Exhibit 10.1
$110,000,000
CREDIT AGREEMENT
===============================================
PETCO ANIMAL SUPPLIES, INC.
BORROWER
THE BANKS NAMED HEREIN
LENDERS
AND
UNION BANK OF CALIFORNIA, N.A.
Administrative Agent, Arranger and
Syndication Agent
===============================================
Dated as of January 30, 1998
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS 1
ARTICLE 2
THE CREDIT 14
2.1 Revolving Loans 14
2.2 Issuance of Letters of Credit 16
2.3 Fees 20
2.4 Term Loans 21
2.5 Types of Loans 22
2.6 Voluntary Conversion of Advances 22
2.7 Interest. 23
2.8 Rates Applicable After Default 24
2.9 Method of Payment 24
2.10 Telephonic Notices 24
2.11 Interest Payment Dates; Interest and Fee Basis 24
2.12 Notification of Loan, Interest Rates, Prepayments and
Commitment Reductions 25
2.13 Applicable Lending Offices 25
2.14 Non-Receipt of Funds by the Agent 26
2.15 Withholding Tax Exemption 26
2.16 Optional Prepayments 26
2.17 Mandatory Prepayments 27
2.18 Commitment Obligations 27
2.19 Commitment Termination 27
2.20 Required Payments 27
ARTICLE 3
CHANGE IN CIRCUMSTANCES 28
3.1 Yield Protection 28
3.2 Taxes 29
ARTICLE 4
CONDITIONS PRECEDENT 29
4.1 Initial Loan or Letter of Credit 29
4.2 All Loans 31
4.3 All Letters of Credit 31
ARTICLE 5
REPRESENTATIONS AND WARRANTIES 32
5.1 Authorization 32
5.2 Governmental Action 32
5.3 Enforceability 32
5.4 Use of Proceeds 32
5.5 Litigation 33
5.6 Financial Statements 33
5.7 Taxes 33
5.8 Subsidiaries 33
5.9 ERISA 33
5.10 Accuracy of Information 33
5.11 Organization and Existence 34
5.12 Consents 34
5.13 Intellectual Property 34
5.14 Default 34
5.15 Nature of Business 34
5.16 Ranking of Loans 35
5.17 Compliance with Laws 35
5.18 Investment Company Acts; Other Regulations 35
5.19 Environmental Matters 35
5.20 Title 35
5.21 Solvency 35
ARTICLE 6
COVENANTS 36
6.1 Financial Reporting 36
6.2 Use of Proceeds 38
6.3 Notice of Default 38
6.4 Conduct of Business 38
6.5 Records 39
6.6 Insurance 39
6.7 Compliance with Laws 39
6.8 Maintenance of Properties 39
6.9 Inspection 39
6.10 Debt 39
6.11 Merger 40
6.12 Sale of Assets 40
6.13 Sale of Accounts 40
6.14 Acquisitions 40
6.15 Affiliates 41
6.16 ERISA 41
6.17 Capital Expenditures 41
6.18 Total Debt Ratio 42
6.19 Payment of Obligations 42
6.20 Consolidated Net Worth 42
6.21 Restricted Junior Payments. 43
6.22 Encumbrances and Liens 43
6.23 Loans, Advances and Guaranties 43
6.24 Investments 44
6.25 Minimum Fixed Charge Coverage Ratio 45
6.26 Capitalized Rent Expense Ratio 45
6.27 Guaranties, Etc 45
6.28 Lease Obligations 46
6.29 Condition Subsequent 46
ARTICLE 7
DEFAULTS 46
7.1 Payment Defaults. 46
7.2 Representations and Warranties. 46
7.3 Other Loan Document Defaults. 46
7.4 Bankruptcy. 46
7.5 Other Agreements. 47
7.6 ERISA. 47
7.7 Judgments. 47
7.8 Loan Documents 47
ARTICLE 8
ACCELERATION, WAIVERS AND AMENDMENTS 47
8.1 Acceleration 47
8.2 Cash Collateral 48
8.3 Additional Remedies 48
8.4 Amendments 48
8.5 Preservation of Rights 49
ARTICLE 9
GENERAL PROVISIONS 49
9.1 Survival of Representations 49
9.2 Governmental Regulation 49
9.3 Headings 49
9.4 Entire Agreement 49
9.5 Several Obligations; Benefits of this Agreement 49
9.6 Expenses; Indemnification 50
9.7 Numbers of Documents 50
9.8 Accounting 50
9.9 Severability of Provisions 51
9.10 Nonliability of Lenders 51
9.11 CHOICE OF LAW 51
9.12 CONSENT TO JURISDICTION 51
9.13 WAIVER OF JURY TRIAL 51
9.14 Integration Clause 51
9.15 Confidentiality 52
ARTICLE 10
THE AGENT 52
10.1 Appointment 52
10.2 Powers 52
10.3 General Immunity 52
10.4 No Responsibility for Loans, Recitals, etc. 52
10.5 Action on Instructions of Lenders 53
10.6 Employment of Agents and Counsel 53
10.7 Reliance on Documents; Counsel 53
10.8 Agent's Reimbursement and Indemnification 53
10.9 Rights as a Lender 54
10.10 Lender Credit Decision 54
10.11 Successor Agent 54
ARTICLE 11
SETOFF; RATABLE PAYMENTS 55
11.1 Setoff 55
11.2 Ratable Payments 55
ARTICLE 12
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 56
12.1 Successors and Assigns 56
12.2 Participations 56
12.3 Assignments 57
12.4 Dissemination of Information 58
12.5 Tax Treatment 58
ARTICLE 13
NOTICES 59
13.1 Giving Notice 59
13.2 Change of Address 59
ARTICLE 14
COUNTERPARTS 59
SCHEDULE 1 - LENDERS AND APPLICABLE LENDING OFFICES
SCHEDULE 2 - SUBSIDIARIES
SCHEDULE 3 - DEBT
EXHIBIT A-1 - FORM OF REVOLVING NOTE
EXHIBIT A-2 - FORM OF TERM NOTE
EXHIBIT B - COMPLIANCE CERTIFICATE
EXHIBIT C - ASSIGNMENT AGREEMENT
EXHIBIT D - LEVERAGE RATIO LEVEL CERTIFICATE
EXHIBIT E - FORMS OF LETTER OF CREDIT REQUESTS
EXHIBIT F - FORM OF NOTICE OF BORROWING
CREDIT AGREEMENT
This Agreement, dated as of January 30, 1998, is among PETCO ANIMAL
SUPPLIES, INC., a Delaware corporation (the "Borrower"), the financial
institutions party hereto (together with their respective successors and
permitted assigns, the "Lenders") and UNION BANK OF CALIFORNIA, N.A.
("UBOC"), as Agent for the Lenders. The parties hereto agree as follows:
RECITALS
WHEREAS, UBOC, certain lenders and the Borrower are parties to that
Credit Agreement dated as of December 6, 1996 (the "Prior Loan Agreement");
and
WHEREAS, the Lenders have agreed, on the terms and conditions herein
set forth, to extend term and revolving credit to the Borrower for the
purposes of repaying all amounts under the Prior Loan Agreement, of
refinancing costs associated with recent acquisitions and store
conversions, of making permitted acquisitions and capital expenditures, of
making bridge loans permitted hereunder to Canadian Petcetera Warehouse
Inc., for working capital purposes and for general corporate purposes;
WHEREAS, the Lenders have agreed, on the terms and conditions herein
set forth, to issue letters of credit for the Borrower's account as a
revolving commitment subfacility for the purposes of supporting purchases
of inventory by the Borrower and of providing support for lease and
insurance obligations of the Borrower;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
the Borrower or any of its Subsidiaries (i) acquires any going business in
the pet food and supply business or related fields or all or substantially
all of the assets of any firm, corporation or division thereof in the pet
food and supply business or related fields, whether through purchase of
assets, merger or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions)
at least a majority (in number of votes) of the securities of a corporation
in the pet food and supply business or related fields which have ordinary
voting power for the election of directors (other than securities having
such power only by reason of the happening of a contingency) or a majority
(by percentage or voting power) of the outstanding partnership interests of
a partnership in the pet food and supply business or related fields.
"Acquisition Documents" means the purchase agreement, together with
all schedules and exhibits referenced therein and the legal opinions
delivered in connection therewith in connection with any Acquisition.
"Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by the Lenders to the Borrower of the same
Type and, in the case of a LIBOR Loan, for the same Interest Period.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or 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 to direct
or cause the direction of the management or policies of the controlled
Person, whether through ownership of stock, by contract or otherwise.
"Agent" means UBOC in its capacity as administrative agent for the
Lenders pursuant to Article 10, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article 10.
"Aggregate Available Commitment" means the aggregate of the Available
Commitments of all the Lenders.
"Aggregate Commitment" means the aggregate of the Term Commitments
and Revolving Commitments of all the Lenders.
"Aggregate Revolving Commitment" means the aggregate of the Revolving
Commitments of all the Lenders.
"Agreement" means this Credit Agreement, as it may be amended or
modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent
with that used in preparing the financial statements referred to in
Section 5.6 (except for changes concurred on by the Borrower's independent
public accountants and the Required Lenders).
"Applicable Lending Office" means for any Lender, its offices for
LIBOR Loans and Base Rate Loans, specified in Schedule 1 or in the
Assignment and Acceptance pursuant to which it became a party hereto, as
the case may be, any of which offices may, upon 10 days' prior written
notice to the Agent and the Borrower, be changed by such Lender.
"Applicable Margin": for each LIBOR Loan and for each Base Rate Loan
as set forth below:
LIBOR Base
Leverage Ratio Level Margin Rate Margin
1 .500% 0%
2 .875% 0%
3 1.125% 0%
4 1.375% 0%
5 1.500% 0%
"Article" means an article of this Agreement unless another document
is specifically referenced.
"Assignment and Acceptance" means an Assignment and Acceptance in the
form of Exhibit C hereto.
"Authorized Officer" means any of the chief executive officer, chief
financial officer or any senior vice president (specifically authorized by
the Borrower) of the Borrower, acting singly.
"Available Commitment" means, with respect to each Lender having a
Revolving Commitment, the amount by which (i) the Revolving Commitment of
each Lender on such date exceeds (ii) the sum of (a) the aggregate
principal sum of such Lender's Revolving Loans outstanding, (b) such
Lender's Revolving Commitment Percentage of the aggregate Letter of Credit
Amount of all Letters of Credit outstanding and (c) such Lender's Revolving
Commitment Percentage of the aggregate amount of unreimbursed drawings
under all Letters of Credit on such date.
"Base Rate" means, for any day, a rate per annum equal to (i) the
Corporate Base Rate for such day plus (ii) the Applicable Margin, in each
case changing when and as the Corporate Base Rate changes.
"Base Rate Loan" means a Loan when it bears interest at the Base
Rate.
"Borrower" means Petco Animal Supplies, Inc., a Delaware corporation,
and its successors and assigns.
"Borrowing Date" means a date on which a Revolving Loan is made
hereunder.
"Business Day" means any day (i) other than a Saturday, Sunday or
other day on which commercial banks are authorized or required by law to
close in Los Angeles, California and (ii) if the applicable Business Day
relates to a LIBOR Loan, on which dealings are carried on in the London
interbank market.
"Capital Expenditures" means, for any period, for any person or
entity, the aggregate of all expenditures which are made during such period
(whether paid in cash or accrued as liabilities), by such person or entity,
for property, plant or equipment and which would be reflected as additions
to property, plant or equipment on a balance sheet of such person or entity
prepared in accordance with Agreement Accounting Principles (including,
without limitation, all such property held under Capitalized Leases).
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Agreement Accounting Principles.
"Capitalized Rent Expense Ratio" means for the Borrower and its
Subsidiaries on a consolidated basis, determined as of the end of each
fiscal quarter for the period of four fiscal quarters then ended, the ratio
of (i) the sum of Funded Debt plus eight times the Rent Expense for such
period to (ii) the sum of Funded Debt plus eight times the Rent Expense for
such period plus the stockholders' equity of the Borrower and its
Subsidiaries at such time.
"Closing Date" means the date on which all the conditions precedent
set forth in Section 4.1 shall have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"Commitment" means, for each Lender, its Revolving Commitment and
Term Commitment.
"Compliance Certificate" has the meaning set forth in Section 6.1(v).
"Consideration" means, with respect to any Acquisition, the aggregate
consideration, in whatever form (including, without limitation, cash
payments, the principal amount of promissory notes and Debt assumed, the
aggregate amounts payable to acquire, extend and exercise any option, the
aggregate amount payable under non-compete agreements and management
agreements and the fair market value of other property delivered) paid,
delivered or assumed by the Borrower and its Subsidiaries for such
Acquisition and the expenses associated therewith, including all brokerage
commissions, legal fees and similar expenses. Notwithstanding anything
herein to the contrary, no Acquisition involving the assumption of Debt by
the Borrower or its Subsidiaries shall be permitted if such assumption
would violate the terms of this Agreement.
"Consolidated Fixed Charges" means, for the Borrower and its
Subsidiaries, on a consolidated basis, for any period of four consecutive
fiscal quarters, the sum (without duplication) of (i) Interest Expense for
such period, (ii) cash dividends and distributions paid with respect to the
capital stock of the Borrower or its Subsidiaries during such period (other
than dividends and distributions paid by its Subsidiaries to the Borrower),
(iii) the aggregate principal amount of all scheduled payments of Debt
(including the principal portion of rentals under Capitalized Leases)
required to be made during such period, (iv) all income taxes required to
be paid during such period and (v) Rent Expenses during such period.
"Consolidated Net Worth" means with respect to the Borrower and its
Subsidiaries, the excess of total assets over total liabilities, all to be
determined on a consolidated basis in accordance with Agreement Accounting
Principles.
"Control" means the power to direct or cause the direction of the
management or policies of a person, whether through rights of ownership
under voting securities, under contract or otherwise, and "Controlling" and
"Controlled" shall have meanings correlative thereto.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrower or any of its
Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"Conversion/Continuation Notice" is the notice referred to in
Section 2.6.
"Corporate Base Rate" means a fluctuating interest rate per annum, as
in effect from time to time, at all times equal to the higher of the
following: (i) the sum of the Federal Funds Effective Rate in effect from
time to time plus 0.50% per annum; and (ii) the annual rate of interest
announced from time to time by UBOC as its corporate reference rate (which
is a rate set by UBOC based upon various factors, including, without
limitation, general market conditions, which is used as a reference point
for pricing certain loans and UBOC may price its loans at, above or below
such rate)
"Debt" of any person or entity means (i) all indebtedness of such
person or entity for borrowed money or for the deferred purchase price of
property or services, (ii) all obligations of such person or entity
evidenced by notes, bonds, debentures or other similar instruments,
(iii) all indebtedness created or arising under any conditional-sale or
other title-retention agreement with respect to property acquired by such
person or entity, (iv) all obligations of such person or entity as lessee
under leases that have been or should be, in accordance with Agreement
Accounting Principles, recorded as Capitalized Leases, (v) all obligations
of such person or entity under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire,
or otherwise to secure a credit against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (i), (ii), (iii)
or (iv) above and (vi) liabilities in respect of unfunded vested benefits
under plans covered by Title IV of ERISA.
"Default" means any Event of Default and any default, event or
condition that would, with the giving of any requisite notice and the
passage of any requisite period of time, constitute an Event of Default.
"Drawing Lender" has the meaning set forth in Section 2.2(iii).
"EBITDA" means for any period, for the fiscal quarter most recently
ended and the immediately preceding three fiscal quarters, Net Income after
eliminating extraordinary gains and losses, plus (i) provisions for income
taxes, (ii) depreciation and amortization and (iii) Interest Expense.
"EBITDAR" means for any period, for the fiscal quarter most recently
ended and the immediately preceding three fiscal quarters, (i) EBITDA plus
(ii) Rent Expenses.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any State thereof, and having total assets in
excess of $250,000,000 and having a credit rating acceptable to the Agent
and the Borrower; (ii) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such
country, and having total assets in excess of $250,000,000 and having a
credit rating acceptable to the Agent and the Borrower, provided that such
bank is acting through a branch or agency located in the United States;
(iii) an insurance company or other financial institution or an investment
fund that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and having total
assets in excess of $250,000,000 and having a credit rating acceptable to
the Agent and the Borrower; (iv) any Affiliate of an existing Lender having
a credit rating acceptable to the Agent and the Borrower; and (v) any other
Person approved by the Agent and, in the absence of any Default, the
Borrower.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurocurrency Liabilities" has the meaning set forth in Regulation D
of the Board of Governors of the Federal Reserve System.
"Event of Default" has the meaning set forth in Section 7.
"Facility Termination Date" means January 30, 2003.
"Federal Funds Effective Rate" means, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published for such day (or, if such
day is not a Business Day, for the immediately preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations at
approximately 10:00 a.m., Los Angeles time, on such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent in its sole discretion.
"Funded Debt" means the sum of the outstanding principal balance of
all Debt of the Borrower and its Subsidiaries described in clauses (i),
(ii), (iii) and (iv) of the definition of "Debt" set forth herein.
"Governmental Person" means, whether domestic or foreign, any
national, federal, state or local government, any political subdivision
thereof or any governmental, quasi-governmental, judicial, public or
regulatory instrumentality, authority, body or entity, including the
Federal Deposit Insurance Corporation, the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System, any central bank and any
comparable authority.
"Governmental Rule" means any treaty, law, rule, regulation,
ordinance, order, code, judgment, decree, directive, interpretation,
request, guideline, policy or similar form of decision of any Governmental
Person.
"Guarantors" means International Pet Supplies and Distribution, Inc.,
a California corporation, and Pet Nosh, Consolidated Co., Inc., a New York
corporation, and any other Subsidiary of the Borrower now or hereafter
formed or acquired, which has executed and delivered a Guaranty pursuant to
Section 6.27.
"Guaranties" means, collectively, each Guaranty dated as of even date
herewith executed by a Guarantor in favor of the Agent, for the benefit of
the Lenders, and in form and substance satisfactory to the Agent, as it may
be amended from time to time.
"Interest Expense" means as of any date, for the fiscal quarter most
recently ended and the immediately preceding three fiscal quarters, the sum
of (i) the amount of all interest on Funded Debt which was paid, payable
and/or accrued for such period (without duplication of previous amounts)
and (ii) all commitment, letter of credit or line of credit fees paid,
payable and/or accrued for such period (without duplication of previous
amounts) to any lender in exchange for such lender's commitment to lend.
"Interest Period" means, with respect to a LIBOR Loan, a period of
one, two, three or six months, commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Interest Period shall end on
(but exclude) the day which corresponds numerically to such date one, two
or three or six months thereafter, provided, however, that if there is no
such numerically corresponding day in such next, second or third or sixth
succeeding month, such Interest Period shall end on the last Business Day
of such next, second or third or sixth succeeding month. If an Interest
Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day, provided,
however, that if said next succeeding Business Day falls in a new calendar
month, such Interest Period shall end on the immediately preceding Business
Day. No Interest Period may end after the Facility Termination Date.
"Lenders" means the lending institutions listed on the signature
pages of this Agreement and their respective successors and assigns.
"Letter of Credit Amount" means the stated maximum amount available
to be drawn under a particular Letter of Credit, as such amount may be
reduced or reinstated from time to time in accordance with the terms of
such Letter of Credit.
"Letter of Credit Request" means a request by the Borrower for the
issuance of a Letter of Credit, on the Agent's standard form of standby or
commercial letter of credit application and agreement, the current form of
which is attached hereto as Exhibit E, and containing terms and conditions
satisfactory to the Agent in its sole discretion.
"Letter of Credit" shall have the meaning set forth in Section 2.1.
"Leverage Ratio Level": if the Total Debt Ratio shall be less than
0.75:1.00, the Leverage Ratio Level shall be 1; if the Total Debt Ratio
shall be equal to or greater than 0.75:1.00 and less than 1:00:1.00, the
Leverage Ratio Level shall be 2; if the Total Debt Ratio shall be equal to
or greater than 1.00:1.00 and less than 1.50:1.00, the Leverage Ratio Level
shall be 3; if the Total Debt Ratio shall be equal to or greater than
1.50:1.00 and less than 2.00:1.00, the Leverage Ratio Level shall be 4; and
if the Total Debt Ratio shall be equal to or greater than 2.00:1.00, the
Leverage Ratio Level shall be 5.
"Leverage Ratio Level Certificate" is defined in Section 2.7.
"LIBOR" means, for any Interest Period for any LIBOR Loan, the
interest rate per annum obtained by dividing (a) the average of the
respective rates per annum at which deposits in United States dollars are
offered to the Agent in London, England in the London interbank market at
11:00 a.m., London time, two Business Days before the first day of such
Interest Period in an amount substantially equal to the amount of such Loan
and for a period equal to such Interest Period by (b) a percentage equal to
100% minus the LIBOR Reserve Percentage for such Interest Period.
"LIBOR Loan" means a Loan when it bears interest at the LIBOR Rate.
"LIBOR Rate" means, with respect to a LIBOR Loan for the relevant
Interest Period, the sum of (i) LIBOR applicable to such Interest Period,
plus (ii) the Applicable Margin. The LIBOR Rate shall be rounded to the
next higher multiple of 1/100 of 1% if the rate is not such a multiple.
"LIBOR Reserve Percentage" means, for any Interest Period for any
LIBOR Loan, the reserve percentage applicable two Business Days before the
first day of such Interest Period under regulations issued from time to
time by the Board of Governors of the Federal Reserve System for
determining the maximum reserve requirements (including any emergency,
supplemental or other marginal reserve requirement) for any Bank with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that
includes deposits by reference to which the interest rate on such LIBOR
Loan is determined) having a term equal to such Interest Period.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including the lien or retained title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
"Loan" means, with respect to a Lender, a Term Loan or a Revolving
Loan, as applicable.
"Loan Documents" means this Agreement, any Letter of Credit Requests,
the Letters of Credit, the Notes and the Guaranties executed by the
Borrower or any Guarantor in connection herewith and any other agreement
executed by the Borrower or any Guarantor in connection herewith, as such
agreements and documents may be amended, supplemented and otherwise
modified from time to time in accordance with the terms hereof.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise) or results of
operations of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents
or (iii) the validity or enforceability of any of the Loan Documents or the
rights or remedies of the Agent or the Lenders thereunder.
"Multiemployer Plan" means a Plan that is a "multiemployer plan" as
defined in Section 3(37) or 4001(i)(3) of the Borrower's ERISA Plan.
"Net Income" means for the Borrower and its Subsidiaries on a
consolidated basis, net income as determined in accordance with Agreement
Accounting Principles.
"Net Proceeds" means, with respect to any asset disposition or
issuance of equity or debt securities of the Borrower or any of its
Subsidiaries, the net amount equal to the aggregate amount received in cash
in connection with such asset disposition or issuance of equity or debt
securities minus federal, state and local taxes and other expenses
including legal, accounting, brokerage, advertising, underwriting and
closing costs incurred and paid in connection with such asset disposition
or issuance of equity or debt securities and taxes reasonably estimated to
be actually payable as a result of such asset disposition or issuance of
equity or debt securities.
"Notes" means, collectively, the Revolving Notes and the Term Notes.
"Notice of Assignment" is defined in Section 12.3(ii).
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, the obligation to reimburse drawings under Letters
of Credit (including the contingent obligation to reimburse any drawings
under outstanding Letters of Credit), all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of the Borrower
to the Lenders or to any Lender, the Agent or any indemnified party
hereunder arising under the Loan Documents.
"Participants" is defined in Section 12.2(i).
"Payment Date" means the last day of each January, April, July and
October in each calendar year.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Person" means any natural person, corporation, firm, limited
liability company, joint venture, partnership, association, enterprise,
trust or other entity or organization, or any government or political
subdivision or any agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code maintained by or contributed to by the Borrower or
any member of the Controlled Group.
"Prior Loan Agreement" is defined in the first Recital.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Purchasers" is defined in Section 12.3(i).
"Reduction Installment" is defined in Section 2.4(iv).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of
the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing
or carrying margin stocks applicable to member banks of the Federal Reserve
System.
"Rent Expense" means, for the Borrower and its Subsidiaries, on a
consolidated basis, for any period of four consecutive fiscal quarters
(except as set forth in Section 6.26), rent expenses under operating leases
of real, personal or mixed property.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such section, with
respect to a Single Employer Plan, excluding, however, such events as to
which the PBGC by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event,
provided, however, that a failure to meet the minimum funding standard of
Section 412 of the Code and of Section 302 of ERISA shall be a Reportable
Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least
66 2/3% of the Aggregate Commitment or, if the Aggregate Commitment has
been terminated, Lenders in the aggregate holding at least 66 2/3% of the
aggregate unpaid principal amount of the outstanding Loans.
"Revolving Commitment" means, for each Lender having a Revolving
Commitment, the obligation of such Lender to make Revolving Loans not
exceeding the amount set forth opposite its name on Schedule 1 hereto or as
set forth in any Assignment and Acceptance relating to any assignment that
has become effective pursuant to Section 12.3, as such amount may be
modified from time to time pursuant to the terms hereof.
"Revolving Commitment Percentage" means, as to each Lender having a
Revolving Commitment at any time, the percentage of the Aggregate Revolving
Commitment then constituted by such Lender's Revolving Commitment.
"Revolving Loan" is defined in Section 2.1(i).
"Revolving Note" means a promissory note, in substantially the form
of Exhibit A-1 hereto, duly executed by the Borrower and payable to the
order of the Lender having a Revolving Commitment in the aggregate amount
of such Lender's Revolving Commitment.
"SEC" means the United States Securities and Exchange Commission.
"SEC Report" means a Current Report on Form 8-K pursuant to the
Securities Exchange Act of 1934.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Single Employer Plan" means a Plan other than a Multiemployer Plan.
"Solvent" means when used with respect to any Person, that:
(i) the present fair salable value of such Person's assets is in
excess of the total amount of the probable liability on such Person's
liabilities;
(ii) such Person is able to pay its debts as they become due; and
(iii) such Person does not have unreasonably small capital to carry
on such Person's business as theretofore operated and all businesses in
which such Person is about to engage.
"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or
by one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, joint venture or
similar business organization more than 50% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to
a "Subsidiary" shall mean a Subsidiary of the Borrower.
"Taxes" is defined in Section 3.2.
"Term Commitment" means, for each Lender having a Term Commitment,
the obligation of such Lender to make a Term Loan in the amount set forth
opposite its name on Schedule 1 hereto or as set forth in any Assignment
and Acceptance relating to any assignment that has become effective
pursuant to Section 12.3, as such amount may be modified from time to time
pursuant to the terms hereof.
"Term Loan" is defined in Section 2.4(i).
"Term Note" means a promissory note, in substantially the form of
Exhibit A-2 hereto, duly executed by the Borrower and payable to the order
of each Lender having a Term Commitment in the amount of such Lender's Term
Commitment.
"Total Debt Ratio" means for the Borrower and its Subsidiaries on a
consolidated basis, determined as of the end of each fiscal quarter for the
period of four fiscal quarters then ended, the ratio of Funded Debt
(including obligations under Capitalized Leases) outstanding at such time
to EBITDA.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to a Loan, its nature as a Base Rate Loan
or a LIBOR Loan.
"UBOC" means Union Bank of California, N.A. in its individual
capacity, and its successors.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined in accordance with the respective most recent
valuations for such Plans.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE 2
THE CREDIT
2.1 Revolving Loans.
(i) Each Lender having a Revolving Commitment severally agrees, on
the terms and conditions set forth in this Agreement, to make loans on a
revolving credit basis (each a "Revolving Loan," and, collectively, the
"Revolving Loans") to the Borrower from time to time and to participate in
standby and/or commercial letters of credit issued for the account of the
Borrower pursuant to Section 2.2 from time to time (each a "Letter of
Credit" and, collectively, the "Letters of Credit"), from and including the
Closing Date to but excluding the Facility Termination Date in an amount
not to exceed the amount of its Revolving Commitment. The sum of (a) the
aggregate principal amount of all Revolving Loans outstanding, (b) the
aggregate Letter of Credit Amount of all Letters of Credit outstanding and
(c) the aggregate amount of unreimbursed drawings under all Letters of
Credit shall not exceed, at any time, the amount of the Aggregate Revolving
Commitment. Further, the sum of (A) the aggregate Letter of Credit Amount
of all Letters of Credit outstanding and (B) the aggregate amount of
unreimbursed drawings under all Letters of Credit shall not exceed
$10,000,000 at any time. Within the limit of each Lender's Revolving
Commitment, the Borrower may borrow, have Letters of Credit issued and/or
renewed for the Borrower's account, prepay Revolving Loans, reborrow and
have additional Letters of Credit issued for the Borrower's account.
(ii) The principal amount of each Lender's Revolving Loan and
participation in a Letter of Credit shall be in an amount equal to the
product of (a) such Lender's Revolving Commitment Percentage (expressed as
a fraction) and (b) the total amount of the Revolving Loan or Revolving
Loans or Letters of Credit requested; provided that in no event shall any
Lender be obligated to make a Revolving Loan if after giving effect to such
Revolving Loan such Lender's Revolving Loans, the Revolving Commitment
Percentage of the aggregate Letter of Credit Amount of all Letters of
Credit outstanding and the Revolving Commitment Percentage of the aggregate
amount of unreimbursed drawings under all Letters of Credit outstanding
would exceed its Revolving Commitment or if the amount of such requested
Loan is in excess of such Lender's Available Commitment.
(iii) The Revolving Loans made by each Lender to the Borrower shall
be evidenced by a Revolving Note, with appropriate insertions therein as to
payee, date and principal amount, payable to the order of such Lender and
representing the obligation of the Borrower to pay the aggregate unpaid
principal amount of all Revolving Loans made by such Lender to the
Borrower, with interest thereon as prescribed in Sections 2.7 and 2.8.
Each such Lender is hereby authorized (but not required) to record the date
and amount of each payment or prepayment of principal of its Revolving
Loans made to the Borrower, each continuation thereof, each conversion of
all or a portion thereof to another Type and, in the case of LIBOR Loans,
the length of each Interest Period with respect thereto, in the books and
records of such Lender, and any such recordation shall constitute prima
facie evidence of the accuracy of the information so recorded. The failure
of any Lender to make any such recordation or notation in the books and
records of such Lender (or any error in such recordation or notation)
shall not affect the obligations of the Borrower hereunder or under the
Revolving Notes. Each Revolving Note shall (a) be dated the Closing Date,
(b) provide for the payment of interest in accordance with Sections 2.7 and
2.8 and (c) be stated to be payable on the Facility Termination Date.
(iv) The Borrower shall give the Agent irrevocable written notice
substantially in the form of Exhibit F attached hereto (which notice must
be received by the Agent prior to 11:00 a.m., Los Angeles time, on the
proposed Borrowing Date or, if all or any part of the Revolving Loans are
requested to be made as LIBOR Loans, three Business Days prior to each
proposed Borrowing Date) requesting that the Lenders having a Revolving
Commitment make the Revolving Loans on the proposed Borrowing Date and
specifying (a) the aggregate amount of Revolving Loans requested to be made
(which must be in an aggregate amount equal to at least $1,000,000 or an
integral multiple of $500,000), (b) subject to Section 2.5, whether the
Revolving Loans are to be LIBOR Loans, Base Rate Loans or a combination
thereof and (c) if the Revolving Loans are to be entirely or partly LIBOR
Loans, the respective amounts of each such Type of Revolving Loan and the
respective lengths of the Interest Periods therefor. On receipt of such
notice, the Agent shall promptly notify each such Lender thereof not later
than 11:00 a.m., Los Angeles time, on the date of receipt of such notice.
On the proposed Borrowing Date, not later than 1:00 p.m., Los Angeles time,
each such Lender shall make available to the Agent at its office specified
in Section 13.1 such Lender's Revolving Commitment Percentage of the
aggregate borrowing amount (as determined in accordance with Section
2.1(ii)) in immediately available funds. Not later than 1:30 p.m., Los
Angeles time, on the date of such Loans and upon fulfillment of the
applicable conditions set forth in Section 4, the Agent shall make such
Revolving Loans available to the Borrower in immediately available funds.
Each notice pursuant to this Section 2.1(iv) shall be irrevocable and
binding on the Borrower. The Agent may, in the absence of notification
from any Lender having a Revolving Commitment that such Lender has not made
its pro rata share available to the Agent, on such date, credit the account
of the Borrower on the books of such office of the Agent with the aggregate
amount of such Revolving Loans.
(v) At the Borrower's option and upon at least five Business Days'
prior irrevocable written notice to the Agent, with such notice specifying
the amount and the date of such reduction, the Borrower may permanently
reduce the Aggregate Revolving Commitment in whole at any time or in part
from time to time; provided, however, that each partial reduction of the
Aggregate Revolving Commitment shall be in an aggregate amount equal to at
least $1,000,000 or an integral multiple of $1,000,000. The Agent shall
promptly notify each Lender having a Revolving Commitment (by telecopy or
by telephone) of such requested Aggregate Revolving Commitment reduction.
Reductions of the Aggregate Revolving Commitment pursuant to this
Section 2.1(v) shall automatically effect a reduction of the Revolving
Commitment of each such Lender to an amount equal to the product of (a) the
Aggregate Revolving Commitment of all Lenders, as reduced pursuant to this
Section 2.1(v) and (b) the Revolving Commitment Percentage of such Lender,
in each case determined immediately prior to such reduction of the
Aggregate Revolving Commitment on such date.
Upon each reduction of the Aggregate Revolving Commitment, the
Borrower shall (a) pay the unused commitment fee, payable pursuant to
Section 2.3, accrued on the amount of the Aggregate Revolving Commitment so
reduced through the date of such reduction, (ii) prepay the amount, if any,
by which the sum of (A) the aggregate unpaid principal amount of the
Revolving Loans, (B) the aggregate Letter of Credit Amount of all Letters
of Credit outstanding and (C) the aggregate amount of unreimbursed drawings
under all Letters of Credit exceeds the amount of the Aggregate Revolving
Commitment as so reduced, together with accrued interest on the amount
being prepaid to the date of such prepayment (or, with respect to
outstanding Letters of Credit, make a cash collateral deposit in an amount
equal to such excess to the extent such excess is not corrected by the
foregoing prepayment) and (D) compensate such Lenders for their funding
costs, if any, in accordance with Section 3.1.
2.2 Issuance of Letters of Credit.
(i) The Borrower shall be entitled to request the issuance of
standby and/or commercial Letters of Credit from time to time from and
including the Closing Date to but excluding the date which is seven
Business Days prior to the Facility Termination Date by giving the Agent
(a) a standby Letter of Credit Request at least three Business Days before
the requested date of issuance of such standby Letter of Credit and (b) a
commercial Letter of Credit Request no later than the requested date of
issuance of such commercial Letter of Credit (provided that such Letter of
Credit Request is received by the Agent no later than 11:00 a.m., Los
Angeles time and any Letter of Credit Request received after such time
shall be deemed to have been received on the next Business Day) (which date
of issuance shall be a Business Day). All letters of credit outstanding on
the Closing Date which were issued under the Prior Loan Agreement shall be
deemed to have been issued hereunder on and as of the Closing Date and
shall be subject to the terms and conditions hereof. No Letter of Credit
shall have an expiration date more than one year from its date of issuance
or after the Facility Termination Date. The aggregate Letter of Credit
Amounts under all outstanding Letters of Credit and the aggregate amount of
unreimbursed drawings under Letters of Credit shall reduce, dollar for
dollar, the Aggregate Available Commitment. The sum of (a) the aggregate
Letter of Credit Amount of all Letters of Credit outstanding and (b) the
aggregate amount of unreimbursed drawings under all Letters of Credit shall
not at any time exceed $10,000,000. In addition, the sum of (i) the
aggregate principal amount of all Revolving Loans outstanding, (ii) the
aggregate Letter of Credit Amount of all Letters of Credit outstanding and
(iii) the aggregate amount of unreimbursed drawings under all Letters of
Credit shall not exceed, at any time, the Aggregate Revolving Commitment.
Any Letter of Credit Request received by the Agent later than 10:00 a.m.,
Los Angeles time, shall be deemed to have been received on the next
Business Day. Each Letter of Credit Request shall be made in writing,
shall be signed by an Authorized Officer, shall be irrevocable and shall be
effective upon receipt by the Agent. Provided that a valid Letter of
Credit Request has been received by the Agent and upon fulfillment of the
other applicable conditions set forth in Section 4.3, the Agent will issue
the requested Letter of Credit from its office specified in Section 13.1.
Commercial Letters of Credit shall be used only for the purpose of
supporting purchases of inventory by the Borrower and standby Letters of
Credit shall be used solely to provide support for leasing (including
Capitalized Leases) and insurance obligations of the Borrower.
(ii) Immediately upon the issuance of each Letter of Credit, the
Agent shall be deemed to have sold and transferred to each Lender, and each
Lender shall be deemed to have purchased and received from the Agent, in
each case irrevocably and without any further action by any party, an
undivided interest and participation in such Letter of Credit, each drawing
thereunder and the obligations of the Borrower under this Agreement in
respect thereof in an amount equal to the product of (a) such Lender's
Revolving Commitment Percentage and (b) the maximum amount available to be
drawn under such Letter of Credit (assuming compliance with all conditions
to drawing). The Agent shall advise each Lender of the issuance of each
Letter of Credit, the Letter of Credit Amount of such Letter of Credit, any
change in the face amount or expiration date of such Letter of Credit, the
cancellation or other termination of such Letter of Credit and any drawing
under such Letter of Credit.
(iii) The payment by the Agent of a draft drawn under any Letter of
Credit shall first be made from any cash collateral deposit held by the
Agent with respect to such Letter of Credit. After any such cash
collateral deposit has been applied, the payment by the Agent of a draft
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Agent in its individual capacity as a Lender
hereunder (in such capacity, the "Drawing Lender") of a Revolving Loan
bearing interest at the Base Rate in the amount of such payment (but
without any requirement of compliance with the conditions set forth in
Section 4.3). In the event that any such Loan by the Drawing Lender
resulting from a drawing under any Letter of Credit is not repaid by the
Borrower by 12:00 noon, Los Angeles time, on the day of payment of such
drawing, the Agent shall promptly notify each other Lender having a
Revolving Commitment. Each such Lender shall, on the day of such
notification (or if such notification is not given by 1:00 p.m., Los
Angeles time, on such day, then on the next succeeding Business Day), make
a Revolving Loan bearing interest at the Base Rate, which shall be used to
repay the applicable portion of the Revolving Loan of the Drawing Lender
with respect to such Letter of Credit drawing, in an amount equal to the
amount of such Lender's participation in such drawing for application to
repay the Drawing Lender (but without any requirement of compliance with
the applicable conditions set forth in Section 4.3) and shall deliver to
the Agent for the account of the Drawing Lender, on the day of such
notification (or if such notification is not given by 1:00 p.m., Los
Angeles time, on such day, then on the next succeeding Business Day) and in
immediately available funds, the amount of such Revolving Loans. In the
event that any Lender fails to make available to the Agent for the account
of the Drawing Lender the amount of such Revolving Loan, the Drawing Lender
shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Effective Rate for each
day such amount remains outstanding.
(iv) The obligations of the Borrower with respect to any Letter of
Credit, any Letter of Credit Request and any other agreement or instrument
relating to any Letter of Credit and any Revolving Loan made under
Section 2.2(iii) shall be absolute, unconditional and irrevocable and shall
be paid strictly in accordance with the terms of the aforementioned
documents under all circumstances, including the following:
(a) any lack of validity or enforceability of any Letter of
Credit, this Agreement or any other Loan Document;
(b) the existence of any claim, setoff, defense or other right
that the Borrower may have at any time against any beneficiary or
transferee of any Letter of Credit (or any Person for whom any such
beneficiary or transferee may be acting), the Agent, any Lender (other than
the defense of payment to a Lender in accordance with the terms of this
Agreement) or any other Person, whether in connection with this Agreement,
any other Loan Document, the transactions contemplated hereby or thereby or
any unrelated transaction;
(c) any statement 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
whatsoever;
(d) payment by the Agent under any Letter of Credit against
presentation of a draft or certificate that does not comply on its face
with the terms of such Letter of Credit;
(e) any exchange, release or nonperfection of any collateral,
or any release, amendment or waiver of or consent to departure from any
Guaranty, other Loan Document or other guaranty, for any of the Obligations
of the Borrower in respect of the Letters of Credit; and
(f) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
(v) The Borrower shall pay to the Agent with respect to each Letter
of Credit issued hereunder, the following fees:
(a) for each commercial Letter of Credit for the period from
and including the day such commercial Letter of Credit is issued to but
excluding the day such commercial Letter of Credit expires, a letter of
credit fee to the Agent for the benefit of the Lenders equal to the amount
set forth on the Agent's published Schedule of International Fees (such fee
to be payable on the date of issuance) except for payment fees, which shall
be equal to the greater of (x) the product of (i) .125% and (ii) the Letter
of Credit Amount of such Letter of Credit paid or (y) $100 (such payment
fee to be payable on the date such Letter of Credit is paid);
(b) for each commercial Letter of Credit, a fronting fee to
the Agent for its benefit alone equal to (x) $100, if the commercial Letter
of Credit Amount is less than $500,000 or (y) .125% of the Letter of Credit
Amount, if the commercial Letter of Credit Amount is equal to or more than
$500,000 (such fee to be payable on the date of issuance);
(c) for each standby Letter of Credit, for the period from
and including the day such standby Letter of Credit is issued to but
excluding the day such standby Letter of Credit expires, a letter of credit
fee to the Agent for the benefit of the Lenders equal to the Applicable
Margin (then in effect for LIBOR Loans), multiplied by the Letter of Credit
Amount (such fee to be payable on the date of issuance);
(d) for each standby Letter of Credit, a fronting fee to the
Agent for its benefit alone equal to .15% of the Letter of Credit Amount
(such fee to be payable on date of issuance); and
(e) from time to time, such additional fees and charges
(including cable charges) as are generally associated with letters of
credit, in accordance with the Agent's standard internal charge guidelines
and the related Letter of Credit Request.
(vi) The Borrower agrees to the provisions in the Letter of Credit
Request form; provided, however, that the terms of the Loan Documents shall
take precedence if there is any inconsistency between the terms of the Loan
Documents and the terms of said form.
(vii) The Borrower assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to its use
of such Letter of Credit. Neither the Agent nor any Lender nor any of
their respective officers or directors shall be liable or responsible for
(i) the use that may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith;
(ii) the validity, sufficiency or genuineness of documents, or of any
endorsement thereof, even if such documents should prove to be in any or
all respects invalid, insufficient, fraudulent or forged; (iii) in the
absence of any gross negligence or willful misconduct by the Agent, payment
by the Agent against presentation of documents that do not comply with the
terms of any Letter of Credit, including failure of any documents to bear
any reference or adequate reference to any Letter of Credit; or (iv) any
other circumstance whatsoever in making or failing to make payment under
any Letter of Credit. In furtherance and not in limitation of the
foregoing, the Agent may accept any document that appears on its face to be
in order, without responsibility for further investigation, regardless of
any notice or information to the contrary.
2.3 Fees. The Borrower agrees to pay to the Lenders an unused
commitment fee to be shared among Lenders on the basis of their respective
Revolving Commitment Percentages with respect to the Revolving Commitments
for the period from and including the Closing Date to but excluding the
Facility Termination Date, computed at the applicable percentage set forth
below of the average daily aggregate amount of the Aggregate Available
Commitment from time to time in effect, to be payable quarterly in arrears
on each Payment Date and on the Facility Termination Date, commencing on
the first such date to occur after the Closing Date.
Commitment
Leverage Ratio Level Fee
1 .200%
2 .250%
3 .250%
4 .375%
5 .375%
2.4 Term Loans.
(i) Subject to the terms and conditions hereof, each Lender
having a Term Commitment severally agrees to make a Term Loan to the
Borrower on the Closing Date in a principal amount equal to the amount of
the Term Commitment of such Lender. Any Term Loan repaid or prepaid may
not be reborrowed.
(ii) The Term Loan made by each Lender shall be evidenced by a
Term Note, with appropriate insertions therein as to payee, date and
principal amount, payable to the order of such Lender and representing the
obligation of the Borrower to pay the aggregate unpaid principal amount of
the Term Loan made by such Lender to the Borrower, with interest thereon as
prescribed in Sections 2.7 and 2.8. Each such Lender is hereby authorized
(but not required) to record the date and amount of each payment or
prepayment of principal of its Term Loan made to the Borrower, each
continuation thereof, each conversion of all or a portion thereof to
another Type and, in the case of LIBOR Loans, the length of each Interest
Period with respect thereto, in the books and records of such Lender, and
any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded. The failure of any Lender to make any such
recordation or notation in the books and records of such Lender (or any
error in such recordation or notation) shall not affect the obligations of
the Borrower hereunder or under the Term Notes. Each Term Note shall
(a) be dated the Closing Date, (b) provide for the payment of interest in
accordance with Sections 2.7 and 2.8 and (c) be stated to be payable in
installments of principal in accordance with, and subject to the provisions
of, Section 2.4(iv).
(iii) The Borrower shall give the Agent irrevocable written
notice substantially in the form of Exhibit F hereto (which notice must be
received by the Agent prior to 10:00 a.m., Los Angeles time, one Business
Day prior to the Closing Date) requesting that the Lenders having a Term
Commitment make the Terms Loans in accordance with their respective Term
Loan Commitments on the Closing Date. Upon receipt of such notice, the
Agent shall promptly notify each such Lender thereof not later than 11:00
a.m., Los Angeles time, on the date of receipt of such notice. Not later
than 1:00 p.m., Los Angeles time, on the Closing Date each such Lender
shall make available to the Agent at its office specified in Section 13.1
the amount of such Lender's aggregate Term Commitment in immediately
available funds. The notice pursuant to this Section shall be irrevocable
and binding on the Borrower. The Agent may, in the absence of notification
from any Lender having a Term Commitment that such Lender has not made its
pro rata share available to the Agent, on such date, credit the account of
the Borrower on the books of such office or the Agent with the aggregate
among such Term Loans.
(iv) On each reduction date set forth in this Section, the
Borrower shall on a pro rata basis repay the principal of the Term Notes in
an aggregate amount equal to the amount set forth below (subject to
Sections 2.16 and 2.17) (each such amount a "Reduction Installment"):
April 30, 1998, July 31, 1998, October
31, 1998 and January 31, 1999 $1,125,000.00
April 30, 1999, July 31, 1999, October
31, 1999 and January 31, 2000 $1,125,000.00
April 30, 2000, July 31, 2000, October
31, 2000 and January 31, 2001 $1,500,000.00
April 30, 2001, July 31, 2001, October
31, 2001 and January 31, 2002 $1,875,000.00
April 30, 2002, July 31, 2002, October
31, 2002 and January 30, 2003 $1,875,000.00
; provided, that the final Reduction Installment paid shall be in an amount
equal to all amounts owed by the Borrower on the Term Notes.
All outstanding Term Loans shall be due and payable, to the extent
not previously paid in accordance with the terms hereof, on the Facility
Termination Date.
2.5 Types of Loans. The Loans may from time to time be (i) LIBOR
Loans, (ii) Base Rate Loans or (iii) a combination thereof, as determined
by the Borrower and notified to the Agent in accordance with Section 2.6.
Notwithstanding the foregoing, the initial Loans made on the Closing Date
shall be made as Base Rate Loans and shall be subject to conversion to
LIBOR Loans pursuant to Section 2.6. Each Lender may make or maintain its
Loans to the Borrower by or through any Applicable Lending Office. At no
time shall more than ten Advances be outstanding.
2.6 Voluntary Conversion of Advances. The Borrower may on any
Business Day, upon written notice given to the Agent not later than 12:00
noon, Los Angeles time, on the third Business Day before the date of the
proposed conversion and subject to the provisions of Section 2.5, convert
any Advance into an Advance of another Type; provided, however, that, with
respect to a conversion from a LIBOR Loan into a Base Rate Loan, any such
conversion shall be made on, and only on, the last day of the Interest
Period for such Loan. Each such notice of a conversion shall, within the
restrictions specified above, specify (i) the Loan to be converted, (ii)
the type of Loan into which such Loan is to be converted and (iii) the
requested date for such conversion. Upon receipt of any such notice the
Agent shall promptly notify each Lender thereof. Any part of outstanding
LIBOR Loans and Base Rate Loans may be converted as provided herein,
provided (a) no Loan may be converted into a LIBOR Loan after the date that
is one month prior to the Facility Termination Date and (b) the Borrower
shall not have the right to continue or convert to a LIBOR Loan if a
Default shall have occurred and be continuing. However, if the Borrower
shall fail to give any required notices described above in this Section or
if such continuation is not permitted pursuant to the preceding sentence,
such Loans shall be automatically converted to Base Rate Loans on the last
day of such then-expiring Interest Period.
2.7 Interest. A Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from and including the
date such Loan is made or is converted from a LIBOR Loan into a Base Rate
Loan pursuant to Section 2.6 to (but not including) the date it becomes due
or is converted into a LIBOR Loan pursuant to Section 2.6 hereof, at a rate
per annum equal to the Base Rate for such day. Changes in the rate of
interest on any Loan maintained as a Base Rate Loan will take effect
simultaneously with each change in the Corporate Base Rate. Each LIBOR
Loan shall bear interest from and including the first day of the Interest
Period applicable thereto to (but not including) the last day of such
Interest Period at the LIBOR Rate determined as applicable to such LIBOR
Loan.
For purposes of determining the Applicable Margin for all Loans,
interest rates on the Loans shall be calculated on the basis of the Total
Debt Ratio set forth in the most recent certificate of an Authorized
Officer of the Borrower delivered pursuant to Section 6.1(v) (a "Leverage
Ratio Level Certificate"). For accrued and unpaid interest only (no
changes being made for interest payments previously made), changes in
interest rates on the Loans attributable to changes in the Applicable
Margin caused by changes in the applicable Leverage Ratio Level shall be
calculated upon the delivery of a Leverage Ratio Level Certificate and such
change shall be effective (y) in the case of a Base Rate Loan, on the day
subsequent to the delivery of the Leverage Ratio Level Certificate and (z)
in the case of a LIBOR Loan, from the first day of the Interest Period
applicable to such LIBOR Loans subsequent to the delivery of the Leverage
Ratio Level Certificate. If, for any reason, the Borrower shall fail to
deliver a Leverage Ratio Level Certificate when due in accordance with
Section 6.1(v), and such failure shall continue for a period of twenty
days, the Leverage Ratio Level shall be deemed to be Xxxxx 0, retroactive
to the date on which the Borrower should have delivered such Leverage Ratio
Level Certificate and shall continue until a Leverage Ratio Level
Certificate indicating a different Leverage Ratio Level is delivered to the
Agent. Notwithstanding the foregoing, LIBOR Loans shall accrue interest at
the Applicable Margin for Leverage Level 2 from the Closing Date until five
Business Days after the Agent has received the Borrower's annual financial
statements and Compliance Certificate for the fiscal period ended April 30,
1998.
2.8 Rates Applicable After Default. Notwithstanding anything to
the contrary contained in Section 2.5 or 2.6, during the continuance of an
Event of Default no Loan may be made as, converted into or continued as a
LIBOR Loan. During the continuance of an Event of Default each Loan shall
bear interest at a rate per annum equal to the Base Rate otherwise
applicable to the Base Rate Loan plus 3% per annum. All such interest
shall be payable on demand of the Agent.
2.9 Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article 13, or at any other Applicable Lending Office of the Agent
specified in writing by the Agent to the Borrower, by 12:00 noon, Los
Angeles time, on the date when due and shall be applied ratably by the
Agent among the Lenders. Each payment delivered to the Agent for the
account of any Lender shall be delivered promptly by the Agent to such
Lender in the same type of funds that the Agent received at its address
specified pursuant to Article 13 or at any Applicable Lending Office
specified in a notice received by the Agent from such Lender. The Agent is
hereby authorized (but not obligated) to charge the account of the Borrower
maintained with UBOC for each payment of principal, interest and fees as it
becomes due hereunder.
2.10 Telephonic Notices. The Borrower hereby authorizes the Lenders
and the Agent to convert or continue Loans and effect selections of Types
of Loans based on telephonic notices made by any person or persons the
Agent or any Lender in good faith believes to be acting on behalf of the
Borrower. The Borrower agrees to deliver promptly to the Agent a written
confirmation, if such confirmation is requested by the Agent or any Lender,
of each telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the
Agent and the Lenders, the records of the Agent and the Lenders shall
govern absent manifest error.
2.11 Interest Payment Dates; Interest and Fee Basis. Interest
accrued on each Base Rate Loan shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any
date on which a Base Rate Loan is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on that portion of the
outstanding principal amount of any Base Rate Loan converted into a LIBOR
Loan on a day other than a Payment Date shall be payable on the date of
conversion. Interest accrued on each LIBOR Loan shall be payable on the
last day of its applicable Interest Period, on any date on which the LIBOR
Loan is prepaid, whether by acceleration or otherwise, and at maturity.
Interest accrued on each LIBOR Loan having an Interest Period longer than
three months shall also be payable on the last day of each three-month
interval during such Interest Period.
Interest on Loans and commitment fees shall be calculated for actual
days elapsed on the basis of a 360-day year. Interest shall be payable for
the day a Loan is made but not for the day of any payment on the amount
paid if payment is received prior to 2:00 p.m., Los Angeles time, at the
place of payment. Whenever any payment to be made hereunder shall be
stated to be due on a day that is not a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall
in such case be included in the computation of payment of interest;
provided, however, that, if such extension would cause any payment of
interest on or principal of any LIBOR Loan to be made in the next following
calendar month, then such payment shall instead be made on the next
preceding Business Day, and such shortened time shall in such case be used
in the computation of payment of interest. Each determination by the Bank
of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
2.12 Notification of Loan, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Agent will
notify each Lender of the contents of a borrowing notice,
Conversion/Continuation Notice and repayment notice received by it
hereunder. The Agent will notify each Lender of the interest rate
applicable to each LIBOR Loan promptly upon determination of such interest
rate and will give each Lender prompt notice of each change in the
Corporate Base Rate.
Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower
and the Lenders in the absence of manifest error.
2.13 Applicable Lending Offices. Each Lender may book its Loans at
any Applicable Lending Office selected by such Lender and may change its
Applicable Lending Office from time to time. All terms of this Agreement
shall apply to any such Applicable Lending Office and the Notes shall be
deemed held by each Lender for the benefit of such Applicable Lending
Office. Each Lender may, by written or telex notice to the Agent and the
Borrower, designate an Applicable Lending Office through which the Loans
will be made by it and for whose account Loan payments are to be made.
2.14 Non-Receipt of Funds by the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which
it is scheduled to make payment to the Agent of (i) in the case of a
Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a
payment of principal, interest or fees to the Agent for the account of the
Lenders, that it does not intend to make such payment, the Agent may assume
that such payment has been made. The Agent may, but shall not be obligated
to, make the amount of such payment available to the intended recipient in
reliance upon such assumption. If such Lender or the Borrower, as the case
may be, has not in fact made such payment to the Agent, the recipient of
such payment shall, on demand by the Agent, repay to the Agent the amount
so made available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per
annum equal to (a) in the case of payment by a Lender, the Federal Funds
Effective Rate for such day or (b) in the case of payment by the Borrower,
the interest rate applicable to the relevant Loan.
2.15 Withholding Tax Exemption. At least five Business Days prior to
the first date on which interest or fees are payable hereunder for the
account of any Lender, each Lender that is not incorporated under the laws
of the United States of America, or a state thereof, agrees that it will
deliver to each of the Borrower and the Agent two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, certifying in
either case that such Lender is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United
States federal income taxes. Each Lender which so delivers a Form 1001 or
4224 further undertakes to deliver to each of the Borrower and the Agent
two additional copies of such form (or a successor form) on or before the
date that such form expires (currently, three successive calendar years for
Form 1001 and one calendar year for Form 4224) or becomes obsolete or after
the occurrence of any event requiring a change in the most recent forms so
delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Borrower or the Agent, in
each case certifying that such Lender is entitled to receive payments under
this Agreement and the Note without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation
any change in treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises the
Borrower and the Agent that it is not capable of receiving payments without
any deduction or withholding of United States federal income tax.
2.16 Optional Prepayments. The Borrower may on the last day of any
Interest Period with respect thereto, in the case of LIBOR Loans, or at any
time and from time to time, in the case of Base Rate Loans, prepay the
Loans, in whole or in part, without premium or penalty, upon at least three
Business Days' irrevocable written notice, in the case of LIBOR Loans, and
upon at least one Business Day's irrevocable written notice, in the case of
Base Rate Loans, from the Borrower to the Agent, specifying the date and
amount of prepayment and whether the prepayment is of LIBOR Loans, Base
Loans or a combination thereof, and, if a combination thereof, the amount
allocable to each. Upon receipt of any such notice from the Borrower, the
Agent shall promptly notify each Lender thereof. If any such notice is
given, the amount specified in such notice shall be due and payable by the
Borrower on the date specified therein, together with accrued interest to
such date on the amount prepaid. Partial prepayments of Loans shall be in
an aggregate principal amount of $1,000,000 or an integral multiple
thereof. Partial prepayments of Term Loans made on a day other than a day
specified in Section 2.4(iv) or any payment made on such day in excess of
the Reduction Installment specified therein shall be applied pro rata to
each Reduction Installment remaining as of the date of such prepayment or
payment.
2.17 Mandatory Prepayments. On the day of receipt by the Borrower
of any Net Proceeds with respect to an asset disposition or an issuance of
equity or debt securities of the Borrower or any of its Subsidiaries, the
Borrower shall prepay the Loans with 75% of Net Proceeds from the issuance
of equity and asset dispositions and 100% of the Net Proceeds from the
issuance of debt securities as follows: Prepayment shall first be applied
to each Term Loan Reduction Installment on a pro rata basis and, when the
Term Loan is paid in full, shall be applied to outstanding Revolving Loans.
Prepayments of Revolving Loans with Net Proceeds from asset dispositions
shall also result in a permanent reduction of the Aggregate Revolving
Commitment by an amount equal to such prepayment amounts.
2.18 Commitment Obligations. Neither the Agent nor any Lender shall
be responsible for the obligation or Available Commitment of any other
Lender hereunder, nor will the failure of any Lender to comply with the
terms of this Agreement relieve any other Lender or the Borrower of its
obligations under this Agreement and the Notes. Nothing herein shall be
deemed to relieve any Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights which the Borrower may have against
any Lender as a result of any default by such Lender hereunder.
2.19 Commitment Termination. The Revolving Commitment of each
Lender and the Aggregate Revolving Commitment shall terminate on the
Facility Termination Date.
2.20 Required Payments. The outstanding Loans and all other unpaid
Obligations shall be paid in full by the Borrower on the Facility
Termination Date.
ARTICLE 3
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection.
(i) If any repayment of principal of, or conversion of, any LIBOR
Loan is made other than on the last day of an Interest Period therefor, as
a result of a prepayment, payment or conversion, or an acceleration of the
maturity of the Loan pursuant to Section 8, or for any other reason, or if
the Borrower shall fail to borrow a LIBOR Loan after requesting one, then
the Borrower shall, upon demand by the Agent pay to the Lenders any amounts
required to compensate them for any additional losses, costs or expenses
that they may reasonably incur as a result of such repayment, conversion or
failure to borrow, including any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by a Lender to fund or
maintain such LIBOR Loan.
(ii) If, due to either (a) the introduction of or any change in or
in the interpretation of any Governmental Rule or (b) the compliance by the
Lenders with any Governmental Rule (whether or not having the force of
law), there is any increase in the cost to the Lenders of agreeing to make,
making, funding or maintaining any LIBOR Loan, then the Borrower shall from
time to time, upon written demand by the Agent, pay to the Agent additional
amounts sufficient to compensate the Lenders for such increased cost. A
certificate as to the amount of such increased cost, submitted to the
Borrower by the Agent, shall be conclusive and binding for all purposes,
absent manifest error.
(iii) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any
Governmental Rule makes it unlawful, or any Governmental Person asserts
that it is unlawful, for any Lender to perform its obligations hereunder to
make LIBOR Loans or to continue to fund or maintain LIBOR Loans hereunder,
then, on notice thereof and demand therefor by the Agent to the Borrower,
(a) the obligation of such Lender to make LIBOR Loans and to convert Base
Rate Loans into LIBOR Loans shall terminate and (b) the Borrower shall
forthwith prepay in full all LIBOR Loans then outstanding, together with
interest accrued thereon, unless the Borrower, within five Business Days of
such notice and demand, converts all LIBOR Loans then outstanding into Base
Rate Loans in accordance with Section 2.6.
(iv) If, with respect to any LIBOR Loan, the Agent notifies the
Borrower that LIBOR for such Loan will not adequately reflect the cost to
one or more Lenders (as determined by such Lender(s) in good faith on the
basis of market conditions then in effect) of making, funding or
maintaining such Loan, then (a) such Loan will automatically, on the last
day of the then existing Interest Period therefor, convert into a Base Rate
Loan and (b) the obligation of the affected Lender to make, or to convert
Base Rate Loans into LIBOR Loans shall be suspended until the Agent
notifies the Borrower that the circumstances causing such suspension no
longer exist.
3.2 Taxes. All payments by or on behalf of the Borrower hereunder
shall be made without set-off or counterclaim and in such amounts as may be
necessary in order that all such payments (after deduction or withholding
for or on account of any present or future taxes, levies, imposts, duties
or other charges of whatsoever nature imposed by any Governmental Person,
other than any tax on or measured by the overall net income of the Agent or
a Lender pursuant to the income tax laws of the United States, the
jurisdiction where the Agent's or such Lender's principal office is located
or any political subdivision thereof (collectively, the "Taxes")) shall not
be less than the amounts otherwise specified to be paid hereunder. A
certificate as to any additional amounts payable to the Agent or a Lender
hereunder submitted to the Borrower by the Agent shall show in reasonable
detail the amount payable to the Agent or a Lender and the calculations
used to determine in good faith such amount and shall be conclusive absent
manifest error. Any amounts payable by the Borrower hereunder with respect
to past payments shall be due within ten days following receipt by the
Borrower of such certificate from the Agent; and such amounts payable with
respect to future payments shall be due concurrently with such future
payments. With respect to each deduction or withholding for or on account
of any Taxes, the Borrower shall promptly furnish to the Agent such
certificates, receipts and other documents as may be required (in the
reasonable judgment of the Agent) to establish any tax credit to which a
Lender may be entitled. The agreements and obligations of the Borrower
under this paragraph shall survive the payment in full of the Loans.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 Initial Loan or Letter of Credit. The Lenders shall not be
required to make their initial Loans or participate in the initial Letter
of Credit hereunder unless the Borrower has furnished to the Agent:
(i) this Agreement and the Notes, duly executed by the
Borrower;
(ii) the Guaranties, duly executed by each Guarantor;
(iii) Articles of Incorporation and Bylaws of the Borrower and
each Guarantor certified by the Secretary of State of the relevant state of
incorporation;
(iv) Resolutions of the Board of Directors of the Borrower and
of the executive officers of each Guarantor approving the execution,
delivery and performance by the Borrower and each Guarantor, of the Loan
Documents to which the Borrower and each Guarantor is a party, certified by
the Secretary of the Borrower and each Guarantor to be true and correct and
in full force and effect;
(v) an Incumbency Certificate of the Borrower and each
Guarantor;
(vi) evidence that all amounts outstanding under the Prior Loan
Agreement have been paid in full and that such agreement has been
terminated;
(vii) all fees and expenses to be paid on the Closing Date
(including, but not limited to, amounts due to UBOC in reimbursement of
costs and expenses under the Prior Loan Agreement);
(viii) no statute, rule, regulation, order, decree or preliminary
or permanent injunction of any court or administrative agency or, to the
best knowledge of the Borrower, any such action threatened by any Person,
shall be in effect that prohibits the Lenders from consummating the
transactions contemplated by this Agreement and the other Loan Documents;
(ix) copies of the Borrower's consolidated audited financial
statements for the period ending February 3, 1997, together with any
management letter prepared by the accountants, unaudited financial
statements for the period ending November 1, 1997 and a plan, forecast and
budget containing the information specified in Section 6.1(iv) with respect
to fiscal year 1998;
(x) evidence satisfactory to the Agent that there shall have
been no material adverse change to the syndication markets for credit
facilities similar to this Agreement and there shall not have occurred and
be continuing a material disruption of or material adverse change in
financial, banking or capital markets which would have an adverse effect on
such syndication market, as determined by the Agent in its sole discretion;
(xi) evidence satisfactory to the Agent that all intercompany
Debt has been subordinated to the obligations of the Borrower hereunder;
and
(xii) such other documents, instruments and opinions as the
Agent or its counsel may have reasonably requested.
4.2 All Loans. The Lenders shall not be required to make any Loan
(including the initial Loan) hereunder unless the Borrower has furnished to
the Agent with sufficient copies for the Lenders:
(i) a duly completed certificate executed by an Authorized
Officer of the Borrower certifying that:
(a) there exists no Default or Event of Default;
(b) the representations and warranties contained in
Article 5 hereof are true and correct as of the Borrowing Date except
to the extent any such representation or warranty is stated to relate
solely to an earlier date, in which case such representation or
warranty shall be true and correct on and as of such earlier date;
and
(c) no event has occurred, or condition exists, which
could have a Material Adverse Effect.
(ii) in the case where Loan proceeds are to be used for an
Acquisition and such Acquisition will result in the Borrower being required
to file an SEC Report, executed copies of each of the Acquisition
Documents, certified by an Authorized Officer, together with the other
documents required by Section 6.14;
(iii) in the case where Loan proceeds are to be used for an
Acquisition, evidence satisfactory to the Agent that the Acquisition
contemplated by the relevant Acquisition Documents will immediately be
consummated upon the funding of the Loan; and
(iv) such other documents as the Agent or its counsel may
have reasonably requested.
4.3 All Letters of Credit. The Agent shall not be required to
issue any Letter of Credit and the Lenders shall not be required to
participate in any Letter of Credit (including the initial Letter of
Credit) hereunder unless the Borrower has furnished to the Agent with
sufficient copies for the Lenders:
(i) a completed Letter of Credit Request with regard to each
such Letter of Credit;
(ii) all fees to be paid to the Agent in connection with each
Letter of Credit shall have been paid; and
(iii) such other documents as the Agent, any Lender or its
respective counsel may have reasonably requested.
Any Letter of Credit Request delivered to the Agent shall be deemed a
representation and warranty to the Agent and the Lenders that:
(i) there exists no Default or Event of Default;
(ii) the representations and warranties contained in Article 5
hereof are true and correct as of the issuance date of each Letter of
Credit except to the extent any such representation or warranty is stated
to relate solely to an earlier date, in which case such representation or
warranty shall be true and correct on and as of such earlier date; and
(iii) no event has occurred, or condition exists, which could
have a Material Adverse Effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1 Authorization. The execution, delivery and performance by the
Borrower of the Loan Documents to which the Borrower is a party are within
the Borrower's corporate powers, have been duly authorized by all necessary
corporate action and do not contravene any applicable law, rule, regulation
or order or any contractual restriction binding on or affecting the
Borrower or its Subsidiaries.
5.2 Governmental Action. No authorization, approval or other
action by, or notice to or filing with, any Governmental Person is required
for the due execution, delivery and performance by the Borrower of the Loan
Documents to which the Borrower is a party.
5.3 Enforceability. Each Loan Document to which the Borrower is a
party is the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally.
5.4 Use of Proceeds. The Borrower will use the proceeds of the
Term Loans solely for the repayment of amounts outstanding under the Prior
Loan Agreement and to refinance costs incurred in connection with certain
Acquisitions and conversions of stores. The Borrower will use the proceeds
of the Revolving Loans solely (i) to make permitted Acquisitions, (ii) to
make permitted Capital Expenditures, (iii) for working capital purposes,
(iv) to make bridge loans permitted hereunder to Canadian Petcetera
Warehouse Inc. and (v) general corporate purposes. The Borrower will use
the Letters of Credit solely for the purposes set forth in Section 2.2(i).
No action has been taken or is currently planned by the Borrower, or any
agent acting on its behalf, which would cause this Agreement or the Notes
to violate Regulation U or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Securities and Exchange Act
of 1934, in each case as in effect now or as the same may hereafter be in
effect. The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock as one of its
important activities and none of the proceeds of the Loans or Letters of
Credit will be used directly or indirectly for such purpose.
5.5 Litigation. There is no litigation, tax claim, proceeding,
arbitration or dispute pending, or, to the best knowledge of the Borrower,
threatened against or affecting the Borrower or its Property, an adverse
determination in which could have a Material Adverse Effect.
5.6 Financial Statements. The consolidated financial statements of
the Borrower dated February 3, 1997 and November 1 , 1997, copies of which
have been delivered to the Lenders, fairly and accurately reflect the
financial condition of the Borrower and its Subsidiaries as of such date,
and since such date there has been no Material Adverse Effect.
5.7 Taxes. The Borrower and each Subsidiary has filed all tax
returns and reports required to be filed and has paid all applicable
federal, state and local franchise and income taxes which are due and
payable.
5.8 Subsidiaries. Schedule 2 hereto contains an accurate list of
(i) all of the presently existing Subsidiaries of the Borrower, setting
forth their respective jurisdictions of incorporation or organization and
the percentage of their respective capital stock or ownership interests
owned by the Borrower or other Subsidiaries, and (ii) all shareholder
agreements, management agreements and similar agreements executed in
connection therewith. All of the issued and outstanding shares of capital
stock of such Subsidiaries have been duly authorized and issued and are
fully paid and non-assessable.
5.9 ERISA. The Unfunded Liabilities do not in the aggregate exceed
$1,000,000. Each Single Employer Plan complies in all material respects
with all applicable requirements of law and regulations, except to the
extent that the failure to comply therewith does not have a Material
Adverse Effect. No Reportable Event has occurred with respect to any
Single Employer Plan, except to the extent that such Reportable Event has
no Material Adverse Effect. Neither the Borrower nor any Subsidiary (a) is
a party to any Multiemployer Plan or (b) has withdrawn from any
Multiemployer Plan, except to the extent such actions do not have a
Material Adverse Effect.
5.10 Accuracy of Information. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained
therein not misleading in any material respect.
5.11 Organization and Existence. The Borrower is duly organized,
validly existing and in good standing under the laws of the State of
Delaware and it has the corporate power and authority, and the legal right,
to own and operate its Properties and to conduct the business in which it
is currently engaged and in which it proposes to be engaged after the
Closing Date and is duly qualified as a foreign entity 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
except to the extent that the failure to comply thereunder could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect and
is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.12 Consents. No consent or authorization of, or filing with or
other act by or in respect of, any Governmental Authority, or any other
Person is required in connection with the Loans hereunder or with the
execution, delivery, performance, validity or enforceability of this
Agreement, the Notes or the other Loan Documents. The execution, delivery
and performance of this Agreement, the Notes and the other Loan Documents,
the Loans, the Letters of Credit and the use of the proceeds thereof will
not violate any Requirement of Law or contractual obligations of the
Borrower or any of its Subsidiaries which could be reasonably expected to
have a Material Adverse Effect and will not result in, or require, the
creation or imposition of any Lien on any of its or their respective
Properties or revenues pursuant to any such Requirement of Law or
contractual obligation, except pursuant to the Loan Documents or otherwise
as permitted hereunder, which Lien could reasonably be expected to have a
Material Adverse Effect.
5.13 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
patents, copyrights, material permits, licenses or other intangibles
necessary for the conduct of its business as currently conducted, except to
the extent that the failure to own or license such property could not
reasonably be expected to have a Material Adverse Effect.
5.14 Default. There exists no Default or Event of Default.
5.15 Nature of Business. Neither the Borrower nor any of its
Subsidiaries is engaged in any material business other than the ownership
and operation of pet food and supply retail stores and the manufacture or
procurement of pet food and supplies.
5.16 Ranking of Loans. This Agreement and the other Loan Documents
to which the Borrower is a party, when executed, and the Loans, when
borrowed are and will be the direct and general obligations of the
Borrower. The Borrower's obligations hereunder and thereunder will rank at
least pari passu in priority of payment with all other senior Debt, except
to the extent otherwise permitted hereunder.
5.17 Compliance with Laws. The Borrower and each of its
Subsidiaries is in compliance with all Governmental Rules except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
5.18 Investment Company Acts; Other Regulations. Neither the
Borrower nor any of its Subsidiaries is an "investment company," or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
5.19 Environmental Matters. The Borrower and its Subsidiaries are
in compliance in all material respects with all applicable environmental
laws, and there is no contamination at, under or about any of their
respective Properties, or violation of any environmental law with respect
to any of their respective Properties or the business conducted at any of
their respective Properties which involves a matter or matters which has
caused or reasonably likely to cause a Material Adverse Effect.
5.20 Title. Except for assets which may have been disposed of in
the ordinary course of business, the Borrower has good and marketable title
to all of the property reflected in its financial statements delivered to
the Lenders, to all property acquired by the Borrower since the date of
said financial statements and to all property necessary for the conduct of
its business, free and clear of all Liens, encumbrances, security interests
and adverse claims except (a) those specifically referred to in said
financial statements, (b) those permitted by Section 6.22 hereof and (c)
those that could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
5.21 Solvency. Immediately prior to and upon execution of this
Agreement and the funding of the Loans and the issuance of any Letters of
Credit, the Borrower was, is and will be Solvent.
ARTICLE 6
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1 Financial Reporting. The Borrower will maintain, for itself
and each Subsidiary, a system of accounting established and administered in
accordance with Agreement Accounting Principles, and furnish to the
Lenders:
(i) As soon as available and in any event within 45 days
after the end of each quarterly fiscal period of each
fiscal year of the Borrower (except the last fiscal
quarter), consolidated statements of income, retained
earnings and cash flow of the Borrower and its
consolidated Subsidiaries for such period and for the
period from the beginning of the respective fiscal year
to the end of such period, and the related consolidated
balance sheets of the Borrower and its consolidated
Subsidiaries as at the end of such period, setting forth
in each case in comparative form the corresponding
consolidated figures for the corresponding period in the
preceding fiscal year, accompanied by a certificate of an
Authorized Officer of the Borrower, which certificate
shall state that those consolidated financial statements
fairly present the consolidated financial condition and
results of operations of the Borrower and its
consolidated Subsidiaries, in each case in accordance
with Agreement Accounting Principles, consistently
applied, as at the end of, and for, such period (subject
to normally recurring audit adjustments).
(ii) As soon as available and in any event within 90 days
after the end of each fiscal year of the Borrower,
consolidated statements of income, retained earnings and
cash flow of the Borrower and its consolidated
Subsidiaries for such fiscal year and the related
consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such fiscal
year, setting forth in each case in comparative form the
corresponding consolidated figures for the preceding
fiscal year, and accompanied, in the case of those
consolidated statements and balance sheet of the
Borrower, by a unqualified opinion of independent
certified public accountants of recognized national
standing, which opinion shall state that those
consolidated financial statements fairly present the
consolidated financial condition and results of
operations of the Borrower and its consolidated
Subsidiaries as at the end of, and for, such fiscal year
in accordance with Agreement Accounting Principles,
consistently applied.
(iii) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other
regular reports or statutory statements which the
Borrower or any of its Subsidiaries files with the SEC or
any insurance or regulatory agency.
(iv) As soon as available, but in any event no later than 45
days subsequent to the beginning of each fiscal year of
the Borrower, based on the best information then
currently available, a copy of the plan and forecast
(including a projected consolidated balance sheet, income
statement, funds flow statement and a budget for Capital
Expenditures), prepared on a quarterly format basis, of
the Borrower and its Subsidiaries for such fiscal year.
(v) Together with the financial statements required in
Section 6.1(i) and (ii) (commencing with the fiscal
period ending April 30, 1998), a compliance certificate
in substantially the form of Exhibit B hereto (a
"Compliance Certificate") signed by an Authorized Officer
showing the calculations necessary to determine
compliance with this Agreement and stating that no
Default or Event of Default exists, or if any Default or
Event of Default exists, stating the nature and status
thereof.
(vi) As soon as possible, but in any event within 45 days
after the end of each quarter (except the last fiscal
quarter, in which case within 90 days after the end of
such quarter), a Leverage Ratio Level Certificate in
substantially the form of Exhibit D hereto signed by an
Authorized Officer.
(vii) As soon as possible and in any event within 10 days after
the Borrower knows that any Reportable Event has occurred
with respect to any Single Employer Plan, a statement,
signed by an Authorized Officer, describing said
Reportable Event and the action which the Borrower
proposes to take with respect thereto.
(viii) As soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (a) any notice or
claim to the effect that the Borrower or any of its
Subsidiaries is or may be liable to any Person as a
result of the release by the Borrower, any of its
Subsidiaries, or any other Person of any toxic or
hazardous waste or substance into the environment, and
(b) any notice alleging any violation of any federal,
state or local environmental, health or safety law or
regulation by the Borrower or any of its Subsidiaries,
which, in either case, could have a Material Adverse
Effect.
(ix) Promptly upon the furnishing thereof to the shareholders
of the Borrower, copies of all financial statements,
reports and proxy statements so furnished.
(x) Such other information (including non-financial information) as
the Agent may from time to time reasonably request.
6.2 Use of Proceeds. The Borrower will use the proceeds of the
Term Loans solely for the repayment of amounts outstanding under the Prior
Loan Agreement and to refinance costs incurred in connection with certain
Acquisitions and conversion of stores, and the proceeds of the Revolving
Loans solely (i) to make permitted Acquisitions, (ii) to make permitted
Capital Expenditures, (iii) for working capital purposes, (iv) to make
bridge loans permitted hereunder to Canadian Petcetera Warehouse Inc. and
(v) for general corporate purposes. The Borrower will use the Letters of
Credit only for the purposes specified in Section 2.2(i). The Borrower
will not, nor will it permit any Subsidiary to, use any of the proceeds of
the Loans to purchase or carry any "margin stock" (as defined in
Regulation U).
6.3 Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt (but in any case, within 5 Business Days) notice
in writing to the Lenders of the occurrence of any Default or Event of
Default and of any other development, financial or otherwise, which could
have a Material Adverse Effect.
6.4 Conduct of Business. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in the pet food and supply
business and related fields and to do all things necessary to remain in
good standing in its jurisdiction of organization and maintain all
requisite authority to conduct its business in each jurisdiction in which
its business is conducted. The Borrower shall not, and shall not permit
any of its Subsidiaries to, make any material change in the nature of its
business as presently conducted; provided that the foregoing shall not be
construed as a limitation on Acquisitions permitted hereunder.
6.5 Records. The Borrower will, and will cause each Subsidiary to,
keep adequate records and books of account, in which full and correct
entries shall be made in accordance with Agreement Accounting Principles of
all financial transactions of the Borrower, its Subsidiaries, their
respective assets and their respective business.
6.6 Insurance. The Borrower will, and will cause each Subsidiary
to, maintain insurance on all their Property in such amounts and covering
such risks as is consistent with sound business practice, and the Borrower
will furnish to any Lender upon request full information as to the
insurance carried.
6.7 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply in all material respects with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, paying before the same become delinquent, all taxes,
assessments and governmental charges imposed upon it or upon its property,
except such taxes, assessments and governmental charges as are being
contested in good faith by appropriate proceedings and as to which
appropriate reserves are maintained.
6.8 Maintenance of Properties. The Borrower will, and will cause
each Subsidiary to, do all things necessary to maintain, preserve, protect
and keep its Property in good repair, working order and condition, and make
all necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at
all times.
6.9 Inspection. At any reasonable time and from time to time upon
reasonable notice, the Borrower will, and will cause each Subsidiary to,
permit the Agent, by its respective representatives and agents, to inspect
any of the Property, corporate books and financial records of the Borrower
and each Subsidiary, to examine and make copies of the books of accounts
and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each
Subsidiary with, and to be advised as to the same by, their respective
officers at such reasonable times and intervals as the Lenders may
designate.
6.10 Debt. The Borrower will not, nor will it permit any Subsidiary
to, create, incur or suffer to exist any Debt, except:
(i) Debt of the Borrower under the Loan Documents;
(ii) Debt in existence on the date hereof, as set forth on Schedule
3;
(iii) trade Debt incurred to acquire goods, supplies, and services
and incurred in the ordinary course of business; and
(iv) Debt secured by Liens permitted pursuant to Section 6.22.
6.11 Merger. The Borrower will not, nor will it permit any
Subsidiary to, enter into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose
of, all or substantially all of its property, business or assets; provided
that the Borrower may merge or consolidate with another Person if (i) the
Borrower is the surviving corporation, (ii) the Borrower will at all times
be in pro forma compliance with all provisions of this Agreement subsequent
to such merger or consolidation as long as either Loans or the Commitment
is outstanding and (iii) the Borrower has filed the SEC Report (if required
to do so by law).
6.12 Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property, to any
other Person except for (i) sales of inventory in the ordinary course of
business and (ii) leases, sales or other dispositions of its Property that,
together with all other Property of the Borrower and its Subsidiaries
previously leased, sold or disposed of (other than inventory in the
ordinary course of business) as permitted by this Section during the term
of this Agreement do not require the Borrower to file an SEC Report;
provided that the foregoing shall not be construed as prohibiting a
transfer of assets from a Subsidiary to the Borrower or the merger of a
Subsidiary into the Borrower.
6.13 Sale of Accounts. The Borrower will not, nor will it permit
any Subsidiary to, sell or otherwise dispose of any notes receivable or
accounts receivable, with or without recourse, except the Borrower or any
Subsidiary may assign accounts receivable (previously expensed by the
Borrower as bad debts) for collection, with or without recourse.
6.14 Acquisitions. The Borrower will not, nor will it permit any
Subsidiary to, enter into any agreement, contract, binding commitment or
other arrangement providing for any Acquisition, or take any action to
solicit the tender of securities or proxies in respect thereof in order to
effect any Acquisition, unless:
(i) the Person to be (or whose assets are to be) acquired does not
oppose such Acquisition and the line or lines of business of the Person to
be acquired are substantially the same as one or more line or lines of
business conducted by the Borrower and its Subsidiaries,
(ii) no Default or Event of Default shall have occurred and be
continuing either immediately prior to or immediately after giving effect
to such Acquisition,
(iii) if any Acquisition would require the Borrower to file an SEC
Report, the Borrower shall have furnished to the Agent (A) pro forma
historical financial statements as of the end of the most recently
completed fiscal year of the Borrower and most recent interim fiscal
quarter, if applicable, giving effect to such Acquisition and (B) a
Compliance Certificate prepared on a historical pro forma basis giving
effect to such Acquisition, which certificate shall demonstrate that no
Default or Event of Default would exist immediately after giving effect
thereto (provided, however, that in each case if such information is not
then available for such periods with respect to Borrower, any Subsidiary or
the Person being acquired (or from whom assets are being acquired), then
such statements may be based instead upon reasonable estimates made by
Borrower as to the financial performance of such Persons for such periods)
and
(iv) the Person acquired shall be a Subsidiary, or be merged into
the Borrower or a Subsidiary, immediately upon consummation of the
Acquisition (or if assets are being acquired, the acquiror shall be the
Borrower or a Subsidiary).
6.15 Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation,
the purchase or sale of any Property or service) with, or make any payment
or transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable
to the Borrower or such Subsidiary than the Borrower or such Subsidiary
would obtain in a comparable arms-length transaction; provided that the
foregoing shall not be construed as prohibiting a transfer of assets from a
Subsidiary to the Borrower or the merger of a Subsidiary into the Borrower.
6.16 ERISA. The Borrower will not, and will not permit any
Subsidiary to, become a party to any Multiemployer Plan.
6.17 Capital Expenditures. The Borrower will not, and will not
permit any Subsidiary to, make or commit to make (by way of the acquisition
of securities of a person or entity or otherwise) any Capital Expenditure,
except for Capital Expenditures not exceeding (i) in fiscal year 1998,
$65,000,000 in the aggregate, (ii) in fiscal year 1999, $55,000,000 in the
aggregate, (iii) in fiscal year 2000, $55,000,000 in the aggregate, and
(iv) in fiscal year 2001, $55,000,000 in the aggregate, and , with respect
to each fiscal year specified in clauses (ii), (iii) and (iv) above, an
additional aggregate amount equal to the amount (if any) by which the
actual Capital Expenditures in the immediately preceding fiscal year were
less than those permitted under clauses (i), (ii) and (iii) above, as
applicable. Notwithstanding the foregoing, any Capital Expenditure made by
a Person which is the subject of an Acquisition by the Borrower, prior to
such Acquisition, shall not be included in determining compliance by the
Borrower and its Subsidiaries with this Section.
6.18 Total Debt Ratio. The Borrower and its Subsidiaries on a
consolidated basis shall not permit, as of the end of each fiscal quarter
for the four consecutive fiscal quarters then ended, the Total Debt Ratio
to be greater than (i) 2.50:1.00 with respect to any such four consecutive
fiscal quarters ending prior to January 30, 2001 and (ii) 2.25:1.00 with
respect to any such four consecutive fiscal quarters ending on or after
January 30, 2001. Notwithstanding the foregoing, EBITDA for the first
quarterly measurement period shall be measured by the sum of EBITDA plus
merger and non-recurring costs up to a maximum of $10,000,000 for the
quarter ending April 30, 1998 multiplied by four. For the second quarterly
measurement period, EBITDA shall be measured by the sum of EBITDA for the
quarters ending April 30, 1998 and July 31, 1998 plus merger and
non-recurring costs up to a maximum of $20,000,000 multiplied by two. For
the third quarterly measurement period, EBITDA shall be measured by the sum
of EBITDA for the quarters ending April 30, 1998, July 31, 1998 and
October 31, 1998 plus merger and non-recurring costs of up to $20,000,000
multiplied by 1.33. For the quarter ending January 30, 1999, EBITDA shall
be measured by the sum of EBITDA for the period of four consecutive fiscal
quarters then ended plus merger and non-recurring costs up to a maximum of
$20,000,000. For the quarter ending April 30, 1999, EBITDA shall be
measured by the sum of EBITDA for the period of four consecutive fiscal
quarters then ended plus merger and non-recurring costs of up to
$10,000,000.
6.19 Payment of Obligations. The Borrower and each Subsidiary will
pay and discharge promptly all taxes, assessments and other governmental
charges and claims levied or imposed upon it or its Property, or any part
thereof, provided, however, that the Borrower and its Subsidiaries shall
have the right in good faith to contest any such taxes, assessments,
charges or claims and, pending the outcome of such contest, to delay or
refuse payment thereof provided that adequately funded reserves are
established by it to pay and discharge any such taxes assessments, charges
and claims.
6.20 Consolidated Net Worth. The Borrower and its Subsidiaries
shall at all times maintain Consolidated Net Worth, determined as of the
end of each fiscal quarter, of not less than $160,000,000 plus 50% of
cumulative Net Income for the period commencing on February 1, 1998 through
the end of such fiscal quarter plus 75% of any Net Proceeds obtained from
any public equity offering. (In the event that the Borrower and its
Subsidiaries have a consolidated net loss for any fiscal quarter, Net
Income for purposes of this Section shall be deemed zero for such fiscal
quarter).
6.21 Restricted Junior Payments. The Borrower shall not and shall
not permit any Subsidiaries to declare or pay any dividends (other than
dividends payable solely in common stock of the Borrower or its
Subsidiaries and other than dividends payable by its Subsidiaries to the
Borrower) on any shares of any class of capital stock of Borrower or its
Subsidiaries or any warrants or options to purchase any such stock, whether
now or hereafter outstanding.
6.22 Encumbrances and Liens. The Borrower will not create, assume
or suffer to exist any Lien (other than for taxes not delinquent and for
taxes and other items being contested in good faith) on Property of any
kind, whether real, personal or mixed, now owned or hereafter acquired, or
upon the income or profits thereof, except for (i) minor encumbrances and
easements on real property which do not materially affect its market value,
(ii) existing Liens on the Borrower's personal property; (iii) future
purchase money security interests encumbering only the property purchased;
(iv) statutory liens of bankers, carriers, warehousemen, mechanics,
materialmen, and other similar Liens imposed by law, which are incurred in
the ordinary course of business for sums not more than 30 days delinquent
or which are being contested in good faith by appropriate proceedings;
(v) deposits made in the ordinary course of business to secure liability to
insurance carriers; (vi) attachment and judgment Liens securing claims less
than $1,000,000 in the aggregate (excluding for purposes of said
calculation any such Liens for which execution has been stayed, payment is
covered in full by insurance, or the Borrower is prosecuting an appeal in
good faith by appropriate proceedings); and (vii) monetary obligations of
the Borrower under any leasing or similar arrangement which, in accordance
with Agreement Accounting Principles, is classified as a Capitalized Lease.
Notwithstanding the foregoing: (i) the Borrower shall not at any time
encumber any real property with a purchase money security interest if (A)
immediately after giving effect to such encumbrances, the purchase money
Debt secured by said encumbrance will exceed 75% of the fair market value
of the Property encumbered by the encumbrance or (B) immediately after
giving effect to such encumbrance, the aggregate Debt of the Borrower
secured by purchase money security interests in real property will exceed
5% of total assets of the Borrower and its Subsidiaries on a consolidated
basis; and (ii) the Borrower shall not at any time encumber its Property
with an additional Lien or encumbrance if, immediately after giving effect
to such encumbrance, the Borrower would be required to file an SEC Report.
6.23 Loans, Advances and Guaranties. The Borrower will not, and
will not permit any Subsidiary to, except in the ordinary course of
business as currently conducted, make any loans or advances, become a
guarantor or surety, pledge its credit or properties in any manner or
extend credit; provided that the foregoing shall not be construed as a
limitation on guaranties or any Liens permitted hereunder and, provided,
further, that the Borrower may make bridge loans to Canadian Petcetera
Warehouse Inc. in an aggregate amount not to exceed at any time $7,000,000.
6.24 Investments. The Borrower will not purchase the Debt of
another Person or entity except for:
(i) certificates of deposit, time deposits, Eurodollar time
deposits, repurchase agreements, reverse repurchase agreements, or bankers'
acceptances, having in each case a maturity date of not more than twelve
months from the date of acquisition by the Borrower, issued by a Lender or
any U.S. commercial bank or any branch or agency of a non-U.S. bank
licensed to conduct business in the U.S. having combined capital and
surplus or not less than $50,000,000 whose short term securities are rated
at least "A" by Standard & Poor's Corporation (or the equivalent rating
provided by any of Xxxxx'x Investors Service, Inc., Duff & Xxxxxx Credit
Rating Co. or Fitch Investors Services, Inc.);
(ii) interest bearing or discounted obligations of the United States
Government, any agency thereof (including without limitation the Federal
Home Loan Mortgage Corporation, the Government National Mortgage
Association, the Federal National Mortgage Association and the Federal Farm
Credit System) or any entities or pools of mortgages or other instruments
formed by the United States Government or any such agencies, and in any
case only if such obligation has a maturity date not more than twelve
months from the date of acquisition by the Borrower;
(iii) obligations issued by states and local governments or their
agencies, instrumentalities, authorities or subdivisions, if such issuer
has received a rating of at least "A" by Standard & Poor's Corporation (or
the equivalent rating provided by any of Xxxxx'x Investors Service, Inc.,
Duff & Xxxxxx Credit Rating Co. or Fitch Investors Services, Inc.), and in
any case only if such obligation has a maturity date of not more than
twelve months from the date of acquisition by the Borrower;
(iv) commercial paper of an issuer rated at least "A" by Standard &
Poor's Corporation (or the equivalent rating provided by any of Xxxxx'x
Investors Service, Inc., Duff & Xxxxxx Credit Rating Co. or Fitch Investors
Services, Inc.), and in any case only if such obligation has a maturity
date not more than twelve months from the date of acquisition by the
Borrower;
(v) investments in money market funds including short-term
adjustable rate money market funds; or
(vi) intercompany Debt otherwise permitted by Section 6.10(ii)
hereof.
6.25 Minimum Fixed Charge Coverage Ratio. The Borrower and its
Subsidiaries on a consolidated basis shall at all times maintain a ratio,
determined as of the end of each fiscal quarter, for the four consecutive
fiscal quarters then ended, of EBITDAR to Consolidated Fixed Charges of not
less than 1.25:1.0. Notwithstanding the foregoing, EBITDAR for the first
quarterly measurement period shall be measured by the sum of EBITDAR plus
merger and non-recurring costs up to a maximum of $10,000,000 for the
quarter ending April 30, 1998 multiplied by four. For the second quarterly
measurement period, EBITDAR shall be measured by the sum of EBITDAR for the
quarters ending April 30, 1998 and July 31, 1998 plus merger and
non-recurring costs up to a maximum of $20,000,000 multiplied by two. For
the third quarterly measurement period, EBITDAR shall be measured by the
sum of EBITDAR for the quarters ending April 30, 1998, July 31, 1998 and
October 31, 1998 plus merger and non-recurring costs up to a maximum of
$20,000,000 multiplied by 1.33. For the quarter ending January 30, 1999,
EBITDAR shall be measured by the sum of EBITDAR for the period of four
consecutive fiscal quarters then ended plus merger and non-recurring costs
up to a maximum of $20,000,000. For the quarter ending April 30, 1999,
EBITDAR shall be measured by the sum of EBITDAR for the period of four
consecutive fiscal quarters then ended plus merger and non-recurring costs
of up to $10,000,000. Notwithstanding the foregoing, Consolidated Fixed
Charges for the first quarterly measurement period shall be for the quarter
ending April 30, 1998, multiplied by four. For the second quarterly
measurement period, Consolidated Fixed Charges shall be for the quarters
ending April 30, 1998 and July 31, 1998, multiplied by two. For the third
quarterly measurement period, Consolidated Fixed Charges shall be for the
quarters ending April 30, 1998, July 31, 1998 and October 31, 1998,
multiplied by 1.33.
6.26 Capitalized Rent Expense Ratio. The Borrower and its
Subsidiaries on a consolidated basis shall not permit, as of the end of
each fiscal quarter for the four consecutive fiscal quarters then ended,
the Capitalized Rent Expense Ratio to be greater than 0.85:1:00.
Notwithstanding the foregoing, Rent Expense for the first quarterly
measurement period shall be for the quarter ending April 30, 1998,
multiplied by four. For the second quarterly measurement period, Rent
Expense shall be for the quarters ending April 30, 1998 and July 31, 1998,
multiplied by two. For the third quarterly measurement period, Rent
Expense shall be for the quarters ending April 30, 1998, July 31, 1998 and
October 31, 1998, multiplied by 1.33.
6.27 Guaranties, Etc. The Borrower will cause each of its
Subsidiaries hereafter formed or acquired to execute and deliver to the
Agent promptly upon the formation or acquisition thereof a Guaranty in form
and substance satisfactory to the Agent, guaranteeing the Obligations on
substantially the same terms as the other Guarantors.
6.28 Lease Obligations. The Borrower shall not and shall not permit
any of its Subsidiaries to, create, incur or suffer to exist, any
obligations as lessee for the payment of lease expenses for any real or
personal property under leases or arrangements to lease, other than rental
expense with respect to Capitalized Lease obligations and long-term
operating leases.
6.29 Condition Subsequent. The Borrower shall no later than
February 5, 1998, deliver to the Agent, for the benefit of the Lenders, a
favorable legal opinion (in form and substance satisfactory to the Agent)
of counsel to the Borrower and each Guarantor.
ARTICLE 7
DEFAULTS
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
7.1 Payment Defaults. The Borrower shall fail to pay when due any
payment of principal of any Loan, or the Borrower shall fail to pay within
3 days of the date when due any reimbursement obligation (with respect to a
drawing under a Letter of Credit) or interest or other charge or fee
required under the terms of this Agreement or the other Loan Documents.
7.2 Representations and Warranties. Any representation or warranty
made by the Borrower or any Guarantor under any Loan Document shall prove
to have been incorrect or misleading in any material respect when made.
7.3 Other Loan Document Defaults. The Borrower or any Guarantor
shall fail to perform (a) any obligation set forth in subsections 6.1, 6.3,
6.10, 6.11, 6.12, 6.13, 6.14, 6.17, 6.18, 6.21, 6.22, 6.23, 6.24, 6.25,
6.26 or 6.28 of the Agreement; (b) any obligation set forth in subsections
6.2 or 6.20 of the Agreement and such failure shall continue for 14 days
following the occurrence thereof; or (c) any other obligation contained in
the Agreement or the other Loan Documents, and such failure shall continue
for 30 days after written notice thereof from the Lenders.
7.4 Bankruptcy. (i) The Borrower or any Guarantor shall fail to
pay its Debts generally as they become due or shall file any petition or
action for relief under any bankruptcy, insolvency, reorganization,
moratorium, creditor composition law, or any other law for the relief of or
relating to debtors; (ii) an involuntary petition under any bankruptcy law
shall be filed against the Borrower or any Guarantor and shall not be
dismissed or discharged within 60 days of filing; or (iii) a custodian,
receiver, trustee, assignee for the benefit or creditors, or other similar
official, shall be appointed to take possession, custody or control of the
properties of the Borrower or any Guarantor and not be dismissed or
discharged with 60 days of appointment.
7.5 Other Agreements. The Borrower shall fail to pay when due
principal or interest payments required under the terms of any bonds,
notes, debentures or other agreements evidencing, in the aggregate, at
least $10,000,000 of indebtedness (excluding, for purposes of this
calculation, payments required under this Agreement or any of the other
Loan Documents) and such non-payment shall continue beyond any period of
grace provided with respect thereto, or the Borrower shall default in the
observance or performance of any other agreement contained in any such
bonds, notes, debentures or other agreements evidencing indebtedness, and
the effect of such failure or default is to cause the indebtedness
evidenced thereby to become due prior to its stated date of maturity.
7.6 ERISA. Any Governmental Person shall take any action under
ERISA, with respect to any Plan, that could have a Material Adverse Effect
or that the unfunded liabilities exceed $1,000,000.
7.7 Judgments. A final judgment or order for the payment of money
in excess of $10,000,000 (exclusive of amounts covered by insurance) shall
be rendered against the Borrower or any Guarantor and the same shall remain
undischarged for a period of 30 days during which execution shall not be
effectively stayed, or any judgment, writ, warrant of attachment, or
execution or similar process, shall be issued or levied against a
substantial part of the Borrower's or any Guarantor's property and such
judgment, writ, warrant of attachment, or execution or similar process,
shall not be released, stayed, vacated, bonded or otherwise dismissed
within 20 days after its issue or levy.
7.8 Loan Documents. The Guaranties or any other Loan Document
shall fail to remain in full force or effect or any action shall be taken
by the Borrower or any Guarantor to discontinue or to assert the invalidity
or unenforceability of any Guaranty or any other Loan Document, or any
Guarantor denies that it has any further liability under any Guaranty to
which it is a party, or gives notice to such effect.
ARTICLE 8
ACCELERATION, WAIVERS AND AMENDMENTS
8.1 Acceleration. If any Event of Default described in Section 7.4
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans and issue and participate in Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due
and payable without any election or action on the part of the Agent or any
Lender. If any other Event of Default occurs, the Required Lenders may
terminate or suspend the obligations of the Lenders to make Loans and issue
and participate in Letters of Credit hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice
of any kind, all of which the Borrower hereby expressly waives.
8.2 Cash Collateral. To the extent that any Letters of Credit are
outstanding at the time of any Event of Default, the Borrower shall deliver
to the Agent, for the benefit of the Lenders, a cash collateral deposit in
an amount equal to the aggregate Letter of Credit Amount for all Letters of
Credit then outstanding.
8.3 Additional Remedies. The rights, powers and remedies given to
the Agent and the Lenders hereunder shall be cumulative and not alternative
and shall be in addition to all rights, powers and remedies given to the
Agent and the Lenders by law against the Borrower or any other person,
including but not limited to any Lender's right of setoff or banker's lien.
8.4 Amendments. Subject to the provisions of this Article 8, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for
the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder
or waiving any Default hereunder; provided, however, that no such
supplemental agreement shall, without the consent of each Lender affected
thereby:
(i) Extend the maturity of any Loan or Note or forgive all or any
portion of the principal amount thereof, or reduce the rate or
extend the time of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Increase the amount of the Commitment of any Lender hereunder
or permit the Borrower to assign its rights under this
Agreement.
(iv) Amend this Section 8.4.
(v) Release any guarantor of the Loans or modify any guaranty in
any material respect.
No amendment of any provision of this Agreement relating to the Agent shall
be effective without the written consent of the Agent. The Agent may waive
payment of the fees for its own account without obtaining the consent of
any other party to this Agreement.
8.5 Preservation of Rights. No delay or omission of the Lenders or
the Agent to exercise any right under the Loan Documents shall impair such
right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a
Default or the inability of the Borrower to satisfy the conditions
precedent to such Loan shall not constitute any waiver or acquiescence.
Any single or partial exercise of any such right shall not preclude other
or further exercise thereof or the exercise of any other right, and no
waiver, amendment or other variation of the terms, conditions or provisions
of the Loan Documents whatsoever shall be valid unless in writing signed by
the Lenders required pursuant to Section 8.4, and then only to the extent
in such writing specifically set forth. All remedies contained in the Loan
Documents or by law afforded shall be cumulative and all shall be available
to the Agent and the Lenders until the Obligations have been paid in full.
ARTICLE 9
GENERAL PROVISIONS
9.1 Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall survive
delivery of the Notes and the making of the Loans and issuance of the
Letters of Credit herein contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, no Lender shall be obligated to extend
credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
9.3 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of
any of the provisions of the Loan Documents.
9.4 Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent and the Lenders
and supersede all prior agreements and understandings among the Borrower,
the Agent and the Lenders relating to the subject matter thereof.
9.5 Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and not joint
and no Lender shall be the partner or agent of any other (except to the
extent to which the Agent is authorized to act as such). The failure of
any Lender to perform any of its obligations hereunder shall not relieve
any other Lender from any of its obligations hereunder. This Agreement
shall not be construed so as to confer any right or benefit upon any Person
other than the parties to this Agreement and their respective successors
and assigns.
9.6 Expenses; Indemnification. The Borrower shall reimburse the
Agent for any costs, internal charges and out-of-pocket expenses paid or
incurred by the Agent in connection with the negotiation and documentation
of this Agreement. The Borrower shall also reimburse the Agent and each
Lender for any costs, internal charges and out-of-pocket expenses
(including reasonable attorneys' fees and time charges of attorneys for the
Agent and each Lender) paid or incurred by the Agent or any Lender in
connection with the collection and enforcement of the Loan Documents. The
Borrower further agrees to indemnify the Agent and each Lender, its
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or
not the Agent or any Lender is a party thereto) which any of them may pay
or incur arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan or Letter
of Credit hereunder, provided that no Person shall have the right to be
indemnified hereunder for such Person's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
9.7 Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.
9.8 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement
Accounting Principles; provided that, if the Borrower notifies the Agent
that the Borrower wishes to amend any covenant contained in Article 6 to
eliminate the effect of any change after the date hereof in Agreement
Accounting Principles (which, for purposes of this proviso shall include
the generally accepted application or interpretation thereof) on the
operation of such covenants (or if the Agent notifies the Borrower that the
Required Lenders wish to amend any such covenant for such purpose), then
the Borrower's compliance with such covenant shall be determined on the
basis of Agreement Accounting Principles in effect immediately before the
relevant change in Agreement Accounting Principles became effective, until
either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Borrower and the Required Lenders.
9.9 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,
or invalid without affecting the remaining provisions in that jurisdiction
or the operation, enforceability, or validity of that provision in any
other jurisdiction, and to this end the provisions of all Loan Documents
are declared to be severable.
9.10 Nonliability of Lenders. The relationship between the Borrower
and the Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities
to the Borrower. Neither the Agent nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower of any
matter in connection with any phase of the Borrower's business or
operations.
9.11 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING
A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE
STATE OF CALIFORNIA, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
9.12 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
CALIFORNIA STATE COURT SITTING IN LOS ANGELES IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR
ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY
OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN LOS
ANGELES, CALIFORNIA.
9.13 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE)
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT
OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
9.14 Integration Clause. Except for documents and instruments
specifically referenced herein, this Agreement constitutes the entire
agreement among the Agent, the Lenders and the Borrower regarding the Loans
and Letters of Credit and all prior communications verbal or written
between the Borrower and the Agent or any Lender shall be of no further
effect or evidentiary value.
9.15 Confidentiality. The Lenders shall take normal and reasonable
precautions to maintain the confidentiality of all non-public information
obtained pursuant to the requirements of this Agreement which has been
identified as such by the Borrower but may, in any event, make disclosures
(i) reasonably required by any bona fide transferee, assignee or
participant in connection with the contemplated transfer or assignment of
any of the Commitments or Loans or participations therein or participations
in Letters of Credit or (ii) as required or requested by any governmental
agency or representative thereof or as required pursuant to any legal
process or (iii) to its attorneys and accountants or (iv) as required by
law or (v) in connection with litigation involving any Lender.
ARTICLE 10
THE AGENT
10.1 Appointment. UBOC is hereby appointed Agent hereunder and
under each other Loan Document, and each of the Lenders irrevocably
authorizes the Agent to act as the agent of such Lender. The Agent agrees
to act as such upon the express conditions contained in this Article 10.
The Agent shall not have a fiduciary relationship in respect of the
Borrower or any Lender by reason of this Agreement.
10.2 Powers. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by the
terms of each thereof, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties to the Lenders,
or any obligation to the Lenders to take any action thereunder except any
action specifically provided by the Loan Documents to be taken by the
Agent.
10.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower or any Lender
for any action taken or omitted to be taken by it or them hereunder or
under any other Loan Document or in connection herewith or therewith except
for its or their own gross negligence or willful misconduct.
10.4 No Responsibility for Loans, Recitals, etc. Neither the Agent
nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify
(i) any statement, warranty or representation made in connection with any
Loan Document or any borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of any obligor under any
Loan Document, including, without limitation, any agreement by an obligor
to furnish information directly to each Lender; (iii) the satisfaction of
any condition specified in Article 4 except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness
of any Loan Document or any other instrument or writing furnished in
connection therewith. The Agent shall have no duty to disclose to the
Lenders information that is not required to be furnished by the Borrower to
the Agent at such time, but is voluntarily furnished by the Borrower to the
Agent (either in its capacity as Agent or in its individual capacity).
10.5 Action on Instructions of Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written instructions
signed by the Required Lenders, and such instructions and any action taken
or failure to act pursuant thereto shall be binding on all of the Lenders
and on all holders of Notes. The Agent shall be fully justified in failing
or refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro
rata against any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.
10.6 Employment of Agents and Counsel. The Agent may execute any of
its duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities received by it
or its authorized agents, for the default or misconduct of any such agents
or attorneys-in-fact selected by it with reasonable care. The Agent shall
be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder and under any other Loan
Document.
10.7 Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons,
and, in respect to legal matters, upon the opinion of counsel selected by
the Agent, which counsel may be employees of the Agent.
10.8 Agent's Reimbursement and Indemnification. The Lenders agree
to reimburse and indemnify the Agent ratably in proportion to their
respective Commitments (i) for any other expenses incurred by the Agent on
behalf of the Lenders, in connection with the preparation, execution,
delivery, administration and enforcement of the Loan Documents and (ii) for
any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of the Loan Documents or any
other document delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms thereof or of
any such other documents, provided that no Lender shall be liable for any
of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent. The obligations of the Lenders under this
Section 10.8 shall survive payment of the Obligations and termination of
this Agreement.
10.9 Rights as a Lender. In the event the Agent is a Lender, the
Agent shall have the same rights and powers hereunder and under any other
Loan Document as any Lender and may exercise the same as though it were not
the Agent, and the term "Lender" or "Lenders" shall, at any time when the
Agent is a Lender, unless the context otherwise indicates, include the
Agent in its individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or any
other Loan Document, with the Borrower or any of its Subsidiaries in which
the Borrower or such Subsidiary is not restricted hereby from engaging with
any other Person. The Agent shall, as long as it shall be the Agent,
retain at least a 20% interest in the Commitment or, if the Commitment has
been terminated at least a 20% interest in Loans outstanding.
10.10 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents.
10.11 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to
be effective upon the appointment of a successor Agent or, if no successor
Agent has been appointed, forty-five days after the retiring Agent gives
notice of its intention to resign. Upon any such resignation, the Required
Lenders shall have the right to appoint, with the consent (which shall not
be unreasonably withheld) of the Borrower, if no Default has occurred and
is continuing, on behalf of the Borrower and the Lenders, a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent's giving notice of its
intention to resign, then the resigning Agent may appoint, on behalf of the
Borrower and the Lenders, a successor Agent. If the Agent has resigned and
no successor Agent has been appointed, the Lenders may perform all the
duties of the Agent hereunder and the Borrower shall make all payments in
respect of the Obligations to the applicable Lender and for all other
purposes shall deal directly with the Lenders. No successor Agent shall be
deemed to be appointed hereunder until such successor Agent has accepted
the appointment. Any such successor Agent shall be a commercial bank
having capital and retained earnings of at least $50,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent. Upon the
effectiveness of the resignation of the Agent, the resigning Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an Agent, the
provisions of this Article 10 shall continue in effect for the benefit of
such Agent in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent hereunder and under the other Loan
Documents.
ARTICLE 11
SETOFF; RATABLE PAYMENTS
11.1 Setoff. Upon the occurrence and during the continuance of any
Event of Default, the Lenders are hereby authorized at any time and from
time to time, 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 and other indebtedness at any time owing by any
Lender to or for the credit or the account of the Borrower against any and
all obligations of the Borrower now or hereafter existing under the Loan
Documents, irrespective of whether or not any Lender shall have made any
demand under this Agreement and although such obligations may be unmatured.
The Agent agrees to notify the Borrower promptly after any such setoff and
application; provided, however, that the failure to give such notice shall
not affect the validity of such setoff and application. The rights of the
Lenders under this Section are in addition to other rights and remedies
(including other rights of setoff) that the Lenders may have.
11.2 Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than payments
received pursuant to Section 3.1 or 3.2) in a greater proportion than that
received by any other Lender, such Lender agrees, promptly upon demand, to
purchase a portion of the Loans held by the other Lenders so that after
such purchase each Lender will hold its ratable proportion of Loans. If
any Lender, whether in connection with setoff or amounts which might be
subject to setoff or otherwise, receives collateral or other protection for
its Obligations or such amounts which may be subject to setoff, such Lender
agrees, promptly upon demand, to take such action necessary such that all
Lenders share in the benefits of such collateral ratably in proportion to
their Loans. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.
ARTICLE 12
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower
and the Lenders and their respective successors and assigns, except that
(i) the Borrower shall not have the right to assign its rights or
obligations under the Loan Documents and (ii) any assignment by any Lender
must be made in compliance with Section 12.3. Notwithstanding clause (ii)
of this Section, any Lender may at any time, without the consent of the
Borrower or the Agent, assign all or any portion of its rights under this
Agreement and its Notes to a Federal Reserve Bank; provided, however, that
no such assignment shall release the transferor Lender from its obligations
hereunder. The Agent may treat the payee of any Note as the owner thereof
for all purposes hereof unless and until such payee complies with
Section 12.3 in the case of an assignment thereof or, in the case of any
other transfer, a written notice of the transfer is filed with the Agent.
Any assignee or transferee of a Note agrees by acceptance thereof to be
bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request
or giving such authority or consent is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of
such Note or of any Note or Notes issued in exchange therefor.
12.2 Participations.
(i) Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable
law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender
or any other interest of such Lender under the Loan Documents. In
the event of any such sale by a Lender of participating interests to
a Participant, such Lender's obligations under the Loan Documents
shall remain unchanged, such Lender shall remain solely responsible
to the other parties hereto for the performance of such obligations,
such Lender shall remain the holder of any such Note for all purposes
under the Loan Documents, all amounts payable by the Borrower under
this Agreement shall be determined as if such Lender had not sold
such participating interests, and the Borrower and the Agent shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under the Loan Documents.
(ii) Voting Rights. Each Lender shall retain the sole right
to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other
than any amendment, modification or waiver with respect to any Loan
or Commitment in which such Participant has an interest which
forgives principal, interest or fees or reduces the interest rate or
fees payable with respect to any such Loan or Commitment, postpones
any date fixed for any regularly-scheduled payment of principal of,
or interest or fees on, any such Loan or Commitment, or releases any
guarantor of any such Loan or any substantial amount of collateral
securing any such Loan.
(iii) Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in
Section 11.1 in respect of its participating interest in amounts
owing under the Loan Documents to the same extent as if the amount of
its participating interest were owing directly to it as a Lender
under the Loan Documents, provided that each Lender shall retain the
right of setoff provided in Section 11.1 with respect to the amount
of participating interests sold to each Participant. The Lenders
agree to share with each Participant, and each Participant, by
exercising the right of setoff provided in Section 11.1, agrees to
share with each Lender, any amount received pursuant to the exercise
of its right of setoff, such amounts to be shared in accordance with
Section 11.2 as if each Participant were a Lender.
12.3 Assignments.
(i) Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any
time assign to one or more Eligible Assignees ("Purchasers") all or
any part of its rights and obligations under the Loan Documents,
provided, however, such assignments must be in a minimum amount at
least equal to $5,000,000; provided, however, that if such Purchaser
is a Lender or an Affiliate thereof, no minimum amount shall be
applicable. Such assignment shall be substantially in the form of
Exhibit C hereto or in such other form as may be agreed to by the
parties thereto. The consent of the Borrower and the Agent shall be
required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender or an Affiliate thereof; provided,
however, that if a Default has occurred and is continuing, the
consent of the Borrower shall not be required. Such consents shall
not be unreasonably withheld.
(ii) Effect; Effective Date. Upon (i) delivery to the Agent
of a notice of assignment, substantially in the form attached as
Exhibit I to Exhibit C hereto (a "Notice of Assignment"), together
with any consents required by Section 12.3(i), and (ii) payment of a
$3,000 fee to the Agent for processing such assignment, such
assignment shall become effective on the effective date specified in
such Notice of Assignment. The Notice of Assignment shall contain a
representation by the Purchaser to the effect that it is an Eligible
Assignee and that none of the consideration used to make the purchase
of the Commitment and Loans under the applicable assignment agreement
are "plan assets" as defined under ERISA and that the rights and
interests of the Purchaser in and under the Loan Documents will not
be "plan assets" under ERISA. On and after the effective date of
such assignment, such Purchaser shall for all purposes be a Lender
party to this Agreement and any other Loan Document executed by the
Lenders and shall have all the rights and obligations of a Lender
under the Loan Documents, to the same extent as if it were an
original party hereto, and no further consent or action by the
Borrower, the Lenders or the Agent shall be required to release the
transferor Lender with respect to the percentage of the Aggregate
Commitment and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this
Section 12.3(ii), the transferor Lender, the Agent and the Borrower
shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in
principal amounts reflecting their Commitment, as adjusted pursuant
to such assignment.
12.4 Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in
such Lender's possession concerning the creditworthiness of the Borrower
and its Subsidiaries, provided that each prospective Transferee shall
execute and deliver to the Agent a confidentiality agreement (in form and
substance reasonably satisfactory to the Borrower and the Agent).
12.5 Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the
transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of
Section 2.15.
ARTICLE 13
NOTICES
13.1 Giving Notice. Except as otherwise permitted by Section 2.6
with respect to notices regarding conversion or continuation of Advances,
all notices and other communications provided to any party hereto under
this Agreement or any other Loan Document shall be in writing or by
facsimile and addressed or delivered to the Borrower and the Agent at their
respective addresses set forth below its signature hereto and to each
Lender at its address set forth on Schedule 1 hereto or at such other
address as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if transmitted by
facsimile, shall be deemed given when transmitted (answerback confirmed in
the case of telexes).
13.2 Change of Address. The Borrower, the Agent and any Lender may
each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
ARTICLE 14
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower, the
Agent and the Lenders and each party has notified the Agent by telex or
telephone, that it has taken such action.
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have
executed this Agreement as of the date first above written.
PETCO ANIMAL SUPPLIES, INC.
By: _____________________________
Print Name: Xxxxx X. Xxxxx
Title: Senior Vice President-
Finance
0000 Xxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Senior Vice President -
Finance
Telecopier: (000) 000-0000
UNION BANK OF CALIFORNIA, N.A.,
as Agent and Lender
By: ______________________________
Print Name: Xxxx Xxxxxxx
Title: Vice President
By: ______________________________
Print Name: Xxxxx Xxxxxxx
Title: Vice President
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Vice President
Telecopier: (000) 000-0000
SCHEDULE 1
LENDERS AND APPLICABLE LENDING OFFICES
Revolving Term Applicable
Lender Commitment Commitment Lending Office
Union Bank of
California, N.A.
Agent and Lender
$80,000,000
$30,000,000
000 Xxxxx Xxxx Xxxxxx,
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Telecopier: (000) 000-0000
___________ ___________
Total $80,000,000 $30,000,000
SCHEDULE 2
SUBSIDIARIES
(See Section 5.8)
Jurisdiction
Investment Owned Amount of Percent of
In By Investment Ownership Organization
International Borrower $100 100% California
Pet Supplies
and
Distribution,
Inc.
Pet Nosh, Borrower $100 100% New York
Consolidated
Co., Inc.
Shareholder Agreements and/or Management Agreements
None
SCHEDULE 3
DEBT
That certain Credit Agreement dated as of December 6, 1996 between Petco Animal
Supplies, Inc., as Borrower, the lenders named therein and Union Bank of
California, N.A. as agent and lender.
EXHIBIT A-1
FORM OF REVOLVING NOTE
$_______________ _______________, 19__
PETCO ANIMAL SUPPLIES, INC., a Delaware corporation, (the
"Borrower"), promises to pay to the order of ___________________________
(the "Lender") the principal sum of ___________________________ Dollars or
such lesser amount as loaned under the Agreement referred to below, in
immediately available funds at the main office of Union Bank of California,
N.A., as Agent, together with interest on the unpaid principal amount
hereof at the rates and on the dates set forth in the Agreement hereinafter
referred to. The Borrower shall pay the principal of and accrued and
unpaid interest on the Revolving Loans made by the Lender in full on the
Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the
schedule attached hereto, or to otherwise record in accordance with its
usual practice, the date and amount of each Revolving Loan and the date and
amount of each principal payment hereunder.
This Note is one of the Revolving Notes issued pursuant to, and is
entitled to the benefits of, the Credit Agreement dated as of January 30,
1998 (the "Agreement") among the Borrower, Union Bank of California, N.A.,
individually and as Agent, and the lenders named therein, including the
Lender, to which Agreement, as it may be amended from time to time,
reference is hereby made for a statement of the terms and conditions
governing this Note, including the terms and conditions under which this
Note may be prepaid or its maturity date accelerated. Capitalized terms
used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
The Borrower waives notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor or any other notices
or demands.
The Borrower shall reimburse the Lender for all costs and expenses,
including without limitation reasonable attorneys' fees, as set forth in
the Agreement.
PETCO ANIMAL SUPPLIES, INC.
By: ______________________________
Print Name:_______________________
Title: ___________________________
EXHIBIT A-2
FORM OF TERM NOTE
$_________________ ______________, 19__
PETCO ANIMAL SUPPLIES, INC., a Delaware corporation, (the
"Borrower"), promises to pay to the order of ________________ (the
"Lender") the principal sum of ________________________ Dollars or such
lesser amount as loaned under the Agreement referred to below, in
immediately available funds at the main office of Union Bank of
California, N.A., as Agent, together with interest on the unpaid principal
amount hereof at the rates and on the dates set forth in the Agreement
hereinafter referred to. The Borrower shall pay the principal of and
accrued and unpaid interest on the Term Loan made by the Lender on the
dates and in the amounts specified in the Agreement, and in any event in
full on the Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual
practice, the date and amount of the Term Loan and the date and amount of
each principal payment hereunder.
This Note is one of the Term Notes issued pursuant to, and is
entitled to the benefits of, the Credit Agreement dated as of January 30,
1998 (the "Agreement") among the Borrower, Union Bank of California, N.A.,
individually and as Agent, and the lenders named therein, including the
Lender, to which Agreement, as it may be amended from time to time,
reference is hereby made for a statement of the terms and conditions
governing this Note, including the terms and conditions under which this
Note may be prepaid or its maturity date accelerated. Capitalized terms
used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
The Borrower waives notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor or any other notices
or demands.
The Borrower shall reimburse the Lender for all costs and expenses,
including without limitation reasonable attorneys' fees, as set forth in
the Agreement.
PETCO ANIMAL SUPPLIES, INC.
By: ______________________________
Print Name:_______________________
Title: ___________________________
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF PETCO ANIMAL SUPPLIES, INC.
DATED JANUARY 30, 1998
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Maturity Paid Balance
EXHIBIT B
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain
Credit Agreement dated as of January 30, 1998 (as amended, modified,
renewed or extended from time to time, the "Agreement") among PETCO ANIMAL
SUPPLIES, INC. (the "Borrower"), the lenders party thereto and Union Bank
of California, N.A., as Agent for the Lenders. Unless otherwise defined
herein, capitalized terms used in this Compliance Certificate have the
meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly [elected/appointed] _________________ of the
Borrower;
2. I have reviewed the terms of the Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrower during the accounting period
covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which
constitutes a Default or an Event of Default during or at the end of the
accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain covenants in
the Agreement, all of which data and computations are true, complete and
correct.
Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Borrower has taken, is
taking, or proposes to take with respect to each such condition or event:
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
The foregoing certifications, together with the computations set
forth in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this day of
, .
________________________
[SAMPLE]
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of _____________, __________ with
Provisions of Sections 6.10, 6.12, 6.17, 6.18, 6.20,
6.21, 6.22, 6.25 and 6.26 of
the Agreement
EXHIBIT C
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
(the "Assignor") and (the
"Assignee") is dated as of , ________. The parties hereto
agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, modified, renewed or extended from
time to time is herein called the "Credit Agreement") described in Item 1
of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings attributed
to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns
to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor's rights and obligations under
the Credit Agreement such that after giving effect to such assignment the
Assignee shall have purchased pursuant to this Assignment Agreement the
percentage interest specified in Item 3 of Schedule 1 of all outstanding
rights and obligations under the Credit Agreement relating to the
facilities listed in Item 3 of Schedule 1 and the other Loan Documents.
The aggregate Commitment (or Loan, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in Item 4 of
Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment
Agreement (the "Effective Date") shall be the later of the date specified
in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed
to by the Agent) after a Notice of Assignment substantially in the form of
Exhibit "I" attached hereto has been delivered to the Agent. Such Notice
of Assignment must include any consents required to be delivered to the
Agent by Section 12.3(i) of the Credit Agreement. In no event will the
Effective Date occur if the payments required to be made by the Assignee to
the Assignor on the Effective Date under Sections 4 and 5 hereof are not
made on the proposed Effective Date. The Assignor will notify the Assignee
of the proposed Effective Date no later than the Business Day prior to the
proposed Effective Date. As of the Effective Date, (i) the Assignee shall
have the rights and obligations of a Lender under the Loan Documents with
respect to the rights and obligations assigned to the Assignee hereunder
and (ii) the Assignor shall relinquish its rights and be released from its
corresponding obligations under the Loan Documents with respect to the
rights and obligations assigned to the Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all payments of
principal, interest and fees with respect to the interest assigned hereby.
The Assignee shall advance funds directly to the Agent with respect to all
Loans and reimbursement payments made on or after the Effective Date with
respect to the interest assigned hereby. [In consideration for the sale
and assignment of Loans hereunder, with respect to any Loan made by the
Assignor and assigned to the Assignee hereunder which is outstanding on the
Effective Date, (a) on the last day of the Interest Period therefor or (b)
on such earlier date agreed to by the Assignor and the Assignee or (c) on
the date on which any Loan either becomes due (by acceleration or
otherwise) or is prepaid (the date as described in the foregoing clauses
(a), (b) or (c) being hereinafter referred to as the "Payment Date"), the
Assignee shall pay the Assignor an amount equal to the principal amount of
the portion of such Loan assigned to the Assignee which is outstanding on
the Payment Date. If the Assignor and the Assignee agree that the Payment
Date for such Loan shall be the Effective Date, they shall agree to the
interest rate applicable to the portion of such Loan assigned hereunder for
the period from the Effective Date to the end of the existing Interest
Period applicable to any Loan (the "Agreed Interest Rate") and any interest
received by the Assignee in excess of the Agreed Interest Rate shall be
remitted to the Assignor. In the event interest for the period from the
Effective Date to but not including the Payment Date is not paid by the
Borrower with respect to any Loan sold by the Assignor to the Assignee
hereunder, the Assignee shall pay to the Assignor interest for such period
on the portion of such Loan sold by the Assignor to the Assignee hereunder
at the applicable rate provided by the Credit Agreement. In the event a
prepayment of any Loan which is existing on the Payment Date and assigned
by the Assignor to the Assignee hereunder occurs after the Payment Date but
before the end of the Interest Period applicable to such Loan, the Assignee
shall remit to the Assignor the excess of the prepayment penalty paid with
respect to the portion of such Loan assigned to the Assignee hereunder over
the amount which would have been paid if such prepayment penalty was
calculated based on the Agreed Interest Rate. The Assignee will also
promptly remit to the Assignor (i) any principal payments received from the
Agent with respect to a Loan prior to the Payment Date and (ii) any amounts
of interest on Loans and fees received from the Agent which relate to the
portion of the Loans assigned to the Assignee hereunder for periods prior
to the Payment Date, and not previously paid by the Assignee to the
Assignor.]* In the event that either party hereto receives any payment to
which the other party hereto is entitled under this Assignment Agreement,
then the party receiving such amount shall promptly remit it to the other
party hereto.
*Each Assignor may insert its standard payment provisions in lieu of the
payment terms included in this Exhibit.
[ 5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the
Assignor a fee on each day on which a payment of interest or
________________ fees is made under the Credit Agreement with respect to
the amounts assigned to the Assignee hereunder (other than a payment of
interest or ___________ fees for the period prior to the Payment Date,
which the Assignee is obligated to deliver to the Assignor pursuant to
Section 4 hereof). The amount of such fee shall be the difference between
(i) the interest or fee, as applicable, paid with respect to the amounts
assigned to the Assignee hereunder and (ii) the interest or fee, as
applicable, which would have been paid with respect to the amounts assigned
to the Assignee hereunder if each interest rate was of 1% less than
the interest rate paid by the Borrower or if the ______________ fee was
of 1% less than the _____________ fee paid by the Borrower, as applicable.
In addition, the Assignee agrees to pay % of the recordation fee
required to be paid to the Agent in connection with this Assignment
Agreement.]
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim created by the
Assignor. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor
makes no other representation or warranty of any kind to the Assignee.
Neither the Assignor nor any of its officers, directors, employees, agents
or attorneys shall be responsible for (i) the due execution, legality,
validity, enforceability, genuineness, sufficiency or collectability of any
Loan Document, including without limitation, documents granting the
Assignor and the other Lenders a security interest in assets of the
Borrower or any guarantor, (ii) any representation, warranty or statement
made in or in connection with any of the Loan Documents, (iii) the
financial condition or creditworthiness of the Borrower or any guarantor,
(iv) the performance of or compliance with any of the terms or provisions
of any of the Loan Documents, (v) inspecting any of the Property, books or
records of the Borrower, (vi) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral securing or
purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the
Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms
that it has received a copy of the Credit Agreement, together with copies
of the financial statements requested by the Assignee and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment Agreement, (ii)
agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender and based on such documents and information at
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Documents, (iii)
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under the Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto, (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of
the Loan Documents are required to be performed by it as a Lender, (v)
agrees that its payment instructions and notice instructions are as set
forth in the attachment to Schedule 1, (vi) confirms that none of the
funds, monies, assets or other consideration being used to make the
purchase and assumption hereunder are "plan assets" as defined under ERISA
and that its rights, benefits and interests in and under the Loan Documents
will not be "plan assets" under ERISA, [and (vii) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying
that the Assignee is entitled to receive payments under the Loan Documents
without deduction or withholding of any United States federal income
taxes].*
*to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
8. INDEMNITY. The Assignee agrees to indemnify and hold the
Assignor harmless against any and all losses, costs and expenses
(including, without limitation, reasonable attorneys' fees) and liabilities
incurred by the Assignor in connection with or arising in any manner from
the Assignee's non-performance of the obligations assumed under this
Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee
shall have the right pursuant to Section 12.3(i) of the Credit Agreement to
assign the rights which are assigned to the Assignee hereunder to any
entity or person, provided that (i) any such subsequent assignment does not
violate any of the terms and conditions of the Loan Documents or any law,
rule, regulation, order, writ, judgment, injunction or decree and that any
consent required under the terms of the Loan Documents has been obtained
and (ii) unless the prior written consent of the Assignor is obtained, the
Assignee is not thereby released from its obligations to the Assignor
hereunder, if any remain unsatisfied, including, without limitation, its
obligations under Sections 4, 5 and 8 hereof.
*[10. REDUCTIONS OF AGGREGATE REVOLVING COMMITMENT. If any
reduction in the Aggregate Revolving Commitment occurs between the date of
this Assignment Agreement and the Effective Date, the percentage interest
specified in Item 3 of Schedule 1 shall remain the same, but the dollar
amount purchased shall be recalculated based on the reduced Aggregate
Commitment.]
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between
the parties hereto and supersede all prior agreements and understandings
between the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by
the internal law, and not the law of conflicts, of the State of California.
13. NOTICES. Notices shall be given under this Assignment Agreement
in the manner set forth in the Credit Agreement. For the purpose hereof,
the addresses of the parties hereto (until notice of a change is delivered)
shall be the address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above
written.
[NAME OF ASSIGNOR]
By:_________________________
Title:______________________
____________________________
____________________________
[NAME OF ASSIGNEE]
By:________________________
Title:_____________________
___________________________
___________________________
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement: Credit Agreement dated as
of January 31, 1998 among Petco Animal Supplies, Inc., the Lenders
party thereto and Union Bank of California, N.A., as Agent.
2. Date of Assignment Agreement: ,
3. Amounts (As of Date of Item 2 above):
a. Total of Assignor's Revolving Commitment (Revolving
Loans/Letters of Credit)*/Term Loans under Credit Agreement
Revolving Commitment: $____________
Term Loan: $____________
b. Assignee's Percentage of Facility purchased under the
Assignment Agreement**
Revolving Commitment: _____%
Term Loan: _____%
c. Amount of Assigned Share in Facility purchased under the
Assignment Agreement
Revolving Commitment: $____________
Term Loan: $____________
d. Amount of Assigned Share in Letters of Credit Outstanding
$________
4. Assignee's aggregate Commitment (Revolving Commitment* and Term
Loan) purchased hereunder:
$
5. Proposed Effective Date: _____________, __
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: _________________________ By:_________________________
Title:_______________________ Title:______________________
* If a Revolving Commitment has been terminated, insert outstanding
Revolving Loans/Letters of Credit in place of Revolving Commitment
** Percentage taken to 10 decimal places
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
_______________, 19__
To: Petco Animal Supplies, Inc.
0000 Xxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Union Bank of California, N.A., as Agent
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Credit Agreement (the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto ("Schedule 1").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and
delivered to the Borrower and the Agent pursuant to Section 12.3(ii) of the
Credit Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of , (the "Assignment"), pursuant
to which, among other things, the Assignor has sold, assigned, delegated
and transferred to the Assignee, and the Assignee has purchased, accepted
and assumed from the Assignor the percentage interest specified in Item 3
of Schedule 1 of all outstandings, rights and obligations under the Credit
Agreement relating to the facilities listed in Item 3 of Schedule 1. The
Effective Date of the Assignment shall be the later of the date specified
in Item 5 of Schedule 1 or two Business Days (or such shorter period as
agreed to by the Agent) after this Notice of Assignment and any consents
and fees required by Sections 12.3(i) and 12.3(ii) of the Credit Agreement
have been delivered to the Agent, provided that the Effective Date shall
not occur if any condition precedent agreed to by the Assignor and the
Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to the Borrower and
the Agent notice of the assignment and delegation referred to herein. The
Assignor will confer with the Agent before the date specified in Item 5 of
Schedule 1 to determine if the Assignment Agreement will become effective
on such date pursuant to Section 3 hereof, and will confer with the Agent
to determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter. The Assignor shall notify the Agent if the Assignment
Agreement does not become effective on any proposed Effective Date as a
result of the failure to satisfy the conditions precedent agreed to by the
Assignor and the Assignee. At the request of the Agent, the Assignor will
give the Agent written confirmation of the satisfaction of the conditions
precedent.
5. The Assignor or the Assignee shall pay to the Agent on or
before the Effective Date the processing fee of $3,000 required by Section
12.3(ii) of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor
and the Assignee request and direct that the Agent prepare and cause the
Borrower to execute and deliver new Notes or, as appropriate, replacements
notes, to the Assignor and the Assignee. The Assignor and, if applicable,
the Assignee each agree to deliver to the Agent the original Note received
by it from the Borrower upon its receipt of a new Note in the appropriate
amount.
7. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the
purchase pursuant to the Assignment are "plan assets" as defined under
ERISA and that its rights, benefits, and interests in and under the Loan
Documents will not be "plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent under the
Loan Documents in accordance with the terms thereof. The Assignee
acknowledges that the Agent has no duty to supply information with respect
to the Borrower or the Loan Documents to the Assignee until the Assignee
becomes a party to the Credit Agreement.*
*May be eliminated if Assignee is a party to the Credit Agreement prior to
the Effective Date.
NAME OF ASSIGNOR NAME OF ASSIGNEE
By:____________________ By:____________________
Title: ________________ Title:_________________
ACKNOWLEDGED AND CONSENTED ACKNOWLEDGED AND CONSENTED
TO BY UNION BANK OF TO BY PETCO ANIMAL SUPPLIES,
CALIFORNIA, N.A., as Agent INC., a Delaware corporation
By________________________ By_________________________
Name:_____________________ Name:______________________
Title:____________________ Title:_____________________
[Attach photocopy of Schedule 1 to Assignment]
EXHIBIT D
LEVERAGE RATIO LEVEL CERTIFICATE
TO: The Lenders Party to the Credit Agreement
described below
This Leverage Ratio Level Certificate is furnished pursuant to that
certain Credit Agreement dated as of January 30, 1998 (as amended,
modified, renewed or extended from time to time, the "Agreement") among
Petco Animal Supplies, Inc. (the "Borrower"), the Lenders party thereto and
Union Bank of California, N.A., as Agent for the Lenders. Unless otherwise
defined herein, capitalized terms used in this Leverage Ratio Level
Certificate have their meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. The Total Debt Ratio for the Borrower and its Subsidiaries on a
consolidated basis as at ____________, ___________ for the period of four
fiscal quarters then ended is as follows:
(a) Funded Debt (including Capitalized
Leases outstanding) $_______________
(b) EBITDA
$_______________
(c) On the basis of the foregoing,
the Total Debt Ratio is
_____ to 1.00 ((a) divided by (b)).
2. Based on the Total Debt Ratio, the applicable Leverage Ratio
Level for the Borrower as of ____________, _____________ is Level
___________.
The foregoing certifications are made and delivered this _____ day of
_____________, ___________.
_____________________________
EXHIBIT F
FORM OF NOTICE OF BORROWING
[Date]
Union Bank of California, N.A., as Agent
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Vice President
Re: Credit Agreement Dated as of January 30, 1998 (the "Credit
Agreement")
Ladies and Gentlemen:
Pursuant to the provisions of Section [2.1(iv)/2.4(iii)] of the
Credit Agreement, Petco Animal Supplies, Inc. (the "Borrower") hereby gives
irrevocable and binding notice to you, as Agent, that the Borrower is
requesting a Loan to be made under the Credit Agreement as follows
(capitalized terms have the definitions set forth in the Credit Agreement):
1. Aggregate Loan Amount: $____________.
Term Loans: $___________
Revolving Loans: $___________
[At least $1,000,000 or multiple of $500,000]
2. Borrowing Date: ____________, ____.
[Same date for Base Rate Loans; at least 3 Business Days for
LIBOR Loans.]
3. (a) Revolving Loans will be [LIBOR Loans ($______) and/or Base
Rate Loans ($______)].
(b) Term Loans will be [LIBOR Loans
($_________) and/or Base Rate Loans
($_________)]
4. LIBOR Loans will have the following Interest Periods [1, 2, 3
or 6 months]:
(a) Revolving Loans
$_________: ____ months
$_________: ____ months
(b) Term Loans
$_________: _____ months
$_________: _____ months
[no more than 10 Loans in aggregate to be outstanding]
[5. Loan proceeds are to be used for an Acquisition and such
Acquisition does/does not require the Borrower to file an SEC
Report. If such SEC Report must be filed, Acquisition
Documents certified by an Authorized Officer are included.]
[6. Loan proceeds are to be used for an Acquisition. Such
Acquisition will be consummated on __________, ___________
[date of Loan funding].]
7. The undersigned certifies that:
A. There exists no Default or Event of Default.
B. The representations and warranties contained in Article 5
of the Credit Agreement are true and correct as of the
Borrowing Date.
C. No event has occurred, or condition exists, which could
have a Material Adverse Effect.
Sincerely,
PETCO ANIMAL SUPPLIES, INC.
By______________________________
Name:
Title:
* To be included if interest assigned consists of a
Revolving Commitment or Revolving Loans.
1 Calculated as follows: Net Income ($______), plus
provisions for taxes ($_______), plus depreciation and
amortization ($________), plus Interest Expense ($_______),
provided that Borrower shall be permitted to adjust such
amounts as set forth in Section 6.18 for the first six
quarters.
