Exhibit 4.10
AMENDMENT NO. 2 TO GUARANTY
AMENDMENT NO. 2 TO GUARANTY ("Amendment No. 2"), dated as of October
25, 1999, from RITE AID CORPORATION, a Delaware corporation (the
"Guarantor"), to RAC LEASING LLC, a Wyoming limited liability company (the
"Lessor").
WHEREAS, the Lessor and Rite Aid Realty Corp. (the "Lessee") entered
into a Master Lease and Security Agreement dated as of March 19, 1998, as
amended by Amendment No. 1, dated as of June 22, 1998, and as further
amended by Amendment No. 2, dated as of the date hereof (as so amended, the
"Lease"); and
WHEREAS, the Guarantor and the Lessor entered into a Guaranty, dated
as of March 19, 1998, as amended by Amendment No. 1, dated as of June 22,
1998 (as so amended, the "Guaranty"); and
WHEREAS, the Lessor has pledged and assigned its rights in the
Guaranty pursuant to the Amended and Restated Intercreditor and Security
Agreement dated as of March 19, 1998, as amended by Amendment No. 1, dated
as of June 22, 1998, among the Lessor, the Guarantor, the Lessee, The
Sumitomo Bank, Limited, New York Branch, as Collateral Agent and the other
parties thereto; and
WHEREAS, the obligations of the Guarantor under the Guaranty have been
secured under the PCS Pledge Agreement and the xxxxxxxxx.xxx Pledge
Agreement (as such terms are defined in the Amended and Restated Credit
Agreement dated as of October 25, 1999 among the Guarantor, the banks
parties thereto and Xxxxxx Guaranty Trust Company of New York, as agent);
and
WHEREAS, the Guarantor and the Lessor now desire to further amend the
Guaranty; and
WHEREAS, capitalized terms used but not defined herein shall have the
respective meanings given to such terms in Appendix I to the Lease.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Amendment to Guaranty. Section 11(a) of the Guaranty is
hereby amended to read in its entirety as follows:
"(a) The covenants set forth in Annex A hereto, are
hereby incorporated herein in their entirety with the same
force and effect as if such covenants were set forth
expressly herein. The Guarantor further covenants and
agrees that it shall not cause or permit any increase in
the principal amount secured under the PCS Pledge Agreement
(as defined in Annex A) or the xxxxxxxxx.xxx Pledge
Agreement (as defined in Annex A and together with the PCS
Pledge Agreement, the "Pledge Agreements") or cause or
permit any amendment or waiver to either Pledge Agreement
that by its terms materially adversely affects the rights
of the holders of the Synthetic Lease Obligations (as
defined in the Pledge Agreements) in a manner different
from its effect on the rights of holders of any other
Secured Obligations (as defined in the Pledge Agreements)
without the prior written consent of the Required
Participants."
Section 2. Pledge Agreements. The Lessor hereby accepts the benefits
of and agrees to be bound by the terms of the PCS Pledge Agreement and the
xxxxxxxxx.xxx Pledge Agreement and confirms its appointment of Xxxxxx
Guaranty Trust Company of New York as its agent thereunder in accordance
with the terms thereof.
Section 3. Secretary's Certificate. The Guarantor hereby agrees to
deliver to the Collateral Agent on the date hereof a certificate dated the
date of this Amendment No. 2, from the Secretary or Assistant Secretary of
the Guarantor certifying (i) as to the incumbency and signature of each
officer of the Guarantor authorized to execute and deliver this Amendment
No. 2, (ii) that attached thereto are true and complete copies of the
Certificate of Incorporation and By-Laws of the Guarantor as in full force
and effect on the date of this Amendment No. 2 and (iii) that attached
thereto is a true and complete copy of the resolutions of the Board of
Directors of the Guarantor authorizing the execution, delivery and
performance of this Amendment No. 2 and the transactions contemplated
hereby, together with a certificate of another officer of the Guarantor as
to the incumbency and signature of such Secretary or Assistant Secretary.
Section 4. Representations and Warranties. The Guarantor hereby
represents and warrants that (a) each of the representations and warranties
made in Section 4 of the Guaranty are true and correct with the same force
and effect as though made on and as of the date of this Amendment No. 2,
except (i) to the extent that any such representations or warranties
expressly relate to an earlier date, such representations and warranties
were true and correct on and as of such earlier date, (ii) with respect to
the representation set forth in Section 4(d) and (e) of the Guaranty, such
representation is true and correct on and as of the date hereof as if made
on and as of the date hereof except to the extent set forth in the
Information (as defined in Annex A) and (iii) with respect to the
representation set forth in Section 4(f) of the Guaranty, such
representation is true and correct on and as of the date hereof as if made
on and as of the date hereof except to the extent set forth in the
Guarantor's 1999 Annual Report on Form 10-K for the fiscal year ended
February 27, 1999, and (b) no Default or Event of Default has occurred and
is continuing.
Section 5. Continuing Effect. Except as expressly modified and
amended hereby, the Guaranty remains unchanged and in full force and effect
in all respects. As expressly modified and amended hereby, the Guarantor
hereby ratifies and reaffirms the Guaranty.
Section 6. Governing Law. THIS AMENDMENT NO. 2 SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
Section 7. Counterparts. This Amendment No. 2 may be executed in any
number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same Amendment No. 2.
[Remainder of this page left intentionally blank. Signatures begin on next
page.]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 2 to be executed by their officers thereunto duly authorized
as of the date first above written.
RITE AID CORPORATION,
as Guarantor
By: ______________________________
Name:
Title:
Acknowledged and Agreed:
RAC LEASING LLC
By: The Diversified Group Incorporated
By: ___________________________________
Name:
Title:
ANNEX A TO GUARANTY
DEFINITIONS
Definitions. Unless otherwise defined in the text of this Annex A,
the following terms, as used in this Annex A, have the following meanings
(capitalized terms used in this Annex A but not otherwise defined in this
Annex A shall have their respective meanings as set forth in the Guaranty;
unless otherwise specified in this Annex A, references to section numbers
in this Annex A refer to the numbered sections of this Annex A):
"ATTRIBUTABLE DEBT" means, as to any particular Sale and Leaseback
Transaction under which the Guarantor or any Subsidiary is at the time
liable, at any date as of which the amount thereof is to be determined (i)
in the case of any such transaction involving a Capital Lease, the amount
on such date of the Capital Lease Obligation thereunder, or (ii) in the
case of any other Sale and Leaseback Transaction, the then present value of
the minimum rental obligations under such Sale and Leaseback Transaction
during the remaining term thereof (after giving effect to any extensions at
the option of the lessor) computed by discounting the respective rental
payments at the actual interest factor included in such payments or, if
such interest factor cannot be readily determined, at the rate of 14% per
annum. The amount of any rental payment required to be made under any such
Sale and Leaseback Transaction not involving a Capital Lease may exclude
amounts required to be paid by the lessee on account of maintenance and
repairs, insurance, taxes, assessments, utilities, operating and labor
costs and similar charges.
"BANK" means each bank listed on the signature pages of the Credit
Agreement, each Assignee (as defined in the Credit Agreement) which becomes
a Bank pursuant to Section 9.06(c) of the Credit Agreement, and their
respective successors.
"BENEFIT ARRANGEMENT" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by
any member of the ERISA Group.
"BORROWING" means the aggregation of Loans of the same Class to be
made to the Guarantor by the Banks pursuant to Article 2 of the Credit
Agreement on a single date and for a single Interest Period.
"BUSINESS ACQUISITION" means (i) an Investment by the Guarantor or any
of its Subsidiaries in any other Person (including an Investment by way of
acquisition of securities of any other Person) pursuant to which such
Person shall become a Subsidiary or shall be merged into or consolidated
with the Guarantor or any of its Subsidiaries or (ii) an acquisition by the
Guarantor or any of its Subsidiaries of the property and assets of any
Person (other than the Guarantor or any of its Subsidiaries) that
constitute substantially all the assets of such Person or any division or
other business unit of such Person.
"CAPITAL LEASE" means any lease of property which, in accordance with
generally accepted accounting principles, should be capitalized on the
lessee's balance sheet; and "CAPITAL LEASE OBLIGATION" means the amount of
the liability so capitalized in respect of a Capital Lease.
"CLASS" has the meaning set forth in Section 1.03 of the Credit
Agreement.
"COLLATERAL" means collateral subject to the Collateral Documents.
"COLLATERAL DOCUMENTS" means the Pledge Agreements, any additional
pledge agreements required to be delivered pursuant to the Loan Documents
and any other instruments or agreements executed pursuant to the foregoing.
"COMMITMENT" means a Tranche A Commitment or a Tranche B Commitment,
and "COMMITMENTS" means any two or more of the foregoing, as the context
may require.
"COMMITMENT SCHEDULE" means the Schedule attached to the Credit
Agreement and identified as such.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate amount of expenditures by the Guarantor and its Consolidated
Subsidiaries for plant, property and equipment during such period
(including any such expenditure by way of acquisition of a Person or by way
of assumption of indebtedness or other obligations of a Person, to the
extent reflected as plant, property and equipment), but excluding any such
expenditures made (i) for the replacement or restoration of assets to the
extent financed by condemnation awards or proceeds of insurance received
with respect to the loss or taking of or damage to the asset or assets
being replaced or restored and (ii) for assets acquired to the extent
financed by a Sale and Leaseback Transaction permitted by Section 1.08.
"CONSOLIDATED DEBT" means at any date the Debt of the Guarantor and
its Consolidated Subsidiaries, determined on a consolidated basis as of
such date.
"CONSOLIDATED EBITDA" for any period, Consolidated Net Income for such
period plus, to the extent deducted in determining Consolidated Net Income
for such period, the aggregate amount of (i) Consolidated Interest Charges,
(ii) provision for income taxes, (iii) depreciation and amortization and
(iv) charges incurred in connection with store closings not in excess of
$48,000,000 and $20,000,000 during the fiscal years ending on or closest to
February 28, 2000 and February 28, 2001, respectively; provided that if
there shall have been an acquisition or disposition of operations during
such period, Consolidated EBITDA shall be calculated on a pro forma basis
giving effect thereto as if such acquisition or disposition had occurred on
the first day of such period.
"CONSOLIDATED INTEREST CHARGES" means, for any period, the aggregate
amount of interest charges, whether expensed or capitalized, incurred or
accrued by the Guarantor and its Consolidated Subsidiaries during such
period.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of the Guarantor and its Consolidated Subsidiaries (exclusive of (a)
any non-cash loss on account of a sale of any drugstore and (b)
extraordinary items of gain or loss and other non-recurring items of gain
or loss, but only to the extent that such non-recurring items of loss do
not (i) involve any cash expenditure by the Guarantor during such period or
any future period or (ii) exceed $50,000,000 in any fiscal year),
determined on a consolidated basis for such period.
"CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of assets
(less applicable reserves and other properly deductible items) which under
generally accepted accounting principles would be included on a
consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries after deducting therefrom (i) all liabilities and liability
items, including amounts in respect of obligations or guarantees of
obligations under leases, which under generally accepted accounting
principles would be included on such balance sheet, except Funded Debt,
capital stock and surplus, surplus reserves and provisions for deferred
income taxes, and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, which in
each case under generally accepted accounting principles would be included
on such consolidated balance sheet.
"CONSOLIDATED NET WORTH" means at any date the consolidated
stockholders' equity of the Guarantor and its Consolidated Subsidiaries
determined as of such date.
"CONSOLIDATED RENT" means, for any period, the consolidated rental
expense of the Guarantor and its Consolidated Subsidiaries for such period.
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the
Guarantor in its consolidated financial statements if such statements were
prepared as of such date.
"CREDIT AGREEMENT" means the Amended and Restated Credit Agreement
dated as of October 25, 1999 among Rite Aid Corporation, the banks from
time to time parties thereto and Xxxxxx Guaranty Trust Company of New York,
as Agent, without giving effect to any amendments or waivers thereof made
by the requisite parties thereunder after October 25, 1999 unless expressly
consented to by the Required Participants.
"DEBT" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles,
(v) all non-contingent obligations (and, for purposes of Section 1.10 and
the definition of Material Financial Obligations, all contingent
obligations) of such Person to reimburse any bank or other Person in
respect of amounts paid under a letter of credit or similar instrument,
(vi) all Debt secured by a Lien on any asset of such Person, whether or not
such Debt is otherwise an obligation of such Person, and (vii) all Debt of
others Guaranteed by such Person.
"DEFAULT" means any condition or event which constitutes an Event of
Default under the Credit Agreement or which with the giving of notice or
lapse of time or both would, unless cured or waived, become an Event of
Default under the Credit Agreement.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law
to close.
"XXXXXXXXX.XXX" means xxxxxxxxx.xxx, inc., a Delaware corporation, and
its successors.
"XXXXXXXXX.XXX PLEDGE AGREEMENT" means the xxxxxxxxx.xxx Pledge
Agreement dated as of October 25, 1999 between the Guarantor and Xxxxxx
Guaranty Trust Company of New York, as agent thereunder.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances
or wastes into the environment including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes
or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA GROUP" means the Guarantor, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or
not incorporated) under common control which, together with the Guarantor
or any Subsidiary, are treated as a single employer under Section 414 of
the Internal Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01 of the
Credit Agreement.
"FIXED CHARGE COVERAGE RATIO" means at any date, the ratio of (i)
Consolidated EBITDA plus Consolidated Rent to (ii) Consolidated Interest
Charges plus Consolidated Rent, in each case for the period of four
consecutive fiscal quarters most recently ended on or prior to such date.
"FUNDED DEBT" means any Debt maturing more than one year after the
date of determination thereof and any Debt, regardless of its term,
renewable pursuant to the terms thereof or of a revolving credit or similar
agreement effective for more than one year after the date of the creation
of such Debt, which would, in accordance with generally accepted accounting
practice, be classified as funded debt but shall not include:
(a) any Debt for the payment, redemption or satisfaction of
which money (or evidences of indebtedness, if permitted under the
instrument creating such indebtedness) in the necessary amount shall
have been deposited in trust with a trustee or proper depository
either at or before maturity or redemption date thereof; or
(b) guarantees arising in connection with the sale, discount,
guarantee or pledge of notes, chattel mortgages, leases, accounts
receivable, trade acceptances and other paper arising, in the ordinary
course of business, out of installment or conditional sales to or by,
or transactions involving title retention with, distributors, dealers
or other customers of merchandise, equipment or services or guarantees
other than guarantees of indebtedness for borrowed money.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of
any other Person; provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "GUARANTEE" used as a verb has a corresponding meaning.
"INDENTURES" means (i) the Indenture dated as of December 21, 1998
between the Guarantor and Xxxxxx Trust and Savings Bank, as trustee, (ii)
the Indenture dated as of September 22, 1998 between the Guarantor and
Xxxxxx Trust and Savings Bank, as trustee and (iii) the Indenture dated as
of August 1, 1993, between the Guarantor and First Trust of New York,
National Association, as successor trustee.
"INFORMATION" means, collectively, (i) the information provided to the
Banks in connection with the waiver dated as of September 29, 1999 to the
Existing Credit Agreement and (ii) the information presented to the Banks
at meetings in New York City on October 4, 1999 and October 18, 1999 among
the Borrower and certain financial institutions.
"INTEREST PERIOD" shall have the meaning set forth in Section 1.01 of
the Credit Agreement.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"INVESTMENT" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise. Any
repurchase by the Guarantor of its own capital stock shall not constitute
an Investment for purposes of this Annex A. The amount of any Investment
shall be the original principal or capital amount thereof less all returns
of principal or equity thereon (and without adjustment by reason of the
financial condition of such other Person) and shall, if made by the
transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal, to the fair market
value of such property at the time of such transfer or exchange.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Annex A, the Guarantor or any Subsidiary
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional
sale agreement, Capital Lease or other title retention agreement relating
to such asset.
"LOAN" means a Tranche A Loan or a Tranche B Loan and "LOANS" means
Tranche A Loans or Tranche B Loans or any combination of the foregoing.
"LOAN DOCUMENTS" means the Credit Agreement, the Notes and the
Collateral Documents.
"MATERIAL FINANCIAL OBLIGATIONS" means (i) a principal or face amount
of Debt (except Debt outstanding hereunder) and/or (ii) payment or
collateralization obligations in respect of Derivatives Obligations and/or
(iii) payment or collateralization obligations in respect of leases (other
than Capital Leases, which are Debt) of the Guarantor and/or one or more of
its Subsidiaries, arising in one or more related or unrelated transactions,
exceeding in the aggregate $25,000,000.
"MULTIEMPLOYER PLAN" means at any time an employee pension benefit
plan within the meaning of Section 4001 (a) (3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be a
member of the ERISA Group during such five year period.
"1999 FACILITY" means the $1,300,000,000 Term Loan Agreement dated as
of the date of this Amended Agreement among Rite Aid Corporation, the banks
listed therein and Xxxxxx Guaranty Trust Company of New York, as
administrative agent thereunder, without giving effect to any amendments or
waivers thereof made by the requisite parties thereunder after October 25,
1999 unless expressly consented to by the Required Participants.
"1999 EXPOSURES" mans the undrawn commitments and/or the outstanding
loans under the 1999 Facility.
"1999 LOAN DOCUMENTS" means the "Loan Documents" as defined in the
1999 Facility.
"NOTES" means promissory notes of the Guarantor, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Guarantor to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PCS" means PCS Holding Corporation, a Delaware corporation, and its
successors.
"PCS PLEDGE AGREEMENT" means the PCS Pledge Agreement dated as October
25, 1999 between the Guarantor and Xxxxxx Guaranty Trust Company of New
York, as agent thereunder.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"PLAN" means at any time an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Internal Revenue
Code and either (i) is maintained, or contributed to, by any member of the
ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed
to, by any Person which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of the ERISA Group.
"PLEDGE AGREEMENTS" means the xxxxxxxxx.xxx Pledge Agreement and the
PCS Pledge Agreement.
"REFUNDING BANK" shall have the meaning set forth in Section 1.01 of
the Credit Agreement.
"REGULATION T, U OR X" means Regulation T, U or X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution on
any shares of the Guarantor's capital stock (except dividends payable
solely in shares of its capital stock) or (ii) any payment on account of
the purchase, redemption, retirement or acquisition of (a) any shares of
the Guarantor's capital stock or (b) any option, warrant or other right to
acquire shares of the Guarantor's capital stock (other than such payment in
connection with employee benefit plans in the ordinary course of business).
"SALE AND LEASEBACK TRANSACTION" has the meaning set forth in
Section 1.09.
"SEC" means the Securities and Exchange Commission, or any Person
succeeding to its functions under the Securities Exchange Act of 1934, as
amended.
"SECURED DEBT" means Debt which is secured by a Lien on property of
the Guarantor or any Subsidiary, but shall not include guarantees arising
in connection with the sale, discount, guarantee or pledge of notes,
chattel mortgages, leases, accounts receivable, trade acceptances and other
papers arising, in the ordinary course of business, out of installment or
conditional sales to or by, or transactions involving title retention with,
distributors, dealers or other customers, of merchandise, equipment or
services.
"SIGNIFICANT SUBSIDIARY" means at any time any Subsidiary or any group
of Subsidiaries having consolidated assets, individually or in the
aggregate, equal to or greater than 8% of the consolidated assets of the
Guarantor and its Consolidated Subsidiaries at such time.
"SUBSIDIARY" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Guarantor.
"TEMPORARY CASH INVESTMENT" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial
paper rated at least A-I by S&P and P- I by Moody's, (iii) time deposits
with, including certificates of deposit issued by, any office located in
the United States of any bank or trust company which is organized or
licensed under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000,
(iv) repurchase agreements with respect to securities described in clause
(i) above entered into with an office of a bank or trust company meeting
the criteria specified in clause (iii) above, provided in each case that
such Investment matures within one year from the date of acquisition
thereof by the Guarantor or a Subsidiary or (v) money market mutual funds
at least 90% the assets of which are held in Investments referred to in
clauses (i) through (iv) above (except that the maturities of certain
Investments held by any such money market funds may exceed one year so long
as the dollar-weighted average life of the Investments of such money market
mutual fund is less than one year).
"TERMINATION DATE" means July 19, 2001, or, if such day is not a Euro-
Dollar Business Day, the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which
case the Termination Date shall be the next preceding Euro-Dollar Business
Day.
"TOTAL CAPITAL" means, at any date, the sum of Consolidated Debt and
Consolidated Net Worth, each determined as of such date.
"TRANCHE A COMMITMENT" means (i) with respect to each Bank listed in
the Commitment Schedule, the amount set forth opposite the name of such
Bank in the Commitment Schedule as its Tranche A Commitment and (ii) with
respect to each Assignee which becomes a Bank pursuant to Section 9.06(c)
of the Credit Agreement, the amount of the Tranche A Commitment thereby
assumed by it, in each case as such amount may be changed from time to time
pursuant to Sections 2.08, 2.10 and 9.06(c) of the Credit Agreement.
"TRANCHE A EXPOSURE" means, with respect to each Bank, the amount of
its Tranche A Commitment, if still in existence, or the aggregate
outstanding principal amount of its Tranche A Loans, if its Tranche A
Commitment is no longer in existence.
"TRANCHE A LOAN" means a loan made by a Bank pursuant to Section 2.
01(a) of the Credit Agreement.
"TRANCHE B COMMITMENT" means (i) with respect to each Bank listed in
the Commitment Schedule, the amount set forth opposite the name of such
Bank in the Commitment Schedule as its Tranche B Commitment and (ii) with
respect to each Assignee which becomes a Bank pursuant to Section 9.06(c)
of the Credit Agreement, the amount of the Tranche B Commitment thereby
assumed by it, in each case as such amount may be changed from time to time
pursuant to Sections 2.08, 2. 10 and 9.06(c) of the Credit Agreement.
"TRANCHE B EXPOSURE" means, with respect to each Bank, the amount of
its Tranche B Commitment, if still in existence, or the aggregate
outstanding principal amount of its Tranche B Loans, if its Tranche B
Commitment is no longer in existence.
"TRANCHE B LOAN" means a loan made by a Bank pursuant to Section
2.01(b) of the Credit Agreement.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under
such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii)
the fair market value of all Plan assets allocable to such liabilities
under Title IV of ERISA (excluding any accrued but unpaid contributions),
all determined as of the then most recent valuation date for such Plan, but
only to the extent that such excess represents a potential liability of a
member of the ERISA Group to the PBGC or any other Person under Title IV of
ERISA.
"UNITED STATES" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests
of which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Guarantor.
Accounting Terms and Determinations. (a) Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from
time to time, applied on a basis consistent (except for changes concurred
in by the Guarantor's independent public accountants) with the most recent
audited consolidated financial statements of the Guarantor and its
Consolidated Subsidiaries delivered accordance with such timetable.
COVENANTS
The Guarantor agrees that, until the Commitments (as defined in the
Committed Loan Agreement) of the all of the Lenders have been terminated
and all of the Secured Obligations (as defined in the Intercreditor
Agreement) have been paid or performed in full:
SECTION 1. Information. The Guarantor will deliver to each of
the Liquidity Providers:
(a) as soon as available and in any event within 90 days (or within
such longer period of time, not greater than 120 days, to which the SEC may
extend the filing deadline for the Guarantor's Annual Report on Form 10-K)
after the end of each fiscal year of the Guarantor, a consolidated balance
sheet of the Guarantor and its Consolidated Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income and cash
flows for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on in a manner
acceptable to the SEC by KPMG Peat Marwick LLP or other independent public
accountants of nationally recognized standing;
(b) as soon as available and in any event within 45 days (or (x) in
the case of the fiscal quarter most recently ended prior to October 25,
1999, within 65 days or (y) in the case of any subsequent fiscal quarter,
within such longer period of time, not greater than 60 days, to which the
SEC may extend the filing deadline for the Guarantor's Quarterly Report on
Form 10-Q) after the end of each of the first three quarters of each fiscal
year of the Guarantor, a consolidated balance sheet of the Guarantor and
its Consolidated Subsidiaries as of the end of such quarter and the related
consolidated statements of income and cash flows for such quarter and for
the portion of the Guarantor's fiscal year ended at the end of such
quarter, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the Guarantor's
previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the chief
accounting officer of the Guarantor;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting officer of the Guarantor
(i) setting forth in reasonable detail the calculations required to
establish whether the Guarantor was in compliance with the requirements of
Sections 1.08 to 1.15, inclusive, on the date of such financial statements
and (ii) stating whether any Default exists on the date of such certificate
and, if any Default then exists, setting forth the details thereof and the
action which the Guarantor is taking or proposes to take with respect
thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
whether anything has come to their attention to cause them to believe that
any Default existed on the date of such statements and (ii) confirming the
calculations set forth in the officer's certificate delivered
simultaneously therewith pursuant to clause (c) above;
(e) within five days after any officer of the Guarantor obtains
knowledge of any Default, if such Default is then continuing, a certificate
of the chief financial officer or the chief accounting officer of the
Guarantor setting forth the details thereof and the action which the
Guarantor is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Guarantor generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Guarantor shall have filed with the SEC;
(h) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer, any Plan, a copy of such notice; (iv)
applies for a waiver of the minimum funding standard under Section 412 of
the Internal Revenue Code, a copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
result in the imposition of a Lien or the posting of a bond or other
security, a certificate of the chief financial officer or the chief
accounting officer of the Guarantor setting forth details as to such
occurrence and action, if any, which the Guarantor or applicable member of
the ERISA Group is required or proposes to take; and
(i) from time to time such additional information regarding the
financial position or business of the Guarantor and its Subsidiaries as the
Liquidity Agent, at the request of any Liquidity Provider, may reasonably
request.
Information required to be delivered pursuant to Section 1.01 (a),
1.01 (b), 1.01 (f) or 1.01 (g) above shall be deemed to have been delivered
on the date on which the Guarantor provides notice to the Liquidity
Providers that such information has been posted on the Guarantor's website
on the Internet at the website address listed on the signature pages
hereof, at xxx.xxx/xxxxx/xxxxxxxx.xxx or at another website identified in
such notice and accessible by the Liquidity Providers without charge;
provided that (i) such notice may be included in a certificate delivered
pursuant to Section 1.01(c) and (ii) the Guarantor shall deliver paper
copies of the information referred to in Section 1.01(a), 1.01(b), 1.01(f)
or 1.01(g) to any Liquidity Provider which requests such delivery.
SECTION 2. Payment of Obligations. The Guarantor will, and will
cause each of its Subsidiaries to, pay and discharge, as the same shall
become due and payable, (i) all material claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons prior
to the time such claims or demands give rise to a Lien upon any of its
property or assets, and (ii) all material taxes, assessments and
governmental charges or levies upon it or its property or assets, except
where any of the items in clause (i) or (ii) above may be contested in good
faith by appropriate proceedings, and the Guarantor or such Subsidiary, as
the case may be, shall have set aside on its books, in accordance with
generally accepted accounting principles, appropriate reserves, if any, for
the accrual of any such items.
SECTION 3. Maintenance of Property; Insurance.
(a) The Guarantor will keep, and will cause each Subsidiary to keep,
all property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted.
(b) The Guarantor will, and will cause each of its Subsidiaries to,
maintain (either in the name of the Guarantor or in such Subsidiary's own
name) with financially sound and responsible insurance companies, insurance
on all their respective properties in at least such amounts and against at
least such risks (and with such risk retention) as are usually insured
against in the same general area by companies of established repute engaged
in the same or a similar business; and will furnish to the Liquidity
Providers, upon request from the Liquidity Agent, information presented in
reasonable detail as to the insurance so carried.
SECTION 4. Conduct of Business and Maintenance of Existence.
Except as otherwise permitted in the covenants set forth in this Annex A,
the Guarantor will continue, and will cause each Significant Subsidiary to
continue, to engage in business of the same general type as now conducted
by the Guarantor and its Significant Subsidiaries, and will preserve, renew
and keep in full force and effect, and will cause each Significant
Subsidiary (except where such Significant Subsidiary merges into the
Guarantor or any other Subsidiary) to preserve, renew and keep in full
force and effect their respective legal existences and their respective
rights, privileges and franchises necessary or desirable in the normal
conduct of business.
SECTION 5. Compliance with Laws. The Guarantor will comply, and
cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws
and ERISA and the rules and regulations thereunder) except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to comply would not have a material
adverse effect on the business, financial position or results of operations
of the Guarantor and its Consolidated Subsidiaries, considered as a whole.
SECTION 6. Inspection of Property, Books and Records. The
Guarantor will keep, and will cause each Subsidiary to keep, proper books
of record and account in which full, true and correct entries shall be made
of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary to permit,
representatives of any Liquidity Provider at such Liquidity Provider's
expense to visit and inspect any of their respective properties, to examine
and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
SECTION 7. Restriction on Other Agreements. The Guarantor will not,
and will not permit any Subsidiary to, enter into any agreement (other
than the Loan Documents and the 1999 Loan Documents) which imposes a
limitation on incurrence by the Guarantor and its Subsidiaries of Liens
that is more restrictive than the limitation on Liens set forth in the
Indentures (other than agreements with respect to Debt secured by Liens
permitted by Section 1.10(a) containing restrictions on the ability to
transfer or grant Liens on the assets securing such Debt and other than
customary restrictions contained in purchase and sale agreements limiting
the transfer of the subject assets pending closing and customary
non-assignment provisions in leases and other contracts entered into in the
ordinary course of business) or which imposes other covenants more
restrictive than those set forth in this Annex A.
SECTION 8. Restriction on Debt of Subsidiaries. The Guarantor will
not permit any Subsidiary to create, issue, incur, assume, or in any
other way become liable for any unsecured Debt unless immediately prior
thereto the Guarantor would be entitled under Section 1.10(e) to create
Secured Debt not specifically permitted under Section 1.10 but for
subsection (e) thereof in an amount equal to such Debt; provided that the
foregoing restriction shall not prevent (i) any Subsidiary from becoming
liable to the Guarantor or to a Wholly-Owned Consolidated Subsidiary for
Debt or (ii) the extension, renewal or refunding of any Debt of any
Subsidiary so long as Consolidated Debt is not thereby increased.
SECTION 9. Restriction on Sales with Leases Back. Except for a
sale or transfer by a Subsidiary to the Guarantor or a Wholly-Owned
Consolidated Subsidiary, the Guarantor will not, and will not permit any
Subsidiary to, sell or transfer any manufacturing plant, warehouse, retail
store or equipment now or hereafter owned and operated by the Guarantor or
a Subsidiary, with the intention that the Guarantor or any Subsidiary take
back a lease thereof, except a lease for a period, including renewals, not
exceeding 24 months, by the end of which period it is intended that the use
of such property or equipment by the lessee will be discontinued (any such
transaction being herein referred to as a "SALE AND LEASEBACK
TRANSACTION"); provided that, notwithstanding the foregoing, the Guarantor
or any Subsidiary may enter into a Sale and Leaseback Transaction if the
Guarantor or a Subsidiary would be entitled under Section 1.10(e) to create
Secured Debt not specifically permitted under Section 1. 10 but for Section
1.10(e) in an amount equal to the Attributable Debt respecting such Sale
and Leaseback Transaction; provided further that, notwithstanding the
foregoing, the Guarantor or any Subsidiary may enter into a Sale and
Leaseback Transaction if entered into in respect of property acquired by
the Guarantor or a Subsidiary if such Sale and Leaseback Transaction is
entered into within 24 months from the date of such acquisition; and
provided still further that, notwithstanding the foregoing, the Guarantor
or any Subsidiary may enter into a Sale and Leaseback Transaction so long
as the Net Cash Proceeds thereof are applied as contemplated by Section
2.10 of the Credit Agreement.
SECTION 10. Restriction on Liens. The Guarantor will not, and
will not permit any Subsidiary to, create, issue, incur, assume or
guarantee any Secured Debt; provided that the foregoing covenant shall not
apply to the following:
(a) (i) Any Lien on any property acquired or constructed by the
Guarantor or a Subsidiary and created contemporaneously with, or within 24
months after, such acquisition or the completion of such construction and
commencement of full operation of such property, whichever is later, to
secure or provide for the payment of any part of the purchase or
construction price of such property, or (ii) the acquisition by the
Guarantor or a Subsidiary of property subject to any Lien upon such
property existing at the time of acquisition thereof, whether or not
assumed by the Guarantor or such Subsidiary, or (iii) any conditional sales
agreement or other title retention agreement with respect to any property
hereafter acquired; provided that the Lien does not spread to other
property except unimproved real property previously owned upon which any
new construction has taken place and subsequent additions to such acquired
or constructed property;
(b) Any Lien created for the sole purpose of extending, renewing or
refunding, in whole or part, any Lien permitted by this Section 1.10 or any
Lien securing the Debt of the Guarantor or of any Subsidiary on October 25,
1999 or of a corporation at the time such corporation becomes a Subsidiary,
or any extensions, renewals or refundings of any such Lien; provided that
the principal amount of Debt secured thereby shall not exceed the principal
amount of Debt so secured at the time of such extension, renewal or
refunding and that such extension, renewal or refunding Lien shall be
limited to all or that part of the same property which secured the Debt so
extended, renewed or refunded;
(c) Any Secured Debt of a Subsidiary owing to the Guarantor or a
Wholly-Owned Consolidated Subsidiary;
(d) Any Lien created by the Loan Documents or the 1999 Loan
Documents; and
(e) Secured Debt of the Guarantor and its Subsidiaries which would
otherwise be prohibited by the foregoing restrictions (not including
Secured Debt permitted to be secured under subsections (a) through (d)
above) so long as the sum of any such Secured Debt hereafter incurred and
outstanding at the time plus Attributable Debt of the Guarantor and any
Subsidiaries in respect of Sale and Leaseback Transactions hereafter
entered into and outstanding at the time (excluding Attributable Debt
incurred in respect of any Sale and Leaseback Transaction (i) entered into
in respect of property acquired by the Guarantor or a Subsidiary not more
than 24 months prior to the date such Sale and Leaseback Transaction is
entered into or (ii) if the Guarantor, within 120 days before or after such
Sale and Leaseback Transaction is entered into applies an amount equal to
the greater of (A) the net proceeds of the sale of the property so sold and
leased back or (B) the fair market value of such property at the date such
arrangement is entered into to the retirement of Secured Debt (other than
at maturity or pursuant to any mandatory payment provision) or to reduction
of the Commitments) plus unsecured Debt of any Subsidiary hereafter
incurred and outstanding at the time (excluding unsecured Debt incurred
through the extension, renewal or refunding of Debt of such Subsidiary
where Consolidated Debt was not thereby increased and excluding any Debt
owed to the Guarantor or a Wholly-Owned Consolidated Subsidiary) does not
at the time exceed 5% of Consolidated Net Tangible Assets.
SECTION 11. Capital Expenditures. The aggregate amount of
Consolidated Capital Expenditures for any period set forth below shall not
exceed the amount set forth below opposite such period:
FISCAL YEAR ENDING ON AMOUNT
OR CLOSEST TO
February 29, 2000 $620,000,000
February 28, 2001 $295,000,000
SECTION 12. Capitalization Leverage Ratio. At no time during any
period set forth below shall the ratio of (i) Consolidated Debt at such
time to (ii) Total Capital at such time, exceed the ratio set forth below
opposite such period:
FISCAL QUARTER ENDING RATIO
ON OR CLOSEST TO
November 30, 1999 0.635
February 29, 2000 0.635
May 31, 2000 and thereafter 0.62
SECTION 13. Cash Flow Leverage Ratio. At no time during any
period set forth below shall the ratio of (i) Consolidated Debt at such
time to (ii) Consolidated EBITDA for the four consecutive fiscal quarters
then most recently ended at or prior to such time, exceed the ratio set
forth below opposite such period:
FISCAL QUARTER ENDING RATIO
ON OR CLOSEST TO
November 30, 1999 6.30
February 29, 2000 6.00
May 31, 2000 5.75
August 31, 2000 4.75
November 30, 2000 4.50
February 28, 2001 and thereafter 4.00
SECTION 14. Fixed Charge Coverage. At no time during any period
set forth below shall the Fixed Charge Coverage Ratio be less than the
ratio set forth below opposite such period:
FISCAL QUARTER ENDING RATIO
ON OR CLOSEST TO
November 30, 1999 1.35
February 29, 2000 1.35
May 31, 2000 1.35
August 31, 2000 1.45
November 30, 2000 1.55
February 28, 2001 and thereafter 1.60
SECTION 15. Limitation on Investments and Acquisitions.
(a) Neither the Guarantor nor any Consolidated Subsidiary will make
or acquire any Investment in any Person other than:
(i) Investments in Consolidated Subsidiaries; provided, that
Investments (exclusive of inter-company payables owing to the
Guarantor or a Subsidiary arising from cash management transactions in
the ordinary course of business) in PCS, whether existing on the date
hereof or hereafter made, may be made only by the Guarantor and only
in the form of a contribution to the capital of PCS and without
issuance of additional shares of capital stock therefor, and provided
further that no such Investment may be made in any Subsidiary of PCS
except by PCS or another Subsidiary of PCS;
(ii) Temporary Cash Investments;
(iii) Investments received as consideration for sale or other
disposition of the capital stock of PCS or xxxxxxxxx.xxx permitted by
Section 1.16;
(iv) Investments in xxxxxxxxx.xxx existing on the date hereof;
and
(v) Any Investment not otherwise permitted by the foregoing
clauses of this Section if, immediately after such Investment is made
or acquired, the aggregate net book value of all Investments permitted
by this clause (c) does not exceed 10% of Consolidated Net Worth.
(b) The Guarantor will not, and will not permit any Subsidiary to,
consummate any Business Acquisition to the extent that the aggregate
consideration paid or payable by the Guarantor or any Subsidiary in
connection with all such Business Acquisitions on or after the Closing Date
would exceed $15,000,000.
SECTION 16. Consolidations, Mergers and Sales of Assets. The
Guarantor will not (i) consolidate or merge with or into any other Person,
(ii) sell, lease or otherwise transfer, directly or indirectly, all or any
substantial part of the assets of the Guarantor and its Subsidiaries, taken
as a whole, to any other Person or (iii) sell, lease or otherwise transfer
any Collateral to any other Person; provided that (x) the Guarantor may
merge with another Person if (A) the Guarantor is the corporation surviving
such merger and (B) immediately after giving effect to such merger, no
Default shall have occurred and be continuing and (y) the Guarantor may
sell or otherwise dispose of the capital stock of PCS or xxxxxxxxx.xxx, in
whole but not in part, so long as the consideration therefor is not less
than the fair market value of such capital stock and shall consist solely
of a combination of cash and publicly traded securities payable and
deliverable at the closing of such sale.
SECTION 17. Use of Proceeds. The proceeds of the Tranche A Loans
made under the Credit Agreement will be used by the Guarantor exclusively
to repay commercial paper (or to refund borrowings the proceeds of which
were used solely to repay commercial paper), which commercial paper
provided funds for the payment of the purchase price of the capital stock
of PCS. The proceeds of the Tranche B Loans made under the Credit Agreement
will be used by the Guarantor for the Guarantor's general corporate
purposes; provided that no Tranche B Loans may be borrowed for a purpose
for which Tranche A Loans may be borrowed unless the Tranche A Commitments
are at the time fully drawn. No such use of the proceeds will be for the
purpose of prepaying commercial paper prior to the maturity thereof and no
such use of proceeds will be, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of buying or carrying any
"MARGIN STOCK" within the meaning of Regulation U, other than publicly
traded securities issued to the Guarantor in connection with the sale of
the capital stock of PCS. The Guarantor will ensure that no such use of
proceeds violates Regulation T, U or X.
SECTION 18. Restricted Payments. After the date hereof, neither
the Guarantor nor any Subsidiary will declare or make any Restricted
Payment.
SECTION 19. Synthetic Leases. Neither the Guarantor nor any
Subsidiary will enter into any Synthetic Lease if, after giving effect
thereof, the aggregate amount financed under all Synthetic Leases entered
into in any period of twelve consecutive calendar months commencing after
October 25, 1999 would exceed $35,000,000.
SECTION 20. Tranche A Limitations.
(a) No Tranche A Loans may be borrowed under the Credit Agreement
unless the commitments under the 1999 Facility are fully drawn.
(b) The Guarantor will not for so long as the Tranche B Commitments
remain in existence use any source of funds other than additional Tranche A
Loans to repay or prepay Tranche A Loans prior to the Termination Date,
except as expressly contemplated by Section 2.10 of the Credit Agreement.
(c) If the capital stock of PCS is sold for consideration consisting
in whole or in part of "margin stock" within the meaning of Regulation U,
then for so long as such margin stock is held as substitute collateral
under the PCS Pledge Agreement, the Guarantor may not make any Tranche A
Borrowing other than a from a Refunding Bank unless it shall have delivered
to the Liquidity Agent an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx,
LLP, satisfactory in form and substance to the Liquidity Agent, to the
effect that such Borrowing does not result in a violation of Regulation T,
U or X.
SECTION 21. Mandatory Payments. The Guarantor agrees to use all
Net Cash Proceeds, if any, from the sale of the Collateral (or any part
thereof) that are remaining after the application of such Net Cash Proceeds
in accordance with all mandatory prepayment provisions set forth in each
Debt agreement to which the Guarantor is a party on October 25, 1999, and
any refinancings, renewals or extensions thereof, and which is in effect at
the time of such sale, to reduce the Lease Balance under the Lease.
