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AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of March 14, 1997
among
QUALITY FOOD CENTERS, INC.,
QUALITY FOOD HOLDINGS, INC.,
QUALITY FOOD, INC.,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
and Paying Agent,
THE CHASE MANHATTAN BANK,
as Administrative Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged by
BANCAMERICA SECURITIES, INC.
and
CHASE SECURITIES INC.
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TABLE OF CONTENTS
Section Page
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ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms............................................ 1
1.2 Other Interpretive Provisions.................................... 27
1.3 Accounting Principles............................................ 28
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Credits..................................... 29
(a) The Term Credit............................................. 29
(b) The Revolving Credit....................................... 29
(c) The Acquisition Credit..................................... 29
2.2 Loan Accounts.................................................... 29
2.3 Procedure for Borrowing of Term Loans, Revolving Loans
and Acquisition Loans............................................ 30
2.4 Conversion and Continuation Elections............................ 31
2.5 Swingline Loans.................................................. 33
2.6 Reduction or Termination of Commitments.......................... 35
(a) Voluntary Reduction or Termination of Commitments........... 35
(b) Scheduled Mandatory Reductions of Acquisition
Facility Commitment Amount................................. 36
(c) Mandatory Reductions resulting from Potential
Subordinated Note Prepayment............................... 36
2.7 Optional Prepayments of Revolving Loans, Acquisition
Loans and Term Loans............................................. 36
2.8 Mandatory Prepayments............................................ 37
(a) Term Loans.................................................. 37
(b) Prepayments resulting from Acquisition Facility
Commitment Amount Reductions............................... 38
(c) Prepayments of Acquisition Loans and Revolving
Loans resulting from Potential Subordinated
Note Prepayments........................................... 38
2.9 Repayment........................................................ 38
(a) The Term Credit............................................. 38
(b) The Revolving Credit....................................... 38
(c) The Acquisition Facility Credit............................ 38
2.10 Interest......................................................... 38
2.11 Fees............................................................. 39
(a) Arrangement, Agency Fees................................... 39
(b) Commitment Fees............................................ 39
2.12 Computation of Fees and Interest................................. 40
2.13 Payments by the Borrowers........................................ 40
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2.14 Payments by the Lenders to the Paying Agent...................... 41
2.15 Sharing of Payments, Etc......................................... 42
ARTICLE III
THE LETTERS OF CREDIT
3.1 The Letter of Credit Subfacility................................. 43
3.2 Issuance, Amendment and Renewal of Letters of Credit............. 44
3.3 Existing Letters of Credit; Risk Participations,
Drawings and Reimbursements...................................... 47
3.4 Repayment of Participations...................................... 49
3.5 Role of the Issuing Lenders...................................... 49
3.6 Obligations Absolute............................................. 50
3.7 Cash Collateral Pledge........................................... 52
3.8 Letter of Credit Fees............................................ 52
3.9 Uniform Customs and Practice..................................... 52
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes............................................................ 53
4.2 Illegality....................................................... 54
4.3 Increased Costs and Reduction of Return.......................... 55
4.4 Funding Losses................................................... 56
4.5 Inability to Determine Rates..................................... 57
4.6 Certificates of Lenders.......................................... 58
4.7 Substitution of Lenders.......................................... 58
4.8 Survival......................................................... 59
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions of Effectiveness...................................... 59
(a) Credit Agreement and Notes................................. 59
(b) Resolutions and Incumbency of the Credit Parties........... 59
(c) Organization Documents; Good Standing...................... 60
(d) Legal Opinions............................................. 60
(e) Payment of Fees............................................ 60
(f) Certificate................................................ 60
(g) Pledge Agreements.......................................... 61
(h) Intercompany Guaranty (QFC)................................ 61
(i) Pricing Certificate........................................ 61
(j) Other Documents............................................ 61
5.2 Conditions to All Credit Extensions.............................. 61
(a) Notice, Application........................................ 61
(b) Continuation of Representations and Warranties............. 62
(c) No Existing Default........................................ 62
(d) Availability............................................... 62
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Corporate Existence and Power.................................... 62
6.2 Corporate Authorization; No Contravention........................ 63
6.3 Governmental Authorization....................................... 63
6.4 Binding Effect................................................... 63
6.5 Litigation....................................................... 63
6.6 No Default....................................................... 64
6.7 ERISA Compliance................................................. 64
6.8 Use of Proceeds; Margin Regulations.............................. 65
6.9 Title to Properties.............................................. 65
6.10 Taxes............................................................ 65
6.11 Financial Condition.............................................. 65
6.12 Environmental Matters............................................ 66
6.13 Regulated Entities............................................... 66
6.14 No Burdensome Restrictions....................................... 66
6.15 Copyrights, Patents, Trademarks and Licenses, etc................ 66
6.16 Subsidiaries..................................................... 67
6.17 Insurance........................................................ 67
6.18 Full Disclosure.................................................. 67
6.19 Solvency, etc.................................................... 67
ARTICLE VII
AFFIRMATIVE COVENANTS
7.1 Financial Statements............................................. 68
7.2 Certificates; Other Information.................................. 68
7.3 Notices.......................................................... 69
7.4 Preservation of Corporate Existence, Etc......................... 70
7.5 Maintenance of Property.......................................... 71
7.6 Insurance........................................................ 71
7.7 Payment of Obligations........................................... 71
7.8 Compliance with Laws............................................. 72
7.9 Compliance with ERISA............................................ 72
7.10 Inspection of Property and Books and Records..................... 72
7.11 Environmental Laws............................................... 72
7.12 Use of Proceeds.................................................. 72
7.13 Further Assurances............................................... 73
7.14 Interest Rate Protection......................................... 74
ARTICLE VIII
NEGATIVE COVENANTS
8.1 Limitation on Liens.............................................. 74
8.2 Consolidations and Mergers....................................... 76
8.3 Loans and Investments............................................ 77
8.4 Limitation on Funded Debt........................................ 78
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8.5 Transactions with Affiliates..................................... 80
8.6 Margin Stock..................................................... 80
8.7 Contingent Obligations........................................... 80
8.8 Amendments to Certain Documents.................................. 81
8.9 Restricted Payments.............................................. 81
8.10 Interest and Rental Expense Coverage Ratio....................... 82
8.11 Leverage Ratio................................................... 82
8.12 Senior Leverage Ratio............................................ 83
8.13 Net Worth........................................................ 83
8.14 ERISA............................................................ 83
8.15 Line of Business................................................. 83
8.16 Restrictive Agreements........................................... 83
8.17 Accounting Changes............................................... 84
8.18 Santee Agreements................................................ 84
ARTICLE IX
EVENTS OF DEFAULT
9.1 Event of Default................................................. 84
(a) Non-Payment................................................. 84
(b) Representation or Warranty.................................. 84
(c) Specific Defaults........................................... 85
(d) Other Defaults.............................................. 85
(e) Cross-Default............................................... 85
(f) Insolvency; Voluntary Proceedings........................... 85
(g) Involuntary Proceedings..................................... 85
(h) ERISA....................................................... 86
(i) Monetary Judgments.......................................... 86
(j) Non-Monetary Judgments...................................... 86
(k) Change of Control........................................... 86
(l) Ownership of Certain Subsidiaries........................... 87
(m) Guaranties.................................................. 87
(n) Collateral Documents, etc................................... 87
9.2 Remedies......................................................... 87
9.3 Rights Not Exclusive............................................. 88
ARTICLE X
PARENT GUARANTY PROVISIONS
10.1 Parent Guaranty.................................................. 88
10.2 Acceleration of Parent Guaranty.................................. 89
10.3 Parent Guaranty Absolute, etc.................................... 89
10.4 Reinstatement, etc............................................... 90
10.5 Waiver, etc...................................................... 91
10.6 Delay of Subrogation............................................. 91
10.7 Binding on Successors, Transferees and Assigns;
Assignment of Parent Guaranty.................................... 91
10.8 No Waiver; Remedies; Security.................................... 91
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ARTICLE XI
THE AGENTS
11.1 Appointment and Authorization................................... 92
11.2 Delegation of Duties............................................ 92
11.3 Liability of Agent.............................................. 92
11.4 Reliance by Agents.............................................. 93
11.5 Notice of Default............................................... 94
11.6 Credit Decision................................................. 94
11.7 Indemnification of Agents....................................... 95
11.8 Agents in Individual Capacity................................... 95
11.9 Successor Agent................................................. 95
11.10 Withholding Tax................................................. 96
11.11 Collateral Matters.............................................. 98
11.12 Other Agents.................................................... 99
12.1 Amendments and Waivers.......................................... 99
12.2 Notices.........................................................100
12.3 No Waiver; Cumulative Remedies..................................101
12.4 Costs and Expenses..............................................101
12.5 Indemnification by Borrowers....................................102
12.6 Payments Set Aside..............................................102
12.7 Successors and Assigns..........................................103
12.8 Assignments, Participations, etc................................103
12.9 Confidentiality.................................................105
12.10 Set-off.........................................................106
12.11 Automatic Debits of Fees........................................106
12.12 Notification of Addresses, Lending Offices, Etc.................106
12.13 Counterparts....................................................106
12.14 Severability....................................................107
12.15 No Third Parties Benefited......................................107
12.16 Subsidiary References...........................................107
12.17 Governing Law and Jurisdiction..................................107
12.18 Waiver of Jury Trial............................................107
12.19 Entire Agreement................................................108
12.20 Restructuring Effective Date....................................108
12.21 Amendment and Restatement.......................................108
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SCHEDULES
Schedule 1.1(a) Pricing Schedule
Schedule 1.1(b) Commitments and Pro Rata Shares
Schedule 1.1(c) Properties Held For Sale
Schedule 1.1(d) Terms of Product Purchase Agreement
Schedule 1.1(e) Terms of Santee Debt Placement Agreement
Schedule 1.1(f) Terms Governing Santee Loans
Schedule 1.1(g) Terms Governing Santee Guaranty
Schedule 1.1(h) Form of Permitted Comfort Letter
Schedule 2.1 Term Commitment Amount and Acquisition Facility
Commitment Amount
Schedule 2.9 Term Loan Repayment Dates
Schedule 3.3 Existing Letters of Credit
Schedule 6.5 Litigation
Schedule 6.7 ERISA
Schedule 6.11 Material Indebtedness and other Liabilities
Schedule 6.12 Environmental Matters
Schedule 6.16 Subsidiaries and Equity Investments
Schedule 6.17 Insurance
Schedule 8.1 Liens
Schedule 8.3 Investments
Schedule 8.4 Funded Debt
Schedule 8.7 Contingent Obligations
Schedule 12.2 Offshore and Domestic Lending Offices;
Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D-1 Form of Legal Opinion of Xxxxx & Xxxxx P.L.L.C.
Exhibit D-2 Form of Opinion of Paul, Hastings, Xxxxxxxx &
Xxxxxx LLP
Exhibit D-3 Form of Opinion of Xxxxxxxxx & Xxxxxxxxxxx, P.C.
Exhibit E Form of Legal Opinion of Xxxxx, Xxxxx & Xxxxx
Exhibit F Form of Assignment and Acceptance
Exhibit G Form of Note
Exhibit H Form of Pledge Agreement
Exhibit I Form of Guaranty
Exhibit J Form of Intercompany Note
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of March 14,
1997, among QUALITY FOOD CENTERS, INC., a Washington corporation ("QFC"),
QUALITY FOOD HOLDINGS, INC., a Delaware corporation ("Holdings"), QUALITY FOOD,
INC., a Delaware corporation ("Parent"), the financial institutions from time to
time party to this Agreement (collectively the "Lenders"; individually each a
"Lender"), THE CHASE MANHATTAN BANK, as Administrative Agent, and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent and
Paying Agent.
WHEREAS, QFC, various financial institutions and Bank of America National
Trust and Savings Association, as agent, have entered into a Credit Agreement,
dated as of March 15, 1995 (as amended or otherwise modified, the "Existing
Agreement"); and
WHEREAS, QFC, the Agents and the Lenders have agreed to amend and restate
the Existing Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficient of which are hereby acknowledged, the parties hereto agree that the
Existing Agreement shall be amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms have the following
meanings:
Acquisition means any transaction for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all or substantially all
of the assets of a Person, or of any business unit (including any retail
store) or division of a Person, (b) the acquisition of in excess of 50% of
the capital stock, partnership interests, membership interests or other
equity of any Person, or otherwise causing any Person to become a
Subsidiary, or (c) a merger or consolidation or any similar combination
with another Person (other than a Person that is a Subsidiary), provided
that (i) in the case of any such transaction involving the Company or a
Borrower, the Company or such Borrower is the surviving entity and (ii) in
the case of any other such
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transaction, the surviving entity is, or as a result of such transaction
becomes, a Subsidiary.
Acquisition Facility Commitment Amount means the amount determined
in accordance with Schedule 2.1, subject to the Facility Adjustment and
subject to reduction from time to time in accordance with the terms
hereof.
Acquisition Loan - see Section 2.1.
Administrative Agent means each of BofA and Chase, in each case
acting in its capacity as administrative agent for the Lenders hereunder,
and any successor administrative agent arising under Section 11.9.
Affected Lender means any Lender which has (a) made a claim for
compensation under Section 4.1 or 4.3, (b) given a notice (which has not
been withdrawn) of the type described in subsection 4.2(a) or 4.2(b) or
(c) wrongfully failed to make any Loan.
Affiliate means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power (a) to direct or cause the direction of the management and policies
of the other Person, whether through the ownership of voting securities,
membership interests, by contract, or otherwise, or (b) to vote 10% or
more of the securities (on a fully diluted basis) having ordinary voting
power for election of directors, managing general partners or similar
officials of the other Person.
Agent means the Paying Agent and each Administrative Agent.
Agent-Related Persons means each Agent and any successor agent
arising under Section 11.9, any Issuing Lender, and the Swingline Lender
and any successor thereto, together with their respective Affiliates
(including the Arrangers), and the officers, directors, employees, agents
and attorneys-in-fact of such Persons and Affiliates.
Agent's Payment Office means the address for payments set forth on
the signature page hereto in relation to the Paying Agent, or such other
address as the Paying Agent may from time to time specify.
Agreement means this Amended and Restated Credit Agreement.
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Applicable Margin means
(i) with respect to Base Rate Loans, the Base Rate Margin set
forth in Schedule 1.1(a); and
(ii) with respect to Offshore Rate Loans, the Offshore Margin
set forth in Schedule 1.1(a).
Arrangers means each of BancAmerica Securities, Inc. and Chase
Securities Inc.
Asset Sale means any sale, lease or other disposition by the Company
or any Subsidiary of any assets outside the ordinary course of business
(excluding Sale-Leasebacks but including sales of surplus property);
provided that no sale or other disposition of any store acquired in
connection with the acquisition of the stock of KUI pursuant to the KUI
Acquisition Agreement shall be considered an "Asset Sale" if such sale is
completed prior to the time such store has converted to operation under
the "Quality Food" name.
Assignee - see subsection 12.8(a).
Assignment and Acceptance - see subsection 12.8(a).
Attorney Costs means and includes all reasonable fees and
disbursements of any law firm or other external counsel and, without
duplication, the reasonable allocated cost of internal legal services and
all reasonable disbursements of internal counsel.
Bankruptcy Code means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. ss.101, et seq.).
Base Rate means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by BofA in San
Francisco, California, as its "reference rate." (The "reference rate" is a
rate set by BofA based upon various factors including BofA's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate.) Any change in the reference rate
announced by BofA shall take effect at the opening of business on the day
specified in the public announcement of such change.
Base Rate Loan means a Loan, or an L/C Advance, that bears interest
based on the Base Rate.
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BofA means Bank of America National Trust and Savings Association, a
national banking association.
Borrower means (a) prior to the Restructuring Effective Date, QFC,
and (b) on and after the Restructuring Effective Date, with respect to the
Term Loans, QFC, and with respect to all other Loans and all Letters of
Credit (and all fees and other matters related thereto), Holdings.
Borrowing means a borrowing hereunder consisting of (a) Acquisition
Loans, Revolving Loans or Term Loans made to a Borrower of the same Type,
made (or continued or converted) on the same day and, other than in the
case of Base Rate Loans, having the same Interest Period or (b) a
Swingline Loan made to a Borrower by the Swingline Lender, in each case
pursuant to Article II.
Borrowing Date means any date on which a Borrowing occurs under
Section 2.3 or 2.5.
Business Day means any day other than a Saturday, Sunday or other
day on which commercial banks in Seattle, Chicago, New York or San
Francisco are authorized or required by law to close and, if the
applicable Business Day relates to an Offshore Rate Loan, means such a day
on which dealings are carried on in the applicable offshore dollar
interbank market.
Canadian Acquisition means any Acquisition (x) of a Person which
will be a Canadian Subsidiary or (y) where more than an immaterial portion
of the assets acquired, or more than an immaterial portion of the
businesses of the Person acquired, are located in Canada.
Canadian Subsidiary means any Subsidiary organized under the Laws of
Canada or one of its Provinces and which conducts substantially all of its
business in Canada.
Capital Adequacy Regulation means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law, in
each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
Capital Expenditures means all expenditures which, in accordance
with GAAP, would be required to be capitalized and shown on the
consolidated balance sheet of the Company, but excluding expenditures made
in connection with the replacement, substitution or restoration of assets
to the extent financed (i) from insurance proceeds (or other
4
similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (ii) with awards of compensation arising
from the taking by eminent domain or condemnation of the assets being
replaced.
Cash Collateralize means to pledge and deposit with or deliver to
the Paying Agent, for the benefit of the Paying Agent, the Issuing Lenders
and the Lenders, as additional collateral for the L/C Obligations, cash or
deposit account balances pursuant to documentation in form and substance
reasonably satisfactory to the Paying Agent and the Issuing Lenders (which
documents are hereby consented to by the Lenders). Derivatives of such
term shall have corresponding meanings. Each Borrower hereby grants the
Paying Agent, for the benefit of the Paying Agent, the Issuing Lenders and
the Lenders, a security interest in all such cash and deposit account
balances. Cash collateral shall be maintained in blocked, interest bearing
deposit accounts at BofA.
Chase means The Chase Manhattan Bank, a New York banking
corporation.
Code means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
Collateral Document means each Pledge Agreement and any other
document pursuant to which collateral securing the liabilities of either
Borrower or any Guarantor under any Loan Document is granted to the Paying
Agent for the benefit of itself and the Lenders.
Comfort Letter Debt means all Indebtedness of Santee in excess of
$10,000,000 benefitting from a comfort letter substantially in the form
set forth on Schedule 1.1(h).
Commitment means, as to each Lender, its commitment to make or
maintain Loans and participate in other Credit Extensions hereunder. The
initial amount of each Lender's Commitment is set forth opposite such
Lender's name on Schedule 1.1(b). After the making of the Term Loans on
the Effective Date, the amount of each Lender's Commitment shall be deemed
to be equal to the amount of such Lender's Term Loan plus such Lender's
ratable share of the Revolving Credit Amount and the Acquisition Facility
Commitment Amount (or, after termination of the commitments to make
Revolving Loans and Acquisition Loans, the amount of such Lender's
Revolving Loans and Acquisition Loans).
Commitment Fee Rate means the applicable Commitment Fee Rate per
annum set forth in Schedule 1.1(a).
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Company means (x) prior to the Restructuring Effective Date, QFC,
and (y) on and after the Restructuring Effective Date, Parent.
Compliance Certificate means a certificate substantially in the form
of Exhibit C.
Computation Period means any period of four consecutive fiscal
quarters of the Company ending on the last day of a fiscal quarter;
provided that for purposes of calculating the Interest and Rental Expense
Coverage Ratio pursuant to Section 8.10, the Computation Periods ending on
the last day of the second, third and fourth fiscal quarters of fiscal
year 1997 shall be comprised of the one, two and three fiscal quarter
periods, respectively, ending on such dates.
Contemplated Equity Issuance means the contemplated offering of
4,500,000 Shares (5,175,000 Shares if the underwriters' over-allotment
options are exercised in full) substantially on the terms described in the
preliminary Prospectus Supplement dated February 18, 1997.
Contingent Obligation means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligation") of another
Person (the "primary obligor"), including any obligation of that Person
(i) to purchase, repurchase or otherwise acquire such primary obligation
or any security therefor, (ii) to advance or provide funds for the payment
or discharge of such primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net
worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property, securities
or services primarily for the purpose of assuring the holder of such
primary obligation of the ability of the primary obligor to make payment
of such primary obligation, or (iv) otherwise to assure or hold harmless
the holder of such primary obligation against loss in respect thereof
(each, a "Guaranty Obligation"); (b) with respect to any Surety Instrument
(other than any Letter of Credit) issued for the account of that Person or
as to which that Person is otherwise liable for reimbursement of drawings
or payments; (c) to purchase any materials, supplies or other property
from, or to obtain the services of, another Person if the relevant
contract or other related document or obligation requires that payment for
such materials, supplies or other property, or for such services, shall be
made regardless of
6
whether delivery of such materials, supplies or other property is ever
made or tendered, or such services are ever performed or tendered; or (d)
in respect of any Swap Contract. The amount of any Contingent Obligation
shall (a) in the case of any Guaranty Obligation, be deemed equal to the
stated or determinable amount of the primary obligation in respect of
which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect
thereof, and (b) in the case of any other Contingent Obligation, be equal
to the maximum reasonably anticipated liability in respect thereof.
Contractual Obligation means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
Conversion/Continuation Date means any date on which, under Section
2.4, the Company (a) converts Loans of one Type to the other Type or (b)
continues a Borrowing of Offshore Rate Loans having an Interest Period
expiring on such date for a new Interest Period.
Credit Extension means and includes (a) the making of any Loan
hereunder and (b) the Issuance of any Letter of Credit hereunder.
Credit Party means each Borrower and each Guarantor.
Debt to be Repaid means all Debt listed under the heading "Debt to
be Repaid" on Schedule 8.4.
Dollars, dollars and $ each mean lawful money of the United States.
EBITDA means, for any period, Net Income for such period before
gross interest expense, income tax expense, depreciation and amortization
and before (i) any extraordinary gains or losses, (ii) any LIFO charges
(or credits), (iii) any equity earnings or losses with respect to
unconsolidated subsidiaries and (iv) any gain or loss on the sale or other
disposition of any of the properties listed on Schedule 1.1(c). For
purposes of calculating the Leverage Ratio and the Senior Leverage Ratio
for any Computation Period, EBITDA shall be calculated on a pro forma
basis (as certified by the Company to the Administrative Agents) assuming
that all Acquisitions (including the Acquisitions of KUI and HMI) made,
and all
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divestitures completed, during such Computation Period had been made on
the first day of such Computation Period (but without adjustment for
expected cost savings or other synergies).
Effective Amount means, with respect to any outstanding L/C
Obligations on any date, the aggregate amount of such L/C Obligations on
such date after giving effect to any Issuances of Letters of Credit
occurring on such date and any other changes in the aggregate amount of
the L/C Obligations as of such date, including as a result of any
reimbursement of outstanding unpaid drawings under any Letter of Credit or
any reductions in the maximum amount available for drawing under Letters
of Credit taking effect on such date.
Effective Date means the date on which all conditions precedent set
forth in Section 5.1 are satisfied or waived by all Lenders (or, in the
case of subsection 5.1(e), waived by the Person entitled to receive the
applicable payment).
Eligible Assignee means a commercial bank, savings and loan
association, insurance company, mutual fund, commercial finance company or
similar financial institution, in each case having a combined capital and
surplus of at least $100,000,000.
Environmental Claims means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
Environmental Laws means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with
all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authority, in each case relating to environmental matters (including
pollution control and protection of the environment).
ERISA means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
ERISA Affiliate means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
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ERISA Event means (a) a Reportable Event with respect to a Pension
Plan; (b) the failure to make a required contribution to a Pension Plan if
such failure is sufficient to give rise to a Lien under Section 302(f) of
ERISA; (c) a withdrawal by the Company or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (d) a complete or partial withdrawal by the
Company or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (e) the filing of a notice
of intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings
by the PBGC to terminate a Pension Plan or Multiemployer Plan; (f) an
event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (g) the imposition of any liability under Title IV of ERISA,
other than PBGC premiums under Section 4007 of ERISA which are due but not
delinquent, upon the Company or any ERISA Affiliate.
Event of Default means any of the events or circumstances specified
in Section 9.1.
Excess Cash Flow means, for any fiscal year, the remainder, if any,
of (a) EBITDA for such fiscal year minus (b) the sum of Capital
Expenditures (to the extent paid in cash, but excluding Capital
Expenditures made with the proceeds of Funded Debt (other than the Loans))
plus the aggregate amount paid with respect to scheduled payments of
principal of Funded Debt plus the aggregate amount of all optional
prepayments of the Term Loans pursuant to Section 2.7 plus gross cash
interest expense plus the aggregate amount of all cash tax payments, in
each case made during such fiscal year.
Exchange Act means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
Excluded Entity means Xxxxxx Realty, Inc., a California corporation,
Second Story, Inc., a Washington corporation, Univar San Bernadino, Inc.,
a California corporation, and MM Foods, Inc., a California corporation, in
each case so long as (x) such Person engages in no business other than the
businesses such Person is engaged in on the Effective Date and (y) the
book value of all assets of such Person does not exceed (i) $5,000,000, in
the case
9
of Xxxxxx Realty, Inc., (ii) $4,000,000, in the case of Second Story,
Inc., (iii) $100,000, in the case of Univar San Bernadino, Inc., and (iv)
$100,000, in the case of MM Foods, Inc.
Existing Agreement has the meaning specified in the first recital
hereof.
Existing Letters of Credit means the letters of credit described on
Schedule 3.3.
Facility Adjustment - see Schedule 2.1.
Federal Funds Rate means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such
rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Paying Agent of
the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of three
leading brokers of Federal funds transactions in New York City selected by
the Paying Agent.
Fee Letter - see subsection 2.11(a).
Foreign Acquisition means any Acquisition (x) of an entity organized
under the laws of any jurisdiction other than the United States or any
political subdivision thereof or (y) where more than an immaterial portion
of the assets acquired, or more than an immaterial portion of the
businesses of the Person acquired, are located outside the United States.
FRB means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
Funded Debt means (i) all Indebtedness of the Company and its
Subsidiaries of the type described in clauses (a), (b), (c), (d), (e) and
(f) of the definition of Indebtedness (including the Loans) and, without
duplication, (ii) all Guaranty Obligations of the Company and its
Subsidiaries with respect to Indebtedness of the type described in clause
(i) above (excluding, to the extent they would otherwise constitute
Guaranty Obligations, any obligations described in subsection 8.7(e) or
8.7(f)).
10
GAAP means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature
and authority within the U.S. accounting profession), which are applicable
to the circumstances as of the date of determination.
Governmental Authority means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
Guaranteed Obligations has the meaning specified in Section 10.1
hereof.
Guarantor means (a) as of the Effective Date, each of HMI, KUA,
Parent and Holdings and (b) thereafter, the Persons referred to in clause
(a), QFC and each other Person which from time to time executes and
delivers a counterpart of a Guaranty (but excluding any Person which has
been released in writing from its obligations under the applicable
Guaranty in accordance with the terms of this Agreement).
Guaranty means (a) as of the Effective Date, the Intercompany
Guaranty (QFC) and the Parent Guaranty and (b) on and after the
Restructuring Effective Date, the Intercompany Guaranty (QFC), the
Intercompany Guaranty (Holdings) and the Parent Guaranty.
Guaranty Obligation has the meaning specified in the definition of
Contingent Obligation.
HMI means Xxxxxx Markets, Inc., a California corporation.
HMI Acquisition Agreement means the Agreement and Plan of Merger,
dated as of November 20, 1996, as amended, among QFC, QHI Acquisition
Corporation and HMI.
Holdings - see the Preamble.
Honor Date - see subsection 3.3(c).
Indebtedness of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations
11
issued, undertaken or assumed as the deferred purchase price of property
or services; (c) all non-contingent reimbursement or payment obligations
with respect to Surety Instruments; (d) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets
or businesses; (e) all indebtedness created or arising under any
conditional sale agreement or other title retention agreement, or incurred
as financing, in either case with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale
of such property); (f) all obligations with respect to capital leases; (g)
all net obligations with respect to Swap Contracts; (h) all indebtedness
referred to in clauses (a) through (g) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including
accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness; and (i) all Guaranty Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (a) through
(g) above. Notwithstanding the foregoing, (x) Indebtedness shall not
include trade payables entered into in the ordinary course of business on
ordinary terms and (y) neither the Company nor any Subsidiary shall be
deemed to have any Indebtedness under clause (h) above solely due to a
Lien on the capital stock of Santee or on the equity interest in Santee
Holding granted to secure obligations of Santee under the Santee Debt
Placement Agreement.
Indemnified Liabilities - see Section 12.5.
Indemnified Person - see Section 12.5.
Independent Auditor - see subsection 7.1(a).
Insolvency Proceeding means, with respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief
of debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar
arrangement in respect of such Person's creditors generally or any
substantial portion of its creditors, in each case undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
12
Intercompany Guaranty (Holdings) means a guaranty, substantially in
the form of Exhibit I, to be executed on the Restructuring Effective Date
by each then-existing Subsidiary of Parent other than Holdings (and to be
subsequently executed by any new Subsidiary of the Company to the extent
required by Section 7.13).
Intercompany Guaranty (QFC) - see subsection 5.1(h).
Intercompany Loan means any loan made by a Borrower to the Company
or any of its Subsidiaries and any loan made by the Company or any of its
Subsidiaries to Santee; it being understood that all such loans shall be
evidenced by an Intercompany Note.
Intercompany Note means a promissory note, substantially in the form
of Exhibit J, evidencing an Intercompany Loan.
Interest Payment Date means, as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the last Business Day of each calendar quarter,
provided that if any Interest Period for an Offshore Rate Loan exceeds
three months, the date that falls three months after the beginning of such
Interest Period and after each Interest Payment Date thereafter is also an
Interest Payment Date.
Interest Period means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which such Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the applicable Borrower in its
Notice of Borrowing or Notice of Conversion/Continuation; provided that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
following Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period;
13
(iii) no Interest Period for any Revolving Loan or Acquisition
Loan shall extend beyond the Termination Date; and
(iv) no Interest Period applicable to a Term Loan or portion
thereof shall extend beyond any Repayment Date unless the aggregate
principal amount of Term Loans represented by Base Rate Loans, or by
Offshore Rate Loans having Interest Periods that will expire on or
before such Repayment Date, equals or exceeds the amount of the
scheduled principal payment on such Repayment Date.
Investment means, relative to any investment of the Company or any
Subsidiary,
(a) any loan, advance or other extension of credit made by it
to any other Person (excluding (i) reasonable commission, travel,
salary, relocation, and similar advances or loans to officers and
employees made in the ordinary course of business, (ii) other loans
and advances to officers and employees for bona fide business
purposes not in excess of $2,500,000 in the aggregate at any time
outstanding and (iii) deposits in connection with leases, utility
services or similar items in the ordinary course of business);
(b) any Guaranty Obligation of the Company or such Subsidiary;
and
(c) any capital contribution by the Company or such Subsidiary
to, or purchase by the Company or such Subsidiary of stock or other
securities or partnership, limited liability company or similar
interests in, any other Person, or any other investment evidencing
an ownership or similar interest of the Company or such Subsidiary
in any other Person;
and the amount of any Investment shall be the original principal or
capital amount thereof less
(i) all cash returns of principal or equity thereof; and
(ii) in the case of any Guaranty Obligation, any reduction in
the aggregate amount of liability under such Guaranty Obligation
(and, in each case, without adjustment by reason of the financial
condition of such other Person);
14
and the amount of such Investment 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. Notwithstanding the foregoing, increases in prices payable
for product by HMI under or in connection with the Product Purchase
Agreement shall not be considered Investments.
IRS means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
Issuance Date -see subsection 3.1(a).
Issue means, with respect to any Letter of Credit, to incorporate
the Existing Letters of Credit into this Agreement, or to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter
of Credit; and the terms Issued, Issuing and Issuance have corresponding
meanings.
Issuing Lender means each of BofA, Chase and Union Bank of
California, N.A. in its capacity as issuer of one or more Letters of
Credit hereunder, together with (i) any replacement letter of credit
issuer arising under subsection 11.1(b) or Section 11.9 and (ii) any other
Lender which the Agents and the Company have approved in writing as, and
which has agreed to act as, an "Issuing Lender" hereunder.
KUA means KU Acquisition Corporation, a Washington corporation.
KUI means Xxxxx Xxxxxxxxx, Inc., a Washington corporation.
KUI Acquisition Agreement means the Agreement and Plan of Merger,
dated as of December 18, 1996, among QFC, KUA, KUI and certain KUI
shareholders.
L/C Advance means each Lender's participation in any L/C Borrowing
in accordance with its Pro Rata Share.
L/C Amendment Application means an application form for amendment of
outstanding standby or commercial documentary letters of credit as shall
at any time be in use at the applicable Issuing Lender, as such Issuing
Lender shall reasonably request.
L/C Application means an application form for issuances of standby
or commercial documentary letters of credit as shall at any time be in use
at the applicable
15
Issuing Lender, as such Issuing Lender shall reasonably request.
L/C Borrowing means an extension of credit resulting from a drawing
under any Letter of Credit which shall not have been reimbursed on the
date when made nor converted into a Borrowing of Revolving Loans under
subsection 3.3(c).
L/C Commitment means the commitment of the Issuing Lenders to Issue,
and the commitment of the Lenders severally to participate in, Letters of
Credit (including the Existing Letters of Credit) from time to time Issued
or outstanding under Article III, in an aggregate amount not to exceed on
any date the lesser of (a) the Revolving Commitment Amount and (b)
$20,000,000, it being understood that the L/C Commitment is a subfacility
which may utilize a part of the Revolving Commitment Amount and does not
constitute a separate, independent commitment.
L/C Obligations means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under all Letters of Credit, including
all outstanding L/C Borrowings.
L/C-Related Documents means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the applicable Issuing
Lender's standard form documents for letter of credit issuances.
Lender - see the Preamble. References to the "Lenders" shall include
each Issuing Lender in its capacity as such and the Swingline Lender in
its capacity as such; for purposes of clarification only, to the extent
that any Issuing Lender or the Swingline Lender may have any rights or
obligations in addition to those of the Lenders due to its status as
Issuing Lender or Swingline Lender, respectively, its status as such will
be specifically referenced.
Lending Office means, as to any Lender, the office or offices of
such Lender specified as its "Lending Office" or "Domestic Lending Office"
or "Offshore Lending Office", as the case may be, on Schedule 12.2, or
such other office or offices as such Lender may from time to time notify
the Company and the Paying Agent.
Letter of Credit means the Existing Letters of Credit and any letter
of credit Issued by an Issuing Lender pursuant to Article III.
16
Leverage Ratio means, as of any date, the ratio of (a) Funded Debt
determined on a consolidated basis as of such date to (b) EBITDA for the
Computation Period most recently ended on or before such date for which
financial statements have been delivered pursuant to Section 7.1.
Lien means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) in respect of any property (including those
created by, arising under or evidenced by any conditional sale or other
title retention agreement, the interest of a lessor under a capital lease,
or the filing of any financing statement naming the owner of the asset to
which such lien relates as debtor, under the Uniform Commercial Code or
any comparable law), but not including the interest of a lessor under an
operating lease.
Line of Business Percentage means the result, expressed as a
percentage, of (x) that portion of EBITDA generated from retail grocery
operations in the United States in conventional retail grocery store
formats (including, without limitation, the formats of QFC and HMI in
existence on the Effective Date) for any Computation Period divided by (y)
total EBITDA for such Computation Period.
Liquidity Amount means the sum of (i) the aggregate amount of all
Contingent Obligations of the Company and its Subsidiaries permitted only
by Subsection 8.7(h) plus (ii) the greater of (A) 1.5% of the consolidated
sales of the Company and its Subsidiaries for the most recently ended
Computation Period and (B) $35,000,000.
Loan means an extension of credit by a Lender to a Borrower under
Article II or Article III in the form of a Revolving Loan, Term Loan,
Acquisition Loan, Swingline Loan or L/C Advance.
Loan Documents means this Agreement, any Notes, the Fee Letter, the
L/C-Related Documents, each Pledge Agreement, each Guaranty, each interest
rate protection agreement entered into with a Lender pursuant to Section
7.14 and all other agreements, certificates or documents delivered to any
Agent or Lender in connection herewith.
Majority Lenders means at any time Lenders then having Pro Rata
Shares totaling more than 50%.
Margin Stock means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
17
Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the actual or prospective operations,
business, properties or condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole; or (b) a material adverse effect
upon the legality, validity, binding effect or enforceability against the
Company or any Subsidiary of any applicable Loan Document.
Merger Subsidiary means a Subsidiary organized solely for the
purpose of acting as a merger subsidiary in connection with the
acquisition of HMI or the consummation of the Restructuring; provided that
no such Subsidiary shall have assets of more than $10,000 (prior to the
consummation of the applicable transaction at which time it shall cease to
be a Merger Subsidiary).
Multiemployer Plan means a "multiemployer plan", within the meaning
of Section 4001(a)(3) of ERISA, with respect to which the Company or any
ERISA Affiliate may have any liability.
Net Cash Proceeds means the cash proceeds (including any cash
payments received by way of deferred payment of principal pursuant to a
note or installment receivable or purchase price adjustment or otherwise,
but only as and when received) of any Asset Sale, net of (i) all
commissions, attorney's fees, accountants' fees, investment banking fees,
survey costs, title insurance premiums, required debt payments (other than
pursuant to this Agreement) and other fees and charges in connection with
such Asset Sale, (ii) estimated taxes (determined in good faith), if any,
payable as a result of such Asset Sale and (iii) amounts necessary to
retire any Permitted Liens which encumber the applicable assets.
Net Income means, for any period, the Company's consolidated net
income for such period.
Note means a promissory note executed by a Borrower in favor of a
Lender pursuant to subsection 2.2(b) in substantially the form of Exhibit
G.
Notice of Borrowing means a notice in substantially the form of
Exhibit A.
Notice of Conversion/Continuation means a notice in substantially
the form of Exhibit B.
Obligations means all debts, liabilities, obligations, covenants and
duties arising under any Loan Document owing
18
by either Borrower to any Lender, the Agents, or any Indemnified Person,
whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, or now existing or hereafter
arising.
Offshore Rate means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward, unless such rate is an integral
multiple of 1/16 or 1/100 of 1%, to an integral multiple of 1/100th of 1%)
determined by the Paying Agent as follows:
Offshore Rate = IBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal) in
effect on such day (whether or not applicable to any Lender) under
regulations issued from time to time by the FRB for determining the
maximum reserve requirement (including any emergency, supplemental
or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities"); and
"IBOR" means the rate of interest per annum determined by the Paying
Agent to be the arithmetic mean (rounded upward, unless it is an
integral multiple of 1/16 or 1/100 of 1%, to an integral multiple of
1/100th of 1%) of the rates of interest per annum notified to the
Paying Agent by each Reference Lender as the rate of interest at
which dollar deposits in the approximate amount of the amount of the
Loan to be made or continued as, or converted into, an Offshore Rate
Loan by such Reference Lender and having a maturity comparable to
such Interest Period would be offered to prime banks in the offshore
dollar interbank market at their request at approximately 11:00 a.m.
(New York City time) two Business Days prior to the commencement of
such Interest Period.
The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
Offshore Rate Loan means a Loan that bears interest based on the
Offshore Rate.
19
Organization Documents means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
Other Taxes means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other
Loan Document.
Parent - see the Preamble.
Parent Guaranty means the guaranty by Parent set forth in Article X
hereof.
Participant - see subsection 12.8(c).
Paying Agent means BofA in its capacity as paying agent for the
Lenders hereunder, and any successor paying agent arising under Section
11.9.
PBGC means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
Pension Plan means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA with respect to which the Company may
have any liability.
Permitted Liens - see Section 8.1.
Permitted Santee Investments means (x) Investments in and to Santee
in an aggregate maximum amount not to exceed $10,000,000 (plus all
dividends received by HMI from Santee from and after the Effective Date);
(y) prior to the closing of the Santee Debt Placement Agreement, advance
payments for product purchases in an amount not at any time exceeding
$17,000,000 minus the amount of any Comfort Letter Debt; and (z) on terms
and conditions substantially consistent with those set forth in Schedule
1.1(f), additional Investments in Santee in the form of loans and advances
in an aggregate amount not exceeding $80,000,000 (less the amount of any
outstanding guaranty described in subsection 8.4(g), the amount of any
Comfort Letter Debt and the outstanding amount of advance payments for
product purchases referred to in clause (y) above), it being
20
understood that such $80,000,000 shall be reduced to the extent that any
Permitted Santee Investment (other than advance payments for product
purchases) is repaid by the proceeds of any Indebtedness incurred under
the Santee Debt Placement Agreement.
Person means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
Plan means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions, and includes any
Pension Plan.
Pledge Agreement - see Section 5.1(g).
Potential Subordinated Note Prepayment means any optional redemption
or repurchase of the Subordinated Notes in connection with an "Asset Sale"
(as defined in the Subordinated Note Indenture) required by subsection
4.13(1)(b) of the Subordinated Note Indenture.
Potential Subordinated Note Prepayment Notice means (x) any notice
to the Trustee (as defined in the Subordinated Note Indenture) of any
optional redemption of the Subordinated Notes or (y) any notice of an
"Asset Sale Offer" to the holders of the Subordinated Notes, in each case
in connection with a Potential Subordinated Note Prepayment.
Pro Rata Share means, as to any Lender at any time, the percentage
(rounded to the ninth decimal place) at such time of such Lender's
Commitment (whether used or unused) divided by the combined Commitments of
all Lenders. The initial Pro Rata Share of each Lender is set forth on
Schedule 1.1(b).
Product Purchase Agreement means an arrangement (which may be
embodied in one or more agreements) by the Santee Owners with Santee for
the purchase of product, substantially consistent with the terms and
conditions set forth in Schedule 1.1(d).
QFC - see the Preamble.
Reference Lenders means BofA and Chase.
Repayment Date - see subsection 2.9(a).
21
Replacement Lender - see Section 4.7.
Reportable Event means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
Requirement of Law means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon
the Person or any of its property or to which the Person or any of its
property is subject.
Responsible Officer means the chief executive officer or the
president of the Company, as applicable, or any other officer of such
entity having substantially the same authority and responsibility; or,
with respect to compliance with financial covenants, the chief financial
officer or the treasurer of the Company, or any other officer of the
Company having substantially the same authority and responsibility.
Restructuring - see the definition of Restructuring Effective Date.
Restructuring Effective Date means the date on which each of the
following conditions shall have been satisfied:
(i) the required percentage of shareholders of QFC shall have
approved, and QFC and its Subsidiaries shall have consummated, the
restructuring (the "Restructuring") of QFC and its Subsidiaries so
that each of QFC and HMI shall be Wholly-Owned Subsidiaries of
Holdings, which shall be a Wholly-Owned Subsidiary of Parent, which
shall be a publicly held entity, the holders of the Shares of which
shall be substantially similar to the holders of the Shares of QFC
immediately prior to such restructuring;
(ii) Parent shall have delivered to the Administrative Agents
a certificate of a Responsible Officer stating that (x) the
Restructuring has occurred and (y) no Unmatured Event of Default or
Event of Default exists or will result from the Restructuring; and
(iii) all Subsidiaries of Parent (other than Holdings) shall
have executed and delivered a counterpart of the Intercompany
Guaranty (Holdings),
22
and Parent and each Subsidiary thereof shall have executed and
delivered to the Agents all agreements and other documents
reasonably requested by the Agents pursuant to Section 7.13.
Revolving Commitment Amount means $125,000,000, subject to reduction
from time to time in accordance with the terms hereof.
Revolving Loan - see Section 2.1.
Sale-Leaseback means any transaction pursuant to which the Company
or any Subsidiary sells or otherwise disposes of any property with the
intention of retaining the use thereof under a lease or other comparable
arrangement.
Santee means Santee Dairies, Inc., a California corporation.
Santee Agreements means the Product Purchase Agreement and the
Santee Debt Placement Agreement.
Santee Debt Placement Agreement means an agreement between Santee
and its lenders substantially consistent with the terms and conditions set
forth in Schedule 1.1(e).
Santee Debt Service Coverage Ratio means, for any period, the ratio
of (i) the total of Santee's earnings before interest expense, income tax
expense, depreciation and amortization for such period before any
extraordinary gains or losses minus Santee's capital expenditures for such
period to (ii) the sum of required principal payments made by Santee on
Indebtedness during such period plus interest expense of Santee for such
period.
Santee Entities means Santee and Santee Holdings.
Santee Fixed Charge Coverage Ratio means, for any period, the ratio
of (i) the total of Santee's earnings before interest expense, income tax
expense, depreciation and amortization for such period before any
extraordinary gains or losses plus net rents minus Santee's capital
expenditures (net of asset sales) for such period to (ii) net interest
expense plus net rents.
Santee Guaranty means a guaranty by the Company or any Subsidiary of
Indebtedness of Santee, on terms and conditions substantially consistent
with those set forth in Schedule 1.1(g).
23
Santee Holdings means any Person, the sole business of which is to
hold a 100% ownership interest in Santee and activities reasonably related
thereto, and which is initially owned 50% by each Santee Owner.
Santee Loan means a loan to Santee by the Company or any Subsidiary.
Santee Owner means HMI or Stater.
SEC means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
Senior Funded Debt means all Funded Debt of the Company and its
Subsidiaries other than Subordinated Debt.
Senior Leverage Ratio means, as of any date, the ratio of (a) Senior
Funded Debt determined on a consolidated basis as of such date to (b)
EBITDA for the Computation Period most recently ended on or before such
date for which financial statements have been delivered pursuant to
Section 7.1 (or in the Certificate described in the footnote in Schedule
1.1(a)).
Shares means the Company's common stock, $.001 par value per share.
Specified Net Proceeds means, for any fiscal year, all Net Cash
Proceeds received by the Company or any Subsidiary during such fiscal year
in excess of $7,500,000; provided that no Net Cash Proceeds shall be
included in the calculation of "Specified Net Proceeds" for any fiscal
year (x) if such Net Cash Proceeds are invested by the Company or any of
its Subsidiaries, as applicable, in noncurrent assets of the Company or
any of its Subsidiaries within twelve months of the receipt of such Net
Cash Proceeds and (y) after giving effect to such investment, the Line of
Business Percentage for the most recent Computation Period (calculated on
a pro forma basis (if necessary) as if such investment and the Asset Sale
giving rise to such Net Cash Proceeds had occurred at the beginning of
such Computation Period) was at least 80%. For purposes of the foregoing
and subsection 2.8(a)(i), Net Cash Proceeds shall be deemed received on
the earlier of (i) the date the Company certifies that such Net Cash
Proceeds will not be reinvested as contemplated by the proviso above and
(ii) the date one year after actual receipt of such Net Cash Proceeds.
Stater means Stater Bros. Markets, a California corporation.
24
Subordinated Debt means (i) the Subordinated Notes and (ii) any
unsecured indebtedness of Parent or Holdings the terms and conditions of
which either (x) are no less favorable to the Agents and the Lenders than
the Subordinated Notes or (y) have been approved by the Majority Lenders.
Subordinated Note Indenture means the Indenture among QFC, certain
guarantors named therein and First Trust National Association, as trustee,
substantially on the terms set forth in the draft of such Indenture dated
March 7, 1997.
Subordinated Notes means the Senior Subordinated Notes due 2007
issued by QFC pursuant to the Subordinated Note Indenture.
Subsidiary of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the Voting Stock, membership interests or
other equity interests (in the case of Persons other than corporations),
is owned or controlled directly or indirectly by such Person, or one or
more of the other Subsidiaries of such Person, or a combination thereof.
Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Company. Notwithstanding
anything to the contrary set forth above, (a) no Santee Entity shall be
considered a Subsidiary of the Company or HMI; and (ii) except for
purposes of (x) the preparation of financial statements, and any financial
calculations to be made, on a consolidated basis, and (y) the definitions
of Asset Sale, Net Cash Proceeds and Specified Net Cash Proceeds and
subsection 2.8(a)(i), no Excluded Entity shall be considered to be a
Subsidiary of the Company or any of its Subsidiaries.
Supermajority Lenders means at any time Lenders then having Pro Rata
Shares of 66-2/3% or more.
Surety Instrument means any letter of credit (including standby and
commercial), banker's acceptance, bank guaranty, surety bond or similar
instrument.
Swap Contract means any agreement (including any master agreement
and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward
rate agreement, commodity swap, commodity option, equity or equity index
swap or option, bond option, interest rate option, forward foreign
exchange agreement, rate cap, collar
25
or floor agreement, currency swap agreement, cross-currency rate swap
agreement, swaption, currency option or any other, similar agreement
(including any option to enter into any of the foregoing).
Swingline Lender means BofA.
Swingline Loan - see subsection 2.5(a).
Taxes means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and Agent, (i) income
taxes, (ii) franchise taxes based on net income and (iii) any Taxes
imposed on such Lender or Agent as a result of a present, former or future
connection between the jurisdiction of the government or taxing authority
imposing such tax or any political subdivision or taxing authority thereof
or therein and such Lender or Agent (other than, in the case of this
clause (iii), a connection arising solely from such Lender or Agent having
executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement).
Term Commitment Amount means the amount determined in accordance
with Schedule 2.1, subject to the Facility Adjustment and subject to
reduction from time to time in accordance with the terms hereof.
Term Loan - see Section 2.1.
Termination Date means the earlier to occur of:
(a) March 31, 2004; and
(b) the date on which the commitments of the Lenders to make
Credit Extensions hereunder terminate in accordance with the
provisions of this Agreement.
Type of Loan means the characterization of a Loan as a Base Rate
Loan or an Offshore Rate Loan.
Unfunded Pension Liability means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA as of the end of
the most recent plan year over the value of such Plan's assets as of such
date, determined in accordance with the assumptions that would be used in
a termination of such Plan for the applicable plan year.
Unmatured Event of Default means any event or circumstance which,
with the giving of notice, the lapse of
26
time, or both, would (if not cured or otherwise remedied during such time)
constitute an Event of Default.
United States and U.S. each means the United States of America.
Voting Stock means, with respect to any corporation, the capital
stock of such corporation having general voting power under ordinary
circumstances to elect directors to the board of directors of such
corporation, but shall not include any capital stock that has or would
have such voting power solely by reason of the happening of any
contingency.
Wholly-Owned Subsidiary means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination
is being made, is owned, beneficially and of record, by the Company, or by
one or more other Wholly-Owned Subsidiaries, or both.
Z/C means Xxxx/Chilmark Fund, L.P.
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding", and
the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent
27
amendments and other modifications thereto, but only to the extent such
amendments and other modifications are not prohibited by the terms of any Loan
Document, and (ii) references to any statute or regulation are to be construed
as including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agents, QFC,
Holdings and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agents
merely because of the Agents' or Lenders' involvement in their preparation.
1.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied; provided that if the Borrowers notify the Agents
that the Borrowers wish to amend any covenant or other provision of this
Agreement to eliminate the effect of any change in GAAP on the operation of such
covenant or other provision (or if the Agents notify the Borrowers that the
Majority Lenders wish to amend any covenant or other provision for such
purpose), then compliance with such covenant or other provision shall be
determined on the basis of GAAP in effect immediately before the relevant change
in GAAP became effective, until either such notice is withdrawn or such covenant
or other provision is amended in a manner satisfactory to the Borrowers and the
Majority Lenders.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
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ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Credits. (a) The Term Credit. Each Lender
severally agrees, on the terms and conditions set forth herein, to make a single
loan to the Borrower (each such loan, a "Term Loan") on the Effective Date in an
amount not to exceed such Lender's Pro Rata Share of the Term Commitment Amount.
Amounts borrowed as Term Loans which are repaid or prepaid may not be
reborrowed.
(b) The Revolving Credit. Each Lender severally agrees, on the terms
and conditions set forth herein, to make loans to the Borrower (each such loan,
a "Revolving Loan") from time to time on any Business Day during the period from
the Effective Date to the Termination Date, in an aggregate amount not to exceed
at any time outstanding such Lender's Pro Rata Share of the Revolving Commitment
Amount; provided that, after giving effect to any Borrowing of Revolving Loans,
the aggregate amount of all outstanding Revolving Loans and Swingline Loans plus
the Effective Amount of all L/C Obligations shall not exceed the Revolving
Commitment Amount. Within the foregoing limits, and subject to the other terms
and conditions hereof, the Borrower may borrow under this subsection 2.1(b),
prepay under Section 2.7 and reborrow under this subsection 2.1(b).
(c) The Acquisition Credit. Each Lender severally agrees, on the
terms and conditions set forth herein, to make loans to the Borrower (each such
loan, an "Acquisition Loan") from time to time on any Business Day during the
period from the Effective Date to the Termination Date, in an aggregate amount
not to exceed at any time outstanding such Lender's Pro Rata Share of the
Acquisition Facility Commitment Amount. Within the foregoing limits, and subject
to the other terms and conditions hereof, the Borrower may borrow under this
subsection 2.1(c), prepay under Section 2.7 and reborrow under this subsection
2.1(c).
2.2 Loan Accounts. (a) Each Lender (including the Swingline Lender), with
respect to amounts payable to it hereunder, each Issuing Lender, with respect to
all Letters of Credit issued by such Issuing Lender and L/C Obligations with
respect thereto, and the Paying Agent, with respect to all amounts payable
hereunder, shall maintain on its books, in accordance with its usual practice,
loan accounts or other records setting forth each applicable Loan or Letter of
Credit hereunder. The accounts or records maintained by each Lender, each
Issuing Lender and the Paying Agent shall be prima facie evidence as to the
amount of the Loans made by the Lenders to the Borrower and the Letters of
Credit Issued for the account of the
29
Borrower (or jointly for the account of the Borrower and any Subsidiary), and
the interest and payments thereon. Any failure so to record or any error in
doing so shall not, however, limit or otherwise affect the obligation of either
Borrower hereunder to pay any amount owing with respect to any Loan or any
Letter of Credit.
(b) Upon the request of any Lender made through the Paying Agent,
the Loans made by such Lender may be evidenced by one or more Notes, instead of
loan accounts. Each such Lender shall endorse on the schedules annexed to its
Note(s) the date and amount of each Loan made by it and the amount of each
payment of principal made by the applicable Borrower with respect thereto. Each
such Lender is irrevocably authorized by each Borrower to endorse its respective
Note(s) and each Lender's record shall be prima facie evidence of the amount of
the Loans evidenced thereby; provided, however, that the failure of a Lender to
make, or an error in making, a notation thereon with respect to any Loan shall
not limit or otherwise affect the obligations of the applicable Borrower
hereunder or under any such Note to such Lender.
2.3 Procedure for Borrowing of Term Loans, Revolving Loans and Acquisition
Loans. (a) Except for Borrowings of Revolving Loans made pursuant to Sections
2.5(e) or 3.3(c), each Borrowing of Revolving Loans, Acquisition Loans or Term
Loans shall be made upon the applicable Borrower's irrevocable written notice
delivered to the Paying Agent in the form of a Notice of Borrowing, which notice
must be received by the Paying Agent prior to 9:00 a.m. (San Francisco time) (i)
three Business Days prior to the requested Borrowing Date, in the case of
Offshore Rate Loans, and (ii) one Business Day prior to the requested Borrowing
Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in the
amount of $5,000,000 or a higher integral multiple of $100,000;
(B) the requested Borrowing Date, which shall be a
Business Day;
(C) the Type of Loans comprising the Borrowing; and
(D) the duration of the Interest Period applicable to
any Offshore Rate Loans included in such notice. If the Notice of
Borrowing fails to specify the duration of the Interest Period for
any Borrowing comprised of Offshore Rate Loans, such Interest Period
shall be one month.
30
(b) The Paying Agent will promptly notify each Lender of its receipt
of any Notice of Borrowing and of the amount of such Lender's Pro Rata Share of
such Borrowing.
(c) Each Lender will make the amount of its Pro Rata Share of each
Borrowing available to the Paying Agent for the account of the applicable
Borrower at the Agent's Payment Office by 11:00 a.m. (San Francisco time) on the
Borrowing Date requested by such Borrower in funds immediately available to the
Paying Agent. The proceeds of all such Loans will then be made available to the
applicable Borrower by the Paying Agent by wire transfer in accordance with
written instructions provided to the Paying Agent by such Borrower of like funds
as received by the Paying Agent.
(d) After giving effect to any Borrowing, there may not be more than
12 different Interest Periods in effect.
2.4 Conversion and Continuation Elections. (a) Each Borrower may, upon
irrevocable written notice to the Paying Agent in accordance with subsection
2.4(b):
(i) elect to convert, on any Business Day, any Base Rate Loans
(or any part thereof in an amount not less than $5,000,000 or a higher
integral multiple of $100,000) into Offshore Rate Loans; or
(ii) elect to convert, on the last day of the applicable
Interest Period, any Offshore Rate Loans maturing on such day (or any part
thereof in an amount not less than $5,000,000 or a higher integral
multiple of $100,000) into Base Rate Loans; or
(iii) elect to continue, on the last day of the applicable
Interest Period, any Offshore Rate Loans maturing on such day (or any part
thereof in an amount not less than $5,000,000 or a higher integral
multiple of $100,000) for a new Interest Period;
provided that (x) notwithstanding the foregoing, but subject to clause (y)
below, Borrowings of Term Loans may be in an amount which is not an integral of
$100,000 to the extent (and only to the extent) necessary to permit payment of
scheduled installments of Term Loans without breaking Interest Periods or as a
result of prepayments required pursuant to Section 2.8 and (y) if the aggregate
amount of Offshore Rate Loans in respect of any Borrowing shall have been
reduced, by payment, prepayment or conversion of part thereof to be less than
$5,000,000, such Offshore Rate Loans shall automatically convert into Base Rate
Loans.
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(b) The applicable Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Paying Agent not later than 9:00
a.m. (San Francisco time) at least (i) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans; and (ii) one Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed
conversion or continuation; and
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the applicable Borrower has failed to select timely a new
Interest Period to be applicable to such Offshore Rate Loans, or if any
Unmatured Event of Default or Event of Default then exists (and the Majority
Lenders have not otherwise agreed pursuant to subsection 2.4(e)), such Borrower
shall be deemed to have elected to convert such Offshore Rate Loans into Base
Rate Loans effective as of the expiration date of such Interest Period.
(d) The Paying Agent will promptly notify each Lender of its receipt
of a Notice of Conversion/Continuation or, if no timely notice is provided by
the applicable Borrower, the Paying Agent will promptly notify each Lender of
the details of any automatic conversion. All conversions and continuations shall
be made ratably according to the Pro Rata Shares of the Lenders.
(e) Unless the Majority Lenders otherwise agree, during the
existence of any Unmatured Event of Default or Event of Default, no Borrower may
elect to have a Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than 12 different Interest Periods in effect.
32
2.5 Swingline Loans.
(a) Subject to the terms and conditions hereof, the Swingline Lender
may, in its sole discretion (subject to subsection 2.5(b)), make a portion of
the Revolving Commitment Amount available to the Borrower by making swingline
loans (each such loan, a "Swingline Loan") to the Borrower on any Business Day
during the period from the Effective Date to the Termination Date in accordance
with the procedures set forth in this Section 2.5 in an aggregate principal
amount at any one time outstanding not to exceed the lesser of (x) the Revolving
Commitment Amount and (y) $25,000,000 (and notwithstanding the fact that such
Swingline Loans, when aggregated with the Swingline Lender's outstanding
Revolving Loans, may exceed the Swingline Lender's Pro Rata Share of the
Revolving Commitment Amount); provided that at no time shall the sum of the
outstanding principal amount of all Swingline Loans and Revolving Loans plus the
Effective Amount of all L/C Obligations exceed the Revolving Commitment Amount.
Subject to the other terms and conditions hereof, the Borrower may borrow under
this subsection 2.5(a), prepay pursuant to subsection 2.5(d) and reborrow
pursuant to this subsection 2.5(a) from time to time; provided that the
Swingline Lender shall not be obligated to make any Swingline Loan.
(b) The Borrower shall provide the Paying Agent and the Swingline
Lender irrevocable written notice (including notice via facsimile confirmed
promptly by a telephone call) of any Swingline Loan requested hereunder (which
notice must be received by the Swingline Lender and the Paying Agent prior to
1:00 p.m. (San Francisco time) on the requested Borrowing Date) specifying (i)
the amount to be borrowed and (ii) the requested Borrowing Date, which shall be
a Business Day. Upon receipt of such notice, the Swingline Lender will promptly
confirm with the Paying Agent (by telephone or in writing) that the Paying Agent
has received a copy of such notice from the Borrower and, if not, the Swingline
Lender will provide the Paying Agent with a copy thereof. Unless the Swingline
Lender has received notice prior to 2:00 p.m. (San Francisco time) on the
proposed Borrowing Date from the Paying Agent (including at the request of any
Lender) (A) directing the Swingline Lender not to make the requested Swingline
Loan as a result of the limitations set forth in the proviso set forth in the
first sentence of subsection 2.5(a) or (B) that one or more conditions specified
in Article V is not then satisfied, then, subject to the terms and conditions
hereof, the Swingline Lender may make the amount of the requested Swingline Loan
available to the Borrower by crediting the account of the Borrower on the books
of the Swingline Lender with the amount of such Swingline Loan. Each Swingline
Loan shall be in an aggregate principal amount equal to $500,000 or a higher
integral multiple of $100,000. The Swingline Lender will
33
promptly notify the Paying Agent of the amount of each Swingline Loan.
(c) Principal of and accrued interest on each Swingline Loan shall
be due and payable (i) on demand made by the Swingline Lender at any time upon
one Business Day's prior written notice to the Borrower furnished at or before
8:45 a.m. (San Francisco time) and (ii) in any event on the Termination Date.
Interest on Swingline Loans shall be for the sole account of the Swingline
Lender (except to the extent that the other Lenders have funded the purchase of
participations therein pursuant to subsection 2.5(e)).
(d) The Borrower may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal amount
of any Swingline Loan, without incurring any premium or penalty; provided that
(i) each such voluntary prepayment shall require prior written
notice given to the Paying Agent and the Swingline Lender no later
than 1:00 p.m. (San Francisco time) on the day on which the Borrower
intends to make a voluntary prepayment, and
(ii) each such voluntary prepayment shall be in an amount
equal to $500,000 or a higher integral multiple of $100,000 (or, if
less, the aggregate outstanding principal amount of all Swingline
Loans then outstanding).
Voluntary prepayments of Swingline Loans shall be made by the Borrower to
the Swingline Lender at such office in the continental United States as the
Swingline Lender may designate by notice to the Borrower from time to time. All
such payments shall be made in dollars and in immediately available funds no
later than 2:00 p.m. (San Francisco time) on the date specified by the Borrower
pursuant to clause (i) above (and any payment received later than such time
shall be deemed to have been received on the next Business Day). The Swingline
Lender will promptly notify the Paying Agent of the amount of each prepayment of
Swingline Loans.
(e) If (i) any Swingline Loan shall remain outstanding at 9:00 a.m.
(San Francisco time) on the Business Day immediately prior to a Business Day on
which Swingline Loans are due and payable pursuant to subsection 2.5(c) and by
such time on such Business Day the Paying Agent shall have received neither (A)
a Notice of Borrowing delivered pursuant to Section 2.3 requesting that
Revolving Loans be made pursuant to subsection 2.1(b) on such following Business
Day in an amount at least equal to the aggregate principal amount of such
Swingline Loans, nor
34
(B) any other notice indicating the Borrower's intent to repay such Swingline
Loans with funds obtained from other sources, or (ii) any Swingline Loans shall
remain outstanding during the existence of an Unmatured Event of Default or
Event of Default and the Swingline Lender shall in its sole discretion notify
the Paying Agent that the Swingline Lender desires that such Swingline Loans be
converted into Revolving Loans, then the Paying Agent shall be deemed to have
received a Notice of Borrowing from the Borrower pursuant to Section 2.3
requesting that Base Rate Loans be made pursuant to subsection 2.1(b) on the
following Business Day in an amount equal to the aggregate amount of such
Swingline Loans, and the procedures set forth in subsections 2.3(b) and 2.3(c)
shall be followed in making such Base Rate Loans; provided that such Base Rate
Loans shall be made notwithstanding the Borrower's failure to comply with
Section 5.2; and provided, further, that if a Borrowing of Revolving Loans
becomes legally impractical and if so required by the Swingline Lender at the
time such Revolving Loans are required to be made by the Lenders in accordance
with this subsection 2.5(e), each Lender agrees that in lieu of making Revolving
Loans as described in this subsection 2.5(e), such Lender shall purchase a
participation from the Swingline Lender in the applicable Swingline Loans in an
amount equal to such Lender's Pro Rata Share of such Swingline Loans, and the
procedures set forth in subsections 2.3(b) and 2.3(c) shall be followed in
connection with the purchases of such participations. The proceeds of such Base
Rate Loans (or participations purchased) shall be delivered by the Paying Agent
to the Swingline Lender to repay such Swingline Loans (or as payment for such
participations). A copy of each notice given by the Paying Agent to the Lenders
pursuant to this subsection 2.5(e) with respect to the making of Revolving
Loans, or the purchases of participations, shall be promptly delivered by the
Paying Agent to the Borrower. Each Lender's obligation in accordance with this
Agreement to make Revolving Loans, or purchase participations, as contemplated
by this subsection 2.5(e), shall be absolute and unconditional and shall not be
affected by any circumstance, including (1) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against the
Swingline Lender, the Borrower or any other Person for any reason whatsoever;
(2) the occurrence or continuance of an Event of Default, an Unmatured Event of
Default or a Material Adverse Effect; or (3) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing.
2.6 Reduction or Termination of Commitments.
(a) Voluntary Reduction or Termination of Commitments. The Borrower
may, from time to time upon not less than five Business Days' prior notice
to the Paying Agent terminate or permanently reduce the Revolving
35
Commitment Amount, the Acquisition Facility Commitment Amount or (prior to
the making of the Term Loans) the Term Commitment Amount by an aggregate
amount of $5,000,000 or a higher integral multiple of $1,000,000; provided
that (i) the Borrower may not reduce the Revolving Commitment Amount to an
amount which is less than the sum of the aggregate principal amount of all
outstanding Revolving Loans and Swingline Loans plus the Effective Amount
of all L/C Obligations and (ii) the Borrower may not reduce the
Acquisition Facility Commitment Amount to an amount which is less than the
aggregate principal amount of all outstanding Acquisition Loans. Any
reduction of the Revolving Commitment Amount, the Acquisition Facility
Commitment Amount or the Term Commitment Amount shall ratably reduce the
Commitment of each Lender according to its Pro Rata Share.
(b) Scheduled Mandatory Reductions of Acquisition Facility
Commitment Amount. The Acquisition Facility Commitment Amount shall be
reduced by $25,000,000 on each of March 31, 2000, March 31, 2001, March
31, 2002 and March 31, 2003; provided that if there is a Facility
Adjustment, the amount of each such scheduled reduction shall be increased
by $1,000,000 for each $5,000,000 increase in the Acquisition Facility
Commitment Amount as a result of such Facility Adjustment; and provided,
further, that if there is any reduction of the Acquisition Facility
Commitment Amount pursuant to subsection (a) above or subsection (c) below
(each a "Non-Scheduled Reduction"), the amount of each such scheduled
reduction shall be reduced by the product of (x) the amount of such
Non-Scheduled Reduction multiplied by (y) a fraction, the numerator of
which is the original amount of such scheduled reduction (after giving
effect to any Facility Adjustment) and the denominator of which is the
original Acquisition Facility Commitment Amount (after giving effect to
any Facility Adjustment).
(c) Mandatory Reductions resulting from Potential Subordinated Note
Prepayment. The Acquisition Facility Commitment Amount and/or the
Revolving Commitment Amount, as applicable, shall be automatically reduced
on any date on which the Borrower makes any prepayment of Acquisition
Loans or Revolving Loans, as the case may be, pursuant to subsection
2.8(c), in each case in an amount equal to the amount of such prepayment.
2.7 Optional Prepayments of Revolving Loans, Acquisition Loans and Term
Loans. Subject to Section 4.4, each Borrower may, at any time or from time to
time, upon not less than three Business Days' irrevocable notice to the Paying
Agent in the case of Offshore Rate Loans and not less than one Business Day's
36
irrevocable notice to the Paying Agent in the case of Base Rate Loans, prepay
any Borrowing of Revolving Loans, Acquisition Loans or Term Loans, in whole or
ratably among the Lenders in part, in an aggregate amount of $5,000,000 or a
higher integral multiple of $100,000 (or, if any Swingline Loans have become
Revolving Loans pursuant to subsection 2.5(e) or any Revolving Loans have been
made pursuant to Section 3.3, in such other amount as is necessary to cause the
amount of each Borrowing of Revolving Loans to be an aggregate amount of
$5,000,000 and an integral multiple of $100,000). Such notice of prepayment
shall specify the date and amount of such prepayment and the Loans to be
prepaid. The Paying Agent will promptly notify each Lender of its receipt of any
such notice and of such Lender's Pro Rata Share of such prepayment. If any such
notice is given by either Borrower, the payment amount specified in such notice
shall be due and payable on the date specified therein, together with accrued
interest to the date of such prepayment on the amount prepaid and any amount
required pursuant to Section 4.4. Optional prepayments of Term Loans shall be
applied pro rata to the remaining installments thereof.
2.8 Mandatory Prepayments.
(a) Term Loans. So long as Term Loans are outstanding:
(i) within ten days after receipt thereof by the Company or
any Subsidiary, QFC shall make a prepayment of the Term Loans in an
amount equal to such Specified Net Proceeds (provided that no such
prepayment shall be required until the aggregate amount of unapplied
Specified Net Proceeds equals or exceeds $500,000);
(ii) at least one Business Day prior to the date on which QFC
would be required to give any Potential Subordinated Note Prepayment
Notice, QFC shall make a prepayment of the Term Loans in an amount
equal to the applicable Potential Subordinated Note Prepayment; and
(iii) within ten days after the date on which the Company is
required to deliver the financial statements referred to in
subsection 7.1(b) for the first fiscal quarter of any fiscal year
(excluding the first fiscal quarter of 1997), QFC shall make a
prepayment of the Term Loans in an amount equal to 35% of Excess
Cash Flow for the immediately preceding fiscal year; provided that
no such prepayment shall be required if the Leverage Ratio was less
than 4.50 to 1 as of either (x) the end of such immediately
preceding fiscal year or (y) the end of such first fiscal quarter.
37
Each prepayment of Term Loans pursuant to this Section 2.8(a) shall be
applied pro rata to the then-unpaid installments of the Term Loans.
(b) Prepayments resulting from Acquisition Facility Commitment
Amount Reductions. On each date on which the Acquisition Facility Commitment
Amount is reduced pursuant to subsection 2.6(b), the Borrower shall immediately,
and without notice or demand, prepay the outstanding principal amount of the
Acquisition Loans by an amount equal to the excess, if any, of the aggregate
amount of all Acquisition Loans over the Acquisition Facility Commitment Amount
(as so reduced).
(c) Prepayments of Acquisition Loans and Revolving Loans resulting
from Potential Subordinated Note Prepayments. At least one Business Day prior to
the date on which QFC would be required to give a Potential Subordinated Note
Prepayment Notice, the Borrower shall prepay Acquisition Loans and/or Revolving
Loans in an amount equal to the remainder, if any, of the amount of the
applicable Potential Subordinated Note Prepayment minus any concurrent
prepayment of Term Loans required by subsection 2.8(a)(2). Any such prepayment
shall be applied first to the Acquisition Loans and then to the Revolving Loans.
2.9 Repayment. (a) The Term Credit. The Borrower shall repay the Term
Loans on each of the dates set forth in Schedule 2.9 (each a "Repayment Date")
in the amount set forth opposite such date on Schedule 2.9 (subject to
adjustment pursuant to Sections 2.7 and 2.8(a)).
(b) The Revolving Credit. The Borrower shall repay to the Lenders on
the Termination Date the aggregate principal amount of all Revolving Loans
outstanding on such date.
(c) The Acquisition Facility Credit. The Borrower shall repay to the
Lenders on the Termination Date the aggregate principal amount of all
Acquisition Loans outstanding on such date.
2.10 Interest. (a) Each Revolving Loan, Acquisition Loan and Term Loan
shall bear interest on the outstanding principal amount thereof from the
applicable Borrowing Date at a rate per annum equal to the Offshore Rate or the
Base Rate, as the case may be (and subject to the Borrower's right to convert to
the other Type of Loan under Section 2.4) plus the Applicable Margin. Each
Swingline Loan shall bear interest on the outstanding principal amount thereof
from the applicable Borrowing Date at a rate per annum equal to the Base Rate
plus the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the
38
date of any prepayment of Term Loans under Section 2.7, 2.8 or 2.9 for the
portion of the Term Loans so prepaid and upon payment (including prepayment) in
full thereof.
(c) Notwithstanding subsection (a) of this Section, after the
occurrence of any Unmatured Event of Default under subsection (a) or (g) of
Section 9.1 or any Event of Default under subsection (a), (f) or (g) of Section
9.1 and, at the election of the Majority Lenders, after the occurrence of any
other Event of Default, and so long as such Unmatured Event of Default or Event
of Default exists, each Borrower will pay interest (after as well as before
judgment thereon to the extent permitted by applicable law) on the principal
amount of all of its outstanding Loans and, to the extent permitted by
applicable law, on any other amount payable by such Borrower hereunder or under
any other Loan Document, at a rate per annum equal to the rate otherwise
applicable thereto pursuant to the terms hereof or such other Loan Document (or,
if no such rate is specified, the Base Rate) plus 2%. All such interest shall be
payable on demand.
(d) Anything herein to the contrary notwithstanding, the obligations
of each Borrower to any Lender hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder to the extent (but only to the extent) that contracting for
or receiving such payment by such Lender would be contrary to the provisions of
any law applicable to such Lender limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Lender, and in such
event each Borrower shall pay such Lender interest at the highest rate permitted
by applicable law.
2.11 Fees. In addition to certain fees described in Section 3.8:
(a) Arrangement, Agency Fees. QFC shall pay to the Arrangers and the
Agents such fees as are required by the letter agreement (the "Fee Letter")
among QFC, the Arrangers and the Agents dated February 14, 1997.
(b) Commitment Fees. The Borrower shall pay to the Paying Agent for
the account of each Lender a commitment fee at the Commitment Fee Rate on such
Lender's Pro Rata Share of the average daily unused portion of the Revolving
Commitment Amount and the Acquisition Facility Commitment Amount, computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter
based upon the daily utilization for that quarter as calculated by the Paying
Agent. For purposes of calculating utilization under this subsection, the
Revolving Commitment Amount and the Acquisition Facility Commitment Amount
39
shall be deemed used to the extent of the aggregate amount of all Revolving
Loans, Acquisition Loans and L/C Obligations outstanding (but Swingline Loans
shall not constitute usage of the Revolving Commitment Amount). Such commitment
fee shall accrue from the Effective Date to the Termination Date and shall be
due and payable in arrears on the last Business Day of each calendar quarter
through the Termination Date, with the final payment to be made on the
Termination Date. The commitment fees provided in this subsection shall accrue
at all times after the above-mentioned commencement date, including at any time
during which one or more conditions in Article V are not met.
2.12 Computation of Fees and Interest. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by BofA's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed. Interest and fees shall
accrue during each period during which interest or fees are computed from the
first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Paying Agent shall
be conclusive and binding on the Borrowers and the Lenders in the absence of
manifest error. The Paying Agent will, at the request of either Borrower or any
Lender, deliver to such Borrower or such Lender a statement showing the
quotations used by the Paying Agent in determining any interest rate and the
resulting interest rate.
(c) If for any reason whatsoever a Reference Lender ceases to be a
Lender hereunder, such Reference Lender shall thereupon cease to be a Reference
Lender, and the Offshore Rate shall be determined on the basis of the rates as
notified by the remaining Reference Lender.
(d) Each Reference Lender shall use its best efforts to furnish
quotations of rates to the Paying Agent as contemplated hereby. If either
Reference Lender fails to supply such rates to the Paying Agent upon its
request, the Offshore Rate shall be determined on the basis of the quotations of
the remaining Reference Lender.
2.13 Payments by the Borrowers. (a) All payments to be made by either
Borrower shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by either Borrower shall be
made to the Paying Agent for the account of the Lenders at the Agent's Payment
Office, and shall be made in dollars and in immediately available funds, no
later than 10:00 a.m. (San Francisco time) on the date specified herein. The
Paying Agent will promptly distribute to each Lender
40
its Pro Rata Share (or other applicable share as expressly provided herein) of
such payment in like funds as received. Any payment received by the Paying Agent
later than 10:00 a.m. (San Francisco time) shall be deemed to have been received
on the following Business Day and any applicable interest or fee shall continue
to accrue.
(b) Whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day (unless, in the case of
interest on an Offshore Rate Loan, such following Business Day is the first
Business Day of a calendar month, in which case such payment shall be made on
the preceding Business Day), and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.
(c) Unless the Paying Agent receives notice from the applicable
Borrower prior to the date on which any payment is due to the Lenders that such
Borrower will not make such payment in full as and when required, the Paying
Agent may assume that such Borrower has made such payment in full to the Paying
Agent on such date in immediately available funds, and the Paying Agent may (but
shall not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the applicable Borrower has not made such payment in full to
the Paying Agent, each Lender shall repay to the Paying Agent on demand such
amount distributed to such Lender, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Lender
until the date repaid.
2.14 Payments by the Lenders to the Paying Agent. (a) Unless the Paying
Agent receives notice from a Lender on or prior to the Effective Date or, with
respect to any Borrowing after the Effective Date, not later than 3:00 p.m. (San
Francisco time) on the Business Day preceding the date of such Borrowing, that
such Lender will not make available as and when required hereunder to the Paying
Agent for the account of the applicable Borrower the amount of such Lender's Pro
Rata Share of such Borrowing, the Paying Agent may assume that each Lender has
made such amount available to the Paying Agent in immediately available funds on
the Borrowing Date, and the Paying Agent may (but shall not be so required), in
reliance upon such assumption, make available to such Borrower on such date a
corresponding amount. If and to the extent any Lender shall not have made its
full amount available to the Paying Agent in immediately available funds and the
Paying Agent in such circumstances has made available to the applicable Borrower
such amount, such Lender shall on the Business Day following such Borrowing Date
make such amount available to the Paying Agent, together with interest at the
Federal Funds Rate
41
for each day during such period. A notice of the Paying Agent submitted to any
Lender with respect to amounts owing under this subsection (a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Paying Agent shall constitute such Lender's Loan on the date of
Borrowing for all purposes of this Agreement. If such amount is not made
available to the Paying Agent on the Business Day following the Borrowing Date,
the Paying Agent will notify the applicable Borrower of such failure to fund
and, upon demand by the Paying Agent, such Borrower shall pay such amount to the
Paying Agent for the Paying Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any Borrowing Date
shall not relieve any other Lender of any obligation hereunder to make a Loan on
such Borrowing Date, but no Lender shall be responsible for the failure of any
other Lender to make the Loan to be made by such other Lender on any Borrowing
Date.
2.15 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, pursuant to any guaranty or otherwise) in excess of its Pro Rata Share,
such Lender shall immediately (a) notify the Paying Agent of such fact, and (b)
purchase from the other Lenders such participations in the Loans made by them as
shall be necessary to cause such purchasing Lender to share the excess payment
pro rata with each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from the purchasing Lender, such
purchase shall to that extent be rescinded and each other Lender shall repay to
the purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender's ratable share (according to the proportion of (i)
the amount of such paying Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
Each Borrower agrees that any Lender so purchasing a participation from another
Lender may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off, but subject to Section 12.10) with
respect to such participation as fully as if such Lender were the direct
creditor of such Borrower in the amount of such participation. The Paying Agent
will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section and will in each
case notify the Lenders following any such purchases or repayments.
42
ARTICLE III
THE LETTERS OF CREDIT
3.1 The Letter of Credit Subfacility. (a) On the terms and conditions set
forth herein (i) each Issuing Lender agrees, (A) from time to time on any
Business Day, during the period from the Effective Date to the earlier of the
Termination Date or 25 days prior to the scheduled Termination Date, to issue
Letters of Credit for the account of the Borrower (or jointly for the account of
the Borrower and any Subsidiary thereof), and to amend or renew Letters of
Credit previously issued by it, in accordance with subsections 3.2(c) and
3.2(d), and (B) to honor drafts under the Letters of Credit; and (ii) the
Lenders severally agree to participate in Letters of Credit Issued for the
account of the Borrower (or jointly for the account of the Borrower and any of
its Subsidiaries); provided that no Issuing Lender shall be obligated to Issue,
and no Lender shall be obligated to participate in, any Letter of Credit if as
of the date of Issuance of such Letter of Credit (the "Issuance Date") (1) the
Effective Amount of all L/C Obligations plus the aggregate amount of all
Revolving Loans and Swingline Loans exceeds the Revolving Commitment Amount or
(2) the Effective Amount of all L/C Obligations exceeds the L/C Commitment.
Within the foregoing limits, and subject to the other terms and conditions
hereof, the Borrower's ability to obtain Letters of Credit shall be fully
revolving, and, accordingly, the Borrower may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit which have expired or
which have been drawn upon and reimbursed.
(b) No Issuing Lender shall be under any obligation to Issue any
Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain
such Issuing Lender from Issuing such Letter of Credit, or any Requirement
of Law applicable to such Issuing Lender or any request or directive
(whether or not having the force of law) from any Governmental Authority
with jurisdiction over such Issuing Lender shall prohibit, or request that
such Issuing Lender refrain from, the Issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon such
Issuing Lender with respect to such Letter of Credit any restriction,
reserve or capital requirement (for which such Issuing Lender is not
otherwise compensated hereunder) not in effect on the Effective Date, or
shall impose upon such Issuing Lender any unreimbursed loss, cost or
expense
43
which was not applicable on the Effective Date and which such Issuing
Lender in good xxxxx xxxxx material to it;
(ii) such Issuing Lender has received written notice from any
Lender, any Agent or the Borrower, on or prior to the Business Day prior
to the requested date of Issuance of such Letter of Credit, that one or
more of the applicable conditions contained in Article V is not then
satisfied;
(iii) the expiry date of such Letter of Credit is (A) more
than 365 days after the date of Issuance, unless the Majority Lenders have
approved such expiry date in writing, or (B) after the date which is 25
days prior to the scheduled Termination Date, unless all of the Lenders
have approved such expiry date in writing;
(iv) such requested Letter of Credit does not provide for
drafts, or is not otherwise in form and substance acceptable to such
Issuing Lender, or the Issuance of such Letter of Credit shall violate any
applicable policies of such Issuing Lender; or
(v) such Letter of Credit is denominated in a currency other
than Dollars.
3.2 Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter
of Credit shall be issued upon the irrevocable written request of the Borrower
received by the applicable Issuing Lender (with a copy sent by the Borrower to
the Paying Agent) at least four days (or such shorter time as the applicable
Issuing Lender and the Paying Agent may agree in a particular instance in their
sole discretion) prior to the proposed date of issuance. Each such request for
issuance of a Letter of Credit shall be by facsimile, confirmed promptly in an
original writing, in the form of an L/C Application, and shall specify in form
and detail satisfactory to the applicable Issuing Lender: (i) the proposed date
of issuance of the Letter of Credit (which shall be a Business Day); (ii) the
face amount of the Letter of Credit; (iii) the expiry date of the Letter of
Credit; (iv) the name and address of the beneficiary thereof; (v) the documents
to be presented by the beneficiary of the Letter of Credit in case of any
drawing thereunder; (vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and (vii) such other matters as
the applicable Issuing Lender may reasonably require.
(b) At least two Business Days prior to the Issuance of any Letter
of Credit, the applicable Issuing Lender will confirm with the Paying Agent (by
telephone or in writing) that the Paying Agent has received a copy of the L/C
Application or
44
L/C Amendment Application from the Borrower and, if not, such Issuing Lender
will provide the Paying Agent with a copy thereof. Unless the applicable Issuing
Lender has received, on or before the Business Day immediately preceding the
date such Issuing Lender is to issue a requested Letter of Credit, (A) notice
from the Paying Agent directing such Issuing Lender not to issue such Letter of
Credit because such issuance is not then permitted under subsection 3.1(a) as a
result of the limitations set forth in clause (1) or (2) thereof or (B) a notice
described in subsection 3.1(b)(ii), then, subject to the terms and conditions
hereof, such Issuing Lender shall, on the requested date, issue a Letter of
Credit for the account of the Borrower (or jointly for the account of the
Borrower and any of its Subsidiaries) in accordance with such Issuing Lender's
usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Termination Date, the applicable Issuing Lender will, upon the
written request of the Borrower received by such Issuing Lender (with a copy
sent by the Borrower to the Paying Agent) at least four days (or such shorter
time as such Issuing Lender and the Paying Agent may agree in a particular
instance in their sole discretion) prior to the proposed date of amendment,
amend any Letter of Credit issued by it. Each such request for amendment of a
Letter of Credit shall be made by facsimile, confirmed promptly in an original
writing, made in the form of an L/C Amendment Application and shall specify in
form and detail satisfactory to the applicable Issuing Lender: (i) the Letter of
Credit to be amended; (ii) the proposed date of amendment of the Letter of
Credit (which shall be a Business Day); (iii) the nature of the proposed
amendment; and (iv) such other matters as such Issuing Lender may reasonably
require. No Issuing Lender shall have any obligation to amend any Letter of
Credit if: (A) such Issuing Lender would have no obligation at such time to
issue such Letter of Credit in its amended form under the terms of this
Agreement; or (B) the beneficiary of any such Letter of Credit does not accept
the proposed amendment to the Letter of Credit. The Paying Agent will promptly
notify the Lenders of the receipt by it of any L/C Application or L/C Amendment
Application.
(d) The Issuing Lenders and the Lenders agree that, while a Letter
of Credit is outstanding and prior to the Termination Date, at the option of the
Borrower and upon the written request of the Borrower received by the applicable
Issuing Lender (with a copy sent by the Borrower to the Paying Agent) at least
four days (or such shorter time as such Issuing Lender and the Paying Agent may
agree in a particular instance in their sole discretion) prior to the proposed
date of notification of renewal, such Issuing Lender shall be entitled to
authorize the automatic renewal of any Letter of Credit issued by it. Each
45
such request for renewal of a Letter of Credit shall be made by facsimile,
confirmed promptly in an original writing, in the form of an L/C Amendment
Application, and shall specify in form and detail satisfactory to the applicable
Issuing Lender: (i) the Letter of Credit to be renewed; (ii) the proposed date
of notification of renewal of the Letter of Credit (which shall be a Business
Day); (iii) the revised expiry date of the Letter of Credit; and (iv) such other
matters as the Issuing Lender may reasonably require. No Issuing Lender shall
have any obligation to renew any Letter of Credit if: (A) such Issuing Lender
would have no obligation at such time to issue or amend such Letter of Credit in
its renewed form under the terms of this Agreement; or (B) the beneficiary of
any such Letter of Credit does not accept the proposed renewal of the Letter of
Credit. If any outstanding Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice from the
applicable Issuing Lender that such Letter of Credit shall not be renewed, and
if at the time of renewal such Issuing Lender would be entitled to authorize the
automatic renewal of such Letter of Credit in accordance with this subsection
3.2(d) upon the request of the Borrower but such Issuing Lender shall not have
received any L/C Amendment Application from the Borrower with respect to such
renewal or other written direction by the Borrower with respect thereto, such
Issuing Lender shall nonetheless be permitted to allow such Letter of Credit to
renew, and the Borrower and the Lenders hereby authorize such renewal, and,
accordingly, such Issuing Lender shall be deemed to have received an L/C
Amendment Application from the Borrower requesting such renewal.
(e) Each Issuing Lender may, at its election (or as required by the
Paying Agent at the direction of the Majority Lenders), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than 25 days prior to the scheduled Termination
Date.
(f) This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).
(g) Each Issuing Lender will deliver to the Paying Agent (which, if
so requested by any Lender, will promptly deliver a copy thereof to such
Lender), concurrently or promptly following its delivery of a Letter of Credit,
or amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or amendment
to or renewal of a Letter of Credit.
46
3.3 Existing Letters of Credit; Risk Participations, Drawings and
Reimbursements. (a) On and after the Effective Date, the Existing Letters of
Credit shall be deemed for all purposes, including for purposes of the fees to
be collected pursuant to Section 3.8, and reimbursement of costs and expenses to
the extent provided herein, to be Letters of Credit outstanding under this
Agreement, QFC shall be deemed to be a co-applicant with respect to each such
Existing Letter of Credit, and each such Letter of Credit shall be governed by
the applications and agreements pertaining thereto and by this Agreement. Each
Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Lender on the Effective Date a participation in each
Existing Letter of Credit and each drawing thereunder in an amount equal to the
product of (i) such Lender's Pro Rata Share times (ii) the maximum amount
available to be drawn under such Letter of Credit and the amount of such
drawing, respectively. For purposes of subsection 2.1(b) and subsection 2.11(b),
the Existing Letters of Credit shall be deemed to utilize pro rata the
Commitment of each Lender.
(b) Immediately upon the Issuance of each Letter of Credit in
addition to those described in subsection 3.3(a), each Lender shall be deemed
to, and hereby irrevocably and unconditionally agrees to, purchase from the
applicable Issuing Lender a participation in such Letter of Credit and each
drawing thereunder in an amount equal to the product of (i) the Pro Rata Share
of such Lender times (ii) the maximum amount available to be drawn under such
Letter of Credit and the amount of such drawing, respectively.
(c) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the applicable Issuing Lender
will promptly notify the Borrower and the Paying Agent. The Borrower shall
reimburse the applicable Issuing Lender prior to 10:00 a.m. (San Francisco
time), on each date that any amount is paid by such Issuing Lender under any
Letter of Credit (each such date, an "Honor Date"), in an amount equal to the
amount so paid by such Issuing Lender. In the event the Borrower fails to
reimburse the applicable Issuing Lender for the full amount of any drawing under
any Letter of Credit by 10:00 a.m. (San Francisco time) on the Honor Date, such
Issuing Lender will promptly notify the Paying Agent and the Paying Agent will
promptly notify each Lender thereof, and the Borrower shall be deemed to have
requested that Base Rate Loans be made by the Lenders to be disbursed on the
Honor Date in the unreimbursed amount of such drawing under such Letter of
Credit, subject to the amount of the unutilized portion of the Revolving
Commitment Amount and subject to the conditions set forth in Section 5.2. Any
notice given by an Issuing Lender or the Paying Agent pursuant to this
subsection 3.3(c) may be oral if immediately confirmed in writing (including by
facsimile); provided that the
47
lack of such an immediate confirmation shall not affect the conclusiveness or
binding effect of such notice.
(d) Each Lender shall upon any notice pursuant to subsection 3.3(c)
make available to the Paying Agent for the account of the applicable Issuing
Lender an amount in Dollars and in immediately available funds equal to its Pro
Rata Share of the amount of the drawing, whereupon the participating Lenders
shall (subject to subsection 3.3(e)) each be deemed to have made a Revolving
Loan consisting of a Base Rate Loan to the Borrower in that amount. If any
Lender so notified fails to make available to the Paying Agent for the account
of the applicable Issuing Lender the amount of such Lender's Pro Rata Share of
the amount of the drawing by no later than 12:00 noon (San Francisco time) on
the Honor Date, then interest shall accrue on such Lender's obligation to make
such payment, from the Honor Date to the date such Lender makes such payment, at
a rate per annum equal to the Federal Funds Rate in effect from time to time
during such period. The Paying Agent will promptly give notice of the occurrence
of the Honor Date, but failure of the Paying Agent to give any such notice on
the Honor Date or in sufficient time to enable any Lender to effect such payment
on such date shall not relieve such Lender from its obligations under this
Section 3.3 (provided that no Lender shall be obligated to pay interest pursuant
to the immediately preceding sentence in respect of any date prior to the date
it receives such notice from the Paying Agent).
(e) With respect to any unreimbursed drawing that is not converted
into Revolving Loans consisting of Base Rate Loans to the Borrower in whole or
in part, because of the Borrower's failure to satisfy the conditions set forth
in Section 5.2 or for any other reason, the Borrower shall be deemed to have
incurred from the applicable Issuing Lender an L/C Borrowing in the amount of
such drawing, which L/C Borrowing shall be due and payable on demand (together
with interest) and shall bear interest at a rate per annum equal to the Base
Rate plus 2% per annum, and each Lender's payment to such Issuing Lender
pursuant to subsection 3.3(d) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C Advance from
such Lender in satisfaction of its participation obligation under this Section
3.3.
(f) Each Lender's obligation in accordance with this Agreement to
make Revolving Loans or L/C Advances, as contemplated by this Section 3.3, as a
result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to any Issuing Lender and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against the
applicable Issuing Lender, the Borrower or any other
48
Person for any reason whatsoever; (ii) the occurrence or continuance of an
Unmatured Event of Default, an Event of Default or a Material Adverse Effect; or
(iii) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing; provided, however, that each Lender's
obligation to make Revolving Loans under this Section 3.3 is subject to the
conditions set forth in Section 5.2.
3.4 Repayment of Participations. (a) Upon (and only upon) receipt by the
Paying Agent for the account of an Issuing Lender of immediately available funds
from the Borrower (i) in reimbursement of any payment made by such Issuing
Lender under a Letter of Credit with respect to which any Lender has paid the
Paying Agent for the account of such Issuing Lender for such Lender's
participation in such Letter of Credit pursuant to Section 3.3 or (ii) in
payment of interest thereon, the Paying Agent will pay to each Lender, in the
same funds as those received by the Paying Agent for the account of such Issuing
Lender, the amount of such Lender's Pro Rata Share of such funds, and such
Issuing Lender shall receive the amount of the Pro Rata Share of such funds of
any Lender that did not so pay the Paying Agent for the account of such Issuing
Lender.
(b) If the Paying Agent or an Issuing Lender is required at any time
to return to the Borrower, or to a trustee, receiver, liquidator, custodian, or
any official in any Insolvency Proceeding, any portion of the payments made by
the Borrower to the Paying Agent for the account of an Issuing Lender pursuant
to subsection 3.4(a) in reimbursement of a payment made under any Letter of
Credit or interest or fee thereon, each Lender shall, on demand of the Paying
Agent, forthwith return to the Paying Agent or the applicable Issuing Lender the
amount of its Pro Rata Share of any amounts so returned by the Paying Agent or
such Issuing Lender plus interest thereon from the date such demand is made to
the date such amounts are returned by such Lender to the Paying Agent or such
Issuing Lender, at a rate per annum equal to the Federal Funds Rate in effect
from time to time.
3.5 Role of the Issuing Lenders. (a) Each Lender and the Borrower agree
that, in paying any drawing under a Letter of Credit, the applicable Issuing
Lender shall not have any responsibility to obtain any document (other than any
sight draft and certificates expressly required by such Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of any Issuing Lender shall be liable
to any Lender for: (i) any action taken or
49
omitted in connection herewith at the request or with the approval of the
Lenders (including the Majority Lenders, as applicable); (ii) any action taken
or omitted in the absence of gross negligence or willful misconduct; or (iii)
the due execution, effectiveness, validity or enforceability of any L/C-Related
Document.
(c) The Borrower hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided that this assumption is not intended to, and shall not,
preclude the Borrower's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of any Issuing Lender, shall be liable or responsible for any of the
matters described in clauses (i) through (vii) of Section 3.6; provided that,
anything in such clauses to the contrary notwithstanding, the Borrower (or the
Subsidiary which was the co-applicant on the applicable Letter of Credit) may
have a claim against an Issuing Lender, and such Issuing Lender may be liable to
the Borrower (or such Subsidiary), to the extent, but only to the extent, of any
direct, as opposed to consequential or exemplary, damages suffered by the
Borrower (or such Subsidiary) which the Borrower (or such Subsidiary) proves
were caused by such Issuing Lender's bad faith, willful misconduct or gross
negligence or such Issuing Lender's grossly negligent or willful failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of a
sight draft and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) an Issuing Lender may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary; and (ii) no Issuing Lender shall be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.
3.6 Obligations Absolute. The obligations of the Borrower under this
Agreement and any L/C-Related Document to reimburse the applicable Issuing
Lender for a drawing under a Letter of Credit, and to repay any L/C Borrowing
and any drawing under a Letter of Credit converted into Revolving Loans, shall
be unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and each such other L/C-Related Document under all
circumstances, including the following:
50
(i) any lack of validity or enforceability of this Agreement
or any L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Borrower in
respect of any Letter of Credit or any other amendment or waiver of or any
consent to departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the applicable Issuing
Lender or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C-Related Documents or any
unrelated transaction;
(iv) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under any Letter of Credit;
(v) any payment by an Issuing Lender under any Letter of
Credit against presentation of a draft or certificate that does not
strictly comply with the terms of any Letter of Credit; or any payment
made by an Issuing Lender under any Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee
for the benefit of creditors, liquidator, receiver or other representative
of or successor to any beneficiary or any transferee of any Letter of
Credit, including any such payment arising in connection with any
Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the obligations of the
Borrower in respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge of,
the Borrower or a guarantor.
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3.7 Cash Collateral Pledge. If any Letters of Credit remain outstanding
and partially or wholly undrawn as of the Termination Date, then the Borrower
shall Cash Collateralize the L/C Obligations in an amount equal to the maximum
amount then available to be drawn under such Letters of Credit.
3.8 Letter of Credit Fees. (a) The Borrower shall pay to the Paying Agent
for the account of each of the Lenders a letter of credit fee with respect to
the Letters of Credit at a percentage rate per annum equal to the Applicable
Margin for Offshore Rate Loans (as in effect from time to time) of the average
daily maximum amount available to be drawn under the outstanding Letters of
Credit, computed on a quarterly basis in arrears on the last Business Day of
each calendar quarter and on the Termination Date (or such later date on which
the outstanding Letters of Credit shall expire) based upon Letters of Credit
outstanding for the applicable period as calculated by the Paying Agent.
(b) The Borrower shall pay to each Issuing Lender a letter of credit
fronting fee for each Letter of Credit Issued by such Issuing Lender equal to
0.25% per annum of the average daily maximum amount available to be drawn on
such Letter of Credit, computed on the last Business Day of each calendar
quarter and on the Termination Date (or such later date on which such Letter of
Credit shall expire).
(c) The letter of credit fees payable under subsection 3.8(a) and
the fronting fees payable under subsection 3.8(b) shall be due and payable
quarterly in arrears on the last Business Day of each calendar quarter during
which Letters of Credit are outstanding, commencing on the first such quarterly
date to occur after the Effective Date, through the Termination Date (or such
later date upon which all outstanding Letters of Credit shall expire), with the
final payment to be made on the Termination Date (or such later expiration
date).
(d) The Borrower shall pay to each Issuing Lender from time to time
on demand the normal issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of such Issuing Lender relating to
letters of credit as from time to time in effect.
3.9 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in such Letter of Credit) apply to such Letter of Credit.
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ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes. (a) Any and all payments by the Borrowers to each Lender or
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for, any Taxes. In addition, the
Borrowers shall pay all Other Taxes.
(b) Each Borrower agrees to indemnify and hold harmless each Lender
and Agent for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section)
paid by the Lender or Agent and any penalty, interest, addition to tax or
expense arising therefrom or with respect thereto (except to the extent such
penalty, interest, addition to tax or expense arose from any failure of the
applicable Lender or Agent to promptly pay any Taxes assessed against it).
Payment under this indemnification shall be made within 30 days after the date
the Lender or Agent makes written demand therefor.
(c) If either Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) such Lender or Agent, as the case may be, receives an amount
equal to the sum it would have received had no such deductions or
withholdings been made;
(ii) such Borrower shall make such deductions
and withholdings; and
(iii) such Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law.
(d) Within 30 days after the date of any payment by either Borrower
of Taxes or Other Taxes, such Borrower shall furnish the Paying Agent the
original or a copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Paying Agent.
(e) No Borrower shall be required to pay an additional amount to, or
indemnify, any Lender or Agent pursuant to this Section 4.1 to the extent that
(i) the obligation to withhold or pay such amount existed on the Initial Date
(as
53
hereinafter defined) or (ii) the obligation to withhold or pay such amount would
not have arisen but for the failure of any Agent or such Lender to comply with
the provisions of Section 11.10 of this Agreement. For purposes of this Section
4.1(e), "Initial Date" shall mean (a) in the case of any Agent and any Lender
that is a signatory hereto, the date of this Agreement, (b) in the case of any
Person which subsequently becomes a Lender hereunder, the date of the applicable
Assignment and Acceptance, and (c) in the case of any Participant, the date on
which it becomes a Participant.
(f) If either Borrower is required to pay additional amounts to any
Lender or Agent pursuant to subsection (c) of this Section, then such Lender
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office or take other appropriate
action so as to eliminate any such additional payment by such Borrower which may
thereafter accrue, if such change or other action in the judgment of such Lender
is not otherwise disadvantageous to such Lender.
(g) If either Borrower determines in good faith that a reasonable
basis exists for contesting a Tax, the relevant Lender or the Agents, as
applicable, shall cooperate with such Borrower in challenging such Tax at such
Borrower's expense if requested by such Borrower. If any Lender or Agent, as
applicable, receives a refund of a Tax for which a payment has been made by such
Borrower pursuant to this Agreement, or claims any credit, relief or other tax
benefit as a result of the payment of such Tax by either Borrower (a "Tax
Credit"), which refund or Tax Credit in the good faith judgment of such Lender
or Agent, as the case may be, is attributable to such payment made by such
Borrower, then such Lender or Agent, as applicable, shall reimburse to such
Borrower such amount as such Lender or Agent, as applicable, determines to be
the proportion of the Tax Credit or refund as will leave it, after such
reimbursement, in no better or worse position than it would have been in if the
payment had not been required. The Agents and each Lender shall claim any refund
or Tax Credit that it determines is available to it, unless it concludes in its
good faith judgment that it would be adversely affected by making such a claim.
In no event shall the Agents or any Lender be obliged to disclose any
information regarding its tax affairs or computations to either Borrower.
4.2 Illegality. (a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for such Lender or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Lender
54
to each Borrower through the Paying Agent, any obligation of that Lender to make
Offshore Rate Loans shall be suspended until the Lender notifies the Paying
Agent and each Borrower that the circumstances giving rise to such determination
no longer exist.
(b) If a Lender determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for such Lender or its applicable Lending Office to maintain any Offshore Rate
Loan, then such Lender shall promptly notify the applicable Borrower and the
Paying Agent and, on the last day of the Interest Period for each applicable
Offshore Rate Loan made by such Lender (or, if earlier, on such date on which
such Lender may not lawfully continue to maintain such Offshore Rate Loan) such
Offshore Rate Loan shall convert to a Base Rate Loan (and, so long as such
circumstances continue, such Lender shall make and maintain Base Rate Loans in
lieu of Offshore Rate Loans to fulfill its obligation to have a Pro Rata Share
of each applicable Borrowing of Offshore Rate Loans).
(c) If the obligation of any Lender to make or maintain Offshore
Rate Loans has been so terminated or suspended, each Borrower may elect, by
giving notice to the Lender through the Paying Agent, that all Loans which would
otherwise be made by such Lender as Offshore Rate Loans shall be instead Base
Rate Loans.
(d) Before giving any notice or demand to the Paying Agent under
this Section, the affected Lender shall designate a different Lending Office
with respect to its Offshore Rate Loans or take other appropriate action if such
designation or other action will avoid the need for giving such notice or making
such demand and will not, in the judgment of such Lender, be illegal or
otherwise disadvantageous to such Lender.
4.3 Increased Costs and Reduction of Return. (a) If any Lender determines
that, due to either (i) the introduction of or any change (other than (x) any
change by way of imposition of or increase in reserve requirements included in
the calculation of the Offshore Rate, (y) any introduction or change covered by
Section 4.1 or (z) any change with respect to a tax imposed on any Lender or
Agent as a result of a present, former or future connection between the
jurisdiction of the government or taxing authority imposing such tax or any
political subdivision or taxing authority thereof or therein and such Lender or
Agent (other than a connection arising solely from such Lender or Agent having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement)) in or in the interpretation of any law or regulation
or (ii) the
55
compliance by such Lender with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), in each
case referred to in clause (i) or (ii) above occurring after the date of this
Agreement, there shall be any increase in the cost to such Lender of agreeing to
make or making, funding or maintaining any Offshore Rate Loan or participating
in Letters of Credit, or, in the case of any Issuing Lender, any increase in the
cost to such Issuing Lender of agreeing to issue, issuing or maintaining any
Letter of Credit or of agreeing to make or making, funding or maintaining any
unpaid drawing under any Letter of Credit, then the Borrowers shall be liable
for, and shall from time to time, upon demand (with a copy of such demand to be
sent to the Paying Agent), pay to the Paying Agent for the account of such
Lender, additional amounts as are sufficient to compensate such Lender for such
increased costs.
(b) If any Lender shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, or (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, in each case
occurring after the date of this Agreement, affects or would affect the amount
of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender and (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) determines that
the amount of such capital is increased as a consequence of its Commitment,
loans, credits or obligations under this Agreement, then, upon demand of such
Lender to the Borrowers through the Paying Agent, the Borrowers shall pay to
such Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender for such increase.
(c) The liability of the Borrowers under clauses (a) and (b) above
shall be joint and several.
(d) A Lender seeking compensation under clause (a) or (b) above
shall (except to the extent it is able to determine the actual amount thereof)
use reasonable allocation methods to determine the amount of such compensation.
No Lender may seek compensation under this Section 4.3 unless such Lender is
generally seeking compensation for increased costs from other borrowers in
similar circumstances.
4.4 Funding Losses. Each Borrower shall reimburse each Lender and hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of:
56
(a) the failure of such Borrower to borrow, continue or convert to
an Offshore Loan after such Borrower has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/Continuation;
(b) the failure of such Borrower to make any prepayment of an
Offshore Rate Loan in accordance with any notice delivered under Section 2.7;
(c) the prepayment (including pursuant to Section 2.8) or other
payment (including after acceleration thereof) or conversion (including pursuant
to Section 4.2) of an Offshore Rate Loan on a day that is not the last day of
the relevant Interest Period; or
(d) the automatic conversion under Section 2.4 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained (but excluding any
lost profits). For purposes of calculating amounts payable by either Borrower to
the Lenders under this Section and under subsection 4.3(a), each Offshore Rate
Loan made by a Lender (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the IBOR used
in determining the Offshore Rate for such Offshore Rate Loan by a matching
deposit or other borrowing in the interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Offshore Rate Loan is in
fact so funded.
4.5 Inability to Determine Rates. If the Paying Agent determines in good
faith that for any reason adequate and reasonable means do not exist for
determining the Offshore Rate for any requested Interest Period with respect to
a proposed Offshore Rate Loan, or the Majority Banks advise the Paying Agent
that the Offshore Rate applicable pursuant to subsection 2.10(a) for any
requested Interest Period with respect to a proposed Offshore Rate Borrowing
does not adequately and fairly reflect the cost to such Lenders of funding the
Loans included in such Borrowing, the Paying Agent will promptly so notify the
Borrowers and each Lender. Thereafter, the obligation of the Lenders to make or
maintain Offshore Rate Loans hereunder shall be suspended until the Paying Agent
or the Majority Lenders, as the case may be, revoke(s) such notice in writing.
Upon receipt of such notice, either Borrower may revoke any Notice of Borrowing
or Notice of Conversion/Continuation then submitted by it. If a Borrower does
not revoke such Notice, the Lenders shall make, convert or continue the Loans,
as proposed by such Borrower, in
57
the amount specified in the applicable notice submitted by such Borrower, but
such Loans shall be made, converted or continued as Base Rate Loans instead of
Offshore Rate Loans.
4.6 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article IV shall deliver to the Borrowers (with a copy
to the Paying Agent), as soon as practicable after such Lender determines that
it has a basis for such claim, a certificate setting forth in reasonable detail
the basis for such claim, the amount payable to such Lender hereunder and a
reasonable calculation thereof, and such certificate shall be conclusive and
binding on the Borrowers in the absence of manifest error. If a Lender shall
fail to notify the Borrowers of the occurrence of any event or the existence of
any condition which would entitle such Lender to make a claim for reimbursement
or compensation under this Article IV within 90 days following the end of the
month during which such event occurred or such condition arose, then the
Borrowers' liability for any amounts incurred by such Lender as a result of such
event or condition shall be limited to those attributable to the period
occurring subsequent to the 90th day prior to the date upon which such Lender
actually notifies the Borrowers of the occurrence of such event or existence of
such condition.
4.7 Substitution of Lenders. If any Lender is an Affected Lender, the
Borrowers may: (i) request one more of the other Lenders to acquire and assume
all or part of such Affected Lender's Loans and Commitment; and/or (ii)
designate a replacement bank or financial institution satisfactory to the
Borrowers (a "Replacement Lender") to acquire and assume all or a ratable part
of all of such Affected Lender's Loans and Commitment. Any Replacement Lender
shall be an Eligible Assignee, and any designation of a Replacement Lender shall
be subject to the prior written consent of each of the Agents (which consent
shall not be unreasonably withheld or delayed). Each Lender agrees that if it is
an Affected Lender, it will, promptly upon request of the Borrowers, assign all
or the relevant part (as specified by the Borrowers) of its rights and
obligations hereunder to another Lender or a Replacement Lender, as contemplated
above, pursuant to an Assignment and Acceptance and otherwise in accordance with
subsections 12.8(a) and (b) (it being understood that (x) the purchase price for
any such assignment shall be equal to the principal amount of the Loans
assigned, all accrued and unpaid interest thereon and all (or the ratable
portion of) fees owed to such Affected Lender and (y) unless such Affected
Lender wrongfully failed to make any Loan, the Borrower shall reimburse such
Affected Lender for any amount payable under Section 4.4, computed on the
assumption that the Loans assigned by such Affected Lender were prepaid on the
date of such assignment).
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4.8 Survival. The agreements and obligations of the Borrowers in this
Article IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions of Effectiveness. This Agreement shall become effective
(and the Existing Agreement shall be deemed to have been amended and restated
hereby) on the date that (i) QFC shall have consummated (or shall concurrently
therewith consummate) the acquisition of HMI pursuant to the HMI Acquisition
Agreement; (ii) QFC shall have either issued (or concurrently therewith shall
issue) not less than $125,000,000 of Subordinated Notes or shall have received
(or concurrently therewith shall receive) gross cash proceeds of at least
$150,000,000 from the Contemplated Equity Issuance; (iii) QFC shall have
submitted evidence reasonably satisfactory to the Administrative Agents that all
Debt to be Repaid has been, or concurrently with the effectiveness of this
Agreement will be, paid in full (and that all Liens securing Debt to be Repaid
have been, or concurrently with the effectiveness of this Agreement will be,
released); (iv) the Effective Date shall have occurred on or before April 30,
1997; (v) there has been no material adverse change in, or a material adverse
effect upon, the actual or prospective operations, business properties or
condition (financial or otherwise) of HMI since March 3, 1996; (vi) the
conditions precedent to the making of a Credit Extension set forth in Section
5.2 shall be satisfied; and (vii) the Administrative Agents shall have received
all of the following, in form and substance satisfactory to each of the
Administrative Agents and each Lender, and (except for any Notes) in sufficient
copies for each Lender:
(a) Credit Agreement and Notes. This Agreement (and, if applicable,
any Notes) executed by each party thereto.
(b) Resolutions and Incumbency of the Credit Parties.
(i) Copies of resolutions of the board of directors of each
Credit Party authorizing the transactions contemplated hereby, certified
as of the Effective Date by the Secretary or an Assistant Secretary of
such Credit Party; and
(ii) A certificate of the Secretary or an Assistant Secretary
of each Credit Party certifying the names and true signatures of the
officers of such Credit Party authorized to execute and deliver (and
executing and
59
delivering) the Loan Documents to which such Credit Party is a party.
(c) Organization Documents; Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation and the
bylaws of each Credit Party as in effect on the Effective Date, certified
by the Secretary or an Assistant Secretary of such Credit Party; and
(ii) a good standing and, if applicable, tax good standing
certificate as of a recent date for each Credit Party from the Secretaries
of State (or similar, applicable Governmental Authority) of its state of
incorporation.
(d) Legal Opinions.
(i) an opinion of Xxxxx & Xxxxx P.L.L.C., Washington counsel
to the Credit Parties, substantially in the form of Exhibit D-1; an
opinion of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, California counsel to
HMI, substantially in the form of Exhibit D-2; and an opinion of Xxxxxxxxx
& Xxxxxxxxxxx, P.C., special Illinois counsel to the Credit Parties,
substantially in the form of Exhibit D-3; and
(ii) an opinion of Xxxxx, Xxxxx & Xxxxx, special counsel to
the Administrative Agents, substantially in the form of Exhibit E.
(e) Payment of Fees. Evidence of payment by QFC of all accrued and
unpaid fees, costs and expenses owing under or in connection with this Agreement
and the other Loan Documents to the extent then due and payable on the Effective
Date, together with Attorney Costs of the Administrative Agents payable pursuant
to Section 12.4 to the extent invoiced prior to or on the Effective Date, plus
such additional amounts of Attorney Costs as shall constitute the Administrative
Agents' reasonable estimate of Attorney Costs incurred or to be incurred by them
through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between QFC and the
Administrative Agents), including any such costs, fees and expenses arising
under or referenced in Sections 2.11 and 12.4.
(f) Certificate. A certificate signed by a Responsible Officer,
dated as of the Effective Date, stating that:
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(i) the representations and warranties contained in Article VI
are true and correct in all material respects on and as of such date, as
though made on and as of such date;
(ii) no Event of Default or Unmatured Event of Default exists
or would result from the requested Credit Extensions; and
(iii) no event or circumstance has occurred since December 30,
1995 that has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(g) Pledge Agreements. A pledge agreement, substantially in the form
of Exhibit H, issued by each of Parent and QFC (each such pledge agreement,
together with any pledge agreement delivered pursuant to Section 7.13, a "Pledge
Agreement"), together with, in each case, the stock certificates to be pledged
thereunder and stock powers executed in blank and the Intercompany Notes to be
pledged thereunder.
(h) Intercompany Guaranty (QFC). A guaranty, substantially in the
form of Exhibit I (the "Intercompany Guaranty (QFC)"), executed by each
Subsidiary of QFC (other than Parent and any Merger Subsidiary).
(i) Pricing Certificate. A certificate signed by the chief financial
officer of QFC setting forth the pro forma determination (after giving effect to
all transactions consummated on the Effective Date) of the Senior Leverage Ratio
as contemplated by Schedule 1.1(a).
(j) Other Documents. Such other approvals, documents or materials as
either of the Administrative Agents or any Lender may reasonably request.
5.2 Conditions to All Credit Extensions. The obligation of each Lender to
make any Loan (including any Loan to be made on the Effective Date), and the
obligation of the Issuing Lenders to Issue any Letter of Credit (including any
Letter of Credit to be issued on the Effective Date), is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date or Issuance Date:
(a) Notice, Application. In the case of any Loan (other than a
Revolving Loan made pursuant to subsection 2.5(e) or 3.3(c)), the Paying Agent
shall have received (with, in the case of the initial Loans only, a copy for
each Lender) a Notice of Borrowing; or in the case of any Issuance of any Letter
of Credit, the applicable Issuing Lender and the Paying Agent shall
61
have received an L/C Application or L/C Amendment Application, as required under
Section 3.2.
(b) Continuation of Representations and Warranties. The
representations and warranties in Article VI shall be true and correct in all
material respects on and as of such Borrowing Date or Issuance Date with the
same effect as if made on and as of such Borrowing Date or Issuance Date (except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date).
(c) No Existing Default. No Unmatured Event of Default or Event of
Default shall exist or shall result from such Borrowing or such Issuance.
(d) Availability. If any Santee Guaranty is outstanding, after
giving effect to such Credit Extension, the Borrower shall have availability for
additional Revolving Loans and/or Acquisition Loans in an amount at least equal
to the sum of the Liquidity Amount plus the maximum amount which could be
payable under the Santee Guaranty.
Each Notice of Borrowing and L/C Application or L/C Amendment Application
submitted by the Borrowers hereunder shall constitute a representation and
warranty by the applicable Borrower that, as of the date of each such notice and
as of the Borrowing Date or Issuance Date, as applicable, the conditions in this
Section 5.2 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants (and, in connection with each Credit
Extension made on or after the Restructuring Effective Date, Holdings represents
and warrants) to the Agents and each Lender that:
6.1 Corporate Existence and Power. The Company and each of its
Subsidiaries:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets and to carry on its
business;
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(c) is duly qualified as a foreign corporation and is licensed and
in good standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification or license; and
(d) is in compliance with all Requirements of Law;
except, in each case, to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
6.2 Corporate Authorization; No Contravention. The execution, delivery and
performance by each Credit Party of each Loan Document to which it is party, the
borrowings hereunder by the Borrowers, and the grant of security interests
pursuant to the Pledge Agreements are within the corporate power and authority
of such Credit Party, have been duly authorized by all necessary corporate
action, and do not and will not:
(a) contravene the terms of such Credit Party's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
result in or require the creation of any Lien under, any document evidencing any
Contractual Obligation to which such Credit Party is a party or any order,
injunction, writ or decree of any Governmental Authority to which such Credit
Party, or any property of such Credit Party, is subject; or
(c) violate any Requirement of Law.
6.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Credit Party
of any Loan Document to which it is a party.
6.4 Binding Effect. Each of this Agreement and each other Loan Document to
which any Credit Party is a party constitutes the legal, valid and binding
obligation of such Credit Party, enforceable against such Credit Party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
6.5 Litigation. Except as specifically disclosed in Schedule 6.5, there
are no actions, suits, proceedings, claims or disputes pending or, to the best
knowledge of the Company,
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threatened, at law, in equity, in arbitration or before any Governmental
Authority, against the Company or any of its Subsidiaries or any of their
respective properties which (a) purport to affect or pertain to this Agreement
or any other Loan Document, or any of the transactions contemplated hereby or
thereby; or (b) would reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or other order of any nature
has been issued by any court or other Governmental Authority purporting to
enjoin or restrain the execution, delivery or performance of this Agreement or
any other Loan Document, or directing that the transactions provided for herein
or therein not be consummated as herein or therein provided.
6.6 No Default. No Unmatured Event of Default or Event of Default exists
or would result from the incurring of any Obligations by the Borrowers. As of
the Effective Date, neither the Company nor any Subsidiary is in default under
or with respect to any Contractual Obligation in any respect which, individually
or together with all such defaults, could reasonably be expected to have a
Material Adverse Effect, or that would, if such default had occurred after the
Effective Date, create an Event of Default under subsection 9.1(e).
6.7 ERISA Compliance. Except as specifically disclosed in Schedule 6.7:
(a) (i) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law; (ii)
each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and, to the best
knowledge of the Company, nothing has occurred which would cause the loss of
such qualification; (iii) the Company and each ERISA Affiliate has made all
required contributions to any Plan subject to Section 412 of the Code; and (iv)
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) neither the Company nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any
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liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); and (iii) neither
the Company nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
6.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Section 7.12 and
Section 8.6. Neither the Company nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
6.9 Title to Properties. The Company and each Subsidiary has good record
and marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of its businesses, except for
such defects in title or invalidity of leaseholds as could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect. As
of the Effective Date, the property of the Company and its Subsidiaries is
subject to no Liens, other than Permitted Liens.
6.10 Taxes. The Company and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. As of the date of this Agreement, the Company does not
have knowledge of any proposed tax assessment against the Company or any
Subsidiary that would, if made, have a Material Adverse Effect.
6.11 Financial Condition. (a) The audited consolidated financial
statements of QFC and its Subsidiaries dated December 31, 1995, and the
unaudited consolidated financial statements of QFC and its Subsidiaries dated
September 7, 1996, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for the fiscal periods ended on
such dates:
(i) were prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, except as otherwise expressly
noted therein;
(ii) fairly present the financial condition of QFC and its
Subsidiaries as of the dates thereof and results of operations for the
periods covered thereby (subject, in the case of such unaudited financial
statements, to the
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absence of footnotes and to normal year-end adjustments); and
(iii) except as specifically disclosed in Schedule 6.11, show
all material indebtedness and other liabilities, direct or contingent, of
QFC and its Subsidiaries as of the dates thereof, including liabilities
for taxes, material commitments and material Contingent Obligations.
(b) Since December 31, 1995, there has been no Material Adverse
Effect.
6.12 Environmental Matters. The Company conducts in the ordinary course of
business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Company has reasonably concluded that, except as specifically
disclosed in Schedule 6.12, such Environmental Laws and Environmental Claims
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
6.13 Regulated Entities. None of the Company, any Person controlling the
Company, or any Subsidiary is an "Investment Company" within the meaning of the
Investment Company Act of 1940. The Company is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
6.14 No Burdensome Restrictions. Neither the Company nor any Subsidiary is
a party to or bound by any Contractual Obligation, or subject to any restriction
in any Organization Document, or any Requirement of Law, which could reasonably
be expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, etc. The Company or its
Subsidiaries own or are licensed or otherwise have the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person (except for any failure to own, license or otherwise have
the right to use any of the foregoing or any conflict which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect). To the best knowledge of each of the Borrowers, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Company or any
Subsidiary
66
infringes upon any rights held by any other Person (except for any infringement
which could not reasonably be expected to have a Material Adverse Effect).
6.16 Subsidiaries. As of the Effective Date, the Company has no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
6.16 and has no equity investments in any other corporation or entity other than
those specifically disclosed in part (b) of Schedule 6.16.
6.17 Insurance. Except as specifically disclosed in Schedule 6.17, the
properties of the Company and each of its Subsidiaries are insured with
financially sound and reputable insurance companies, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Company or such Subsidiary operates.
6.18 Full Disclosure. None of the representations or warranties made by
the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Lenders prior to the Effective Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered (it being understood that any financial projections prepared by the
Company or any Subsidiary were based on good faith estimates and assumptions
which the officers of the Company or such Subsidiary believed, at the time of
preparation thereof, reasonable and attainable, but that projections as to
future events are not to be viewed as facts or as guaranties of future
performance and that actual results for the period or periods covered by any
projections may differ from projected results and such differences may be
material).
6.19 Solvency, etc. On the Effective Date (or, in the case of any Person
which becomes a Guarantor after the Effective Date, on the date such Person
becomes a Guarantor), and immediately prior to and after giving effect to the
issuance of each Letter of Credit and each borrowing hereunder and the use of
the proceeds thereof, (a) neither the Company nor any Guarantor will be
"insolvent" as such term is defined in each of the Bankruptcy Code, the Uniform
Fraudulent Transfers Act as in effect in the applicable jurisdiction and the
Uniform Fraudulent Conveyances Act as in effect in the applicable jurisdiction
and (b) each of the Company and each Guarantor, will be able to pay its debts as
67
they mature and will have capital reasonably sufficient to carry on its business
as then constituted.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan or
other Obligation for the payment of money shall remain unpaid, or any Letter of
Credit shall remain outstanding, unless the Majority Lenders waive compliance in
writing, the Company agrees that:
7.1 Financial Statements. The Company shall deliver to the Paying Agent,
with sufficient copies for each Lender:
(a) as soon as available, but not later than 90 days after the end
of each fiscal year, a copy of the audited consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year and the related
consolidated and consolidating statements of income or operations, shareholders'
equity and cash flows for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, and accompanied by the opinion of
Deloitte & Touche or another nationally-recognized independent public accounting
firm ("Independent Auditor"), which opinion (x) shall state that such
consolidated financial statements present fairly the financial position of the
Company and its Subsidiaries for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years and (y) shall not be qualified or
limited because of a restricted or limited examination by the Independent
Auditor of any material portion of the Company's or any Subsidiary's records;
and
(b) as soon as available, but not later than 45 days (or, in the
case of the fiscal quarter ending March 22, 1997, 60 days) after the end of each
of the first three fiscal quarters of each fiscal year, a copy of the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such quarter and the related consolidated and consolidating statements of
income, shareholders' equity and cash flows for the period commencing on the
first day and ending on the last day of such quarter, and certified by a
Responsible Officer as fairly presenting, in accordance with GAAP (subject to
normal year-end audit adjustments), the financial position and the results of
operations of the Company and its Subsidiaries.
7.2 Certificates; Other Information. The Company shall furnish to the
Paying Agent, with sufficient copies for each Lender:
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(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), a certificate of the Independent Auditor
stating that in making the examination necessary therefor, nothing came to its
attention that caused it to believe that an Event of Default had occurred with
respect to any of the covenants set forth in Sections 8.9, 8.10, 8.11, 8.12,
8.13 and 8.17 insofar as such covenants relate to accounting, matters, except as
specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a Compliance Certificate executed by
a Responsible Officer;
(c) promptly, copies of all financial statements and reports that
the Company sends to its shareholders, and copies of all financial statements
and regular, periodic or special reports (including Forms 10K, 10Q and 8K) that
the Company or any Subsidiary may make to, or file with, the SEC;
(d) as soon as available, and in any event within 30 days after the
commencement of each fiscal year, the budget for such year and projected income
statements, balance sheets and statements of cash flows as at the end of each
quarter of such fiscal year (including an explanation of the assumptions used in
preparing such budget and projections); and
(e) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as either
Administrative Agent, at the request of any Lender, may from time to time
reasonably request.
7.3 Notices. The Company shall promptly notify each of the Administrative
Agents (and the Paying Agent shall thereupon promptly notify each Lender):
(a) of the occurrence of any Unmatured Event of Default or Event of
Default;
(b) of any matter (including (i) breach or non-performance of, or
any default under, a Contractual Obligation of the Company or any Subsidiary;
(ii) any dispute, litigation, investigation or proceeding between the Company or
any Subsidiary and any Governmental Authority; or (iii) the commencement of, or
any material development in, any litigation or proceeding affecting the Company
or any Subsidiary, including pursuant to any applicable Environmental Laws) that
has resulted or could reasonably be expected to result in a Material Adverse
Effect;
(c) of the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event
69
more than 10 Business Days after such event), and deliver to each of the
Administrative Agents (with sufficient copies for each Lender to the Paying
Agent) a copy of any notice with respect to such event that is filed with a
Governmental Authority and any notice delivered by a Governmental Authority to
the Company or any ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Company or any ERISA
Affiliate; or
(iii) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a material increase
in contributions or Unfunded Pension Liability;
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries; and
(e) any notice delivered pursuant to any Santee Agreement to the
effect that a financial covenant has been breached by Santee or a Santee Owner
or a price adjustment will be applicable as a result of a failure by Santee to
maintain the Santee Debt Service Coverage Ratio or the Santee Fixed Charge
Coverage Ratio.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary has taken or proposes to take with respect thereto. Each notice under
subsection 7.3(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that have been breached or
violated. Without limiting any of the foregoing provisions of this Section 7.3,
the Company will promptly notify each Administrative Agent (and the Paying Agent
will thereupon promptly notify each Lender), and, to the extent possible, give
each Administrative Agent at least 10 days' prior written notice of any
contribution failure sufficient to give rise to a Lien under Section 302(f) of
ERISA.
7.4 Preservation of Corporate Existence, Etc. The Company shall, and shall
cause its Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation (except the extent otherwise permitted herein);
70
(b) preserve and maintain in full force and effect all material
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business except
in connection with transactions permitted by Section 8.2;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill (except to the extent otherwise
permitted herein); and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
7.5 Maintenance of Property. The Company shall, and shall cause its
Subsidiaries to, maintain, and preserve all its property which is used or useful
in its business in good working order and condition, ordinary wear and tear
excepted. The Company and each of its Subsidiaries shall use the standard of
care typical in the industry in the operation and maintenance of its facilities.
7.6 Insurance. The Company shall, and shall cause its Subsidiaries to,
maintain, with financially sound and reputable independent insurers, insurance
with respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.
7.7 Payment of Obligations. The Company shall, and shall cause its
Subsidiaries to, pay and discharge as the same shall become due and payable all
their respective material obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets; and
(b) all lawful material claims which, if unpaid, would by law become
a Lien upon its property;
unless, in each case, the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by the Company or such Subsidiary (it being understood that any failure to pay
any material Indebtedness shall not constitute a breach of this Section 7.7
unless such failure also constitutes an Event of Default under Section 9.1(e)).
71
7.8 Compliance with Laws. The Company shall, and shall cause its
Subsidiaries to, comply, in all material respects with all Requirements of Law
of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
7.9 Compliance with ERISA. The Company shall, and shall cause its ERISA
Affiliates to: (a) maintain each Pension Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; and (b) make all required contributions to any Plan subject to
Section 412 of the Code.
7.10 Inspection of Property and Books and Records. The Company shall, and
shall cause its Subsidiaries to, maintain, proper books of record and account,
in which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Company or each Subsidiary. The Company shall permit,
and shall cause each of its Subsidiaries to permit, agents or representatives of
any Agent or any Lender (at the expense of such Agent or such Lender) to visit
and inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and receive copies thereof or
abstracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public accountants (it
being understood that the Company shall have the right to participate in any
discussions with such accountants), in each case at reasonable times during
normal business hours and upon reasonable advance notice to the Company;
provided, however, at any time an Event of Default exists, any Agent or any
Lender may do any of the foregoing at the expense of the Company at any time
during normal business hours and without advance notice.
7.11 Environmental Laws. The Company shall, and shall cause its
Subsidiaries to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws, except for any non-compliance which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
7.12 Use of Proceeds. QFC shall use the proceeds of the Loans made on the
Effective Date only for (a) refinancing Debt to be Repaid, (b) the payment of
fees and expenses in connection with this Agreement and (c) working capital and
other general corporate purposes (including the acquisition of HMI pursuant to
the HMI Acquisition Agreement) not in contravention of any Requirement of Law or
of any Loan Document. Thereafter, the applicable Borrower shall use the proceeds
of (i) the Revolving
72
Loans and Swingline Loans for working capital and other general corporate
purposes (including Acquisitions permitted pursuant to subsection 8.3(e)) not in
contravention of any Requirement of Law or any Loan Document and (ii)
Acquisition Loans solely to consummate Acquisitions permitted pursuant to
subsection 8.3(e); provided that to the extent that either the Contemplated
Equity Issuance has not occurred or the Subordinated Notes have not been issued
on or prior to the Effective Date, QFC may use up to the Specified Portion (as
defined below) of the Acquisition Facility for the purposes set forth in the
first sentence of this Section 7.12. For purposes of the foregoing, "Specified
Portion" means the lesser of (x) $150,000,000 and (y) $275,000,000 minus the net
cash proceeds from the Contemplated Equity Issuance or the issuance of the
Subordinated Notes (whichever has occurred). Notwithstanding the foregoing,
proceeds of Revolving Loans and/or Acquisition Loans may be used to make
Permitted Santee Investments or to make payments under the Santee Guaranty.
7.13 Further Assurances. The Company shall, and shall cause its
Subsidiaries to, take such actions as may be necessary or as either
Administrative Agent or the Majority Lenders reasonably request from time to
time (including the execution and delivery of guaranties, pledge agreements and
other documents, and the delivery of stock certificates and Intercompany Notes)
in order to ensure that (a) each Subsidiary (other than a Canadian Subsidiary)
of the Company has unconditionally guaranteed the Obligations (except to the
extent it is the primary obligor thereof), (b) the Obligations of the Borrowers
hereunder and under the other Loan Documents are secured by the pledge by each
Borrower of each Intercompany Note issued in favor of such Borrower and (c) the
obligations of each Credit Party under the Loan Documents are secured by the
pledge of all of the capital stock of each Subsidiary of such Credit Party (to
the extent owned directly by such Credit Party); provided that (i) the pledge of
the capital stock of any Canadian Subsidiary shall be limited to 65% of the
outstanding capital stock of such Canadian Subsidiary and (ii) QFC shall not be
required to pledge the stock of Parent or any Merger Subsidiary so long as such
entities have no material assets and engage in no material business (other than
effectuating the Restructuring and, in the case of Parent, issuing the Parent
Guaranty). Notwithstanding anything to the contrary set forth above, with
respect to any Person that is the subject of a tender offer initiated by the
Company or any of its Subsidiaries with the intended result that the Company or
such Subsidiary, as applicable, acquire a sufficient interest in such Person to
effectuate a squeeze-out merger, such Person shall not be required to guaranty
the Obligations or pledge any capital stock until the earlier of (x) 30 days
after the acquisition of such sufficient interest and (y) the completion of such
squeeze-out merger. Contemporaneously with the execution and delivery of any
guaranty, pledge agreement or other document required to
73
comply with the foregoing provisions of this Section 7.13, the Company shall, or
shall cause the applicable Subsidiary to, deliver all resolutions, opinions and
corporate documents as either Administrative Agent or the Majority Lenders may
reasonably request to confirm the enforceability of such document and the
perfection of the security interest created thereby, if applicable.
7.14 Interest Rate Protection. If Subordinated Notes in a principal amount
not less than $125,000,000 are not issued within 180 days after the Effective
Date, then no later than such 180th day the Company shall enter into one or more
interest rate protection agreements reasonably acceptable to the Administrative
Agents with respect to a notional principal amount of not less than $125,000,000
(less the sum of the amount of gross cash proceeds in excess of $150,000,000
received from any offering of Shares by the Company and the gross cash proceeds
of any issuance of Subordinated Notes, in either case, received on the Effective
Date or during the 180-day period thereafter).
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan or
other Obligation for the payment of money shall remain unpaid or any Letter of
Credit shall remain outstanding, unless the Majority Lenders waive compliance in
writing, the Company covenants as follows:
8.1 Limitation on Liens. The Company shall not, and shall not permit any
Subsidiary to, directly or indirectly, make, create, incur, assume or permit to
exist any Lien upon or with respect to any part of its property, whether now
owned or hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien existing on property of the Company or any Subsidiary
on the Effective Date and set forth on Schedule 8.1 securing Indebtedness
outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 7.7, provided that no notice of
lien has been filed or recorded under the Code or any other Requirement of Law;
74
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the property
subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on property of the Company or its Subsidiaries securing
(i) the non-delinquent performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, (ii) contingent obligations on
surety bonds (other than appeal bonds or other bonds relating to litigation),
and (iii) other non-delinquent obligations of a like nature, in each case
incurred in the ordinary course of business, provided all such Liens in the
aggregate would not (even if enforced) reasonably be expected to have a Material
Adverse Effect;
(g) Liens consisting of judgment or judicial attachment liens and
Liens securing appeal bonds and other bonds relating to litigation, provided
that the enforcement of such Liens is effectively stayed and all such liens in
the aggregate at any time outstanding for the Company and its Subsidiaries do
not exceed $15,000,000;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, do not materially interfere with the financial condition, properties,
prospects or ordinary conduct of the businesses of the Company and its
Subsidiaries taken as a whole;
(i) Liens on real property acquired after the Effective Date
securing Indebtedness permitted by subsection 8.4(e);
(j) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB and (ii) such deposit account is not
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intended by the Company or any Subsidiary to provide collateral to such
depository institution;
(k) Liens on inventory (i) that is in the possession or control of a
wholesaler or supplier, (ii) has not been delivered to or paid for by the
Company or any Subsidiary and (iii) for which neither the Company nor any
Subsidiary has any obligation to make any payment until such delivery is made
and accepted;
(l) Liens on assets of Subsidiaries of the Company which become
Subsidiaries after the Effective Date or Liens on assets acquired by the Company
or any of its Subsidiaries after the Effective Date; provided that (i) such
Liens were in existence at the time such Subsidiary became a Subsidiary or at
the time such assets were acquired and (ii) such Liens were not created in
contemplation of the transaction pursuant to which such Subsidiary became a
Subsidiary or in contemplation of the acquisition of such assets;
(m) Liens on personal property of the Company and its Subsidiaries
(other than the capital stock of any Subsidiary or any Intercompany Note)
securing Indebtedness permitted by subsection 8.4(d);
(n) Liens on the capital stock of Santee or on the equity interest
in Santee Holdings granted to secure obligations of Santee under the Santee Debt
Placement Agreement;
(o) Liens arising in connection with the refinancing of Indebtedness
secured by Liens described in clauses (a) or (l) above, provided that there is
no increase in the principal amount of such Indebtedness and such Liens do not
extend to any additional property; and
(p) other Liens (other than Liens on the capital stock of any
Subsidiary or any Intercompany Note) securing obligations not in excess of
$1,000,000.
8.2 Consolidations and Mergers. The Company shall not, and shall not
permit any Subsidiary to, merge, consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, or make any Acquisition
except:
(a) any Subsidiary may merge or consolidate with the Company,
provided that the Company shall be the continuing or surviving corporation, or
with any one or more Subsidiaries, provided that if any transaction shall be
between a Subsidiary
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and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be the
continuing or surviving corporation;
(b) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Company or another Subsidiary;
(c) the Company or any Subsidiary may sell assets so long as the
proceeds thereof are, to the extent applicable, applied in accordance with
Sections 2.6 and 2.8;
(d) the Company and its Subsidiaries may enter into the transactions
described in clause (i) of the definition of Restructuring Effective Date; and
(e) the Company or any Subsidiary may make Acquisitions permitted by
subsection 8.3(e).
Notwithstanding anything to the contrary set forth above, neither QFC nor
HMI shall sell all or a substantial part of the assets owned by such entity on
the Effective Date (it being understood that each such entity may sell inventory
in the ordinary course of business).
8.3 Loans and Investments. The Company shall not, and shall not permit any
Subsidiary to, make or permit to exist any Investment in any Person, except for:
(a) any Investment existing on the Effective Date and listed on
Schedule 8.3;
(b) Investments in cash equivalents and short term marketable debt
securities;
(c) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(d) subject to Section 7.13, Investments in Subsidiaries and
Investments by Subsidiaries in the Company;
(e) Investments incurred in order to consummate Acquisitions,
provided that (i) no Unmatured Event of Default or Event of Default exists or
will result therefrom, (ii) after giving effect to such Acquisition, the unused
portion of the Revolving Commitment Amount will be not less than the Liquidity
Amount, (iii) after giving effect to such Acquisition, (A) the Line of Business
Percentage for the most recently-ended Computation Period (calculated on a pro
forma basis as if such Acquisition had occurred at the beginning of such
Computation Period) shall be at least 80% and (B) the Company would have been
77
in compliance on a pro forma basis, after giving effect to such Acquisition (as
if such Acquisition had occurred, and any related Indebtedness had been assumed
or incurred, on the first day of the most recently-ended Computation Period)
with Sections 8.10, 8.11 and 8.12 as of such most recently-ended Computation
Period; provided that for purposes of testing compliance herewith, the
"Permitted Ratio" for the applicable period as set forth in each of Sections
8.11 and 8.12, shall be reduced by 0.25, (iv) the aggregate total consideration
paid (including cash consideration paid, Indebtedness created or assumed and
equity issued) after the Effective Date in connection with (A) all Acquisitions
(including such proposed Acquisition) shall not exceed $750,000,000 and (B) all
Canadian Acquisitions (including, if applicable, such proposed Acquisition)
shall not exceed $75,000,000 (it being understood that Canadian Acquisitions
shall be the only permitted Foreign Acquisitions); (v) if Z/C and its Affiliates
do not own at least 10% of each class of Voting Stock of the Company, the board
of directors of any entity proposed to be acquired has not announced that it
will oppose such Acquisition and has not commenced any litigation which alleges
that such Acquisition violates, or will violate, any Requirement of Law or any
Contractual Obligation of such entity, and (vi) if the total consideration to be
paid in connection with such proposed Acquisition exceeds $25,000,000, the
Company shall have delivered to the Administrative Agents a certificate setting
forth calculations demonstrating compliance with the requirements set forth in
clauses (ii) and (iii) above;
(f) Permitted Santee Investments;
(g) Contingent Obligations permitted by Section 8.7;
(h) extensions of credit in connection with sales of assets outside
the ordinary course of business in an aggregate maximum amount not to exceed
$10,000,000 at any time outstanding; provided that such Investments may exceed
$10,000,000 so long as such excess would be permitted under clause (i) below;
and
(i) other Investments, in addition to those described in clauses (a)
through (h) above, (including Investments described in clause (h) above in
excess of $10,000,000) in and to other Persons in an aggregate maximum
outstanding amount not at any time to exceed $25,000,000; provided that no
Investments of the type described in clauses (e) or (f) above shall be permitted
pursuant to this clause (i).
8.4 Limitation on Funded Debt. The Company shall not, and shall not permit
any Subsidiary to, create, incur, assume, permit to exist, or otherwise become
or remain directly or indirectly liable with respect to, any Funded Debt,
except:
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(a) Funded Debt incurred pursuant to this Agreement and the other
Loan Documents;
(b) Subordinated Debt;
(c) Funded Debt set forth on Schedule 8.4; provided that all Debt to
be Repaid shall be paid in full on the Effective Date;
(d) Funded Debt not exceeding $15,000,000 in the aggregate at any
time outstanding secured by Liens on personal property;
(e) Funded Debt secured by mortgages on real property and Funded
Debt of the type described in clause (f) of the definition of Indebtedness, in
each case incurred after the Effective Date, not exceeding $125,000,000 in the
aggregate at any time outstanding; provided that not more than $25,000,000 of
the principal amount of all such Funded Debt shall be payable before the
scheduled Termination Date;
(f) Funded Debt assumed or created in connection with Acquisitions
permitted by subsection 8.3(e); provided that no more than $25,000,000 of Funded
Debt may be assumed or created in connection with any such Acquisition or series
of related Acquisitions unless approved by the Majority Lenders;
(g) Guaranty Obligations of the Company or any Subsidiary with
respect to Indebtedness incurred by Santee; provided that any such Guaranty
Obligations shall be on terms and conditions substantially consistent with those
set forth in Schedule 1.1(g) and the aggregate amount of such Guaranty
Obligations (including amounts previously paid thereunder) shall not exceed
$80,000,000 minus the amount of all Investments described in clause (z) of the
definition of Permitted Santee Investments and the amount of any Comfort Letter
Debt;
(h) Funded Debt owed to the Company or any Subsidiary (subject, if
applicable, to Section 7.13);
(i) Funded Debt which constitutes a Contingent Obligation permitted
by subsection 8.7(h); and
(j) renewals, extensions, refinancings and refundings of Funded Debt
permitted pursuant to this Section 8.4; provided that, in the case of capital
lease obligations referred to in clause (c) and other Funded Debt referred to in
clause (f), there is no increase in the outstanding principal thereof and the
terms and conditions thereof are no less favorable to the Lenders than the
existing terms and conditions of such original Funded Debt.
79
Notwithstanding the foregoing provisions of this Section 8.4, neither the
Company nor any Subsidiary shall incur any Funded Debt (other than the
Subordinated Notes) of the type described in clause (b) or (e) if, after giving
effect to the incurrence of such Funded Debt, (A) an Unmatured Event of Default
or Event of Default would exist or (B) on a pro forma basis, after giving effect
to the incurrence of such Funded Debt (as if such Funded Debt had been incurred
on the first day of the most recently-ended Computation Period), the Company
would not have been in compliance with Sections 8.10 through 8.13 as of such
most recently-ended Computation Period.
8.5 Transactions with Affiliates. The Company shall not, and shall not
permit any Subsidiary to, enter into any transaction (other than the
transactions contemplated by the Santee Agreements) with any Affiliate of the
Company (other than the Company or a Subsidiary), except upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than would
obtain in a comparable arm's-length transaction with a Person not an Affiliate
of the Company or such Subsidiary.
8.6 Margin Stock. The Company shall not permit more than 25% of the value
of the assets of the Company and its Subsidiaries to constitute Margin Stock.
8.7 Contingent Obligations. The Company shall not, and shall not permit
any Subsidiary to, create, incur, assume or permit to exist any Contingent
Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) Swap Contracts entered into in the ordinary course of business
as bona fide hedging transactions;
(c) Contingent Obligations of the Company and its Subsidiaries
existing as of the Effective Date and listed in Schedule 8.7;
(d) Guaranty Obligations to the extent permitted by Section 8.4;
(e) Contingent Obligations of HMI arising under the Product Purchase
Agreement;
(f) Contingent Obligations arising under any comfort letter
substantially in the form set forth on Schedule 1.1(h) issued by the Company or
any Subsidiary in favor of any working capital lender (or, prior to the issuance
of Indebtedness under the Santee Debt Placement Agreement, any lender) to
Santee, provided that the aggregate amount of Indebtedness of Santee
80
benefitting from such comfort letters shall not at any time exceed (x) prior to
the issuance of Indebtedness under the Santee Debt Placement Agreement,
$30,000,000 minus the amount of all advance payments made to Santee for product
purchases in excess of $6,000,000, and (y) thereafter, $10,000,000;
(g) subordinated Guaranty Obligations arising under the Subordinated
Note Indenture or any supplement thereto; and
(h) other Contingent Obligations (other than letters of credit) not
at any time exceeding in the aggregate $15,000,000.
8.8 Amendments to Certain Documents. The Company will not, and will not
permit any Subsidiary to, make or agree to any amendment to or modification of,
or waive any of its rights under, the HMI Acquisition Agreement, the
Subordinated Note Indenture or any other instrument or document evidencing or
governing Subordinated Debt (other than any amendment or modification to cure
any ambiguity, to correct or supplement any provision thereof which may be
inconsistent with any other provision thereof or to make any other technical
amendment thereto which, in any such case, is not material and, in any event, is
not adverse to the interests of the Lenders or any other amendment or
modification which is not material or not adverse to the interests of the
Lenders).
8.9 Restricted Payments. The Company shall not, and not permit any
Subsidiary to, (a) declare or pay any dividends on any of its capital stock, (b)
purchase or redeem any such stock or any warrants, options or other rights in
respect of such stock, (c) make any other distribution to shareholders, (d)
prepay, purchase, defease or redeem any Subordinated Debt or (e) set aside funds
for any of the foregoing; provided that:
(i) any Subsidiary may declare and pay dividends to any Credit
Party;
(ii) the Company may declare and make dividend payments or other
distributions payable solely in Shares;
(iii) the Company may purchase, redeem or otherwise acquire Shares
or warrants or options to acquire Shares (A) with the proceeds received
from the substantially concurrent issue of new Shares and (B) so long as
no Event of Default exists and is continuing or would result therefrom,
from officers and other employees of the Company or any of its
Subsidiaries in connection with incentive and compensation programs in an
aggregate amount not exceeding $2,500,000 in any fiscal year; and
81
(iv) so long as no Event of Default or Unmatured Event of Default
exists or would result therefrom, the Company may declare and pay cash
dividends to its stockholders or purchase, redeem or otherwise acquire
shares of its capital stock or warrants, rights or options to acquire such
shares, or prepay or redeem (or permit QFC or Holdings to prepay or
redeem) any Subordinated Debt, so long as immediately after giving effect
thereto, the aggregate amount of all payments made in connection with the
foregoing (excluding any payments permitted by clause (iii) above) will
not exceed the sum of (A) $15,000,000 plus (B) the Specified Percentage
(as defined below) of Net Income for each fiscal year ending on or after
December 27, 1997 plus (C) 100% of net cash proceeds received from any
issuance of common stock of the Company (other than proceeds from the
Contemplated Equity Issuance except to the extent the net cash proceeds
thereof exceed $144,000,000).
For purposes of clause (iv) above, "Specified Percentage" means, for any
fiscal year, (i) if the Leverage Ratio was greater than 3.0 to 1 as of the last
day of such fiscal year, 25% and (ii) if the Leverage Ratio was equal to or less
than 3.0 to 1 as of the last day of such fiscal year, 50%; provided that if
there was negative Net Income for such fiscal year, the "Specified Percentage"
shall be 100%.
8.10 Interest and Rental Expense Coverage Ratio. The Company shall not
permit the ratio of (a) EBITDA plus consolidated net rent expense of the Company
and its Subsidiaries for any Computation Period to (b) the sum of consolidated
gross interest expense of the Company and its Subsidiaries plus consolidated net
rent expense of the Company and its Subsidiaries for such Computation Period to
be less than the applicable ratio set forth below for such Computation Period:
Computation Permitted
Period Ending Ratio
------------- -----
Second, third and fourth fiscal quarters of
fiscal year 1997 and during fiscal
year 1998 1.75
During fiscal year 1999 2.00
During fiscal year 2000 2.25
Thereafter 2.50.
8.11 Leverage Ratio. The Company shall not permit the Leverage Ratio to be
greater than the applicable ratio set forth below at any time during any period
set forth below:
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Permitted
Period Ratio
------ -----
During fiscal years 1997 and 1998 5.00
During fiscal year 1999 4.75
During fiscal year 2000 4.50
During fiscal year 2001 4.25
Thereafter 4.00.
8.12 Senior Leverage Ratio. The Company shall not permit the Senior
Leverage Ratio to be greater than the applicable ratio set forth below at any
time during any period set forth below:
Permitted
Period Ratio
------ -----
During fiscal year 1997 4.00
During fiscal years 1998 and 1999 3.75
During fiscal year 2000 3.50
During fiscal year 2001 3.25
Thereafter 3.00.
8.13 Net Worth. The Company shall not at any time permit its consolidated
shareholders' equity to be less than the sum of (a) $65,000,000 plus (b) 75% of
the net proceeds of all issuances of equity by the Company after December 28,
1996, plus (c) the Specified Percentage (as defined below) of Net Income (but
not less than zero in any fiscal year) for each fiscal year ended on or after
December 27, 1997. For purposes of the foregoing, "Specified Percentage" means,
for any fiscal year, (i) if the Leverage Ratio was greater than 3.0 to 1 as of
the last day of such fiscal year, 75%; and (ii) otherwise, 50%.
8.14 ERISA. The Company shall not, and shall not permit any of its ERISA
Affiliates to, engage in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
8.15 Line of Business. The Company shall not, and shall not permit its
Subsidiaries to, engage in any business other than retail grocery operations,
the wholesale distribution of groceries, and other businesses reasonably related
thereto.
8.16 Restrictive Agreements. Except (in the case of clause (i) below) for
the Subordinated Note Indenture, the Company shall not, and shall not permit any
Subsidiary to, directly or indirectly enter into or become bound by any
agreement, instrument, indenture or other obligation (other than this Agreement,
the other Loan Documents and, for purposes of clause (i) below, the Santee
Agreements) which could (i) directly or indirectly restrict, prohibit or require
the consent of any Person with respect to the payment of dividends or
distributions
83
or the making or repayment of intercompany loans by a Subsidiary of the Company
to the Company (or, to the extent applicable, another Subsidiary), (ii) prohibit
the creation or assumption of any Lien on its properties, revenues or assets,
whether now owned or hereafter acquired, to secure the Obligations (except that
if any property or asset is subject to a Permitted Lien, the documentation
giving rise to such Permitted Lien may restrict the creation or assumption of
another Lien on such property or asset), or (iii) restrict the ability of the
Company or any of its Subsidiaries to amend or modify this Agreement or any
other Loan Document.
8.17 Accounting Changes. The Company shall not, and shall not permit any
Subsidiary to, make any significant change in accounting treatment or reporting
practices, except as required by GAAP, or change the fiscal year of the Company.
8.18 Santee Agreements. The Company will not permit the execution of a
definitive Product Purchase Agreement, or any amendment to the Product Purchase
Agreement, which is substantially inconsistent with the terms and provisions set
forth on Schedule 1.1(d) in any manner which is adverse to the Company, HMI or
any other Subsidiary of the Company. The Company will not permit the execution
of a definitive Santee Debt Placement Agreement, or any amendment to the Santee
Debt Placement Agreement, which is substantially inconsistent with the terms and
provisions set forth on Schedule 1.1(e) in any manner which is adverse to
Santee.
ARTICLE IX
EVENTS OF DEFAULT
9.1 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. Either Borrower fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan or (ii) within
five days after the same becomes due, any interest, fee or any other amount
payable to any Agent or any Lender hereunder or under any other Loan Document.
(b) Representation or Warranty. Any representation or warranty by
the Company or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement of the Company, any Subsidiary or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the date made or
deemed made.
84
(c) Specific Defaults. Either Borrower fails to perform or observe
any term, covenant or agreement contained in Article VIII (other than Sections
8.1 and 8.5).
(d) Other Defaults. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any other Loan Document,
and such default shall continue unremedied for a period of 30 days (or, in the
case of Section 8.1 or 8.5, 15 days) after the earlier of (i) the date upon
which a Responsible Officer knew of such failure or (ii) the date upon which
written notice thereof is given to the Company by any Agent or any Lender.
(e) Cross-Default. The Company or any Subsidiary (i) fails to make
any payment of principal of or interest on any Indebtedness or Contingent
Obligation having an aggregate principal amount (including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than
$15,000,000 when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the relevant document on
the date of such failure; or (ii) fails to perform or observe any other
condition or covenant, or any other default by the Company or any Subsidiary
shall occur, under any agreement or instrument relating to any such Indebtedness
or Contingent Obligation (other than a Guaranty Obligation), if the effect of
such failure, event or condition is to cause, or to permit the holder or holders
of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, such Indebtedness or Contingent Obligation to be
declared to be due and payable prior to its stated maturity or cash collateral
in respect thereof to be demanded.
(f) Insolvency; Voluntary Proceedings. The Company or any Subsidiary
(i) ceases or fails to be solvent, or generally fails to pay, or admits in
writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing.
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Subsidiary, or any
writ, judgment, warrant of attachment, execution or similar process, is issued
or levied against a substantial part of the Company's or any Subsidiary's
properties, and such proceeding or petition shall not be dismissed, or such
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writ, judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded, within 60 days after commencement, filing or
levy; (ii) the Company or any Subsidiary admits the material allegations of a
petition against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) the Company or any Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of its
property or business.
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Company under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $15,000,000
(or, in the case of a contribution failure sufficient to give rise to a Lien
under Section 302(f) of ERISA, in any amount); or (ii) the Company or any ERISA
Affiliate shall fail to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $5,000,000.
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Company or any Subsidiary involving in the aggregate a liability (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $15,000,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 30 days after
the entry thereof.
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Company or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be any
period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect.
(k) Change of Control. (i) A majority of the Board of Directors of
the Company shall not be Continuing Directors (as defined below), (ii) any
Person or group of Persons (within the meaning of Section 13 or 14 of the
Exchange Act shall acquire beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of the
86
outstanding shares of Voting Stock of the Company and, at any time, the
beneficial ownership interest of such Person or group of Persons shall be
greater than the beneficial ownership interest of Z/C and its Affiliates or
(iii) a "Change in Control" as defined in the Subordinated Note Indenture shall
have occurred. For purposes of clause (i) above, "Continuing Directors" means,
as of any date, (A) individuals who on the date one year prior to such date were
members of the Company's (or, during the first year after the Restructuring
Effective Date, QFC's) Board of Directors and (B) any new Directors whose
nomination for election by the Company's shareholders was approved by a vote of
at least a majority of the Directors on the date of such nomination who either
were Directors of the Company (or, during the first year after the Restructuring
Effective Date, of QFC) on the date one year prior to the date of such
nomination or whose nomination for election was previously so approved.
(l) Ownership of Certain Subsidiaries. Prior to the Restructuring
Effective Date, HMI shall fail to be a direct or indirect Wholly-Owned
Subsidiary of QFC; or on and after the Restructuring Effective Date, (i)
Holdings shall fail to be a direct or indirect Wholly-Owned Subsidiary of Parent
or (ii) QFC and HMI shall fail to be direct or indirect Wholly-Owned
Subsidiaries of Holdings.
(m) Guaranties. Any Guaranty shall cease to be in full force and
effect with respect to any applicable Guarantor (other than as a result of a
transaction expressly permitted herein), any Guarantor shall fail to comply with
or to perform any applicable provision of any Guaranty, or any applicable
Guarantor (or any person by, through or on behalf of any applicable Guarantor)
shall contest in any manner the validity, binding nature or enforceability of
any Guaranty.
(n) Collateral Documents, etc. Any Collateral Document shall cease
to be in full force and effect with respect to any applicable Credit Party, any
applicable Credit Party shall fail to comply with or to perform any applicable
provision of any Collateral Document, or any applicable Credit Party (or any
Person by, through or on behalf of any applicable Credit Party) shall contest in
any manner the validity, binding nature or enforceability of any Collateral
Document.
9.2 Remedies. If any Event of Default occurs, the Paying Agent shall, at
the request of, or may, with the consent of, the Majority Lenders do any or all
of the following:
(a) declare the commitment of each Lender to make Loans and any
obligation of the Issuing Lenders to Issue Letters
87
of Credit to be terminated, whereupon such commitments and obligation shall be
terminated;
(b) declare an amount equal to the maximum aggregate amount that is
or at any time thereafter may become available for drawing under any outstanding
Letter of Credit (whether or not any beneficiary shall have presented, or shall
be entitled at such time to present, the drafts or other documents required to
draw under such Letter of Credit) to be immediately due and payable, and declare
the unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or under any
other Loan Document to be immediately due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrowers; and
(c) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 9.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each
Lender to make Loans and any obligation of the Issuing Lenders to Issue Letters
of Credit shall automatically terminate and the unpaid principal amount of all
outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Paying Agent,
any Issuing Lender or any Lender.
9.3 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
right, power, privilege or remedy provided by law or in equity, or under any
other instrument, document or agreement now existing or hereafter arising.
ARTICLE X
PARENT GUARANTY PROVISIONS
10.1 Parent Guaranty. Parent hereby absolutely, unconditionally and
irrevocably, as primary obligor and not merely as surety, guarantees the full
and prompt payment when due, whether by acceleration or otherwise, and at all
times thereafter, of all obligations (monetary or otherwise) of the Borrowers to
each of the Lenders and the Agents, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due, including (without limitation) all obligations which
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arise out of or in connection with this Agreement, the Notes, the Letters of
Credit or any other Loan Document, in each case as the same may be amended,
modified, extended or renewed from time to time (all such obligations being
herein collectively called the "Guaranteed Obligations").
This Parent Guaranty constitutes a guaranty by Parent of payment when due
and not of collection, and Parent specifically agrees that it shall not be
necessary or required that the Agents or any Lender exercise any right, assert
any claim or demand or enforce any remedy whatsoever against the Borrowers (or
any other Person) before or as a condition to the obligations of Parent
hereunder.
10.2 Acceleration of Parent Guaranty. Parent agrees that, in the event of
any Event of Default under subsection 9.1(f) or (g) of this Agreement, and if
such event shall occur at a time when any of the Guaranteed Obligations are not
then due and payable, Parent shall pay to the Paying Agent for the account of
the Agents and the Lenders forthwith the full amount which would be payable
hereunder by Parent if all Obligations (including contingent obligations with
respect to Letters of Credit) were then due and payable.
10.3 Parent Guaranty Absolute, etc. This Parent Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment by Parent, and shall remain in full force and effect until all
Guaranteed Obligations have been paid in full, finally and indefeasibly, all
other obligations of Parent hereunder shall have been paid in full, finally and
indefeasibly, and the Commitments, the Letters of Credit and any other
commitments by the Lenders or the Agents to the Borrowers shall have terminated.
Parent guarantees that the Guaranteed Obligations shall be paid strictly in
accordance with the terms of this Agreement and each other Loan Document under
which they arise, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Agent or any Lender with respect thereto. The creation or existence from time to
time of additional Guaranteed Obligations to the Agents or the Lenders or any of
them is hereby authorized, without notice to Parent, and shall in no way impair
the rights of the Agents or the Lenders or the obligations of Parent under this
Parent Guaranty, including Parent's guaranty of such additional Guaranteed
Obligations. The liability of Parent under this Parent Guaranty shall be
absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of this
Agreement, any Note or any other Loan Document;
(b) the failure of any Agent or any Lender
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(i) to assert any claim or demand or to enforce any right or
remedy against the Borrowers or any other Person (including any
other guarantor) under the provisions of this Agreement, any Note,
any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Guaranteed Obligations;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any other
extension, compromise or renewal of any Guaranteed Obligation;
(d) any reduction, limitation, impairment or termination of any
Guaranteed Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to
(and Parent hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any
Guaranteed Obligations;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of this Agreement, any
Note or any other Loan Document;
(f) (i) any addition, exchange, release, surrender or non-perfection
of any collateral or (ii) any amendment to or waiver or release or
addition of, or consent to departure from, any other guaranty held by any
Agent or any Lender, securing or supporting any of the Guaranteed
Obligations; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, Parent, the
Borrowers, any surety or any guarantor (other than the defense of
payment).
10.4 Reinstatement, etc. Parent agrees that this Parent Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment (in whole or in part) of any of the Guaranteed Obligations is
rescinded or must otherwise be restored by any Agent or any Lender, upon the
insolvency, bankruptcy or reorganization of either Borrower, any other Person or
otherwise, as though such payment had not been made.
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10.5 Waiver, etc. Parent hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Parent Guaranty and any requirement that any Agent or any
Lender protect, secure, perfect or insure any security interest or Lien, or any
property subject thereto, or exhaust any right or take any action against the
Borrowers or any other Person (including any other guarantor) or entity or any
collateral securing any Guaranteed Obligations.
10.6 Delay of Subrogation. Notwithstanding any payment made by or for the
account of Parent pursuant to this Parent Guaranty, Parent shall not be
subrogated to any right of the Agent or any Lender until such time as the Agents
and the Lenders have received final payment in cash of the full amount of all
Guaranteed Obligations and all other obligations of Parent hereunder.
10.7 Binding on Successors, Transferees and Assigns; Assignment of Parent
Guaranty. This Parent Guaranty shall be binding upon Parent and its successors,
transferees and assigns, and all references herein to a Borrower or to Parent
shall be deemed to include any of such Person's successor or successors, whether
intermediate or remote. Any Lender may from time to time, to the extent and in
the manner provided in Section 12.8 of this Agreement, without notice to Parent,
assign or transfer any or all of the Guaranteed Obligations or any interest
therein; and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Guaranteed Obligations shall be and remain
Guaranteed Obligations for purposes of this Parent Guaranty, and each and every
immediate and successive assignee or transferee of any of the Guaranteed
Obligations or of any interest therein shall, to the extent of the interest of
such assignee or transferee in the Guaranteed Obligations, be entitled to the
benefits of this Parent Guaranty and shall be protected to the same extent as if
such assignee or transferee were an original Lender.
10.8 No Waiver; Remedies; Security. In addition to, and not in limitation
of, Section 10.3 and Section 10.5, no failure on the part of any Agent or any
Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
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ARTICLE XI
THE AGENTS
11.1 Appointment and Authorization. (a) Each Lender hereby irrevocably
(subject to Section 11.9) appoints, designates and authorizes each Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to such Agent by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, no Agent shall have any duties or
responsibilities, except those expressly set forth herein, nor shall any Agent
have or be deemed to have any fiduciary relationship with any Lender or any
other Agent, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent.
(b) Each Issuing Lender shall act on behalf of the Lenders with
respect to any Letter of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Paying Agent may agree
at the request of the Majority Lenders to act for such Issuing Lender with
respect thereto; provided, however, that each Issuing Lender shall have all of
the benefits and immunities (i) provided to the Agents in this Article XI with
respect to any act taken or omission suffered by such Issuing Lender in
connection with the Letters of Credit Issued by it or proposed to be Issued by
it and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Agent", as used in this Article XI,
included such Issuing Lender with respect to such act or omission, and (ii) as
additionally provided in this Agreement with respect to such Issuing Lender.
11.2 Delegation of Duties. Each Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
11.3 Liability of Agents. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the
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Lenders for any recital, statement, representation or warranty made by the
Company or any Subsidiary or Affiliate of the Company, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by any Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of the Company or either Borrower or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Company or any of the Company's Subsidiaries or
Affiliates.
11.4 Reliance by Agents. (a) Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to any Credit Party), independent accountants and other experts selected by such
Agent. Each Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders (or, if expressly
required by the provisions hereof, the Supermajority Lenders or all Lenders) as
it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
As between the Agent and the Lenders, each Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Majority
Lenders (or, if expressly required by the provisions hereof, the Supermajority
Lenders or all Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by any Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to
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be consented to or approved by or acceptable or satisfactory to such Lender.
11.5 Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Unmatured Event of Default or Event of Default
(except in the case of the Paying Agent, with respect to defaults in the payment
of principal, interest and fees required to be paid to the Paying Agent for the
account of the Lenders) unless such Agent shall have received written notice
from a Lender, another Agent or a Credit Party referring to this Agreement,
describing such Unmatured Event of Default or Event of Default and stating that
such notice is a "notice of default". Each Agent will notify the other Agents
and the Lenders of its receipt of any such notice. The Agents shall take such
action with respect to such Unmatured Event of Default or Event of Default as
may be requested by the Majority Lenders in accordance with Article IX;
provided, however, that unless and until the Agents have received any such
request, each Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Unmatured Event of Default
or Event of Default as it shall deem advisable or in the best interest of the
Lenders.
11.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by any Agent hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
each Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Borrowers
hereunder. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
the other Credit Parties. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by an Agent, no Agent
shall have any duty or responsibility to provide any Lender with any credit or
other information concerning the business,
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prospects, operations, property, financial and other condition or
creditworthiness of the Company or any other Credit Party which may come into
the possession of any of the Agent-Related Persons.
11.7 Indemnification of Agents. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrowers and without limiting the obligation of the Borrowers to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to any Agent-Related Person of
any portion of the Indemnified Liabilities resulting from such Person's bad
faith, gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse each Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs) incurred
by such Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that such
Agent is not reimbursed for such expenses by or on behalf of the Borrowers. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of any Agent.
11.8 Agents in Individual Capacity. BofA, Chase and each of their
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in and generally engage in
any kind of banking, trust, financial advisory, underwriting or other business
with the Company and its Subsidiaries and Affiliates as though BofA or Chase, as
the case may be, were not an Agent hereunder, without notice to or consent of
the Lenders. The Lenders acknowledge that, pursuant to such activities, BofA,
Chase or any of their respective Affiliates may receive information regarding
the Company or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such Subsidiary) and
acknowledge that no Agent shall be under any obligation to provide such
information to them. With respect to its Loans, each of BofA and Chase and any
of their respective Affiliates shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not an
Agent-Related Person.
11.9 Successor Agent. Each Agent may, and at the request of the Majority
Lenders shall, resign as an Agent upon 30 days' notice to the Lenders. If the
Paying Agent resigns under this Agreement, then Chase (so long as it is still an
Administrative
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Agent) shall be deemed to have been appointed the successor paying agent;
provided that if Chase declines to serve as successor paying agent or Chase is
the resigning Paying Agent, then the Majority Lenders shall appoint from among
the Lenders a successor paying agent. If no successor paying agent is appointed
prior to the effective date of the resignation of the retiring Paying Agent, the
retiring Paying Agent may appoint, after consulting with the Lenders and the
other Agent (if any), a successor agent from among the Lenders. Any appointment
of a successor paying agent by the Majority Lenders or the retiring Paying Agent
pursuant to either of the two preceeding sentences shall, so long as no Event of
Default or Unmatured Event of Default exists, be subject to the approval of the
Company (which approval shall not be unreasonably withheld or delayed). Upon the
acceptance of its appointment as successor paying agent hereunder, such
successor paying agent shall succeed to all the rights, powers and duties of the
retiring Paying Agent and shall become (unless it already is) an "Administrative
Agent" hereunder, the terms "Paying Agent" and "Administrative Agent" shall mean
and include such successor paying agent and the retiring Paying Agent's
appointment, powers and duties as Paying Agent and Administrative Agent shall be
terminated. After any retiring Agent's resignation hereunder as an Agent, the
provisions of this Article XI and Sections 12.4 and 12.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement. If the Paying Agent resigns and no successor paying
agent has accepted appointment as the Paying Agent by the date which is 30 days
following the retiring Paying Agent's notice of resignation, the retiring Paying
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of the Paying Agent hereunder until such
time, if any, as the Majority Lenders appoint a successor paying agent as
provided for above. Notwithstanding anything to the contrary set forth above,
BofA may not be removed as an Agent at the request of the Majority Lenders
unless BofA is simultaneously replaced as an Issuing Lender and as Swingline
Lender pursuant to documentation in form and substance reasonably satisfactory
to BofA.
11.10 Withholding Tax. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Section 1441 or
1442 of the Code, such Lender shall deliver to the Paying Agent and the
Borrowers:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly completed
IRS Forms 1001 and W-8 before the payment of any interest in the first
calendar year and (except to the extent it is unable to do so as a result
of a change in law after the date hereof) before the payment of
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any interest in each third succeeding calendar year during which interest
may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224 before
the payment of any interest is due in the first taxable year of such
Lender and (except to the extent it is unable to do so as a result of a
change in law after the date hereof) in each succeeding taxable year of
such Lender during which interest may be paid under this Agreement, and
IRS Form W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Each such Lender agrees to notify the Paying Agent and the Borrowers promptly of
any change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of either Borrower to such Lender, such Lender
agrees to notify the Paying Agent and such Borrower of the percentage amount in
which it is no longer the beneficial owner of Obligations of such Borrower to
such Lender. To the extent of such percentage amount, the Paying Agent and the
applicable Borrower will treat such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claims exemption from United States withholding
tax by filing IRS Form 4224 with the Paying Agent and either Borrower and such
Lender sells, assigns, grants a participation in, or otherwise transfers all or
part of the Obligations of such Borrower to such Lender, such Lender agrees to
undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Paying Agent or the applicable Borrower may withhold from
any interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other
documentation required by subsection (a) of this Section are not delivered to
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the Paying Agent or the applicable Borrower, then the Paying Agent or such
Borrower may withhold from any interest payment to such Lender not providing
such forms or other documentation an amount equivalent to the applicable
withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Paying Agent or either
Borrower did not properly withhold tax from amounts paid to or for the account
of any Lender (because the appropriate form was not delivered or was not
properly executed, or because such Lender failed to notify the Paying Agent of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason), such Lender shall
indemnify the Paying Agent or such Borrower fully for all amounts paid, directly
or indirectly, by the Paying Agent or such Borrower as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Paying Agent or such Borrower under
this Section, together with all costs and expenses (including Attorney Costs).
The obligation of the Lenders under this subsection shall survive the payment of
all Obligations and the resignation or replacement of the Paying Agent.
11.11 Collateral Matters.
(a) The Paying Agent is authorized on behalf of all the Lenders,
without the necessity of any notice to or further consent from the Lenders, from
time to time to take any action with respect to any collateral or the Collateral
Documents which may be necessary to perfect and maintain perfected the security
interest in and Liens upon the collateral granted pursuant to the Collateral
Documents.
(b) The Lenders irrevocably authorize the Paying Agent, at its
option and in its discretion, (i) to release any Guarantor (other than the
Company, either Borrower, QFC or HMI) from its obligations under the applicable
Guaranty if such Guarantor ceases to be a Subsidiary as a result of a
transaction permitted by this Agreement and (ii) to release any Lien granted to
or held by the Paying Agent upon any collateral (A) upon termination of the
commitments of the Lenders hereunder and payment in full of all Loans and all
other obligations known to the Paying Agent and payable under this Agreement or
any other Loan Document; (B) constituting property sold or to be sold or
disposed of as part of or in connection with any disposition permitted
hereunder; (C) consisting of an Intercompany Note which has been paid in full;
or (D) if approved, authorized or ratified in writing by the Majority Lenders
or, if required by Section 12.1(e), all the Lenders. Upon request by the Paying
Agent at any time, the Lenders will confirm in writing the Paying Agent's
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authority to release any Guarantor or any particular type or item of Collateral
pursuant to this subsection 11.11(b).
11.12 Other Agents. None of the Lenders identified on the signature pages
of this Agreement or otherwise herein as being a "managing agent" or a
"co-agent" (collectively, the "Other Agents") shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders. Each Lender acknowledges that it has not
relied, and will not rely, on any of the Other Agents in deciding to enter into
this Agreement or in taking or refraining from taking any action hereunder or
pursuant hereto.
ARTICLE XII
MISCELLANEOUS
12.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or either Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Majority Lenders (or by the
Administrative Agents at the written request of the Majority Lenders), the
Company and the Borrowers and acknowledged by the Agents, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided that no such waiver, amendment or
consent, unless in writing and signed by the Supermajority Lenders and the
Borrowers and acknowledged by the Agents, shall modify Schedule 2.9 or the terms
of any scheduled reduction of the Acquisition Facility Commitment Amount as set
forth in Section 2.6(b); provided, further, that no such waiver, amendment or
consent shall, unless in writing and signed by all of the Lenders, the Company
and the Borrowers (or the other applicable Credit Parties) and acknowledged by
each Agent, do any of the following:
(a) increase or extend the Commitment of any Lender (or reinstate
any Commitment terminated pursuant to Section 9.2);
(b) extend the final maturity of the Term Loans or, except as set
forth in the first proviso set forth above, postpone or delay any date fixed by
this Agreement or any other Loan Document for any other payment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder or
under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on, any Loan, or (subject to clause (iv) below) reduce any fees or other
amounts payable hereunder or under any other Loan Document;
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(d) change the aggregate Pro Rata Share which is required for the
Lenders or any of them to take any action hereunder;
(e) release any Guaranty or release all or substantially all of the
collateral granted under any Pledge Agreement; or
(f) amend this Section, or Section 2.15, or any provision herein
providing for consent or other action by all Lenders;
and provided, further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the applicable Issuing Lender in addition to the Majority
Lenders or all the Lenders, as the case may be, affect the rights or duties of
such Issuing Lender under this Agreement or any L/C-Related Document relating to
any Letter of Credit Issued or to be Issued by it, (ii) no amendment, waiver or
consent shall, unless in writing and signed by the Swingline Lender in addition
to the Majority Lenders or all Lenders, as the case may be, affect the rights
and duties of the Swingline Lender under this Agreement, (iii) no amendment,
waiver or consent shall, unless in writing and signed by each Agent in addition
to the Majority Lenders or all the Lenders, as the case may be, affect the
rights or duties of any Agent under this Agreement or any other Loan Document,
and (iv) the Fee Letter may be amended, or rights or privileges thereunder
waived, in a writing executed by the parties thereto.
12.2 Notices. (a) All notices, requests and other communications hereunder
shall be in writing (including, unless the context expressly otherwise provides,
by facsimile transmission, provided that any matter transmitted by the Company
by facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on Schedule 12.2 and (ii) shall be followed
promptly by delivery of a hard copy original thereof) and mailed, faxed or
delivered to the address or facsimile number specified for notices on Schedule
12.2; or, as directed to the Company, either Borrower or the applicable Agent,
to such other address as shall be designated by such party in a written notice
to the other parties, and as directed to any other party, at such other address
as shall be designated by such party in a written notice to the Company, the
Borrowers and each Agent.
(b) All such notices, requests and communications shall, if sent by
overnight delivery, hand delivery or registered or certified mail, be effective
when delivered (or when delivery is refused), and, if faxed, be effective when
received in legible form by facsimile machine; except that notices pursuant to
Article II, III or XI to any Agent shall not be effective until
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actually received by such Agent, and notices pursuant to Article III to any
Issuing Lender shall not be effective until actually received by such Issuing
Lender at the address specified for such Issuing Lender on Schedule 12.2.
(c) Any agreement of any Agent and the Lenders herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Borrowers. The Agents and the Lenders shall be entitled to
rely on the authority of any Person purporting to be a Person authorized by
either Borrower to give such notice, and the Agents and the Lenders shall not
have any liability to such Borrower or any other Person on account of any action
taken or not taken by the Agents or the Lenders in reliance upon such telephonic
or facsimile notice. The obligation of the Borrowers to repay the Loans and L/C
Obligations shall not be affected in any way or to any extent by any failure of
any Agent or any Lender to receive written confirmation of any telephonic or
facsimile notice or the receipt by any Agent or any Lender of a confirmation
which is at variance with the terms understood by such Agent or such Lender to
be contained in the telephonic or facsimile notice.
12.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of any Agent or any Lender, any right, remedy, power
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.
12.4 Costs and Expenses.
(a) Whether or not the transactions contemplated hereby are
consummated, the Borrowers shall pay or reimburse each of the Agents and the
Arrangers within five Business Days after demand (subject to subsection 5.1(e))
for all reasonable out-of-pocket costs and expenses incurred by such Agent or
Arranger in connection with the development, preparation, syndication,
execution, delivery and administration of, and any amendment, supplement, waiver
or modification to (in each case, whether or not consummated), this Agreement,
any other Loan Document and any other document prepared in connection herewith
or therewith, and the consummation of the transactions contemplated hereby and
thereby, including Attorney Costs incurred by the Agents and the Arrangers with
respect thereto.
(b) The Borrowers shall pay or reimburse each Agent, each Arranger
and each Lender within five Business Days after demand (subject to subsection
5.1(e)) for all costs and expenses (including Attorney Costs) incurred by them
in connection with the enforcement, attempted enforcement or preservation of any
101
right or remedy under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of the Loans (including
in connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).
(c) The agreements in this Section shall survive the termination of
the Agreement and payment of all other Obligations.
12.5 Indemnification by Borrowers. Whether or not the transactions
contemplated hereby are consummated, the Borrowers shall indemnify and hold the
Agent-Related Persons and each Lender and each of their respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each an
"Indemnified Person") harmless from and against any and all claims, liabilities,
losses, damages (or actions or other proceedings commenced or threatened in
respect thereof) and related expenses (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans, the termination of the Letters of Credit and the
termination, resignation or replacement of any Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such Person that
arise out of, result from or in any way relate to this Agreement or any other
Loan Document, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding) related
to or arising out of this Agreement or the Loans or Letters of Credit or the use
of the proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided that the Borrowers shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities to the extent
resulting from the (x) bad faith, gross negligence or willful misconduct of an
Indemnified Person or (y) in connection with a claim brought by a Credit Party
against such Indemnified Person that has been resolved in favor of such Credit
Party by a final, non-appealable judgment of a court of competent jurisdiction.
The agreements in this Section shall survive the termination of this Agreement
and payment of all other Obligations.
12.6 Payments Set Aside. To the extent that either Borrower makes a
payment to the Agents or the Lenders, or the Agents or the Lenders exercise
their right of set-off, and such payment or the proceeds of such set-off or any
part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by such Agent or such Lender in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any Insolvency
Proceeding or otherwise,
102
then (a) to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such set-off had not
occurred, and (b) each Lender severally agrees to pay to the applicable Agent
upon demand its pro rata share of any amount so recovered from or repaid by such
Agent. The agreements in this Section shall survive the termination of this
Agreement and payment of all other Obligations.
12.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither the Company nor either
Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Agent and each Lender.
12.8 Assignments, Participations, etc. (a) Any Lender may, subject to the
last sentence of this subsection 12.8(a), with the written consent of the Agents
(which consents shall not be unreasonably withheld or delayed) and, unless an
Event of Default exists under subsection (a), (f) or (g) of Section 9.1 or any
other Event of Default exists which has been continuing for 90 consecutive days,
the Company (which consent of the Company shall not be unreasonably withheld or
delayed), at any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company or the Agents shall be required
in connection with any assignment and delegation by a Lender to an Eligible
Assignee that is an Affiliate of such Lender or to another Lender) (each an
"Assignee") all, or any ratable part of all, of the Loans, the Commitment, the
L/C Obligations and the other rights and obligations of such Lender hereunder,
in a minimum amount of $10,000,000 (or, if less, the amount of such Lender's
Commitment); provided that after giving effect to such assignment, the assigning
Lender retains a Commitment of at least $10,000,000 (unless such Lender's
Commitment is reduced to $0 in connection with such assignment); provided,
further, that the Borrowers and the Agents may continue to deal solely and
directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Company and the Agents by such Lender and the
Assignee; (ii) such Lender and the Assignee shall have delivered to the Company
and the Agents an Assignment and Acceptance in the form of Exhibit F
("Assignment and Acceptance") together with any Note or Notes subject to such
assignment and (iii) the assignor Lender or the Assignee shall have paid to the
Paying Agent a processing fee in the amount of $3,500. So long as no Event of
Default exists under subsection (a), (f) or (g) of Section 9.1 or
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any other Event of Default exists which has been continuing for 90 consecutive
days, upon disclosing any non-public information relating to the Company or any
Subsidiary to any prospective assignee (and at least three Business Days before
the date any Lender gives notice of any assignment or delivers any Assignment
and Acceptance referred to above), such Lender shall notify the Company of its
intention to make an assignment (it being understood that failure of a Lender to
comply with its obligations under this sentence shall not, in and of itself,
constitute a reasonable basis to withhold consent to an assignment).
(b) From and after the date that the Paying Agent notifies the
assignor Lender that it has received (and, to the extent required by subsection
12.8(a), the Administrative Agents have given their consent, and have received
the consents of the Borrowers with respect to) an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) Any Lender may, subject to giving prior written notice to the
Company, at any time sell to one or more Persons not Affiliates of the Company
(a "Participant") participating interests in any Loan, the Commitment of such
Lender and the other interests of such Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided that (i) the originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
originating Lender shall remain solely responsible for the performance of such
obligations, (iii) the Borrowers and the Agents shall continue to deal solely
and directly with the originating Lender in connection with the originating
Lender's rights and obligations under this Agreement and the other Loan
Documents, and (iv) no Lender shall transfer or grant any participating interest
under which the Participant has rights to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other Loan Document,
except to the extent such amendment, consent or waiver would be required to be
signed by all Lenders pursuant to Section 12.1. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections 4.1,
4.3, 4.4 and 12.5 as though it were also a Lender hereunder, and if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the
104
occurrence of an Event of Default, the Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement.
(d) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and any Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.
12.9 Confidentiality. Each Lender agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information provided to such Lender by the
Company or any Subsidiary, or by any Agent on the Company's or such Subsidiary's
behalf, under this Agreement or any other Loan Document, and neither such Lender
nor any of its Affiliates shall use any such information other than in
connection with or in enforcement of this Agreement and the other Loan Documents
or in connection with other business now or hereafter existing or contemplated
with the Company or any Subsidiary, except to the extent such information (i)
was or becomes generally available to the public other than as a result of
disclosure by such Lender or (ii) was or becomes available on a non-confidential
basis from a source other than the Company or a Subsidiary, provided that such
source is not bound by a confidentiality agreement with the Company or any
Subsidiary known to the Lender; provided, however, that any Lender may disclose
such information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Lender is subject or in connection with an
examination of such Lender by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which any Agent or
any Lender, or their respective Affiliates, may be party; (E) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (F) to such Lender's independent auditors and, to
the extent reasonably necessary in connection with this Agreement, other
professional advisors (subject in each case to the confidentiality restrictions
set forth in this Section 12.9); (G) to any Participant or Assignee, actual or
potential, provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Lenders hereunder; (H) as to any
Lender or its Affiliates, as expressly permitted under the terms of any other
document or
105
agreement regarding confidentiality to which the Company or any Subsidiary is
party or is deemed party with such Lender or such Affiliate; and (I) to its
Affiliates (to the extent permitted by applicable law).
12.10 Set-off. In addition to any right or remedy of the Lenders provided
by law, if any amount is due and payable to any Lender hereunder, such Lender is
authorized at any time and from time to time, without prior notice to the
Company or either Borrower, any such notice being waived by the Company and each
Borrower to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender to or for
the credit or the account of the Company or such Borrower against any amount
owed by the Company or such Borrower, irrespective of whether or not such Agent
or such Lender shall have made demand under this Agreement or any Loan Document.
Each Lender agrees promptly to notify the Company or the applicable Borrower, as
the case may be, and the Paying Agent after any such set-off and application
made by such Lender; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application.
12.11 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, agency fee, letter of credit fee or other fee due and payable
to any Agent, any Issuing Lender, any Lender, the Swingline Lender or the
Arrangers under the Loan Documents, each Borrower hereby irrevocably authorizes
BofA to debit any deposit account of such Borrower with BofA in an amount such
that the aggregate amount debited from all such deposit accounts does not exceed
such fee or other cost or expense. If there are insufficient funds in such
deposit accounts to cover the amount of the fee or other cost or expense then
due, such debits will be reversed (in whole or in part, in BofA's sole
discretion) and such amount not debited shall be deemed to be unpaid. No such
debit under this Section shall be deemed a set-off.
12.12 Notification of Addresses, Lending Offices, Etc. Each Lender shall
notify each Agent in writing of any changes in the address to which notices to
such Lender should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as any Agent shall reasonably request.
12.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of which taken together shall be deemed to constitute but one
and the same instrument.
106
12.14 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or such instrument or agreement.
12.15 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Company, the Borrowers, the
Lenders, the Agents and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents.
12.16 Subsidiary References. The provisions of this Agreement relating to
Subsidiaries of the Company shall apply only at such times as the Company has
one or more Subsidiaries; and the provision of this Agreement regarding
consolidated financial statements and covenants shall apply only at such times
as the Company has one or more consolidated subsidiaries.
12.17 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND ANY NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
ILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS OR
OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY ILLINOIS LAW.
12.18 Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES ITS RIGHT TO
A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY
AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY
SUCH CLAIM OR CAUSE OF ACTION
107
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING,
THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENT, RENEWAL,
SUPPLEMENT OR MODIFICATION TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
12.19 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties
hereto, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
12.20 Restructuring Effective Date. All of the parties hereto agree that,
effective upon the Restructuring Effective Date without further act or deed of
any of the parties hereto, (x) Holdings will assume all liabilities and
obligations of QFC with respect to the Revolving Loans, the Swingline Loans, the
Letters of Credit, the L/C Obligations and Acquisition Loans and under the Notes
with respect thereto (and, except to the extent provided in the Intercompany
Guaranty (Holdings), QFC will be released from its obligations with respect
thereto), (y) the commitments of the Lenders to make Revolving Loans, Issue
Letters of Credit and make Acquisition Loans shall be deemed to be extended to
Holdings rather than QFC, and (z) Holdings shall (and hereby agrees that it will
be) the "Borrower" for purposes of all Revolving Loans, Swingline Loans, Letters
of Credit, L/C Obligations, Acquisition Loans and other matters related to or
arising in respect of the commitments to extend credit in the amount of the
Revolving Commitment Amount and the Acquisition Facility Commitment Amount.
12.21 Amendment and Restatement. This Agreement is an amendment and
restatement of the Existing Agreement and, upon the effectiveness hereof
pursuant to Section 5.1, shall replace the Existing Agreement in its entirety
(except that any provision of the Existing Agreement which by its terms survives
the termination thereof shall survive such replacement).
108
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Chicago, Illinois by their proper and duly
authorized officers as of the day and year first above written.
QUALITY FOOD CENTERS, INC.
By: /s/ Xxxx Xxxxxxx
--------------------------------
Title: Vice President, Chief
Financial Officer and
Secretary/Treasurer
QUALITY FOOD HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxx
--------------------------------
Title: Vice President and Chief
Financial Officer
QUALITY FOOD, INC.
By: /s/ Xxxx Xxxxxxx
--------------------------------
Title: Vice President and Chief
Financial Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent and Paying
Agent
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Title:__________________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Issuing Lender and Lender
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Title:__________________________________
THE CHASE MANHATTAN BANK,
as Administrative Agent
By: /s/
--------------------------------
Title:__________________________________
THE CHASE MANHATTAN BANK,
as Issuing Lender and Lender
By: /s/
--------------------------------
Title:__________________________________
NATIONSBANK OF TEXAS, N.A., as
Managing Agent and as a Lender
By: /s/
--------------------------------
Title:__________________________________
BANQUE PARIBAS, as Co-Agent and as
a Lender
By: /s/ Xxxxxxx X. X'Xxxxx
--------------------------------
Title:__________________________________
By: /s/ Xxxxx Xxxx III
--------------------------------
Title:__________________________________
CAISSE NATIONALE DE CREDIT
AGRICOLE, S.A., as Co-Agent and as
a Lender
By: /s/ Xxxx Xxxxxx
--------------------------------
Title:__________________________________
FIRST BANK NATIONAL ASSOCIATION, as
Co-Agent and as a Lender
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Title:__________________________________
PNC BANK, NATIONAL ASSOCIATION, as
Co-Agent and as a Lender
By: /s/
--------------------------------
Title:__________________________________
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK, as Co-Agent and as a
Lender
By: /s/ Xxxx X. Silver
--------------------------------
Title:__________________________________
THE BANK OF NEW YORK, as Co-Agent
and as a Lender
By: /s/ R. Was Towns
--------------------------------
Title:__________________________________
UNION BANK OF CALIFORNIA, N.A. as
Co-Agent, Issuing Lender and as a
Lender
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title:__________________________________
ABN-AMRO BANK N.V.
By: /s/ Xxxxxxxxx X. Xxxxxxx
--------------------------------
Title:__________________________________
By: /s/ Xxxxx X. Xxxx
--------------------------------
Title:__________________________________
THE BANK OF NOVA SCOTIA
By: /s/
--------------------------------
Title:__________________________________
By: /s/
--------------------------------
Title:__________________________________
CIBC INC.
By: /s/
--------------------------------
Title:__________________________________
DRESDNER BANK AG NEW YORK AND GRAND
CAYMAN ISLAND BRANCHES
By: /s/
--------------------------------
Title:__________________________________
By: /s/
--------------------------------
Title:__________________________________
CREDIT LYONNAIS CHICAGO BRANCH
By: /s/
--------------------------------
Title:__________________________________
KEYBANK NATIONAL ASSOCIATION
By: /s/
--------------------------------
Title:__________________________________
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/
--------------------------------
Title:__________________________________
XXXXXX TRUST & SAVINGS BANK
By: /s/
--------------------------------
Title:__________________________________
THE LONG-TERM CREDIT BANK OF JAPAN
LTD. LOS ANGELES AGENCY
By: /s/
--------------------------------
Title:__________________________________
US BANK OF WASHINGTON, NATIONAL
ASSOCIATION
By: /s/
--------------------------------
Title:__________________________________
SCHEDULES AND EXHIBITS OMITTED
