credit for the account
of the Company. The aggregate amount of outstanding Letters of Credit shall not
exceed at any time outstanding, the lesser of (i) the Letter of Credit
Commitment or (ii) an amount equal to the lesser of the Commitment or the
Borrowing Base minus the aggregate Reimbursement Obligations and Advances then
outstanding. Letters of Credit may be issued for activities and payments
relating to the ordinary course of business of the Company and its Subsidiaries.
No Letter of Credit shall be issued if issuance, in the Administrative Lender's
or the Issuing Bank's sole judgment, would violate any Applicable Law or any
internal policy or standard of the Issuing Bank.
(b) No Letter of Credit shall have an expiration date
(including all rights of renewal) later than the earlier of (i) five Business
Days prior to the Maturity Date or (ii) the date which is eighteen months after
the issuance thereof. The Company shall be liable for the repayment of any
Reimbursement Obligations. If on the Maturity Date there are any Letters of
Credit outstanding, the Company shall deposit with the Administrative Lender on
the Maturity Date Cash Collateral in an amount not less than the maximum amount
then available to be drawn under such outstanding Letters of Credit.
(c) Promptly upon issuance of a Letter of Credit, the Issuing
Bank shall notify the Administrative Lender and each Lender of the date of
issuance, amount, and expiration date of such Letter of Credit, and shall
deliver a copy to any Lender upon request. Upon issuance, each Lender shall
thereupon have purchased and received from the Issuing Bank a participation in
such Letter of Credit and the Company's reimbursement obligations relating
thereto under the applicable letter of credit application and agreement, to the
extent of such Lender's Specified
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Percentage of the maximum amount available to be drawn under such Letter of
Credit (assuming compliance with all conditions to drawing).
(d) The payment by the Issuing Bank of a draft drawn under any
Letter of Credit shall constitute for all purposes of this Agreement the making
by the Issuing Bank of a Base Rate Advance in the amount of such draft (but
without any requirement for compliance with the conditions set forth in Article
IV hereof); provided, however, if as a result of any Debtor Relief Law the
Issuing Bank is prohibited from making an Advance, the obligation of the Company
to repay such draft shall bear interest at the Base Rate. In the event that a
payment under any Letter of Credit is not reimbursed by the Company by 11:00
a.m. (Concord, California time) on the first Business Day after notice of such
drawing has been given by the Issuing Bank to the Company, the Issuing Bank
shall promptly notify Administrative Lender and each other Lender. Each such
Lender shall, on the first Business Day following such notification, make an
Advance (or, if as a result of any Debtor Relief Law, the Lenders are prohibited
from making an Advance, each Lender shall fund its participation purchased
pursuant to Section 3.1(c) hereof by making such amount available to the
Administrative Lender), which shall bear interest at the Base Rate, and shall be
used to repay the applicable portion of the Issuing Bank's Advance with respect
to such Letter of Credit, in an amount equal to the amount of its Specified
Percentage in such drawing for application to reimburse the Issuing Bank (but
without any requirement for compliance with the applicable conditions set forth
in Article IV hereof) and shall make available to the Administrative Lender for
the account of the Issuing Bank, by deposit at the Administrative Lender's
office, in same day funds, the amount of such Advance. In the event that any
Lender fails to make available to the Administrative Lender for the account of
the Issuing Bank the amount of such Advance on the date specified in the notice
from the Issuing Bank to such Lender, the Issuing Bank shall be entitled to
recover such amount on demand from such Lender together with interest thereon
from such date until paid at a rate per annum equal to the lesser of (i) the
Highest Lawful Rate or (ii) the Federal Funds Rate. Notwithstanding anything to
the contrary above, in no event shall any Lender be obligated to reimburse the
Issuing Bank for such an Advance made with the gross negligence or willful
misconduct of the Issuing Bank.
SECTION 3.2 Standard of Care.
(a) The Issuing Bank agrees that it shall give the same care
and attention to each Letter of Credit as it gives to its other letters of
credit. The Lenders and the Company agree that, in paying any draw under any
Letter of Credit, the Issuing Bank shall not have any responsibility to obtain
any document (other than any sight draft or other document required by the
Letter of Credit), or to ascertain or inquire as to the validity or accuracy of
any document or the authority of the Person delivering any document.
(b) None of the Issuing Bank and its representatives,
directors, officers, employees, or agents shall be liable to any Lender, the
Company, or any other Person for (i) any action taken or omitted in connection
with this Article or any Letters of Credit at the request or with the approval
of Majority Lenders, (ii) any action taken or omitted in the absence of gross
negligence and willful misconduct, (iii) any recitals, statements,
representations, or warranties contained in any document distributed to any
Lender, (iv) the creditworthiness of the Company or any of its Subsidiaries, (v)
the execution, effectiveness, genuineness, validity, or
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enforceability of any Loan Papers, (vi) the value, sufficiency, perfection, or
priority of any security for any obligations under the Loan Papers, or (vii) any
circumstances beyond the control of the Issuing Bank with respect to any Letter
of Credit. The Issuing Bank shall not incur any liability by acting in
reasonable reliance upon any advice of counsel, or any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telecopy,
telex, or similar writing) believed in good faith by it to be genuine or to be
signed by the proper parties.
SECTION 3.3 Expenses of the Issuing Bank. In order to induce the
Issuing Bank to maintain Letters of Credit and to induce the Lenders to
participate therein, the Company agrees to reimburse the Issuing Bank,
Administrative Lender, and Lenders, upon demand, for any Taxes, (other than
Taxes on the overall net income of the Administrative Lender, the Issuing Bank
or any Lender), fees, charges, or other costs or expenses whatsoever, including
attorneys' fees, incurred by the Issuing Bank, the Administrative Lender, or any
Lender in connection with issuance of, maintenance of, participation in, or
payment under any Letter of Credit.
SECTION 3.4 Obligations of the Company Absolute. The obligations of the
Company under this Article shall be absolute and unconditional under all
circumstances and irrespective of any set-off, counterclaim, or defense to
payment which the Company may have or have had against the Issuing Bank, the
Administrative Lender, any Lender, or the beneficiary of any Letter of Credit.
The Company agrees with the Administrative Lender, Issuing Bank, and Lenders
that they shall not be responsible for, and the Company's obligations shall not
be affected by, any matter or event whatsoever pertaining to any Letter of
Credit, including without limitation the validity or genuineness of documents or
of any endorsements thereof, even if such documents should in fact prove to be
in any respect invalid, fraudulent, or forged, or any claims or disputes by or
among the Company, beneficiary of any Letter of Credit, or any other Person,
including any Person to whom any Letter of Credit may be transferred. The
Company agrees to indemnify and hold harmless the Issuing Bank, the Lenders and
their representatives, directors, officers, employees, and agents from and
against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, and/or disbursements of any kind or nature
whatsoever that may be imposed on, asserted against, or incurred by the Issuing
Bank or any Lender in any way with respect to any Letter of Credit issued for
the account of the Company, or any action taken or omitted by the Issuing Bank
with respect to any such Letter of Credit, including any negligence of the
Issuing Bank; provided, however, that the Issuing Bank shall not be so
indemnified and held harmless for, and shall be liable to the Company only to
the extent of, any direct (as opposed to consequential) damages suffered by the
Company which the Company proves were caused by the Issuing Bank's willful
misconduct or gross negligence. The Issuing Bank shall not be liable for error,
omission, interruption, or delay in transmission, dispatch, or delivery of any
message or advice, however transmitted, in connection with any Letter of Credit.
The Company agrees that any action taken or omitted by the Issuing Bank, the
Administrative Lender, or any Lender with respect to any Letter of Credit or
related draws, drafts, or documents, if done in good faith and in accordance
with the standards of care specified in applicable state Laws or the Uniform
Customs and Practices for Documentary Credits as most recently published by the
International Chamber of Commerce (which publication shall control in the event
of any conflict between such publication and any such Applicable Law) shall be
binding on the Company and shall not put the Issuing Bank, the Administrative
Lender, or any Lender under any liability to the Company.
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ARTICLE 4
CONDITIONS PRECEDENT
SECTION 4.1 Conditions Precedent to Effectiveness. The effectiveness of
this Agreement is subject to fulfillment of the following conditions precedent:
(a) The making of the Commitment, the making of the initial
Advance and issuance of the initial Letter of Credit shall not contravene any
Applicable Law applicable to the Administrative Lender, any Lender, or the
Issuing Bank.
(b) No Material Adverse Change, as determined by the
Administrative Lender, shall have occurred and be continuing since January 31,
1999 (other than the Pet City Holdings Charges).
(c) The Company shall have delivered to the Administrative
Lender a Certificate, dated the effective date, executed by a duly authorized
officer, certifying that (i) no Default or Event of Default has occurred and is
continuing, (ii) the representations and warranties set forth in Article V
hereof are true and correct, and (iii) it has complied with all agreements and
conditions to be complied with by it under the Loan Papers by such date.
(d) The Company shall have delivered to the Administrative
Lender a Secretary's Certificate, dated the effective date, certifying (i) that
copies of its certificate of incorporation and bylaws previously delivered to
the Administrative Lender are true and complete, and in full force and effect,
without amendment except as shown, (ii) that a copy of its resolutions
authorizing execution and delivery of this Agreement and any other Loan Papers
attached thereto is true and complete, and that such resolutions are in full
force and effect, were duly adopted, have not been amended, modified, or
revoked, and constitute all resolutions adopted with respect to this loan
transaction, and (iii) to the incumbency, name, and signature of each officer
authorized to sign this Agreement and any other Loan Papers on its behalf. The
Administrative Lender, Lenders, and Issuing Bank may conclusively rely on the
certificate delivered pursuant to this subsection until they receive notice in
writing to the contrary.
(e) Each Domestic Subsidiary shall have delivered to the
Administrative Lender a Secretary's Certificate, dated the effective date,
certifying (i) that copies of its certificate of incorporation and bylaws
previously delivered to the Administrative Lender are true and complete, and in
full force and effect, without amendment except as shown, (ii) that a copy of
its resolutions authorizing execution and delivery of the Loan Papers to which
it is party are true and complete, and that such resolutions are in full force
and effect, were duly adopted, have not been amended, modified, or revoked, and
constitute all resolutions adopted with respect to this loan transaction, and
(iii) to the incumbency, name, and signature of each officer authorized to sign
the Loan Papers to which it is party. The Administrative Lender, Lenders, and
Issuing Bank may conclusively rely on the certificate delivered pursuant to this
subsection until they receive notice in writing to the contrary.
(f) The Administrative Lender shall have received opinions of
counsel to the Company, dated the effective date, which counsel shall be
acceptable to the Administrative
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Lender, (i) to the effect that the Company has full power and authority to
execute, deliver, and perform this Agreement and all other Loan Papers to be
executed and delivered by it; (ii) to the effect that all such Loan Papers
constitute the legal, valid, and binding obligations of the Company, enforceable
in accordance with their respective terms (subject as to enforcement of remedies
to any applicable bankruptcy, reorganization, moratorium, fraudulent conveyance,
or similar Applicable Laws or principles of equity affecting the enforcement of
creditors' rights generally); and (iii) as to such other matters, and otherwise
in form and substance, satisfactory to the Administrative Lender.
(g) The Administrative Lender shall have received, in form and
substance satisfactory to it, (i) certificates from the Secretary of State and
other appropriate officials of the state of organization certifying that the
Company is a corporation duly organized, validly existing, and in good standing
in said state as of the respective dates thereof, and (ii) certificates of
appropriate authorities in Texas and Arizona, to the effect that it is in good
standing and duly qualified to transact business in such jurisdictions.
(h) The Administrative Lender shall have received, in form and
substance satisfactory to it, certificates from the Secretary of State and other
appropriate officials of the states of organization of each Domestic Subsidiary,
certifying that such Domestic Subsidiary is a corporation duly organized,
validly existing and in good standing in said state as of the respective date
thereof.
(i) The Administrative Lender shall have received the fees
required pursuant to Section 2.3(b) hereof.
(j) Each Lender shall have received its Note, duly executed by
the Company, in the amount of such Lender's Commitment.
(k) The Administrative Lender shall have received a Subsidiary
Guaranty, duly executed by each Domestic Subsidiary of the Company.
(l) The Administrative Lender shall have received a Pledge
Agreement, duly executed by the Company and each Domestic Subsidiary which has a
Material Subsidiary, together with the pledged stock covered thereby and
appropriate UCC-1 financing statements and undated blank stock powers related
thereto.
(m) The Administrative Lender shall have received UCC searches
satisfactory to it in appropriate jurisdictions where Collateral is located;
(n) The Administrative Lender shall have received a Security
Agreement, duly executed by the Company and each Domestic Subsidiary, together
with related financing statements, and insurance certificates listing the
Administrative Lender as loss payee and additional insured and otherwise in a
form required by the Security Agreement;
(o) Negotiations shall have begun to refinance all obligations
of the Company in respect to that certain Lease Agreement, dated July 6, 1995,
as amended, between the Company and First Security Bank of Utah, N.A., not
individually, but solely as Owner Trustee under Pet Stores Trust 1995-1, and all
documents related thereto, under terms reasonably
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acceptable to the Administrative Lender, such refinancing to occur no later than
sixty days following the date of this Agreement;
(p) The Administrative Lender shall have received an
Intercreditor Agreement executed by all parties thereto;
(q) The Administrative Lender shall have received a Borrowing
Base Certificate executed and completed as provided therein; and
(r) All proceedings of the Company and its Subsidiaries taken
in connection with the transactions contemplated hereby, and all documents
incidental thereto, shall be satisfactory in form and substance to the
Administrative Lender. The Administrative Lender shall have received copies of
all documents or other evidence that it may reasonably request in connection
with such transactions.
SECTION 4.2 Conditions Precedent to All Advances. The obligation of
each Lender to make each Advance (including the initial Advance) shall be
subject to the further conditions precedent that on the date of such Advance (a)
the following statements shall be true (and each request for an Advance under
Section 2.2 hereof shall constitute a representation that on the disbursement
date they are true):
(i) with respect to each Advance (other than a
Refinancing Advance), the representations and warranties contained in Article V
hereof are true and correct on such date, as though made on and as of such date,
and
(ii) With respect to each Advance (other than a
Refinancing Advance), there shall not exist a Default, and with respect to a
Refinancing Advance, there shall not exist an Event of Default;
and (b) the Administrative Lender shall have received, in form and
substance acceptable to it, such other approvals, documents, certificates,
opinions, and information as it may deem necessary or appropriate.
SECTION 4.3 Conditions Precedent to Issuance of Letters of Credit. The
obligation of the Issuing Bank to issue any Letter of Credit shall be subject to
the further conditions precedent that (a) the Issuing Bank shall have received,
in form and substance satisfactory to it, an application and agreement for such
Letter of Credit executed by the Company, on or before 1:00 p.m. (Concord,
California time) at least five Business Days prior to the date of issuance,
setting forth (among other matters) the purpose of the Letter of Credit; (b) on
the date of issuance the following statements shall be true (and the delivery of
such application and agreement shall constitute a representation that on the
date of issuance such statements are true):
(i) The representations and warranties contained in
Article V hereof are true and correct on such date, as though made on and as of
such date, and
(ii) No event has occurred and is continuing, or
would result from issuance of such Letter of Credit, that does or could
constitute a Default or Event of Default;
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and (c) the Issuing Bank shall have received, in form and substance
acceptable to it, such other approvals (including internal approvals),
documents, certificates, opinions, and information as it may deem necessary or
appropriate.
Notwithstanding the above, the obligation of each Lender to make an
Advance pursuant to Section 3.1(d) hereof (or fund its participation in respect
of Letters of Credit pursuant to Section 3.1(d) hereof) shall be absolute and
unconditional, including, without limitation, (i) the occurrence of any Default
or Event of Default, (ii) the failure of the Borrower to satisfy any condition
set forth in Section 4.2 hereof, or (iii) any other circumstance, happening or
event, except that the conditions precedent set forth in Sections 4.1 and 4.3
hereof with respect to the Letter of Credit for which such Advance is made
pursuant to Section 3.1(d) (or participation funded) shall have been satisfied
at the time of the issuance of such Letter of Credit.
4.4. Conditions Precedent to Conversions and Continuations. The
obligation of the Lenders to convert any existing Base Rate Advance or any
portion thereof into a LIBOR Advance or to continue any existing LIBOR Advance
is subject to the condition precedent that on the date of such conversion or
continuation no Default or Event of Default shall have occurred and be
continuing or would result from the making of such conversion or continuation.
The acceptance of the benefits of each such conversion and continuation shall
constitute a representation and warranty by the Company to each of the Lenders
that no Default or Event of Default shall have occurred and be continuing or
would result from the making of such conversion or continuation.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that the following are true and
correct:
SECTION 5.1 Organization and Qualification. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the Applicable Laws of its jurisdiction of organization. Each of
the Company and its Subsidiaries is qualified to do business in all
jurisdictions where the nature of its business or Properties require such
qualification. Set forth on Schedule 5.1 attached hereto is a complete and
accurate listing of each Subsidiary of the Company, showing (a) the jurisdiction
of its organization and its mailing address, which is the principal place of
business and executive offices of such Subsidiary unless otherwise indicated,
(b) the classes of capital stock, and the numbers of shares authorized and
outstanding, and (c) each owner of outstanding shares on the date hereof,
indicating the ownership percentage. All outstanding shares of capital stock of
the Company and its Subsidiaries are validly issued, fully paid, and
nonassessable and, to the extent owned by the Company or its Subsidiaries, are
owned free and clear of all Liens, including any restrictions on hypothecation
or transfer.
SECTION 5.2 5.2. Due Authorization; Validity. The Boards of Directors
of the Company and its Subsidiaries have duly authorized the execution,
delivery, and performance of the Loan Papers to be executed by each. No consent
of the stockholders of the Company and its Subsidiaries (except any consent
already obtained) is required as a prerequisite to the validity
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and enforceability of any Loan Papers or any other document contemplated hereby.
Each of the Company and its Subsidiaries has full legal right, power, and
authority to execute, deliver, and perform under the Loan Papers to be executed
and delivered by it. The Loan Papers have been duly executed and delivered by
the Company and each Subsidiary and constitute the legal, valid, and binding
respective obligations of the Company and its Subsidiaries, enforceable in
accordance with their respective terms (subject as to enforcement of remedies to
any applicable bankruptcy, reorganization, moratorium, or similar Applicable
Laws or principles of equity affecting the enforcement of creditors' rights
generally).
SECTION 5.3 Conflicting Agreements and Other Matters. The execution and
delivery of any Loan Papers, and performance thereunder, does not conflict with,
or result in a breach of the terms, conditions, or provisions of, or constitute
a default under, or result in any violation of, or result in the creation of any
Lien upon any Properties of the Company or its Subsidiaries under, or require
any consent (other than consents already obtained), approval, or other action
by, notice to, or filing with any Tribunal or Person pursuant to, the articles
of incorporation or bylaws of the Company or any of its Subsidiaries, any award
of any arbitrator, or any agreement, instrument, or Applicable Law to which the
Company, any Subsidiary, or any of their Properties is subject.
SECTION 5.4 Financial Statements. The financial statements of the
Company and its Subsidiaries delivered to the Administrative Lender and Lenders
fairly present their financial condition and the results of operations as of the
dates and for the periods shown, all in accordance with GAAP. The latest of such
financial statements reflects all material liabilities, direct and contingent,
of the Company and its Subsidiaries that are required to be disclosed in
accordance with GAAP. As of the date of the latest of such financial statements,
there were no Contingent Liabilities, liabilities for Taxes, forward or
long-term commitments, or unrealized or anticipated losses from any unfavorable
commitments that are substantial in amount and that are not reflected on such
financial statements or otherwise disclosed in writing to the Administrative
Lender. Since January 31, 1999, there has been no Material Adverse Change (other
than the Pet City Holding Charges). The Company and each of its Subsidiaries is
Solvent.
SECTION 5.5 Litigation. Shown on Schedule 5.5 attached hereto is all
Litigation that is pending or, to the best of the Company's knowledge,
threatened against the Company or its Subsidiaries on the date hereof, and that
involves a claim for damages or reasonably expected potential liability of
$1,000,000 or more. There is no pending or, to the best of the Company's
knowledge, threatened Litigation against the Company or its Subsidiaries that
could constitute a Material Adverse Change.
SECTION 5.6 Compliance with Applicable Laws Regulating the Incurrence
of Indebtedness. No proceeds of any Advance or Letter of Credit will be used
directly or indirectly to acquire any security in any transaction which is
subject to Sections 12, 13 and 14 of the Securities Exchange Act of 1934, as
amended. The Company and its Subsidiaries are not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System), and no proceeds of any Advance or Letter of Credit will be used
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock. Following the Company's
intended use of the proceeds of each Advance, not
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more than 25% of the value of the assets of the Company, both individually and
on a consolidated basis with its Subsidiaries, will be "margin stock" within the
meaning of Regulation U. The Company and its Subsidiaries are not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940, the Interstate Commerce Act (as
any of the preceding acts have been amended), or any other Applicable Law that
the incurring of Indebtedness by the Company or its Subsidiaries would violate
in any material respect, including without limitation Applicable Laws relating
to common or contract carriers or the sale of electricity, gas, steam, water, or
other public utility services.
SECTION 5.7 Licenses, Title to Properties, and Related Matters. The
Company and its Subsidiaries possess all material Licenses and are not in
violation thereof in any material respect. The Company and each of its
Subsidiaries has full power, authority, and legal right to own and operate its
Properties, and to conduct its business, except to the extent that failure to
have such power, authority or legal right could not reasonably be expected to
result in a Material Adverse Change. The Company and each of its Subsidiaries
(other than PETsMART Direct, Inc. and its direct Subsidiaries) has good and
indefeasible title (fee or leasehold, as applicable) to its Properties, subject
to no Lien of any kind, except as permitted hereunder. None of the Company and
its Subsidiaries is in violation of its respective articles of incorporation or
bylaws, or any Applicable Law, or agreement or instrument binding on or
affecting it or any of its Properties, except to the extent that any such
violation could not reasonably be expected to result in a Material Adverse
Change. No business or Properties of the Company and its Subsidiaries is
affected by any strike, lock-out, or other labor dispute, drought, storm,
earthquake, embargo, act of God or public enemy, or other casualty that could
constitute a Material Adverse Change.
SECTION 5.8 Outstanding Indebtedness. The Company and its Subsidiaries
have no outstanding Indebtedness, Contingent Liabilities, or Liens, except (a)
as shown on Schedule 5.8 attached hereto and (b) Liens on assets of, and
Indebtedness and Contingent Liabilities of, PETsMART Direct, Inc. and any of its
Subsidiaries.
SECTION 5.9 Taxes. The Company and its Subsidiaries have filed all
federal, state, and other Tax returns (or extensions related thereto) which are
required to be filed, and have paid all Taxes as shown on said returns, as well
as all other Taxes, to the extent due and payable, except Taxes which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established and the failure of which to pay could not
reasonably be expected to result in a Material Adverse Change. All Tax
liabilities of the Company and its Subsidiaries are adequately provided for on
their books, including interest and penalties, and adequate reserves have been
established therefor in accordance with GAAP. No income Tax liability of a
material nature has been asserted by taxing authorities for Taxes in excess of
those already paid, and no taxing authority has notified the Company or any of
its Subsidiaries of any material deficiency in any Tax return.
SECTION 5.10 ERISA. Each Plan has satisfied the minimum funding
standards under all Applicable Laws applicable thereto, and no Plan has an
accumulated funding deficiency thereunder. The Company and its Subsidiaries have
not incurred any material liability to the PBGC with respect to any Plan. No
ERISA Event has occurred with respect to any Plan. The Company has not
participated in any Prohibited Transaction with respect to any Plan or trust
created thereunder, and the consummation of the transactions contemplated hereby
will not
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involve any Prohibited Transaction. None of the Company, its Subsidiaries, or
any ERISA Affiliate has incurred any Withdrawal Liability to any Multiemployer
Plan. None of the Company, its Subsidiaries, or any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or has been terminated, within the meaning of Title IV of
ERISA.
SECTION 5.11 Environmental Laws. Except as set forth on Schedule 5.11
hereto, the real Properties (whether leased or owned) of the Company or any of
its Subsidiaries, and the operations conducted thereon by any of them or, to the
best of the Company's knowledge, any current or prior owner or operator thereof,
(a) do not violate and have not violated any applicable Environmental Law, the
violation of which would constitute a Material Adverse Change or result in
penalties, fines, or damages in an aggregate amount of $100,000 or more, and (b)
are not subject to any pending or threatened investigation or proceeding by any
Tribunal or to any remedial obligations under any Environmental Law. All
Licenses have been obtained or filed that are required under any Environmental
Law in connection with the use of such Property and assets (including without
limitation past or present treatment, storage, disposal, or release of any
Hazardous Materials into the environment), except where the failure to obtain
any such License would not constitute a Material Adverse Change. No Hazardous
Materials are generated or produced at or in connection with the Properties and
operations of the Company and its Subsidiaries, except in compliance with
Environmental Laws. The Company and its Subsidiaries have no material potential
liability with respect to any release of any Hazardous Materials into the
environment. The use which the Company and its Subsidiaries make or intend to
make of the real Property (whether leased or owned) on which any of their
operations is conducted will not result in the unlawful or unauthorized disposal
or other release of any Hazardous Materials, except in compliance with
applicable Environmental Laws.
SECTION 5.12 Disclosure. None of the Company and its Subsidiaries has
made a material misstatement of fact, or failed to disclose any fact necessary
to make the facts disclosed not misleading, to the Administrative Lender, any
Lender, or the Issuing Bank during the course of application for and negotiation
of any Loan Papers or otherwise in connection with any Advances or Letters of
Credit. There is no fact known to the Company that materially adversely affects
any of the Company's and its Subsidiaries' Properties or businesses, or that
would constitute a Material Adverse Change, and that has not been set forth in
the Loan Papers or in other documents furnished to the Administrative Lender,
Lenders, and Issuing Bank.
SECTION 5.13 Year 2000. The Company has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (and has made appropriate inquiry regarding those affected by
suppliers and vendors) that could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by the Company or
any of its Subsidiaries (or its suppliers and vendors) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed and implemented a
plan for addressing the Year 2000 Problem on a timely basis, and (iii) to date,
operated in accordance with such plan. The Company reasonably believes that all
computer applications (including those of its suppliers and vendors) that are
material to its or any of its Subsidiaries' business and operations on January
1, 2000 have and will continue to be able to perform properly date-sensitive
functions for all dates before and after January 1,
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2000 (that is, be "Year 2000 compliant"), except to the extent that a failure to
do so could not reasonably be expected to cause a Material Adverse Change.
SECTION 5.14 Labor Relations. Neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement or similar
agreement, and the Company and each Subsidiary is in compliance in all respects
with all Laws respecting employment and employment practices, terms and
conditions of employment, wages and hours and other laws related to the
employment of its employees, except to the extent that the failure to so comply
could not reasonably be expected to cause a Material Adverse Change. There are
no arrears in the payment of wages, withholding or social security taxes,
unemployment insurance premiums or other similar obligations of the Company or
any of its Subsidiaries or for which the Company or any such Subsidiary may be
responsible other than in the ordinary course of business or such arrears which
could not reasonably be expected to cause a Material Adverse Change. There is no
strike, work stoppage or labor dispute with any union or group of employees
pending or overtly threatened involving Borrower or any of its Subsidiaries, the
result of which could reasonably be expected to cause a Material Adverse Change.
SECTION 5.15 Common Enterprise. The Company and its Subsidiaries are
engaged in the Related Business. These operations require financing on a basis
such that the credit supplied can be made available from time to time to the
Company and various of its Subsidiaries, as required for the continued
successful operation of the Company and its Subsidiaries as a whole. The Company
and its Subsidiaries expect to derive benefit (and the boards of directors of
the Company and its Subsidiaries have determined that the Company and its
Subsidiaries may reasonably be expected to derive benefit), directly or
indirectly, from the credit extended by the Lenders hereunder, both in their
separate capacities and as members of the group of companies, since the
successful operation and condition of the Company and its Subsidiaries is
dependent on the continued successful performance of the functions of the group
as a whole.
SECTION 5.16 Survival of Representations and Warranties. All
representations and warranties made under this Agreement and the other Loan
Papers shall be deemed to be made at and as of the Agreement Date and at and as
of the date of each Advance (and any continuation or conversion of an Advance)
and the date of issuance or extension of each Letter of Credit, and each shall
be true and correct when made, except to the extent (a) previously fulfilled in
accordance with the terms hereof, (b) previously waived in writing by the
Determining Lenders with respect to any particular factual circumstance or
permitted by the terms of this Agreement, or (c) such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct on and as of
such date. All such representations and warranties shall survive, and not be
waived by, the execution hereof by any Lender, any investigation or inquiry by
any Lender, or by the making of any Advance or the issuance or extension of any
Letter of Credit under this Agreement.
ARTICLE 6
COVENANTS
So long as the Commitment, any Advance, or any Letter of Credit is
outstanding, or the Company owes any other amount hereunder:
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SECTION 6.1 Financial Covenants. The Company and its Subsidiaries shall
comply with the following covenants, calculated on a consolidated basis:
(a) Net Worth. Net Worth shall at no time be less than an
amount equal to the sum of (i) $280,000,000, plus (ii) 50% of cumulative Net
Income for the period from, but not including, January 30, 2000, through the
date of calculation (without deduction for any fiscal quarter in which Net
Income is a negative number), plus (iii) 75% of any Net Cash Proceeds from the
issuance or sale of any capital stock received after January 30, 2000.
(b) Fixed Charges Coverage Ratio. The Fixed Charges Coverage
Ratio shall not be less than 1.25 to 1 at the end of any fiscal quarter of the
Company.
(c) Total Debt to Capitalization. The ratio of Total Debt to
Capitalization shall at no time be greater than .50 to 1.
(d) Capital Expenditures. Capital Expenditures (excluding any
Capital Expenditures in respect of any (i) Capital Leases and (ii) Acquisitions,
permitted pursuant to Section 6.8 hereof) paid or incurred during any fiscal
year of the Company shall not exceed $85,000,000.
(e) Debt Ratio. The Debt Ratio shall not be more than 6.00 to
1 at the end of any fiscal quarter of the Company ending during the term hereof.
SECTION 6.2 Indebtedness. The Company shall not, and shall not permit
any of its Subsidiaries to, create, incur, assume, become or be liable in any
manner in respect of, or suffer to exist, any Indebtedness, except (a)
Indebtedness under the Loan Papers, (b) Indebtedness shown on Schedule 5.8
attached hereto, (c) trade payables incurred and paid in the ordinary course of
business, (d) Capital Lease obligations, (e) Indebtedness with respect to
surety, appeal, indemnity, performance or other similar bonds in the ordinary
course of business, (f) Subordinated Debt owing by the Company to any of its
Subsidiaries, (g) Indebtedness owing by any of the Company's Subsidiaries to the
Company or any of the Company's Domestic Subsidiaries to the extent the
Investment giving rise to such Indebtedness is permitted by Section 6.7 hereof,
(h) Contingent Liabilities resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business, (i) other
Indebtedness not to exceed, together with the Investments permitted under
Sections 6.7(d) and 6.7(e), $40,000,000 in aggregate principal amount, (j)
Indebtedness of Foreign Subsidiaries not in excess of $25,000,000 in the
aggregate, (k) Indebtedness in respect of the Convertible Subordinated Notes,
and (l) subordinated Indebtedness issued at all times under terms acceptable to
Majority Lenders, provided that (i) no Default or Event of Default exists
immediately prior to or after incurring such Indebtedness, and (ii) the Company
is in compliance with all covenants under this Agreement on an actual and a pro
forma basis.
SECTION 6.3 Liens. The Company shall not, and shall not permit any of
its Domestic Subsidiaries which are Material Subsidiaries to, create or suffer
to exist any Lien upon any of their Properties, except (a) Liens shown on
Schedule 5.8 attached hereto, (b) Liens securing Indebtedness permitted under
(i) Section 6.2(d) hereof, encumbering only the assets purchased or financed
with such Indebtedness and (ii) Section 6.2(i) hereof, provided that the value
of the
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collateral secured by such Liens does not exceed the aggregate principal amount
of such Indebtedness, and (c) Tax, mechanics', materialmen's, and landlord Liens
relating to amounts that are not yet due and payable, or that are being
contested in good faith by appropriate proceedings, for which adequate reserves
have been established. It is specifically acknowledged and agreed that the
Company shall not, and shall not permit its Subsidiaries to, hereafter agree
with any Person (other than the Lenders) not to xxxxx x Xxxx on any of their
assets or not to pledge any of their capital stock. The Company shall not, and
shall not permit any Subsidiary to, enter into, or be subject to, a Negative
Pledge (other than a Negative Pledge in favor of (a) Arizona Funding
Corporation, (b) Winthrop Resources pursuant to the Company's guaranty of the
obligations of Medical Management International, Inc. under an equipment
financing lease, and (c) First Security Bank, N.A., as Owner Trustee under the
Pet Stores Trust 1995-1, the Pet Stores Trust 1996-1, the Pet Stores Trust
1997-1, and 2000-1 PETM Construction Trust).
SECTION 6.4 Licenses and Material Agreements. The Company shall, and
shall cause its Subsidiaries to, obtain and comply in all material respects with
all Licenses. The Company shall, and shall cause all its Subsidiaries to,
maintain and comply in all material respects with all agreements necessary or
appropriate for any of them to own, maintain, or operate any of their businesses
or Properties, except to the extent that the failure to so maintain or comply
could not reasonably be expected to result in a Material Adverse Change.
SECTION 6.5 Liquidation, Dispositions of Assets, Merger, Consolidation.
The Company shall not, and shall not permit any of its Subsidiaries to, at any
time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up; or sell, lease, abandon, assign, or otherwise
dispose of all or any part of its assets, properties or business, except (i)
immaterial sales or dispositions of assets in the ordinary course of business,
including dispositions of obsolete or useless assets, (ii) sale-leaseback
transactions in which the consideration received is at least equal to the fair
market value of the asset sold, and (iii) other dispositions of assets,
including capital stock, of the Company or any Subsidiary, provided that, with
respect to dispositions contemplated in Section 6.5(a)(iii) hereof (A) the
aggregate value of the assets disposed of from January 30, 2000, through the
date of any such disposition, including the value of assets to be disposed of by
such disposition, shall not exceed, as of the date of such disposition, 10% of
the consolidated value of the assets of the Company and the Subsidiaries
calculated as the greater of book value and fair market value of such
consolidated assets, (B) the disposition of such assets does not result in the
release or disposition of collateral or guaranties securing the Company's
obligations hereunder, and (C) 100% of the Net Cash Proceeds of such disposition
are applied to the prepayment of outstanding Advances, if any, as provided in
Section 2.5(b) hereof. Notwithstanding the foregoing, a wholly-owned Subsidiary
of the Company may be dissolved or liquidated, so long as such Subsidiary owns
no assets and conducts no business; or
(b) enter into any merger or consolidation, except that (i)
any of the Company's Subsidiaries may merge with the Company provided that the
Company is the continuing or surviving entity, (ii) any of the Company's
Domestic Subsidiaries may merge with another of the Company's Domestic
Subsidiaries, (iii) any of the Company's Foreign Subsidiaries may merge with any
of the Company's Domestic Subsidiaries provided that the Domestic Subsidiary is
the continuing or surviving entity, (iv) any of the Company's Foreign
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Subsidiaries may merge with any of the Company's other Foreign Subsidiaries,
provided that the surviving entity is a direct Foreign Subsidiary of the Company
or of a Domestic Subsidiary, and (v) the Company or any of its Subsidiaries may
enter into any merger or consolidation constituting an Acquisition permitted
under Section 6.8 hereof.
SECTION 6.6 Restricted Payments. The Company shall not, and shall not
permit any of its Subsidiaries to, make any Restricted Payments, except (a) the
declaration and payment of a Dividend by a wholly owned Subsidiary of the
Company to the Company or any of its Domestic Subsidiaries and (b) the purchase,
redemption, or other acquisition or retirement for value of shares of capital
stock of the Company and the purchase, redemption or prepayment of the
Convertible Subordinated Notes not to exceed $25,000,000 in an aggregate
principal amount during any fiscal year, plus an amount of the Net Cash Proceeds
remaining from a public offering of the capital stock of XXXxXXXX.xxx, if any,
after the initial Net Cash Proceeds thereof have been applied as provided in
Section 2.5(b) hereof and there are no Advances outstanding; provided, however,
the Company shall not make any Restricted Payments permitted by this Section 6.6
unless there shall exist no Default or Event of Default at the proposed time for
making, or after giving effect to, any such proposed Restricted Payment.
SECTION 6.7 Investments. The Company shall not, and shall not permit
any of its Subsidiaries to, make any Investments except for: (a) Investments
shown on Schedule 6.7 hereto, (b) Investments in Cash Equivalents, (c)
Investments pursuant to the Investment Policy, (d) provided no Default or Event
of Default exists immediately prior to or after giving effect to any such
Investment, working capital advances to veterinarians who are tenants of
Properties owned by or leased by the Company which amounts do not exceed,
together with Indebtedness permitted under Section 6.2(i) and Investments
permitted under Section 6.7(e), $40,000,000 in aggregate amount, (e) provided no
Default or Event of Default exists immediately prior to or after giving effect
to any such Investment, loans to, or guarantees of obligations of, officers of
the Company to exercise incentive stock options of the Company, to purchase
capital stock of the Company and to pay alternative minimum tax obligations of
such officers not to exceed, together with Indebtedness permitted under Section
6.2(i) and Investments permitted under Section 6.7(d), $40,000,000 in aggregate
amount, (f) provided no Default or Event of Default exists immediately prior to
or after giving effect to any such Investment, Investments in one or more
Domestic Subsidiaries (i) that are subject to the provisions hereof, (ii) that
concurrently with the initial Investment, execute a Subsidiary Guaranty and a
Security Agreement and deliver corporate resolutions, articles of incorporation,
bylaws, and a certificate of incumbency, each in form and substance satisfactory
to the Administrative Lender, and (iii) to the extent such Investment is a loan
or advance, the obligation to repay such loan or advance is recorded on the
books and records of such Subsidiary, (g) provided no Default or Event of
Default shall have occurred and be continuing or would occur after giving effect
to such Investment, Investment in Foreign Subsidiaries which have, concurrently
with such Investment, executed a Subsidiary Guaranty and delivered to the
Administrative Lender corporate resolutions, articles of incorporation, bylaws,
certificate of incumbency and an attorney's opnion, each in form and substance
satisfactory to the Administrative Lender, (h) Investments in stock of the
Company, whether through stock repurchases, or otherwise, not to exceed the
amount permitted pursuant to Section 6.6 hereof, provided, however, that no such
investment may be made unless the Company is in compliance with Section 6.1(b)
hereof after taking into account such capital stock repurchases by including the
aggregate amount of such capital stock repurchases in the
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denominator of the calculation of the Fixed Charges Coverage Ratio, (i)
Investments in XXXxXXXX.xxx and other Affiliates of the Company and its
Subsidiaries (other than Foreign Subsidiaries) not to exceed (x) $15,000,000 in
aggregate amount in the Company's fiscal year 2000 and (y) $10,000,000 in any
fiscal year thereafter, and (j) notwithstanding anything else in this Section
6.7 to the contrary, Investments in PETsMART Direct, Inc. not to exceed
$25,000,000 in aggregate amount.
SECTION 6.8 Acquisitions. The Company shall not, and shall not permit
any of its Subsidiaries to, make, in one or more transactions:
(a) any Acquisition of Domestic Subsidiaries unless (i) no
Default or Event of Default shall have occurred and be continuing or would occur
after giving effect to such Acquisition, (ii) the sum of (A) the aggregate
Acquisition Consideration (other than capital stock of the Company) (including,
without limitation, costs associated with Pooling Acquisitions) for such
Acquisitions, plus (B) the Capital Expenditures paid or incurred in connection
with such Acquisitions, shall not exceed in aggregate amount during each fiscal
year, 15% of Tangible Net Worth of the Company immediately prior to any such
Acquisition, and (iii) such Domestic Subsidiary (other than Acquisition
Subsidiaries), concurrently with its being acquired, executes a Security
Agreement and a Subsidiary Guaranty, causes the Administrative Lender to be
granted a first and prior security interest in 100% of the capital stock of such
Domestic Subsidiary (if it will be a Material Subsidiary) pursuant to a Pledge
Agreement and delivers to the Administrative Lender corporate resolutions,
articles of incorporation, bylaws, and a certificate of incumbency, each in form
and substance satisfactory to the Administrative Lender; and
(b) any Acquisitions of Foreign Subsidiaries (i) which do not
concurrently with such Acquisition execute a Subsidiary Guaranty provided that
(A) no Default or Event of Default shall have occurred and be continuing or
would occur after giving effect to such Acquisition, (B) the aggregate
Acquisition Consideration (other than capital stock of the Company) for such
Acquisitions shall not exceed $18,500,000 in aggregate amount during the term
hereof, and (C) concurrently with such Acquisition, the Company causes the
Administrative Lender to be granted a first and prior security interest in 65%
of the capital stock of such Foreign Subsidiary (unless such Foreign Subsidiary
is not a Material Subsidiary) pursuant to a Pledge Agreement, or (ii) which
concurrently therewith execute a Subsidiary Guaranty provided that (A) no
Default or Event of Default shall have occurred and be continuing or would occur
after giving effect to such Acquisition, and (B) concurrently with such
Acquisition, the Company delivers to the Administrative Lender corporate
resolutions, articles of incorporation, bylaws, a certificate of incumbency, and
an attorney's opinion, each in form and substance satisfactory to the
Administrative Lender.
SECTION 6.9 Business. The Company shall not, and shall not permit any
of its Subsidiaries to, change the nature of its business as now conducted
unless, as changed, such business would constitute a Related Business. The
Company and each of its Subsidiaries shall not conduct any business except a
Related Business.
SECTION 6.10 Compliance with Applicable Laws. The Company shall, and
shall cause its Subsidiaries to, comply in all material respects with all
Applicable Laws, including without limitation compliance with ERISA and payment
of all Taxes before they become delinquent,
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unless contested in good faith by appropriate proceedings and for which there
shall have been established adequate reserves therefor and the failure of which
to comply with could not reasonably be expected to result in a Material Adverse
Change.
SECTION 6.11 Insurance. The Company shall, and shall cause its
Subsidiaries to, (a) keep its insurable Properties adequately insured at all
times by financially sound and reputable insurers to such extent and against
such risks, including fire and other risks insured against by extended coverage,
as is customary with companies similarly situated and in the same or similar
businesses, (b) maintain in full force and effect public liability and workers
compensation insurance (except that the Company shall not be required to
maintain workers compensation in the State of Texas where it is permitted to be
a non-subscriber), in amounts customary for such similar companies to cover
normal risks, by insurers satisfactory to the Administrative Lender, and (c)
maintain such other insurance as may be required by Applicable Law or requested
by the Administrative Lender. The Company shall deliver evidence of renewal of
each insurance policy on or before the date of its expiration, and from time to
time shall deliver to the Administrative Lender, upon demand, evidence of the
maintenance of such insurance.
SECTION 6.12 Inspection Rights. The Company shall, and shall cause its
Subsidiaries to, permit the Administrative Lender or any Lender, upon reasonable
notice and during normal business hours, to examine and make copies of and
abstracts from their records and books of account, to visit and inspect their
Properties and to discuss their affairs, finances, and accounts with any of
their directors, officers, or accountants, all as the Administrative Lender may
reasonably request. The Borrower shall pay the reasonable out-of-pocket expenses
related to such examinations and reviews performed (a) by the Administrative
Lender (or any agent on its behalf, including in respect of any Collateral
audit) no more than twice per calendar year prior to any Event of Default, and
(b) by the Administrative Lender or any Lender (or any agent on their behalf, in
respect of any Collateral audit) at any time after the occurrence and during the
continuance of an Event of Default. Notwithstanding anything to the contrary
above, following the occurrence and during the continuance of an Event of
Default, such visits and inspections shall be conducted at any time requested by
the Administrative Lender or any Lender without any requirement for reasonable
notice.
SECTION 6.13 Records and Books of Account; Changes in GAAP. The Company
shall, and shall cause its Subsidiaries to, keep adequate records and books of
account in conformity with GAAP. The Company and its Subsidiaries shall not
change their fiscal year, nor change their method of financial accounting except
in accordance with GAAP. In connection with any such change in GAAP after the
date hereof, the Company and Lenders shall negotiate in good faith to make
appropriate alterations to the covenants set forth in Section 6.1 hereof,
reflecting such change.
SECTION 6.14 Reporting Requirements. The Company shall furnish to each
Lender and the Administrative Lender:
(a) As soon as available and in any event within 45 days after
the end of each of the Company's fiscal quarters which is not the last fiscal
quarter in a fiscal year, consolidated and consolidating balance sheets of the
Company and its Subsidiaries as of the end of such quarter, and consolidated and
consolidating statements of income, and a consolidated statement
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of changes in cash flow of the Company and its Subsidiaries for such quarter and
for the portion of the fiscal year ending with such quarter, setting forth, in
comparative form, results for the corresponding periods in the previous fiscal
year, all in reasonable detail, and certified by an officer of the Company
acceptable to the Administrative Lender as prepared in accordance with GAAP, and
fairly presenting the financial condition and results of operations of the
Company and its Subsidiaries;
(b) As soon as available and in any event within 90 days after
the end of each fiscal year of the Company, a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such fiscal year, and consolidated
statements of income and changes in cash flow of the Company and its
Subsidiaries for such fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an unqualified opinion of the Auditor,
which opinion shall state that said financial statements were prepared in
accordance with GAAP, that the examination by the Auditor in connection with
such financial statements was made in accordance with generally accepted
auditing standards, and that said financial statements present fairly the
financial condition and results of operations of the Company and its
Subsidiaries;
(c) Promptly upon receipt thereof, copies of all material
reports or letters submitted to the Company or any of its Subsidiaries by the
Auditor or any other accountants in connection with any annual, interim, or
special audit, including without limitation the comment letter submitted to
management in connection with any such audit;
(d) Together with each set of financial statements delivered
pursuant to subsections (a) and (b) above, a Quarterly Compliance Certificate;
(e) As soon as available and in any event prior to the
beginning of each fiscal year of the Company, the annual operating budget and
cash flow statement of the Company and its Subsidiaries for such year;
(f) As soon as possible and in any event within five days
after knowledge by a corporate officer of the Company of the occurrence of any
Default or Event of Default, a notice from an officer of the Company acceptable
to the Administrative Lender, setting forth the details of such Default or Event
of Default, and the action being taken or proposed to be taken with respect
thereto;
(g) As soon possible and in any event within five days after
knowledge thereof by a corporate officer of the Company, notice of any
Litigation pending or threatened against the Company or any of its Subsidiaries
which, if determined adversely, would be reasonably likely to result in
judgment, penalties, or damages of $1,000,000 in excess of any applicable
insurance coverage, together with a statement of an officer of the Company
acceptable to the Administrative Lender, describing the allegations of such
Litigation, and the action being taken or proposed to be taken with respect
thereto;
(h) Promptly following notice or knowledge thereof by a
corporate officer of the Company, notice of any actual or threatened loss or
termination of any material License of the Company or any of its Subsidiaries,
together with a statement of an officer of the Company
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acceptable to the Administrative Lender, describing the circumstances
surrounding the same, and the action being taken or proposed to be taken with
respect thereto;
(i) Promptly after filing or receipt thereof by a corporate
officer of the Company, copies of all reports and notices that the Company or
any of its Subsidiaries (i) files or receives in respect of any Plan with or
from the Internal Revenue Service, the PBGC, or the United States Department of
Labor, or (ii) furnishes to or receives from any holders of any Indebtedness or
Contingent Liability, if in the case of clauses (i) and (ii), any information or
dispute referred to therein could result in a Default or an Event of Default;
(j) Within 30 days after renewal or issuance of any hazard,
public liability, or other insurance policy maintained by the Company, a summary
of such policy in form and substance satisfactory to the Administrative Lender;
(k) As soon as possible and in any event within five days
after knowledge thereof by a corporate officer of the Company, notice of any
act, event or circumstance which is reasonably likely to cause or result in a
Material Adverse Change, together with a statement of an officer of the Company
acceptable to the Administrative Lender, describing the circumstances
surrounding the same, and the action being taken or proposed to be taken with
respect thereto;
(l) As soon as available and in any event within 15 days after
the end of each of the Company's fiscal months, a Borrowing Base Certificate
executed and completed as provided therein; and
(m) Promptly upon written request, such other information
concerning the condition or operations of any of the Company, its Subsidiaries,
and its Affiliates, financial or otherwise, as the Administrative Lender, any
Lender, or the Issuing Bank may from time to time reasonably request.
SECTION 6.15 Use of Proceeds. The Company shall use the proceeds of
Advances for (a) refinancing the Indebtedness under the Prior Credit Agreement,
(b) working capital needs and other general corporate purposes, (c) to repay
draws under Letters of Credit, and (d) to repay certain expenses and costs
incurred in connection with Acquisitions.
SECTION 6.16 Transactions with Affiliates. Except as permitted herein,
the Company shall not, and shall not permit any of its Subsidiaries to, enter
into or be party to a transaction with any Affiliate, except on terms no less
favorable than could be obtained on an arm's-length basis with a Person that is
not an Affiliate.
SECTION 6.17 Environmental Law Compliance. The use which the Company or
any Subsidiary intends to make of any real property owned by it will not result
in the disposal or other release of any Hazardous Substance or solid waste on or
to such real property in any manner or quantities which would be deemed a
violation of the any Environmental Laws. As used herein, the term "release" as
used in this Section shall have the meaning specified in CERCLA (as defined in
the definition of Hazardous Substances), and the terms "solid waste" and
"disposal" shall have the meanings specified in RCRA (as defined in the
definition of Hazardous Substances); provided, however, that if CERCLA or RCRA
is amended so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent
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to the effective date of such amendment; and provided further, to the extent
that any other law applicable to the Company, any Subsidiary or any of their
properties establishes a meaning for "release," "solid waste," or "disposal"
which is broader than that specified in either CERCLA or RCRA, such broader
meaning shall apply. The Company agrees to indemnify and hold the Administrative
Lender and each Lender harmless from and against, and to reimburse them with
respect to, any and all claims, demands, causes of action, loss, damage,
liabilities, costs and expenses (including attorneys' fees and courts costs) of
any kind or character, known or unknown, fixed or contingent, asserted against
or incurred by any of them at any time and from time to time by reason of or
arising out of (a) the failure of the Company or any Subsidiary to perform any
obligation hereunder regarding asbestos or Environmental Laws, (b) any violation
on or before the Release Date of any Environmental Law in effect on or before
the Release Date, and (c) any act, omission, event or circumstance existing or
occurring on or prior to the Release Date (including without limitation the
presence on such real property or release from such real property of hazardous
substances or solid wastes disposed of or otherwise released on or prior to the
Release Date), resulting from or in connection with the ownership of the real
property, regardless of whether the act, omission, event or circumstance
constituted a violation of any Environmental Law at the time of its existence or
occurrence, or whether the act, omission, event or circumstance is caused by or
relates to the negligence of any indemnified Person; provided that, the Company
shall not be under any obligation to indemnify the Administrative Lender or any
Lender to the extent that any such liability arises as the result of the gross
negligence or willful misconduct of such Person, as finally judicially
determined by a court of competent jurisdiction. The provisions of this
paragraph shall survive the Release Date and shall continue thereafter in full
force and effect.
SECTION 6.18 Indirect Foreign Subsidiaries. Notwithstanding the
foregoing Sections 6.7 and 6.8, in no event shall the aggregate Investments
(including Acquisition Consideration) in (a) any single Foreign Subsidiary of a
Foreign Subsidiary exceed $200,000 or (b) all Foreign Subsidiaries of Foreign
Subsidiaries exceed $1,000,000.
SECTION 6.19 Year 2000. The Company will promptly notify the
Administrative Lender in the event the Company discovers or determines that any
computer application (including those of its suppliers and vendors) that is
material to its or any of its Subsidiaries' business and operations is not Year
2000 compliant, except to the extent that such failure could not reasonably be
expected to cause a Material Adverse Change.
SECTION 6.20 Further Assurances. At any time or from time to time upon
reasonable request by the Administrative Lender, the Company shall and shall
cause the Company's Subsidiaries to execute and deliver such further documents
and do such other acts and things as the Administrative Lender may reasonably
request in order to effect fully the purposes of this Agreement and the other
Loan Documents and to provide for payment of the Obligation in accordance with
the terms of this Agreement and the other Loan Documents (including, but not
limited to, any action required to properly perfect a first priority Lien in
100% of the equity interests of any Material Subsidiary which is a Domestic
Subsidiary and 65% of the equity interests of any Foreign Subsidiary which is a
Material Subsidiary of the Company or any Domestic Subsidiary or in the
inventory of the Company or any Domestic Subsidiary).
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SECTION 6.21 Material Subsidiaries. The Company shall not permit the
aggregate gross revenues, consolidated assets or EBITDA of Subsidiaries which
are not Material Subsidiaries as of the end of any fiscal quarter to exceed 10%
of the gross revenues, consolidated assets or EBITDA of the Company and its
Subsidiaries for such period of calculation, without, within 30 days after the
end of such fiscal quarter, executing (or causing any applicable Subsidiary to
execute) a Pledge Agreement pledging 100% (or 65% in the case of any Foreign
Subsidiaries) of its interest in such number of Subsidiaries as are necessary to
reduce the aggregate gross revenues, consolidated assets or EBITDA of such
remaining unpledged Subsidiaries to 10% or less of the gross revenues,
consolidated assets or EBITDA of the Company and its Subsidiaries for such
period of calculation.
SECTION 6.22 Landlord's Waivers. The Company shall, and shall cause
each of its Subsidiaries to, use its good faith best efforts to obtain
Landlord's Waivers from all landlords of real property on which Collateral is
located.
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.1 Events of Default. Any one or more of the following shall
be an "Event of Default" hereunder, if the same shall occur for any reason
whatsoever, whether voluntary or involuntary, by operation of Applicable Law, or
otherwise:
(a) The Company shall fail to pay any principal, interest,
fees, or other amounts payable under any Loan Papers when due;
(b) Any representation or warranty made or deemed made by the
Company or any of its Subsidiaries (or any of their officers or representatives)
under or in connection with any Loan Papers shall prove to have been incorrect
or misleading in any material respect when made or deemed made;
(c) The Company shall fail to perform or observe any term or
covenant contained in Sections 6.1, 6.2, 6.3, 6.5, 6.6, 6.7, 6.8, 6.9, 6.15,
6.16 or 6.18 hereof;
(d) The Company or any of its Subsidiaries shall fail to
perform or observe any other term or covenant contained in any Loan Papers,
other than those described in subsections (a) and (c) above, and such failure
shall not be remedied within 30 Business Days following the earlier of knowledge
thereof by an officer of the Company or Subsidiary, or of written notice by the
Administrative Lender to the Company;
(e) Any Loan Papers or material provision thereof shall, for
any reason, not be valid and binding on the Company or any of its Subsidiaries
signatory thereto, or not be in full force and effect, or shall be declared to
be null and void; the validity or enforceability of any Loan Papers shall be
contested by the Company or any Subsidiary; the Company or any Subsidiary shall
deny that it has any or further liability or obligation under its respective
Loan Papers; or any default or breach under any provision of any Loan Papers
shall continue after the applicable grace period, if any, specified in such Loan
Paper;
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(f) Any of the following shall occur: (i) the Company or any
of its Subsidiaries shall make an assignment for the benefit of creditors or be
unable to pay its debts generally as they become due; (ii) the Company or any of
its Subsidiaries shall petition or apply to any Tribunal for the appointment of
a trustee, receiver, or liquidator of it, or of any substantial part of its
assets, or shall commence any proceedings relating to the Company or any of its
Subsidiaries under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debts, conservatorship, moratorium, dissolution,
liquidation, or other debtor relief Laws of any jurisdiction, whether now or
hereafter in effect; (iii) any such petition or application shall be filed, or
any such proceedings shall be commenced, against the Company or any of its
Subsidiaries and the same is not dismissed or otherwise discharged within 60
days, or an order, judgment or decree shall be entered appointing any such
trustee, receiver, or liquidator, or approving the petition in any such
proceedings; (iv) any final order, judgment, or decree shall be entered in any
proceedings against the Company or any of its Subsidiaries decreeing its
dissolution; or (v) any final order, judgment, or decree shall be entered in any
proceedings against the Company or any of its Subsidiaries decreeing its
split-up which requires the divestiture of a substantial part of its assets;
(g) The Company or any of its Subsidiaries shall fail to pay
any Indebtedness or Contingent Liability of $1,000,000 or more when due (whether
by scheduled maturity, required prepayment, acceleration, demand, or otherwise),
and such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness or
Contingent Liability; the Company or any of its Subsidiaries shall fail to
perform or observe any term or covenant contained in any agreement or instrument
relating to any such Indebtedness or Contingent Liability (or an event or
condition shall occur with respect to such Indebtedness or Contingent
Liability), and such failure (or event or condition) shall continue after the
applicable grace period, if any, specified in such agreement or instrument, and
can result in acceleration of the maturity or redemption, prepayment or purchase
of such Indebtedness or Contingent Liability; or any such Indebtedness or
Contingent Liability shall be declared to be due and payable, or required to be
redeemed, prepaid or purchased (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(h) The Company or any of its Subsidiaries shall have any
final judgment(s) outstanding against any of them for the payment of $1,000,000
or more, and such judgment(s) shall remain unstayed, in effect, and unpaid for
more than 30 days;
(i) Any License of the Company or any of its Subsidiaries
shall lapse, terminate, or be suspended;
(j) Any ERISA Event shall have occurred with respect to a
Plan, and the sum of the Insufficiency of such Plan and liabilities relating
thereto, added to the Insufficiency of and liabilities relating to all other
Plans with respect to which an ERISA Event has occurred, is equal to or greater
than $1,000,000; or the Company, any of its Subsidiaries, or any ERISA Affiliate
shall have committed a failure described in Section 302(f)(l) of ERISA, and the
amount determined under Section 302(f)(3) of ERISA is equal to or greater than
$50,000;
(k) The Company, any of its Subsidiaries, or any ERISA
Affiliate shall have been notified by the sponsor of a Multiemployer Plan that
(i) it has incurred Withdrawal Liability
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to such Plan in an amount that, when aggregated with all other amounts required
to be paid to Multiemployer Plans in connection with Withdrawal Liabilities,
exceeds $100,000 or requires payments exceeding $100,000 per annum, or (ii) such
Plan is in reorganization or is being terminated, within the meaning of Title IV
of ERISA, if as a result thereof the aggregate annual contributions to all
Multiemployer Plans in reorganization or being terminated is increased over the
amounts contributed to such Plans for the preceding Plan year by an amount
exceeding $100,000;
(l) The Company or any of its Subsidiaries shall be required
under any Environmental Law (i) to implement any remedial, neutralization, or
stabilization process or program, the cost of which would constitute a Material
Adverse Change, or (ii) to pay any penalty, fine, or damages in an aggregate
amount of $1,000,000 or more;
(m) Any Property (whether leased or owned) of the Company or
any of its Subsidiaries, or the operations conducted thereon by any of them or
any current or prior owner or operator thereof (in the case of real Property),
shall violate or have violated any applicable Environmental Law, if such
violation would constitute a Material Adverse Change; or the Company or any of
its Subsidiaries shall not obtain or maintain any License required to be
obtained or filed under any Environmental Law in connection with the use of such
Property and assets, including without limitation past or present treatment,
storage, disposal, or release of Hazardous Materials into the environment, if
the failure to obtain or maintain the same would constitute a Material Adverse
Change;
(n) A Change of Control shall have occurred;
(o) An event of default shall occur under that certain Lease
Agreement (Tax Retention Operating Lease), dated as of September 5, 1996,
between First Security Bank, National Association, not individually, but solely
as Owner Trustee under the Pet Stores Trust 1996-1, as Lessor, and the Company,
as Lessee;
(p) An event of default shall occur under that certain Lease
Agreement (Tax Retention Operating Lease), dated as of April 18, 1997, between
First Security Bank, National Association, not individually, but solely as Owner
Trustee under the Pet Stores Trust 1997-1, as Lessor, and the Company, as
Lessee;
(q) An event of default shall occur under that certain Amended
and Restated Lease, dated as of April 18, 1997, between Arizona Funding
Corporation, as Landlord, and the Company, as Tenant;
(r) An event of default shall occur under that certain Lease
Agreement, dated as of April 13, 2000 between First Security Bank, National
Association, not individually, but solely as Owner Trustee under the PETM
Construction Trust 2000-1, as Lessor, and the Company, as Lessee; or
(s) All obligations of the Company in respect to that certain
Lease Agreement, dated July 6, 1995, as amended, between the Company and First
Security Bank of Utah, N.A., not individually, but solely as Owner Trustee under
Pet Stores Trust 1995-1, and all
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documents related thereto, shall not have been refinanced under terms reasonably
acceptable to the Administrative Lender by June 12, 2000.
SECTION 7.2 Remedies upon Default. If an Event of Default shall have
occurred and be continuing:
(a) With the exception of an Event of Default specified in
Section 7.1(f) hereof, the Administrative Lender may at its election, and shall
upon the request of the Majority Lenders, declare the entire unpaid balance of
all Advances immediately due and payable and terminate the Commitment, whereupon
it shall be due and payable without diligence, presentment, demand, protest,
notice of protest or intent to accelerate, or notice of any other kind (except
notices specifically provided for under Section 7.1 hereof), all of which are
hereby expressly waived (except to the extent waiver of the foregoing is not
permitted by Applicable Law);
(b) Upon the occurrence of an Event of Default described in
Section 7.1(f) hereof, the aggregate unpaid principal balance of and accrued
interest on all Advances shall automatically thereupon become due and payable
concurrently therewith and the Commitment shall automatically terminate, all
without any action by the Administrative Lender or any Lender, and without
diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind, all of which are hereby expressly
waived;
(c) The Administrative Lender may, and shall upon the request
of the Majority Lenders, demand payment of an amount equal to the maximum amount
available to be drawn under all Letters of Credit; demand presentation of draws
on the Letters of Credit by the beneficiaries thereof, to the extent permitted
thereunder; require the Company to deposit with the Administrative Lender cash
or Cash Equivalents in an amount equal to the maximum amount available to be
drawn under all Letters of Credit; and/or retain, as collateral for the
reimbursement obligations of the Company with respect thereto, any amounts
received upon foreclosure, or in lieu of foreclosure, through offset, as
proceeds of any collateral or otherwise; and
(d) The Administrative Lender and the Lenders may exercise any
Rights afforded them under any Loan Papers, by Applicable Law, including but not
limited to the UCC, at equity, or otherwise.
SECTION 7.3 Cumulative Rights. All Rights available to the
Administrative Lender, Lenders, and Issuing Bank under the Loan Papers shall be
cumulative of and in addition to all other Rights granted thereto at Applicable
Law or in equity, whether or not amounts owing thereunder shall be due and
payable, and whether or not the Administrative Lender, any Lender, or the
Issuing Bank shall have instituted any suit for collection or other action in
connection with the Loan Papers.
SECTION 7.4 Waivers. The acceptance by the Administrative Lender, any
Lender, or the Issuing Bank at any time and from time to time of partial payment
of any amount owing under any Loan Papers shall not be deemed to be a waiver of
any Event of Default then existing. No waiver by the Administrative Lender, any
Lender, or the Issuing Bank of any Event of
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Default shall be deemed to be a waiver of any Event of Default other than such
Event of Default. No delay or omission by the Administrative Lender, any Lender,
or the Issuing Bank in exercising any Right under the Loan Papers shall impair
such Right or be construed as a waiver thereof or an acquiescence therein, nor
shall any single or partial exercise of any such Right preclude other or further
exercise thereof, or the exercise of any other Right under the Loan Papers or
otherwise.
SECTION 7.5 Expenditures. The Company agrees to reimburse the
Administrative Lender, Lenders, and Issuing Bank for any sums spent by any of
them in connection with the exercise of any Right provided herein. Such sums
shall bear interest at the (i) lesser of the Base Rate in effect from time to
time, plus 2.0% or (ii) the Highest Lawful Rate, from the date spent until the
date of repayment by the Company.
SECTION 7.6 Control. None of the covenants or other provisions
contained in this Agreement shall, or shall be deemed to, give the
Administrative Lender, Lenders, or Issuing Bank any Rights to exercise control
over the affairs and/or management of the Company or any of its Subsidiaries,
the power of the Administrative Lender, Lenders, and Issuing Bank being limited
to the Rights to exercise the remedies provided in this Article; provided,
however, that if the Administrative Lender, any Lender, or the Issuing Bank
becomes the owner of any stock or other equity interest in any Person, whether
through foreclosure or otherwise, it shall be entitled to exercise such legal
Rights as it may have by being an owner of such stock or other equity interest
in such Person.
ARTICLE 8
THE ADMINISTRATIVE LENDER
SECTION 8.1 Authorization and Action. Each of the Lenders and Issuing
Bank hereby appoints and authorizes the Administrative Lender to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Loan Papers as are delegated to the Administrative Lender by the
terms hereof, together with such powers as are reasonably incidental thereto. As
to any matters not expressly provided for by this Agreement and the other Loan
Papers (including without limitation enforcement or collection of the Notes),
the Administrative Lender shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders (or all Lenders, if required under Section
9.1 hereof), and such instructions shall be binding upon all Lenders; provided,
however, that the Administrative Lender shall not be required to take any action
which exposes the Administrative Lender to personal liability or which is
contrary to any Loan Papers or Applicable Law. The Administrative Lender agrees
to give to each Lender prompt notice of each notice given to it by the Company
pursuant to the terms of this Agreement, and to distribute promptly to each
applicable Lender in like funds all amounts delivered to the Administrative
Lender by the Company for the ratable or individual account of any Lender. The
Administrative Lender shall have no trustee or other fiduciary relationship in
respect of any Lender by reason of this Agreement or any other Loan Paper. The
duties of the Administrative Lender under this Agreement and the other Loan
Papers are mechanical and administrative in nature.
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SECTION 8.2 Administrative Lender's Reliance, Etc. Neither the
Administrative Lender, nor any of its directors, officers, agents, employees, or
representatives shall be liable for any action taken or omitted to be taken by
it or them under or in connection with this Agreement or any other Loan Papers,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Administrative Lender (a) may
treat the payee of any Note as the holder thereof until the Administrative
Lender receives written notice of the assignment or transfer thereof signed by
such payee and in form satisfactory to the Administrative Lender; (b) may
consult with legal counsel (including counsel for the Company or any of its
Subsidiaries), independent public accountants, and other experts selected by it,
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants, or
experts; (c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties, or representations
made in or in connection with this Agreement or any other Loan Papers; (d) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants, or conditions of this Agreement or any other
Loan Papers on the part of the Company or its Subsidiaries or to inspect the
Property (including the books and records) of the Company or its Subsidiaries;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency, or value of this Agreement,
any other Loan Papers, or any other instrument or document furnished pursuant
hereto; and (f) shall incur no liability under or in respect of this Agreement
or any other Loan Papers by acting upon any notice, consent, certificate, or
other instrument or writing (which may be by telegram, cable, telex, or
telecopy) believed by it to be genuine and signed or sent by the proper party or
parties.
SECTION 8.3 Bank of America, N.A. and Affiliates. With respect to its
Commitment, its Advances, and any Loan Papers, Bank of America, N.A. shall have
the same Rights under this Agreement as any other Lender and may exercise the
same as though it were not the Administrative Lender. Bank of America, N.A., and
its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Company,
any Affiliate thereof, and any Person who may do business therewith, all as if
Bank of America, N.A. were not the Administrative Lender and without any duty to
account therefor to any Lender.
SECTION 8.4 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Lender or any
other Lender, and based on the financial statements referred to in Sections 5.4
and 6.14 hereof and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Lender 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 and the other Loan Papers.
SECTION 8.5 INDEMNIFICATION BY LENDERS. LENDERS AGREE TO INDEMNIFY THE
ADMINISTRATIVE LENDER, PRO RATA ACCORDING TO THEIR SPECIFIED PERCENTAGES 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 THE
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ADMINISTRATIVE LENDER IN ANY WAY RELATING TO OR ARISING OUT OF ANY LOAN PAPERS
OR ANY ACTION TAKEN OR OMITTED BY THE ADMINISTRATIVE LENDER THEREUNDER,
INCLUDING ANY MERE OR ORDINARY NEGLIGENCE OF THE ADMINISTRATIVE LENDER;
PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES, OR DISBURSEMENTS RESULTING FROM THE ADMINISTRATIVE LENDER'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING,
LENDERS AGREE TO REIMBURSE THE ADMINISTRATIVE LENDER, PRO RATA ACCORDING TO
THEIR SPECIFIED PERCENTAGES, PROMPTLY UPON DEMAND FOR ANY OUT-OF-POCKET EXPENSES
(INCLUDING ATTORNEYS' FEES) INCURRED BY THE ADMINISTRATIVE LENDER IN CONNECTION
WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION,
AMENDMENT, OR ENFORCEMENT (WHETHER THROUGH NEGOTIATION, LEGAL PROCEEDINGS OR
OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER,
THE LOAN PAPERS.
SECTION 8.6 Successor Administrative Lender. The Administrative Lender
may resign at any time by giving written notice thereof to the Lenders and
Company, and may be removed at any time with or without cause by the action of
all Lenders (other than the Administrative Lender, if it is a Lender), or by the
Company upon thirty (30) days prior written notice from the Company to the
Administrative Lender if, at any time, the Administrative Lender's Specified
Percentage is less than eight percent (8.0%); provided, however, that if a
successor Administrative Lender is appointed without the consent of the Majority
Lenders pursuant to the third sentence of this Section, such successor
Administrative Lender may be removed by the Majority Lenders and Company. Upon
any such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Administrative Lender, with the consent of the Company so
long as no Event of Default has occurred and is continuing (which shall not be
unreasonably withheld). If no successor Administrative Lender shall have been so
appointed and shall have accepted such appointment within 30 days after the
retiring Administrative Lender's giving of notice of resignation or the Lenders'
removal of the retiring Administrative Lender, then the retiring Administrative
Lender may, on behalf of the Lenders, appoint a successor Administrative Lender,
which shall be a commercial bank organized under the Applicable Laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $50,000,000. Upon the acceptance of any appointment as
the Administrative Lender hereunder by a successor Administrative Lender, such
successor Administrative Lender shall thereupon succeed to and become vested
with all the Rights and duties of the retiring Administrative Lender, and the
retiring Administrative Lender shall be discharged from its duties and
obligations under the Loan Papers. Notwithstanding any Administrative Lender's
resignation or removal hereunder, the provisions of this Article shall continue
to inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Administrative Lender under this Agreement.
SECTION 8.7 Notice of Default. The Administrative Lender shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Administrative Lender has received notice from a Lender or
the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice
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of default." In the event that the Administrative Lender receives any such
notice, the Administrative Lender shall promptly give notice thereof to the
Lenders.
SECTION 8.8 Documentation Agent. No Lender identified on the cover page
or the signature pages of this Agreement as "Documentation Agent" shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
other than those applicable to all Lenders as such. Without limiting the
foregoing, no Lender so identified shall have or be deemed to have any fiduciary
relationship with any other Lender. Each Lender acknowledges that it has not
relied, and will not rely, on any Lender so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
ARTICLE 9
CHANGES IN CIRCUMSTANCES
SECTION 9.1 LIBOR Basis Determination Inadequate. If with respect to
any proposed LIBOR Advance for any Interest Period, any Lender determines that
(i) deposits in dollars (in the applicable amount) are not being offered to that
Lender in the relevant market for such Interest Period or (ii) the LIBOR Basis
for such proposed LIBOR Advance does not adequately cover the cost to such
Lender of making and maintaining such proposed LIBOR Advance for such Interest
Period, such Lender shall forthwith give notice thereof to the Company,
whereupon until such Lender notifies the Company that the circumstances giving
rise to such situation no longer exist, the obligation of such Lender to make
LIBOR Advances shall be suspended.
SECTION 9.2 Illegality. If any applicable law, rule or regulation, or
any change therein or adoption thereof, or interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its LIBOR Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency, shall make it unlawful or impossible for such Lender (or its LIBOR
Lending Office) to make, maintain or fund its LIBOR Advances, such Lender shall
so notify the Company and the Administrative Lender. Before giving any notice to
the Company pursuant to this Section, the notifying Lender shall designate a
different LIBOR Lending Office or other lending office if such designation will
avoid the need for giving such notice and will not, in the sole judgment of the
Lender, be materially disadvantageous to the Lender. Upon receipt of such
notice, notwithstanding anything contained in Article II hereof, the Company
shall repay in full the then outstanding principal amount of each LIBOR Advance
owing to the notifying Lender, together with accrued interest thereon, on either
(a) the last day of the Interest Period applicable to such Advance, if the
Lender may lawfully continue to maintain and fund such Advance to such day, or
(b) immediately, if the Lender may not lawfully continue to fund and maintain
such Advance to such day. Concurrently with repaying each affected LIBOR Advance
owing to such Lender, notwithstanding anything contained in Article II hereof,
the Company shall borrow a Base Rate Advance from such Lender, and such Lender
shall make such Base Rate Advance, in an amount such that the outstanding
principal amount of the Advances owing to such Lender shall equal the
outstanding principal amount of the Advances owing immediately prior to such
repayment, and such Base Rate Advance shall be payable on the same date or dates
as the affected LIBOR Advances of such Lender would have otherwise been due and
payable but for this Section 9.2.
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SECTION 9.3 Increased Costs.
(a) If any applicable law, rule or regulation, or any change
in or adoption of any law, rule or regulation, or any interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof or compliance
by any Lender (or its LIBOR Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
compatible agency:
(i) shall subject a Lender (or its LIBOR Lending Office)
to any tax (net of any tax benefit engendered thereby) with respect to its LIBOR
Advances or its obligation to make such Advances, or shall change the basis of
taxation of payments to a Lender (or to its LIBOR Lending Office) of the
principal of or interest on its LIBOR Advances or in respect of any other
amounts due under this Agreement, as the case may be, or its obligation to make
such Advances (except for changes in the rate of tax on the overall net income,
net worth or capital of the Lender and franchise taxes, doing business taxes or
minimum taxes imposed upon such Lender); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by, a Lender's LIBOR
Lending Office or shall impose on the Lender (or its LIBOR Lending Office) or on
the United States market for certificates of deposit or the London interbank
market any other condition affecting its LIBOR Advances or its obligation to
make such Advances;
and the result of any of the foregoing is to increase the cost to a
Lender (or its LIBOR Lending Office) of making or maintaining any LIBOR
Advances, or to reduce the amount of any sum received or receivable by a Lender
(or its LIBOR Lending Office) with respect thereto, by an amount deemed by a
Lender to be material, then, within 15 days after demand by a Lender, the
Company agrees to pay to such Lender such additional amount as will compensate
such Lender for such increased costs or reduced amounts, subject to Section 10.9
hereof. The affected Lender will as soon as practicable notify the Company of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section and will designate
a different LIBOR Lending Office or other lending office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole judgment of the affected Lender made in good faith, be
disadvantageous to such Lender.
(b) A certificate of any Lender claiming compensation under
this Section and setting forth the additional amounts to be paid to it hereunder
and calculations therefor shall be conclusive in the absence of manifest error.
In determining such amount, a Lender may use any reasonable averaging and
attribution methods. If a Lender demands compensation under this Section, the
Company may at any time, upon at least five Business Days' prior notice to the
Lender, after reimbursement to the Lender by the Company in accordance with this
Section of all costs incurred, prepay in full the then outstanding LIBOR
Advances of the Lender, together with accrued interest thereon to the date of
prepayment, along with any reimbursement required under Section 2.9 hereof.
Concurrently with prepaying such LIBOR Advances, the Company shall
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borrow a Base Rate Advance from the Lender, and the Lender shall make such Base
Rate Advance, in an amount such that the outstanding principal amount of the
Advances owing to such Lender shall equal the outstanding principal amount of
the Advances owing immediately prior to such prepayment, and such Base Rate
Advance shall be payable on the same date or dates as the LIBOR Advances of such
Lender would have otherwise been due and payable but for this Section 9.3.
SECTION 9.4 Base Rate Advances Rather than LIBOR Advances. If notice
has been given pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the
obligation of a Lender to make LIBOR Advances, or requiring LIBOR Advances of a
Lender to be repaid or prepaid, then, unless and until the Lender notifies the
Company that the circumstances giving rise to such repayment no longer apply,
all Advances which would otherwise be made by such Lender as LIBOR Advances
shall be made instead as Base Rate Advances, which shall be payable on the same
date or dates as the LIBOR Advances made by the other Lenders.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Papers, nor consent to any
departure by the Company or any of its Subsidiaries therefrom, shall be
effective unless the same shall be in writing and signed by the Administrative
Lender with the consent of the Majority Lenders, and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver, or
consent shall, unless in writing and signed by all of the Lenders, (a) increase
the Commitment (except as expressly permitted by Section 2.12 hereof), (b)
reduce any principal, interest, fees, or other amounts payable hereunder, or
waive any Event of Default under Section 7.1(a) hereof, (c) postpone any date
fixed for any payment of principal, interest, fees, or other amounts payable
hereunder, (d) release any collateral or guaranties securing the Company's
obligations hereunder, other than releases contemplated by the Loan Papers, (e)
change the meaning of Specified Percentage (except in accordance with Section
2.12 hereof), the meaning of Borrowing Base or any of the terms used in such
definition, or the number of Lenders required to take any action hereunder, or
(f) amend this Section 10.1. No amendment, waiver, or consent shall affect the
Rights or duties of the Administrative Lender under any Loan Papers, unless it
is in writing and signed by the Administrative Lender in addition to the
requisite number of Lenders.
SECTION 10.2 Notices. Unless otherwise provided herein, all notices,
requests, consents, demands, and other communications under the Loan Papers
shall be in writing and shall be personally delivered, sent by telecopy or telex
(answerback received), or mailed, by certified mail, postage prepaid, to the
following addresses:
(a) If to the Company:
PETsMART, Inc.
00000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
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Attention: Xxxx Xxxxxxxx
with a copy to:
Xxxxxx Godward L.L.P.
0 Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
(b) If to the Administrative Lender:
Bank of America, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
(c) If to any Lender, to its address shown on the
signature pages hereto.
(d) If to the Issuing Bank:
Bank of America, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx
with a copy to:
Bank of America, N.A.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxxxx
or to such other address as any party may designate in written notice
to the other parties. All notices, requests, consents, demands, and other
communications hereunder will be effective when so personally delivered or sent
by telecopy or telex, or five days after being so mailed; provided, however,
that notices to the Administrative Lender pursuant to Article II hereof shall be
effective when received. The Company agrees that the Administrative Lender shall
have no duty or obligation to verify or otherwise confirm telephonic notices
given pursuant to Article II hereof, and agrees to indemnify and hold harmless
the Administrative Lender and Lenders for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, and
expenses resulting, directly or indirectly, from acting upon any such notice.
SECTION 10.3 Parties in Interest. All covenants and agreements
contained in this Agreement and all other Loan Papers shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto. The
Lenders may from time to time assign or transfer their interests hereunder
pursuant to Section 10.4 hereof. The Company may not assign or transfer its
Rights or obligations hereunder without the prior written consent of all
Lenders.
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SECTION 10.4 Assignments and Participations.
(a) Each Lender may assign its Rights and obligations as a
Lender under the Loan Papers to one or more Eligible Assignees, pursuant to an
assignment substantially in the form of Exhibit F hereto, so long as (i) each
assignment shall be of a constant, and not a varying, percentage of all Rights
and obligations thereunder, (ii) the Eligible Assignee or the Lender entering
into such assignment, as determined between such Persons, shall deliver to the
Administrative Lender a processing fee of $3,500, and (iii) the amount of the
Commitment, Advances and Reimbursement Obligations being assigned pursuant to
each such assignment (determined as of the date of the assignment with respect
to such assignment) shall in no event be less the lesser of (A) than $5,000,000
and which is an integral multiple of $1,000,000, or (B) the aggregate amount of
the Commitment, Advances and Reimbursement Obligations owned by the Lender
entering into such Assignment. Within five Business Days after notice of any
such assignment, the Company shall execute and deliver to the Administrative
Lender, in exchange for the Note issued to such Lender, new Notes to the order
of such Lender and its assignee in amounts equal to their respective Specified
Percentages of the Commitment. Such new Notes shall be dated the effective date
of the assignment. It is specifically acknowledged and agreed that on and after
the effective date of each assignment, the assignee shall be a party hereto and
shall have the Rights and obligations of a Lender under the Loan Papers.
(b) Each Lender may sell participations to one or more banks
or other entities in all or any of its Rights and obligations under the Loan
Papers; provided, however, that (i) such Lender's obligations under the Loan
Papers shall remain unchanged, (ii) such Lender shall remain solely responsible
to the other parties hereto for the performance of such obligations, (iii) such
Lender shall remain the holder of its Note for all purposes of the Loan Papers,
(iv) the participant shall be granted the Right to vote on or consent to only
those matters described in subsections (a) through (d) of Section 10.1 hereof,
and (v) the Company, Administrative Lender, and other Lenders shall continue to
deal solely and directly with such Lender in connection with its Rights and
obligations under the Loan Papers.
(c) Any Lender may, in connection with any assignment or
participation, or proposed assignment or participation, disclose to the assignee
or participant, or proposed assignee or participant, any information relating to
the Company or any of its Subsidiaries furnished to such Lender by or on behalf
of the Company or its Subsidiaries; provided, however, that, prior to any such
disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any confidential information
received by it from such Lender.
(d) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its Rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
(e) If the Company receives notice from any Lender requesting
increased costs or additional amounts under Section 2.8 or 10.7, the Company
shall have the right, unless such Lender has removed or cured the conditions
which resulted in the obligation to pay such
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increased costs or additional amounts or agreed to waive and otherwise forego
any right it may have to any payments therein provided, to replace in its
entirety such Lender (the "Replaced Lender"), upon prior written notice to
Administrative Lender and such Replaced Lender, with one or more Eligible
Assignees acceptable to the Administrative Lender (which acceptance shall not be
unreasonably withheld), pursuant to the provisions of this Section 10.4;
provided, however, that nothing herein contained shall relieve the Company of
its obligation to pay any such increased costs or additional amounts to the
extent incurred prior to the replacement of the applicable Lender.
SECTION 10.5 Sharing of Payments. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any Right of
set-off, or otherwise) on account of its Advances in excess of its Specified
Percentage of all payments made by the Company, such Lender shall forthwith
purchase participations in Advances made by the other Lenders as shall be
necessary to share the excess payment pro rata according to Specified
Percentages with each of them; provided, however, that if any of such excess
payment is thereafter recovered from the purchasing Lender, its purchase from
each Lender shall be rescinded and each Lender shall repay the purchase price to
the extent of such recovery together with any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered
according to Specified Percentages. The Company agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by Applicable Law, exercise all its Rights of
payment (including the Right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Company in the amount of
such participation.
SECTION 10.6 Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by Applicable Law,
to set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of the Company against any
and all of the obligations of the Company now or hereafter existing under this
Agreement and the other Loan Papers, whether or not such Lender shall have made
any demand under this Agreement or the other Loan Papers, and even if such
obligations are unmatured. Each Lender shall promptly notify the Company after
any such set-off and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The Rights of
each Lender under this Section are in addition to other Rights (including,
without limitation, other Rights of set-off) which each Lender may have.
SECTION 10.7 Costs, Expenses and Taxes.
(a) The Company agrees to pay on demand (i) all costs and
expenses of the Administrative Lender in connection with the preparation,
negotiation, and administration of any Loan Papers, including without limitation
the reasonable fees and out-of-pocket expenses of counsel for the Administrative
Lender, (ii) all reasonable costs and expenses (including reasonable attorneys'
fees and expenses) of the Administrative Lender in connection with modification,
amendment, waiver, or release of any Loan Papers, and (iii) all costs and
expenses (including reasonable attorneys' fees and expenses) of the
Administrative Lender, Lenders, and Issuing Bank in connection with enforcement
of any Loan Papers.
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(b) In addition, the Company shall pay any and all stamp,
debt, and other Taxes payable or determined to be payable in connection with any
payment hereunder (other than Taxes on the overall net income of the
Administrative Lender, any Lender, or the Issuing Bank or Taxes imposed by
foreign Laws or as a result of any Lender being organized under the laws of a
jurisdiction outside of the United States), or the execution, delivery, or
recordation of any Loan Papers, and agrees to save the Administrative Lender,
Lenders, and Issuing Bank harmless from and against any and all liabilities with
respect to, or resulting from any delay in paying or omission to pay any Taxes
in accordance with this Section, including any penalty, interest, and expenses
relating thereto. All payments by the Company or any Subsidiary under any Loan
Papers shall be made free and clear of and without deduction for any present or
future Taxes (other than Taxes on the overall net income of the Administrative
Lender, any Lender, or the Issuing Bank) of any nature now or hereafter
existing, levied, or withheld, including all interest, penalties, or similar
liabilities relating thereto. If the Company or any Subsidiary shall be required
by Applicable Law to deduct or to withhold any Taxes from or in respect of any
amount payable hereunder, (i) the amount so payable shall be increased to the
extent necessary so that, after making all required deductions and withholdings
(including Taxes on amounts payable to the Administrative Lender, any Lender, or
the Issuing Bank pursuant to this sentence), the payee receives an amount equal
to the sum it would have received had no such deductions or withholdings been
made, (ii) the Company or such Subsidiary shall make such deductions or
withholdings, and (iii) the Company or such Subsidiary shall pay the full amount
deducted or withheld to the relevant taxing authority in accordance with
Applicable Law. Any Lender claiming any additional amounts payable pursuant to
this Section 10.7 shall use reasonable commercial efforts to change the
jurisdiction of its lending office if the making of such change would avoid the
need for or materially reduce the amount of any such additional amounts which
may thereafter accrue and if, in the reasonable opinion of such Lender, such
change in lending office would not be contrary to such Lender's normal banking
practices or be disadvantageous to such Lender.
(c) Each Lender which is not a United States Person hereby
agrees that:
(i) it shall, no later than the date hereof (or, in the
case of a Lender which becomes a party hereto pursuant to Section 11.6 after the
date hereof, the date upon which such Lender becomes a party hereto) deliver to
the Company:
(a) if any lending office is located in the United
States of America, two (2) accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("Form 4224"),
(b) if any lending office is located outside the
United States of America, two (2) accurate and complete signed originals of
Internal Revenue Service Form 1001 or any successor thereto ("Form 1001").
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees for the
account of such lending office or lending offices under this Agreement free from
withholding of United States Federal income tax;
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(ii) if at any time such Lender changes its lending
office or lending offices or selects an additional lending office it shall, at
the same time or reasonably promptly thereafter but only to the extent the forms
previously delivered by it hereunder are no longer effective, deliver to the
Company, in replacement for the forms previously delivered by it hereunder:
(a) if such changed or additional lending office is
located in the United States of America, two (2) accurate and complete signed
originals of Form 4224; or
(b) otherwise, two (2) accurate and complete signed
originals of Form 1001,
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees for the
account of such changed or additional lending office under this Agreement free
from withholding of United States Federal income tax;
(iii) it shall, before or promptly after the occurrence of
any event (including the passing of time but excluding any event mentioned in
clause (ii) above) requiring a change in the most recent Form 4224 or Form 1001
previously delivered by such Lender and if the delivery of the same be lawful,
deliver to the Company, two (2) accurate and complete original signed copies of
Form 4224 or Form 1001 in replacement for the forms previously delivered by such
Lender;
(iv) it shall, promptly upon the request of the Company,
deliver to the Company such other forms or similar documentation as may be
required from time to time by any applicable law, treaty, rule or regulation in
order to establish such Lender's tax status for withholding purposes; and
(v) it shall notify the Company, within 30 days after
any event (including an amendment to, or a change in any applicable law or
regulation or in the written interpretation thereof by any regulatory authority
or any judicial authority, or by ruling applicable to such Lender of any
governmental authority charged with the interpretation or administration of any
law) shall occur that results in such Lender no longer being capable of
receiving payments without any deduction or withholding of United States federal
income tax.
SECTION 10.8 INDEMNIFICATION BY COMPANY. THE COMPANY AGREES TO
INDEMNIFY, DEFEND, AND HOLD HARMLESS THE ADMINISTRATIVE LENDER, THE LENDERS, THE
ISSUING BANK, AND THEIR AFFILIATES, DIRECTORS, OFFICERS, AGENTS, EMPLOYEES, AND
REPRESENTATIVES, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES, AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (COLLECTIVELY, "DAMAGES") WHICH
MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST ANY OF THEM IN ANY WAY
RELATING TO OR ARISING OUT OF ANY LOAN PAPERS (INCLUDING IN CONNECTION WITH OR
AS A RESULT, IN WHOLE OR IN PART, OF THE NEGLIGENCE OF ANY OF THEM), ANY
TRANSACTION RELATED HERETO OR THERETO, OR ANY ACT, OMISSION, OR TRANSACTION OF
THE COMPANY AND ITS
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AFFILIATES, OR ANY OF THEIR DIRECTORS, OFFICERS, AGENTS, EMPLOYEES, OR
REPRESENTATIVES; PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE LENDER, LENDERS, AND
ISSUING BANK SHALL NOT BE INDEMNIFIED, DEFENDED, AND HELD HARMLESS PURSUANT TO
THIS SECTION FOR ANY DAMAGES THAT WERE CAUSED BY THE INDEMNIFIED PARTY'S WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE AS FINALLY JUDICIALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION.
SECTION 10.9 Rate Provision. It is not the intention of any party to
any Loan Papers to make an agreement violative of the Applicable Laws of any
applicable jurisdiction relating to usury. In no event shall the Company or any
of its Subsidiaries be obligated to pay any amount in excess of the Maximum
Amount. If any Lender ever receives, collects or applies, as interest, any such
excess, such amount which would be excessive interest shall be deemed a partial
repayment of principal and treated hereunder as such; and if principal is paid
in full, any remaining excess shall be paid to the Company. In determining
whether or not the interest paid or payable, under any specific contingency,
exceeds the Maximum Amount, the Company and Lenders shall, to the maximum extent
permitted under Applicable Laws, (i) characterize any nonprincipal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effect thereof, and (iii) amortize, prorate, allocate and
spread in equal parts, the total amount of interest throughout the entire
contemplated term of the Obligation so that the interest rate is uniform
throughout the entire term of the Obligation; provided that if the Obligation is
paid and performed in full prior to the end of the full contemplated term
thereof, and if the interest received for the actual period of existence thereof
exceeds the Maximum Amount, Lenders shall refund to the Company the amount of
such excess or credit the amount of such excess against the total principal
amount owing, and, in such event, no Lender shall be subject to any penalties
provided by any Applicable Laws for contracting for, charging or receiving
interest in excess of the Maximum Amount. This Section 10.9 shall control every
other provision of all agreements among the parties to this Agreement
pertaining to the transactions contemplated by or contained in the Loan Papers.
SECTION 10.10 Severability. If any provision of any Loan Papers is held
to be illegal, invalid, or unenforceable under present or future Applicable Laws
during the term thereof, such provision shall be fully severable, the
appropriate Loan Paper shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part thereof, and the
remaining provisions thereof shall remain in full force and effect and shall not
be affected by the illegal, invalid, or unenforceable provision or by its
severance therefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part of such
Loan Paper a legal, valid, and enforceable provision as similar in terms to the
illegal, invalid, or unenforceable provision as may be possible.
SECTION 10.11 Exceptions to Covenants. Neither the Company nor any of
its Subsidiaries shall be deemed to be permitted to take any action or to fail
to take any action that is permitted as an exception to any covenant in any Loan
Papers, or that is within the permissible limits of any covenant, if such action
or omission would result in a violation of any other covenant in any Loan
Papers.
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SECTION 10.12 Counterparts. This Agreement and the other Loan Papers
may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such agreement,
it shall not be necessary to produce or account for any counterpart other than
one signed by the party against which enforcement is sought.
SECTION 10.13 No Novation. Except for Liens expressly released in
connection herewith, the execution, delivery and effectiveness of this Agreement
shall not extinguish the obligations for the payment of money outstanding under
the Prior Credit Agreement (as defined in the recitals hereof) or discharge or
release the Lien or priority of any security agreement, any pledge agreement or
any other security therefor. Nothing herein contained shall be construed as a
substitution or novation of the Obligations outstanding under the Prior Credit
Agreement or instruments securing the same, which shall remain in full force and
effect, except as modified hereby or by instruments executed concurrently
herewith. Nothing expressed or implied in this Agreement, or any other document
contemplated hereby shall be construed as a release or other discharge of the
Company under the Prior Credit Agreement or any guarantor or pledgor under any
Loan Paper (as such term is defined in the Prior Credit Agreement) from any of
its obligations and liabilities thereunder. The Prior Credit Agreement and such
Loan Papers shall remain in full force and effect, until and except as modified
hereby or in connection herewith.
SECTION 10.14 Purchase by Lenders. Simultaneously with the satisfaction
of the conditions precedent to effectiveness set forth in Section 4.1 hereof,
each Lender a party hereto and not a Prior Lender shall be deemed to have
purchased without recourse an amount of each of the Prior Lender's outstanding
Advances and Reimbursement Obligations under the prior Credit Agreement such
that after giving effect to this Agreement, the percentage of each Lender's
Commitment hereunder which has been utilized will be ratable in accordance with
their Specified Percentage. Each Prior Lender warrants that its portion of the
outstanding Advances and Reimbursement Obligations under the Prior Credit
Agreement being sold pursuant to this Section 10.14 is being sold free and clear
of any adverse claims.
SECTION 10.15 Designated Senior Indebtedness. The parties hereto agree
that the Obligation shall be "Designated Senior Indebtedness" for purposes of
the Indenture in respect of the Convertible Subordinated Notes.
SECTION 10.16 GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND ALL OTHER LOAN PAPERS SHALL BE DEEMED
TO BE CONTRACTS MADE IN DALLAS, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS) AND THE UNITED STATES OF AMERICA. WITHOUT EXCLUDING ANY OTHER
JURISDICTION, THE COMPANY AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS
LOCATED IN DALLAS, TEXAS, WILL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION
HEREWITH. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE COMPANY HEREBY WAIVES ANY
RIGHT THAT THEY MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN
TORT, CONTRACT, EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS
AGREEMENT, THE OTHER
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LOAN PAPERS, OR ANY RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE
TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
(b) THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY LEGAL
PROCESS UPON IT. UNDER THE LOAN PAPERS, IN ADDITION, THE COMPANY AGREES THAT
SERVICE OF PROCESS MAY BE MADE UPON IT BY REGISTERED MAIL (RETURN RECEIPT
REQUESTED) DIRECTED TO THE COMPANY AT ITS ADDRESS DESIGNATED FOR NOTICE UNDER
THIS AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS
AFTER DEPOSIT IN THE UNITED STATES MAIL. NOTHING IN THIS SECTION SHALL AFFECT
THE RIGHT OF THE ADMINISTRATIVE LENDER OR ANY LENDER TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW.
SECTION 10.17 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, this Credit Agreement is executed as of the date
first set forth above.
COMPANY: PETsMART, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Xxxx X. Xxxxxxxx
Executive Vice President and CFO
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ADMINISTRATIVE LENDER: BANK OF AMERICA, N.A., as
Administrative Lender
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------
Xxxxxxxx X. Xxxxxxx
Managing Director
ISSUING BANK: BANK OF AMERICA, N.A., as Issuing
Bank
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------
Xxxxxxxx X. Xxxxxxx
Managing Director
Address:
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxxxx X. Xxxxxxx
LENDERS: BANK OF AMERICA, N.A., Individually
Specified Percentage: 27.2727%
Commitment: $19,090,909.09
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------
Xxxxxxxx X. Xxxxxxx
Managing Director
Address:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxxxx X. Xxxxxxx
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XXXXX FARGO BANK, N.A.
Specified Percentage: 31.8182%
Commitment: $22,272,727.27
By: /s/ J. Xxxxxxx Xxxxxx
-----------------------
J. Xxxxxxx Xxxxxx
Regional Vice President
Address:
Xxxxx Fargo Bank, N.A.
--------------------------------
--------------------------------
Attn:
---------------------------
66.
00
XXX XXXX XX XXXX XXXXXX
Specified Percentage: 13.6364%
Commitment: $9,545,454.55
By: /s/ Xxxx Xxxxx
----------------------------
Xxxx Xxxxx
Managing Director, Corporate
Address:
--------------------------------
--------------------------------
Attn:
---------------------------
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74
FIRST UNION NATIONAL BANK
Specified Percentage: 13.6364%
Commitment: $9,545,454.55
By: /s/ Xxxxx X. Xxxxxx
------------------------
Xxxxx X. Xxxxxx
Assistant Vice President
Address:
One South Penn Square
PA 9830 00xx Xxxxx Xxxxxxx Xxxx.
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
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FLEET NATIONAL BANK
Specified Percentage: 13.6364%
Commitment: $9,545,454.55
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxxx X. Xxxxxx
Director
Address:
--------------------------------
--------------------------------
Attn:
--------------------------
69.
