EXHIBIT 10.21
LETTER OF CREDIT AGREEMENT
dated as of
June 30, 2006
between
PETSMART, INC.
BANK OF AMERICA, N.A.
as Issuing Bank
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TABLE OF CONTENTS
PAGE
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1. Definitions........................................................... 1
1.01 Defined Terms.................................................... 1
1.02 Terms Generally.................................................. 7
2. Letters of Credit..................................................... 7
2.01 Issuance of Letters of Credit.................................... 7
2.02 Reimbursement of Drawings........................................ 8
2.03 Notice of Drawings............................................... 8
2.04 Interest on Overdue Amounts...................................... 8
2.05 Procedures for Issuance.......................................... 8
2.06 Unconditional Obligations........................................ 8
2.07 Letter of Credit Fees............................................ 9
2.08 Closing Fees..................................................... 10
2.09 Nature of Fees................................................... 10
2.10 Termination, Reduction or Increase of Commitment................. 10
2.11 Maintenance of Loan Account; Statements of Account............... 10
2.12 Increased Costs.................................................. 11
2.13 Payments......................................................... 12
2.14 Taxes............................................................ 12
2.15 Transfer to Existing Financing Agreement......................... 13
3. Representations and Warranties........................................ 14
3.01 Organization; Powers............................................. 14
3.02 Authorization; Enforceability.................................... 14
3.03 Governmental Approvals; No Conflicts............................. 14
3.04 Litigation....................................................... 15
3.05 Compliance with Laws and Agreements.............................. 15
3.06 Taxes............................................................ 15
3.07 Properties....................................................... 15
3.08 Disclosure....................................................... 15
3.09 Security Documents............................................... 15
3.10 Federal Reserve Regulations...................................... 15
3.11 Solvency......................................................... 16
4. Conditions............................................................ 16
4.01 Closing Date..................................................... 16
4.02 Conditions Precedent to Each Letter of Credit.................... 17
5. Affirmative Covenants................................................. 18
5.01 Financial Statements and Other Information....................... 18
5.02 Existence; Conduct of Business................................... 18
5.03 Compliance with Laws............................................. 18
5.04 Use of Letters of Credit......................................... 18
(i)
5.05 Cash Collateralization of Letter of Credit Outstandings.......... 19
5.06 Taxes and Indebtedness........................................... 19
5.07 Books and Records................................................ 19
5.08 Further Assurances............................................... 19
6. Negative Covenants.................................................... 19
6.01 Liens, Collateral Dispositions................................... 19
6.02 Fundamental Changes.............................................. 19
7. Events of Default..................................................... 20
7.01 Events of Default................................................ 20
7.02 Remedies on Default.............................................. 22
8. Miscellaneous......................................................... 23
8.01 Notices.......................................................... 23
8.02 Waivers; Amendments.............................................. 23
8.03 Expenses; Indemnity; Damage Waiver............................... 23
8.04 Successors and Assigns........................................... 25
8.05 Survival......................................................... 25
8.06 Counterparts; Integration........................................ 26
8.07 Severability..................................................... 26
8.08 Right of Setoff.................................................. 26
8.09 Governing Law; Jurisdiction; Consent to Service of Process....... 26
8.10 WAIVER OF JURY TRIAL............................................. 27
8.11 Headings......................................................... 27
8.12 Interest Rate Limitation......................................... 27
8.13 Additional Waivers............................................... 28
(ii)
LETTER OF CREDIT AGREEMENT dated as of June 30, 2006 between
PETSMART, INC., a Delaware corporation ("Petsmart"), having a place of
business at 00000 Xxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000; and
BANK OF AMERICA, N.A., as Issuing Bank, a national banking association
having a place of business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000;
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
1. DEFINITIONS.
1.01 Defined Terms.
As used in this Agreement, the following terms have the meanings specified
below:
"Additional Collateral" means (i) investments in any mutual fund that
invests solely in United States treasury obligations and which is quoted in the
Wall Street Journal, (ii) investments in United States treasury obligations,
(iii) commercial paper maturing within 180 days from the date of acquisition,
issued by any Person having a rating of at least A-1 or the equivalent thereof
by Standard & Poor's and at least P-1 or the equivalent thereof by Moody's, (iv)
investments in auction rate securities with maturity dates acceptable to the
Issuing Bank and having a rating of at least A or the equivalent thereof by
Standard & Poor's or Moody's, and (v) other investments permitted in Petsmart's
investment policy and acceptable to the Issuing Bank, including, without
limitation, investments specified on Schedule 1 hereto, as such Schedule may be
amended from time to time as mutually agreed by Petsmart and the Issuing Bank.
"Advance Rate" means 85%.
"Affiliate" means with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agreement" means this Letter of Credit Agreement, as modified, amended,
supplemented or restated, and in effect from time to time.
"Applicable Law" means as to any Person: (i) all laws, statutes, rules,
regulations, orders, or other requirements having the force of law and (ii) all
court orders and injunctions, and/or similar rulings, in each instance ((i) and
(ii)) of or by any Governmental Authority, or court, or tribunal which has
jurisdiction over such Person, or any property of such Person, or of any other
Person for whose conduct such Person would be legally responsible.
"Availability" means, at any time of determination, the lesser of (i)
$65,000,000, (as such amount may be increased in accordance with the provisions
hereof), and (ii) an amount equal to the difference between (a) the sum of (1)
100% of the Cash and Cash Equivalents on deposit in the Cash Collateral Account
and (2) as to each item of Additional Collateral on deposit in the Cash
Collateral Account, the amount of such Additional Collateral multiplied by the
Advance Rate and (b) the aggregate Letter of Credit Outstandings.
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"Bank of America" means Bank of America, N.A.
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in Phoenix, Arizona, Boston, Massachusetts or Charlotte,
North Carolina are authorized or required by law or other governmental action to
remain closed.
"Cash and Cash Equivalents" means (i) cash, (ii) investments in money
market funds maintained by Bank of America or any of its Affiliates, (iii)
investments in certificates of deposit maturing within one year from the date of
acquisition, banker's acceptances, and overnight bank deposits, in each case
issued by or created by, or with, Bank of America or any of its Affiliates, and
(iv) investments in deposit accounts in the ordinary course of business with
Bank of America or any of its Affiliates.
"Cash Collateral Account" means an account established by Petsmart with the
Issuing Bank or any of its Affiliates under the sole and exclusive dominion and
control of the Issuing Bank designated as the "Bank of America, N.A. Collateral
Account for PetSmart, Inc." containing investments constituting Cash and Cash
Equivalents and investments constituting Additional Collateral, in which account
the Issuing Bank has been granted a first priority Lien pursuant to the Pledge
and Security Agreement.
"Change in Control" means, at any time, (a) occupation of a majority of the
seats (other than vacant seats) on the board of directors of Petsmart by Persons
who were neither (i) nominated by the board of directors of Petsmart nor (ii)
appointed by directors so nominated; or (b) the acquisition of thirty-five
percent (35%) or more of the capital stock of Petsmart by any Person or group of
Persons, or (c) the failure of Petsmart to own, directly or indirectly, 100% of
the capital stock Petsmart Store Support Group, Inc. and 3003300 Nova Scotia
Company.
"Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by the Issuing Bank (or by the
Issuing Bank's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Charges" has the meaning provided therefor in Section 8.12.
"Closing Date" means the date on which the conditions specified in Section
4.02 are satisfied or waived.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder.
"Collateral" means any and all "Collateral" as defined in the Pledge and
Security Agreement.
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"Commercial Letter of Credit" means any Letter of Credit issued for the
purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by Petsmart or any Subsidiary
Credit Party in the ordinary course of business of Petsmart or such Subsidiary
Credit Party.
"Commitment" means $65,000,000, or such greater or lesser amount on account
of an increase or reduction thereof in accordance with the provisions of Section
2.10 hereof.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "Controlling" and "Controlled" have meanings correlative thereto.
"Credit Documents" means this Agreement, the Letters of Credit, each letter
of credit application, and the Pledge and Security Agreement, and any other
instrument or agreement now or hereafter executed and delivered in connection
herewith or therewith, each as amended and in effect from time to time.
"Default" means any event or condition that constitutes an Event of Default
or that upon notice, lapse of time or both would, unless cured or waived,
constitute an Event of Default.
"dollars" or "$" refers to lawful money of the United States of America.
"Event of Default" has the meaning assigned to such term in Section 7.01.
"Excluded Taxes" means, with respect to the Issuing Bank or any other
recipient of any payment to be made by or on account of any obligation of
Petsmart or any Subsidiary Credit Party hereunder, (a) income or franchise Taxes
imposed on (or measured by) its gross or net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located, and (b) any branch
profits Taxes imposed by the United States of America or any similar Tax imposed
by any other jurisdiction in which Petsmart or such Subsidiary Credit Party is
located.
"Existing Financing Agreement" means the Amended and Restated Credit
Agreement dated as of November 21, 2003 among Petsmart, the other Borrower party
thereto, the Lenders party thereto, Bank of America (f/k/a Fleet National Bank),
as Issuing Bank, and Fleet Retail Group, LLC (f/k/a Fleet Retail Group, Inc.) as
Administrative Agent and Collateral Agent, among others, as amended and in
effect.
"Existing L/Cs" means the letters of credit issued by Bank of America under
the Existing Financing Agreement and outstanding as of the Closing Date.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
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necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by Bank of America from three Federal funds brokers of
recognized standing selected by it.
"GAAP" means generally accepted accounting principles in the United States
of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Hedging Agreement" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement, or other
interest or currency exchange rate or commodity price hedging arrangement.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning provided therefor in Section 8.03(b).
"Issuing Bank" means Bank of America or an Affiliate of Bank of America,
designated by Bank of America and reasonably acceptable to Petsmart, in each
case in its capacity as the issuer of Letters of Credit hereunder.
"L/C Disbursement" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"Letter of Credit" shall mean a letter of credit that is (i) issued
pursuant to this Agreement for the account of Petsmart or any Subsidiary Credit
Party, (ii) a Standby Letter of Credit or Commercial Letter of Credit, (iii) not
in violation of the policies of the Issuing Bank, and (iv) in form reasonably
satisfactory to the Issuing Bank.
"Letter of Credit Fees" shall mean the fees payable in respect of Letters
of Credit pursuant to Section 2.07.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (a)
with respect to Letters of Credit outstanding at such time, the aggregate
maximum amount that then is or at any time thereafter may become available for
drawing or payment thereunder plus (b) all amounts theretofore drawn or paid
under Letters of Credit for which the Issuing Bank has not then been reimbursed.
"Lien" means, with respect to any asset, any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset.
"Margin Stock" has the meaning assigned to such term in Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, assets, or financial condition of Petsmart and
its Subsidiaries taken as a
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whole, or (b) the validity or enforceability of this Agreement or any of the
other Credit Documents or any of the material rights or remedies of the Issuing
Bank hereunder or thereunder.
"Material Indebtedness" means indebtedness (other than the Letters of
Credit) or obligations in respect of one or more Hedging Agreements of Petsmart
in an aggregate principal amount exceeding $5,000,000. For purposes of
determining the amount of Material Indebtedness at any time, the "principal
amount" of the obligations in respect of any Hedging Agreement at such time
shall be the maximum aggregate amount that Petsmart would be required to pay if
such Hedging Agreement were terminated at that time.
"Maturity Date" means June 30, 2009.
"Maximum Rate" has the meaning provided therefor in Section 8.12.
"Obligations" means the due and punctual payment by Petsmart and each
Subsidiary Credit Party of (i) each payment required to be made by Petsmart or
any Subsidiary Credit Party under this Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements and interest thereon (including all interest that accrues after
the commencement of any case or proceeding by or against Petsmart or any
Subsidiary Credit Party under any federal or state bankruptcy, insolvency,
receivership or similar law, whether or not allowed in such case or proceeding)
and (ii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise,
of Petsmart or any Subsidiary Credit Party to the Issuing Bank under this
Agreement and the other Credit Documents.
"Organizational Document" means, relative to any Person, its limited
partnership agreement, its certificate of incorporation, formation or limited
partnership, its operating agreement, and its by-laws, as applicable.
"Other Taxes" means any and all current or future stamp or documentary
Taxes or any other excise or property Taxes, charges or similar levies arising
from any payment made under any Credit Document or from the execution, delivery
or enforcement of, or otherwise with respect to, any Credit Document.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Petsmart" is defined in the Preamble hereto.
"Pledge and Security Agreement" means the Pledge and Security Agreement
dated as of the date hereof between Petsmart and the Issuing Bank, as amended
and in effect from time to time.
"Prime Rate" shall mean, for any day, the higher of (a) the variable annual
rate of interest then most recently announced by Bank of America at its head
office in Charlotte, North Carolina as its "Prime Rate" and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1% (0.50%) per annum. The
Prime Rate is a reference rate and does not necessarily represent the
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lowest or best rate being charged to any customer. If for any reason the Issuing
Bank shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability or failure of the Issuing Bank to obtain
sufficient quotations thereof in accordance with the terms hereof, the Prime
Rate shall be determined without regard to clause (b) of the first sentence of
this definition, until the circumstances giving rise to such inability no longer
exist. Any change in the Prime Rate due to a change in Bank of America's Prime
Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in Bank of America's Prime Rate or the Federal Funds
Effective Rate, respectively.
"Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Security Documents" means the Pledge and Security Agreement and any and
all other financing statements, control agreements or other documents delivered
in connection therewith.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair saleable value of the properties and assets
of such Person is not less than the amount that would be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in a business or a transaction, and is not about to engage in a business or
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged.
"Standby Letter of Credit" means any Letter of Credit other than a
Commercial Letter of Credit.
"Subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, Controlled or held, or
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(b) that is, as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary Credit Party" means each Subsidiary of Petsmart for whose
account a Letter of Credit is issued by the Issuing Bank.
"Taxes" means any and all current or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Termination Date" shall mean the earliest to occur of (i) the Maturity
Date or (ii) the date of the occurrence of any Event of Default pursuant to
Section 7.01(g), 7.01(h) or 7.01(i) hereof, or (iii) the date on which the
Commitment of the Issuing Bank is terminated pursuant to clause (i) of the final
paragraph of Section 7.01 or Section 2.10 hereof.
"Transfer Notice" has the meaning set forth in Section 2.15 hereof.
1.02 Terms Generally. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (iii) the words "herein", "hereof" and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, and (iv) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement.
2. LETTERS OF CREDIT.
2.01 Issuance of Letters of Credit.
(a) Upon the terms and subject to the conditions herein set forth,
Petsmart may request the Issuing Bank, at any time and from time to time after
the date hereof and prior to the Termination Date, to issue, and subject to the
terms and conditions contained herein, the Issuing Bank shall issue, for the
account of Petsmart or any Subsidiary Credit Party one or more Letters of
Credit; provided that no Letter of Credit shall be issued if after giving effect
to such issuance (i) the aggregate Letter of Credit Outstandings shall exceed
the Commitment, or (ii) Availability would be less than zero.
(b) Each Standby Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date, provided that each Standby Letter
of Credit may, upon the request of Petsmart, include a provision whereby
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such Letter of Credit shall be renewed automatically for additional consecutive
periods of 12 months or less (but not beyond the date that is five Business Days
prior to the Maturity Date) unless the Issuing Bank notifies the beneficiary
thereof at least 30 days prior to the then applicable expiration date that such
Letter of Credit will not be renewed.
(c) Each Commercial Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date 180 days after the date of the
issuance of such Commercial Letter of Credit and (ii) the date that is five
Business Days prior to the Maturity Date.
2.02 Reimbursement of Drawings. Drafts drawn under each Letter of Credit
shall be reimbursed by Petsmart or the applicable Subsidiary Credit Party in
dollars by paying to the Issuing Bank an amount equal to such drawing not later
than 4:00 p.m., Boston time, on the Business Day immediately following the date
that Petsmart shall have received notice of such payment.
2.03 Notice of Drawings. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify
Petsmart by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Bank has made or will make payment thereunder, provided that
any failure to give or delay in giving such notice shall not relieve Petsmart or
any Subsidiary Credit Party of its obligation to reimburse the Issuing Bank with
respect to any such payment.
2.04 Interest on Overdue Amounts. If the Issuing Bank shall make any L/C
Disbursement, then, unless Petsmart or a Subsidiary Credit Party shall reimburse
the Issuing Bank in full on the date such reimbursement is due, the unpaid
amount thereof shall bear interest, for each day from and including the date
such reimbursement is due to but excluding the date that Petsmart or a
Subsidiary Credit Party reimburses the Issuing Bank therefor, at the rate per
annum equal to the Prime Rate plus 2.00%. Interest shall be calculated on the
basis of a 360 day year and actual days elapsed.
2.05 Procedures for Issuance. Whenever Petsmart or a Subsidiary Credit
Party desires that the Issuing Bank issue a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), Petsmart shall give to
the Issuing Bank at least two (2) Business Days' prior written notice (or such
shorter period as may be agreed upon by the Issuing Bank and Petsmart)
specifying the date on which the proposed Letter of Credit is to be issued,
amended, renewed or extended (which shall be a Business Day), the stated amount
of the Letter of Credit so requested, the expiration date of such Letter of
Credit, the name and address of the beneficiary thereof, and the provisions
thereof. If requested by the Issuing Bank, Petsmart and the applicable
Subsidiary Credit Party shall also submit a letter of credit application on the
Issuing Bank's standard form in connection with any request for the issuance,
amendment, renewal or extension of a Letter of Credit. In the event of an
inconsistency between any such letter of credit application and this Agreement,
the terms of this Agreement shall control.
2.06 Unconditional Obligations. The obligations of Petsmart and each
Subsidiary Credit Party to reimburse the Issuing Bank for any L/C Disbursement
shall be unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Agreement under all
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circumstances, including, without limitation: (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim, setoff,
defense or other right which Petsmart or any Subsidiary Credit Party may have at
any time against a beneficiary of any Letter of Credit or against the Issuing
Bank, whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction; (iii) any draft, demand, certificate or
other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; (iv) payment by the Issuing Bank of
any Letter of Credit against presentation of a demand, draft or certificate or
other document which does not comply with the terms of such Letter of Credit;
(v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of, or provide a right of setoff
against, Petsmart's or any Subsidiary Credit Party's obligations hereunder; or
(vi) the fact that any Event of Default shall have occurred and be continuing.
Neither the Issuing Bank nor any of its Affiliates shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank, provided that the foregoing
provisions shall not be construed to excuse the Issuing Bank from liability to
Petsmart or any Subsidiary Credit Party to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by Petsmart and each Subsidiary Credit Party to the extent permitted by
Applicable Law) suffered by Petsmart or any Subsidiary Credit Party that are
caused by the Issuing Bank's failure to exercise care when determining whether
drafts and other documents presented under a Letter of Credit comply in all
material respects with the terms thereof. The parties hereto expressly agree
that, in the absence of (a) the Issuing Bank's honoring of a draft presented
under a Letter of Credit which does not comply in all material respects with the
terms thereof, or (b) gross negligence, willful misconduct or bad faith on the
part of the Issuing Bank (in each case as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised care
in each such determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented that appear on their face to be in compliance with the terms of a
Letter of Credit, the Issuing Bank may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.
2.07 Letter of Credit Fees.
(a) Petsmart and the Subsidiary Credit Parties shall pay the Issuing
Bank on the first Business Day of each calendar quarter, in arrears, a fee
(each, a "Letter of Credit Fee") equal to 0.20% per annum (on the basis of
actual number of days elapsed in a year of 360 days) of the average daily face
amount of the Letters of Credit outstanding during the immediately preceding
calendar quarter.
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(b) After the occurrence and during the continuance of an Event of
Default, at the option of the Issuing Bank, the Letter of Credit Fee shall be
increased by an amount equal to two percent (2%) per annum.
(c) Petsmart and the Subsidiary Credit Parties shall pay to the
Issuing Bank, and in addition to all Letter of Credit Fees otherwise provided
for hereunder, such other reasonable fees and charges in connection with the
issuance, negotiation, settlement, amendment and processing of each Letter of
Credit issued by the Issuing Bank as are customarily imposed by the Issuing Bank
from time to time in connection with letter of credit transactions.
2.08 Closing Fees. In addition to any other fees payable hereunder, on the
Closing Date, Petsmart and the Subsidiary Credit Parties shall pay to the
Issuing Bank an arrangement fee in the sum of $50,000.
2.09 Nature of Fees
All fees shall be paid on the dates due, in immediately available funds, to
the Issuing Bank as provided herein. All fees shall be fully earned on the date
when due (or on the Closing Date if specifically indicated as such) and shall
not be refundable under any circumstances.
2.10 Termination, Reduction or Increase of Commitment.
(a) Upon at least three (3) Business Days' prior written notice to the
Issuing Bank, Petsmart may, at any time, in whole permanently terminate, or from
time to time in part permanently reduce, the Commitment. Each such reduction
shall be in the principal amount of $5,000,000 or any integral multiple of
$1,000,000 in excess thereof. Each such reduction or termination shall be
irrevocable when given. No reduction in the Commitment shall result in the
Commitment being less than the then Letter of Credit Outstandings.
(b) Provided no Default then exists or would arise therefrom, upon the
request of Petsmart and with the consent of the Issuing Bank (which consent
shall not be unreasonably withheld or delayed), the Commitment may be increased
by an amount (for all such requests) not exceeding $15,000,000; provided that
any such request for an increase shall be in a minimum amount of $5,000,000. Any
increase in the Commitment which Petsmart requests and to which the Issuing Bank
may agree shall become effective without the imposition of any amendment or
other fee and shall correspondingly increase the amount set forth in clause (i)
of the definition of Availability.
2.11 Maintenance of Loan Account; Statements of Account.
(a) The Issuing Bank shall maintain an account on its books in the
name of Petsmart (the "Loan Account") which will reflect all L/C Disbursements,
fees and interest that have become payable as herein set forth.
(b) After the end of each calendar month, the Issuing Bank shall send
to Petsmart a statement accounting for the transactions occurring among and
between the Issuing Bank and Petsmart during that month. The monthly statements
shall, absent manifest error, be final, conclusive and binding on Petsmart and
each Subsidiary Credit Party, unless otherwise
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objected to in writing by Petsmart within forty-five (45) days after receipt of
the monthly statement.
2.12 Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, the Issuing Bank; or
(ii) impose on the Issuing Bank any other condition affecting
this Agreement or any Letter of Credit;
and the result of any of the foregoing shall be to increase the cost to the
Issuing Bank of issuing or maintaining any Letter of Credit by an amount deemed
material by the Issuing Bank or to reduce the amount of any sum received or
receivable by the Issuing Bank hereunder by an amount deemed material by the
Issuing Bank, then Petsmart and the Subsidiary Credit Parties will pay to the
Issuing Bank, such additional amount or amounts as will compensate the Issuing
Bank for such additional costs incurred or reduction suffered.
(b) If the Issuing Bank reasonably determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on the Issuing Bank's capital or on the capital of the Issuing Bank's
holding company, if any, as a consequence of this Agreement or the Letters of
Credit issued by the Issuing Bank, to a level below that which the Issuing Bank
or the Issuing Bank's holding company could have achieved but for such Change in
Law (taking into consideration the Issuing Bank's policies and the policies of
the Issuing Bank's holding company with respect to capital adequacy), then from
time to time Petsmart and the Subsidiary Credit Parties will pay to the Issuing
Bank such additional amount or amounts as will compensate the Issuing Bank or
the Issuing Bank's holding company for any such reduction suffered deemed
material by the Issuing Bank.
(c) A certificate of the Issuing Bank setting forth the amount or amounts
necessary to compensate the Issuing Bank or its holding company, as the case may
be, as specified in paragraph (a) or (b) of this Section and setting forth in
reasonable detail the manner in which such amount or amounts were determined
shall be delivered to Petsmart and shall be conclusive absent manifest error.
Petsmart and the Subsidiary Credit Parties shall pay the Issuing Bank the amount
shown as due on any such certificate within ten (10) Business Days after receipt
thereof.
(d) The Issuing Bank shall use its reasonable efforts to avoid or mitigate
any costs incurred or reductions suffered for which it has the right to demand
compensation under this Section 2.12. Failure or delay on the part of the
Issuing Bank to demand compensation pursuant to this Section within ninety (90)
days after such right to compensation has arisen shall constitute a waiver of
the Issuing Bank's right to demand such compensation.
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2.13 Payments
Petsmart and each Subsidiary Credit Party shall make each payment required
to be made by it hereunder or under any other Credit Document (whether of
interest, fees or reimbursement of drawings under Letters of Credit, or of
amounts payable under Sections 2.11 or 2.14, or otherwise) prior to 4:00 p.m.,
Boston time, on the date when due, in immediately available funds, without
setoff or counterclaim. Any amounts received after such time on any date may, in
the discretion of the Issuing Bank, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such
payments shall be made to the Issuing Bank at its office at 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx. If any payment under any Credit Document shall be due on
a day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
under each Credit Document shall be made in dollars. Upon the occurrence and
during the continuance of an Event of Default, the Issuing Bank, without the
request of Petsmart or any Subsidiary Credit Party, may apply any amounts in the
Cash Collateral Account towards any payment due under this Agreement.
2.14 Taxes
(a) Any and all payments by or on account of any obligation of
Petsmart or the Subsidiary Credit Parties hereunder or under any other Credit
Document shall be made free and clear of and without deduction for any
Indemnified Taxes, provided that if Petsmart or a Subsidiary Credit Party shall
be required to deduct any Indemnified Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions for Indemnified Taxes (including deductions for Indemnified Taxes
applicable to additional sums payable under this Section) the Issuing Bank
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Petsmart and the Subsidiary Credit Parties shall make
such deductions, and (iii) Petsmart and the Subsidiary Credit Parties shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with Applicable Law.
(b) In addition, Petsmart and the Subsidiary Credit Parties shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
Applicable Law.
(c) Petsmart and the Subsidiary Credit Parties shall indemnify the
Issuing Bank, within ten (10) Business Days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the Issuing Bank
on or with respect to any payment by or on account of any obligation of Petsmart
or any Subsidiary Credit Party hereunder or under any other Credit Document
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto. A certificate
as to the amount of such payment or liability delivered to Petsmart by the
Issuing Bank setting forth in reasonable detail the manner in which such amount
was determined, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by Petsmart or a Subsidiary Credit Party to a Governmental
Authority, Petsmart shall
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deliver to the Issuing Bank the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Issuing Bank.
(e) The Issuing Bank agrees that upon the occurrence of any
circumstances entitling it to indemnification or additional amounts pursuant
hereto, the Issuing Bank shall use reasonable efforts to take any action
(including designating a new lending office and signing any prescribed forms or
other documentation appropriate in the circumstances) if such action would
reduce or eliminate any Tax (including penalties or interest, as applicable)
with respect to which such indemnification or additional amounts may thereafter
accrue.
(f) If the Issuing Bank reasonably determines that it has actually and
finally realized, by reason of a refund, deduction or credit of any Taxes paid
or reimbursed by Petsmart or any Subsidiary Credit Party pursuant to subsection
(a) or (c) above in respect of payments under the Credit Documents, a current
monetary benefit that it would otherwise not have obtained and that would result
in the total payments under this Section 2.14 exceeding the amount needed to
make the Issuing Bank whole, the Issuing Bank shall pay to Petsmart, with
reasonable promptness following the date upon which it actually realizes such
benefit, an amount equal to the lesser of the amount of such benefit or the
amount of such excess, in each case net of all out-of-pocket expenses incurred
in securing such refund, deduction or credit.
2.15 Transfer to Existing Financing Agreement Petsmart may, upon three (3)
Business Days written notice (a "Transfer Notice") to the Issuing Bank, request
that any or all of the Letters of Credit issued under this Agreement be
transferred to, and deemed issued by, the Issuing Bank (as defined in the
Existing Financing Agreement) under the Existing Financing Agreement. As long as
the issuance of such Letters of Credit would be permitted under the Existing
Financing Agreement and all conditions precedent to such issuance would be
satisfied (as if such Letters of Credit were newly issued on the date set forth
in the Transfer Notice) and such issuance would not result in the occurrence of
a Default or Event of Default (as each of those terms is defined in the Existing
Financing Agreement), the Issuing Bank shall promptly take such action, at the
expense of Petsmart, as may be reasonably required to cause such Letters of
Credit to become "Letters of Credit" under the Existing Financing Agreement.
Unless Petsmart otherwise requests, such transfer of any Letters of Credit shall
not cause a reduction in the Commitment of the Issuing Bank hereunder.
2.16 Transfer to Agreement from Existing Financing Agreement
Petsmart may, upon three (3) Business Days written notice to the
Issuing Bank, provided that the Issuing Bank is also the Issuing Bank under the
Existing Financing Agreement at the time of such notice, request that any or all
of the Letters of Credit issued under the Existing Financing Agreement be
transferred to, and deemed issued by, the Issuing Bank under this Agreement. As
long as the issuance of such Letters of Credit would be permitted under this
Agreement and all conditions precedent to such issuance would be satisfied (as
if such Letters of Credit were newly issued on the date set forth in such
notice) and such issuance would not result in the occurrence of a Default or
Event of Default, the Issuing Bank, provided that the Issuing Bank is also the
Issuing Bank under the Existing Financing Agreement at the time of such
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transfer, shall promptly take such action, at the expense of Petsmart, as may be
reasonably required to cause such Letters of Credit to become "Letters of
Credit" under this Agreement.
3. REPRESENTATIONS AND WARRANTIES
Petsmart and each Subsidiary Credit Party represents and warrants to the
Issuing Bank that:
3.01 Organization; Powers. Petsmart and each Subsidiary Credit Party is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
3.02 Authorization; Enforceability. The transactions contemplated hereby
and by the other Credit Documents to be entered into by Petsmart and each
Subsidiary Credit Party are within Petsmart's and such Subsidiary Credit Party's
corporate, limited partnership, limited liability company or other power, as
applicable, and have been duly authorized by all necessary action. This
Agreement has been duly executed and delivered by Petsmart and constitutes, and
each other Credit Document to which Petsmart or any Subsidiary Credit Party is a
party, when executed and delivered by Petsmart or such Subsidiary Credit Party
will constitute, a legal, valid and binding obligation of Petsmart and each such
Subsidiary Credit Party (as the case may be), enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
3.03 Governmental Approvals; No Conflicts. The transactions to be entered
into and contemplated by the Credit Documents (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except for such as have been obtained or made and are in
full force and effect, (b) will not violate any Applicable Law or the
Organizational Documents of Petsmart or any Subsidiary Credit Party or any order
of any Governmental Authority, (c) assuming the execution and delivery by each
party to the Existing Financing Agreement of an amendment thereto as
contemplated by Section 4.01(k) hereof, will not violate or result in a default
under any material indenture, agreement or other instrument binding upon
Petsmart or any Subsidiary Credit Party or its assets, or give rise to a right
thereunder to require any payment to be made by Petsmart or any Subsidiary
Credit Party, and (d) will not result in the creation or imposition of any Lien
on any asset of Petsmart or any Subsidiary Credit Party, except Liens created
under the Credit Documents.
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3.04 Litigation. (a) There are no actions, suits or proceedings by or
before any arbitrator or Governmental Authority pending against or, to the
knowledge of Petsmart, threatened against or affecting Petsmart or any
Subsidiary Credit Party (i) that, if adversely determined, after taking into
account any applicable insurance, could reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect, or (ii) that involve
any of the Credit Documents.
3.05 Compliance with Laws and Agreements. Petsmart and each Subsidiary
Credit Party is in compliance with all Applicable Law and all material
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
3.06 Taxes. Petsmart and each Subsidiary Credit Party has timely filed, or
caused to be filed, all federal and state Tax returns and reports required to
have been filed and has paid, or caused to be paid, all Taxes required to have
been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings, for which such Person has set aside on its books
adequate reserves, or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
3.07 Properties. Petsmart and each Subsidiary Credit Party has good title
to, or valid leasehold interests in, all its real and personal property material
to its business, except for defects which could not reasonably be expected to
have a Material Adverse Effect.
3.08 Disclosure. None of any of the reports, financial statements,
certificates or other information furnished by or on behalf of any Petsmart or
any Subsidiary Credit Party to the Issuing Bank in connection with the
negotiation of this Agreement or any other Credit Document or delivered
hereunder or thereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3.09 Security Documents. The Security Documents create in favor of the
Issuing Bank a legal, valid and enforceable security interest in the Collateral,
and the Security Documents and, subject to the undertaking of all action
required for perfection, constitute the creation of a fully perfected first
priority Lien on, and security interest in, all right, title and interest of
Petsmart and the Subsidiary Credit Parties thereunder in such Collateral, in
each case prior and superior in right to any other Person.
3.10 Federal Reserve Regulations. (a) Neither Petsmart nor any Subsidiary
Credit Party is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of buying or carrying Margin
Stock.
(b) No part of the proceeds of any Letter of Credit will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to buy or carry Margin Stock or to extend credit to others for the purpose of
buying or carrying Margin Stock or to refund indebtedness originally incurred
for such purpose or (ii) for any purpose that entails a violation
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of, or that is inconsistent with, the provisions of the Regulations of the
Board, including Regulation U or X.
3.11 Solvency To the best knowledge of Petsmart, each of Petsmart and the
Subsidiary Credit Parties is and will be Solvent.
4. CONDITIONS
4.01 Closing Date. The effectiveness of this Agreement is subject to the
following conditions precedent:
(a) The Issuing Bank (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement and all other
Credit Documents (including, without limitation, the Security Documents)
signed on behalf of such party or (ii) written evidence satisfactory to the
Issuing Bank (which may include telecopy transmission of a signed signature
page of this Agreement) that such party has signed a counterpart of this
Agreement and all other Credit Documents.
(b) The Issuing Bank shall have received a favorable written opinion
of Xxxxx X. Xxxxxx, Associate General Counsel for Petsmart and the
Subsidiary Credit Parties covering such matters relating to Petsmart and
the Subsidiary Credit Parties, the Credit Documents or the transactions
contemplated thereby as the Issuing Bank shall reasonably request.
(c) The Issuing Bank shall have received such documents and
certificates as the Issuing Bank or its counsel may reasonably request
relating to the organization, existence and good standing of Petsmart and
each Subsidiary Credit Party, the authorization of the transactions
contemplated by the Credit Documents and any other legal matters relating
to Petsmart and the Subsidiary Credit Parties, the Credit Documents or the
transactions contemplated thereby, all in form and substance reasonably
satisfactory to the Issuing Bank and its counsel.
(d) All necessary consents and approvals to the transactions
contemplated hereby shall have been obtained and shall be satisfactory to
the Issuing Bank.
(e) The Issuing Bank shall be reasonably satisfied that any financial
statements delivered to its fairly present the business and financial
condition of Petsmart and its Subsidiaries, and that there has been no
material adverse change in the assets, business, financial condition, or
income of Petsmart and its Subsidiaries since the date of the most recent
financial information delivered to the Issuing Bank.
(f) There shall not be pending any litigation or other proceeding, the
result of which, after taking into account any applicable insurance, could
reasonably be expected to have a Material Adverse Effect.
(g) There shall not have occurred any default of any material contract
or agreement or of any agreement evidencing Material Indebtedness of
Petsmart or any
16
Subsidiary Credit Party which could reasonably be expected to have a
Material Adverse Effect.
(h) All fees due at or immediately after the Closing Date and all
costs and expenses incurred by the Issuing Bank required to be reimbursed
in connection with the establishment of the letter of credit facility
contemplated hereby (including the fees and expenses of one counsel to the
Issuing Bank) shall have been paid in full.
(i) The consummation of the transactions contemplated hereby shall not
violate any Applicable Law.
(j) Petsmart shall have established the Cash Collateral Account with
the Issuing Bank and the Issuing Bank shall have a perfected first priority
security interest in such Cash Collateral Account and all Cash and Cash
Equivalents and Additional Collateral on deposit therein.
(k) Petsmart shall have entered into an amendment to the Existing
Financing Agreement with the other parties thereto, which amendment shall
permit the establishment of the letter of credit facility and the other
transactions contemplated by this Agreement and the other Credit Documents.
(l) No material adverse change shall have occurred with respect to the
financial condition, operations, assets or income of Petsmart or any
Subsidiary Credit Party and no material change shall have occurred with
respect to the regulations or policies of any Governmental Authority
affecting Petsmart, any Subsidiary Credit Party or the Issuing Bank.
(m) There shall have been delivered to the Issuing Bank such
additional instruments and documents as the Issuing Bank or counsel to the
Issuing Bank reasonably may require or request.
4.02 Conditions Precedent to Each Letter of Credit.
The obligation of the Issuing Bank to issue each Letter of Credit, is
subject to the following conditions precedent:
(a) Notice. The Issuing Bank shall have received a notice with respect
to such issuance as required by Section 2.05.
(b) Representations and Warranties. All representations and warranties
contained in this Agreement and the other Credit Documents or otherwise
made in writing in connection herewith or therewith shall be true and
correct in all material respects on and as of the date of each issuance of
each Letter of Credit hereunder with the same effect as if made on and as
of such date, other than representations and warranties that relate solely
to an earlier date.
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(c) No Default. On the date of each issuance of each Letter of Credit,
and after giving effect thereto, (i) no Default or Event of Default shall
have occurred and be continuing, and (ii) Availability shall not be less
than zero.
The request by Petsmart for, and the acceptance by Petsmart and each Subsidiary
Credit Party of, each Letter of Credit hereunder shall be deemed to be a
representation and warranty by Petsmart and each such Subsidiary Credit Party
that the conditions specified in this Section 4.02 have been satisfied at that
time.
5. AFFIRMATIVE COVENANTS
Until (i) the Commitment has expired or been terminated, and (ii) all
Obligations payable hereunder shall have been paid in full, and (iii) all
Letters of Credit shall have expired or terminated, Petsmart and each Subsidiary
Credit Party covenants and agrees with the Issuing Bank that:
5.01 Financial Statements and Other Information. Petsmart will furnish to
the Issuing Bank:
(a) promptly following any request therefor, such information
regarding the operations, business affairs and financial condition of
Petsmart and the Subsidiary Credit Parties, or compliance with the terms of
any Credit Document, as the Issuing Bank may reasonably request.
(b) at least ten (10) days prior written notice of any change (i) in
Petsmart's or any Subsidiary Credit Party's corporate name, (ii) in
Petsmart's or any Subsidiary Credit Party's corporate structure or
jurisdiction of incorporation or formation, or (iii) in Petsmart's or any
Subsidiary Credit Party's Federal Taxpayer Identification Number or
organizational identification number assigned to it by its state of
organization.
5.02 Existence; Conduct of Business. Petsmart will, and will cause each
Subsidiary Credit Party to, do or cause to be done all things necessary to
comply with its respective Organizational Documents and to preserve, renew and
keep in full force and effect its legal existence and its rights, licenses,
permits, and privileges, except in each case where the failure to do so could
not reasonably be expected to result in a Material Adverse Effect, provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.02.
5.03 Compliance with Laws. Petsmart will, and will cause each of the
Subsidiary Credit Parties to, comply with all Applicable Laws, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
5.04 Use of Letters of Credit. The Letters of Credit issued hereunder will
be used only (a) to replace or cash collateralize letters of credit under the
Existing Financing Agreement, (b) to finance the acquisition of working capital
assets of Petsmart and the Subsidiary Credit Parties in the ordinary course of
business, (c) to finance capital expenditures, and (d) for general corporate
purposes. No part of any Letter of Credit will be used, whether directly or
indirectly,
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for any purpose that entails a violation of any of the Regulations of the Board,
including Regulations U and X.
5.05 Cash Collateralization of Letter of Credit Outstandings. Petsmart
shall cause the sum of (i) 100% of the Cash and Cash Equivalents on deposit in
the Cash Collateral Account and (ii) as to each item of Additional Collateral on
deposit in the Cash Collateral Account, the amount of such Additional Collateral
multiplied by the Advance Rate, to be at least equal to the Letter of Credit
Outstandings.
5.06 Taxes and Indebtedness. Petsmart will, and will cause each Subsidiary
Credit Party to, pay its indebtedness and other obligations, including Tax
liabilities, before the same shall become delinquent or in default, except where
(a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) such Person has set aside on its books adequate
reserves with respect thereto in accordance with GAAP, and (c) the failure to
make payment pending such contest could not reasonably be expected to result in
a Material Adverse Effect.
5.07 Books and Records Petsmart will, and will cause each Subsidiary Credit
Party to, keep books of record and account in accordance with GAAP. Petsmart
will, and will cause each Subsidiary Credit Party to, permit any representatives
designated by the Issuing Bank, upon reasonable prior notice, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and its independent accountants, all at such
reasonable times and as often as reasonably requested.
5.08 Further Assurances. Petsmart and each Subsidiary Credit Party will
execute any and all further documents, financing statements, agreements and
instruments, and take all such further actions that may be required under any
Applicable Law, or which the Issuing Bank may reasonably request, to effectuate
the transactions contemplated by the Credit Documents or to grant, preserve,
protect or perfect the Liens created or intended to be created by the Security
Documents or the validity or priority of any such Lien, all at the expense of
Petsmart and the Subsidiary Credit Parties.
6. NEGATIVE COVENANTS
Until (i) the Commitment has expired or been terminated, and (ii) all
Obligations payable hereunder shall have been paid in full, and (iii) all
Letters of Credit shall have expired or terminated, Petsmart and each Subsidiary
Credit Party covenants and agrees with the Issuing Bank that:
6.01 Liens, Collateral Dispositions. Petsmart and the Subsidiary Credit
Parties will not create, incur, assume or permit to exist any Lien on any
Collateral other than Liens under the Credit Documents and subordinate Liens
created under the Existing Financing Agreement and the Loan Documents (as
defined in the Existing Financing Agreement). Petsmart and the Subsidiary Credit
Parties shall not sell, transfer, assign or otherwise dispose of any Collateral
except as permitted by the Security Documents.
6.02 Fundamental Changes. (a) Petsmart and the Subsidiary Credit Parties
will not merge into or consolidate with any other Person, or permit any other
Person to merge into or
19
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default or Event of
Default shall have occurred and be continuing, (i) any Subsidiary Credit Party
may merge into any other Subsidiary Credit Party or into Petsmart, and (ii) any
Subsidiary Credit Party may liquidate or dissolve voluntarily into Petsmart.
(b) Petsmart and the Subsidiary Credit Parties will not engage to any
material extent in any business other than businesses of the type conducted by
Petsmart and the Subsidiary Credit Parties on the date of execution of this
Agreement and businesses reasonably related thereto.
7. EVENTS OF DEFAULT
7.01 Events of Default.
If any of the following events ("Events of Default") shall occur:
(a) Petsmart or the Subsidiary Credit Parties shall fail to pay any
reimbursement obligation in respect of any L/C Disbursement when and as the
same shall become due and payable;
(b) Petsmart or the Subsidiary Credit Parties shall fail to pay any
fee or any other amount (other than an amount referred to in Section
7.01(a)) payable under this Agreement or any other Credit Document, within
five (5) Business Days of the date when the same shall become due and
payable;
(c) any representation or warranty made or deemed made by or on behalf
of Petsmart or any Subsidiary Credit Party in or in connection with any
Credit Document or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Credit Document
shall prove to have been incorrect in any material respect when made or
deemed made;
(d) Petsmart or the Subsidiary Credit Parties shall fail to observe or
perform any covenant, condition or agreement contained in Sections 5.04,
5.05, 6.01 or 6.02;
(e) Petsmart or the Subsidiary Credit Parties shall fail to observe or
perform any covenant, condition or agreement contained in any Credit
Document (other than those specified in Sections 7.01(a), 7.01(b), 7.01(c)
or 7.01(d)), and such failure shall continue unremedied for a period of
thirty (30) days after notice thereof from the Issuing Bank to Petsmart;
(f) the occurrence and continuance of any Event of Default under the
Existing Financing Agreement;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of Petsmart or any Subsidiary Credit Party, their
respective debts, or of a substantial part of their respective assets,
under any federal or state bankruptcy, insolvency, receivership or
20
similar law now or hereafter in effect or (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for Petsmart or an Subsidiary Credit Party or for a substantial part of
their respective assets, and, in any such case, such proceeding or petition
shall continue undismissed for sixty (60) days or an order or decree
approving or ordering any of the foregoing shall be entered;
(h) Petsmart or any Subsidiary Credit Party shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any federal or state bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii)
consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (g) of
this Section 7.01, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for Petsmart or any Subsidiary Credit Party or for a substantial part of
their respective assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing;
(i) Petsmart or any Subsidiary Credit Party shall become unable, admit
in writing its inability or fail generally to pay its debts as they become
due;
(j) one or more judgments for the payment of money to the extent not
covered by insurance (coverage for which has not been disaffirmed or
reserved by the insurer) in an aggregate amount in excess of $25,000,000
shall be rendered against Petsmart or any Subsidiary Credit Party or any
combination thereof and the same shall remain undischarged for a period of
30 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to attach or
levy upon any material assets of Petsmart or any Subsidiary Credit Party to
enforce any such judgment;
(k) Petsmart or any Subsidiary Credit Party shall fail to make any
payment in respect of any Material Indebtedness (other than the Existing
Financing Agreement, as to which clause (f) shall apply) to which Petsmart
or any Subsidiary Credit Party is a party, when and as the same shall
become due and payable (after giving effect to the expiration of any grace
or cure period set forth therein);
(l) (i) any challenge by or on behalf of Petsmart, any Subsidiary
Credit Party or any other Person to the validity of any Credit Document or
the applicability or enforceability of any Credit Document strictly in
accordance with the subject Credit Document's terms or which seeks to void,
avoid, limit, or otherwise adversely affect any security interest created
by or in any Credit Document or any payment made pursuant thereto;
(ii) any Lien purported to be created under any Security Document
shall cease to be, or shall be asserted by Petsmart, any Subsidiary Credit
Party or any other Person not to be, a valid and perfected Lien on any
Collateral, with the priority required by the applicable Security Document;
21
(m) the indictment of, or institution of any legal process or
proceeding against, Petsmart or any Subsidiary Credit Party, under any
federal, state, municipal, and other civil or criminal statute, rule,
regulation, order, or other requirement having the force of law, which is
reasonably likely to have a Material Adverse Effect;
(n) the determination by Petsmart or any Subsidiary Credit Party, to
suspend the operation of their business in the ordinary course, liquidate
all or a material portion of Petsmart's or such Subsidiary Credit Party's
assets or employ an agent or other third party to conduct a program of
closings, liquidations or "Going-Out-Of-Business" sales of any material
portion of the business; or
(o) Any Change in Control;
then, and in every such event (other than an event with respect to Petsmart or
any Subsidiary Company described in clause (g), (h) or (i) of this Section
7.01), and at any time thereafter during the continuance of such event, the
Issuing Bank may by written notice to Petsmart, take either or both of the
following actions, at the same or different times: (i) terminate all or any
portion of the Commitment, and thereupon all or such portion of the Commitment
shall terminate immediately, and (ii) declare all Obligations then outstanding
to be due and payable in whole and thereupon the Obligations so declared to be
due and payable shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
Petsmart and the Subsidiary Credit Parties; and in case of any event with
respect to Petsmart or a Subsidiary Credit Party described in clause (g), (h) or
(i) of this Article, the Commitment shall automatically terminate and the
Obligations then outstanding, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by Petsmart and the Subsidiary Credit Parties.
7.02 Remedies on Default
In case any one or more of the Events of Default shall have occurred and be
continuing, the Issuing Bank may proceed to protect and enforce its rights and
remedies under this Agreement or any of the other Credit Documents by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Credit Documents or any instrument pursuant to which the Obligations are
evidenced, and proceed to enforce the payment thereof or any other legal or
equitable right of the Issuing Bank. No remedy herein is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of law.
22
8. MISCELLANEOUS
8.01 Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
(a) if to Petsmart or any Subsidiary Credit Party to it at 00000 Xxxxx
00xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attention of Xxxxxxx Xxxxxxx, Chief
Financial Officer (Telecopy No. (000) 000-0000) with a copy to Xxxxxx
Xxxxxx & Xxxxx, LLP (Telecopy No. (000) 000-0000) Attention of Xxxxxx X.
Xxxxxx, Esquire;
(b) if to the Issuing Bank, to Bank of America, N.A., 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention Xxxxxxx Xxxxxx (Telecopy No. (617)
434-6685), with a copy to Xxxxxx & Xxxxxxxxxx, LLP, Xxxxx Xxxxxx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxx, Esquire (Telecopy
No. (000) 000-0000);
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
8.02 Waivers; Amendments. (a) No failure or delay by the Issuing Bank in
exercising any right or power hereunder or under any other Credit Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Issuing
Bank hereunder and under the other Credit Documents are cumulative and are not
exclusive of any rights or remedies that it would otherwise have. No waiver of
any provision of any Credit Document or consent to any departure by Petsmart or
any Subsidiary Credit Party therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the issuance
of a Letter of Credit shall not be construed as a waiver of any Default or Event
of Default, regardless of whether the Issuing Bank may have had notice or
knowledge of such Default o Event of Default at the time.
(b) Neither this Agreement nor any other Credit Document nor any
provision hereof or thereof may be waived, amended or modified except pursuant
to an agreement or agreements in writing entered into by Petsmart and the
Issuing Bank.
8.03 Expenses; Indemnity; Damage Waiver. (a) Petsmart and the Subsidiary
Credit Parties shall jointly and severally pay (i) all actual reasonable
out-of-pocket expenses incurred by the Issuing Bank and its Affiliates,
including the actual reasonable fees, charges and disbursements of one counsel
(plus one local counsel to the extent reasonably necessary) for the Issuing
Bank, for the preparation and administration of the Credit Documents or any
amendments, modifications or waivers of the provisions thereof, (ii) all actual
reasonable out-of-
23
pocket expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder, and (iii) all actual reasonable out-of-pocket expenses
incurred by the Issuing Bank, including the reasonable fees, charges and
disbursements of one counsel (plus one local counsel to the extent reasonably
necessary) for the Issuing Bank in connection with the enforcement or protection
of its rights in connection with the Credit Documents, including its rights
under this Section, or in connection with the Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Letters of Credit.
(b) Petsmart and the Subsidiary Credit Parties shall, jointly and
severally, indemnify the Issuing Bank and each Related Party of the Issuing Bank
(each such Person being called an "Indemnitee"), against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the reasonable fees, charges and disbursements of
any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of any Credit Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Credit Documents of
their respective obligations thereunder or the consummation of the transactions
contemplated by the Credit Documents or any other transactions contemplated
hereby, (ii) any Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), or (iii) any
actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence, willful misconduct or bad faith of such Indemnitee. In connection
with any indemnified claim hereunder, the Indemnitees shall be entitled to
select one counsel for themselves (plus one local counsel to the extent
reasonably necessary) and Petsmart and the Subsidiary Credit Parties shall
promptly pay the reasonable fees and expenses of such counsel.
(c) To the extent permitted by Applicable Law, neither Petsmart nor
any Subsidiary Credit Party shall assert, and each hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the transactions contemplated by
the Credit Documents, any Letter of Credit or the use of the proceeds thereof.
Petsmart and the Subsidiary Credit Parties further agree that no Indemnitee
shall have any liability to Petsmart or such Subsidiary Credit Parties, any
Person asserting claims by or on behalf of Petsmart, such Subsidiary Credit
Parties or any other Person in connection with this Agreement or the other
Credit Documents except (i) for breach of the Indemnitee's obligations under
this Agreement and the other Credit Documents, (ii) for the Issuing Bank's
honoring of a draft presented under a Letter of Credit which does not comply in
all material respects with the terms thereof, or (iii) the Indemnitee's gross
negligence, willful misconduct or bad faith (in each case as finally determined
by a court of competent jurisdiction).
24
(d) All amounts due under this Section shall be payable promptly after
written demand therefor.
8.04 Successors and Assigns. (a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), except that Petsmart and the Subsidiary
Credit Parties may not assign or otherwise transfer any of their rights or
obligations hereunder without the prior written consent of the Issuing Bank (and
any such attempted assignment or transfer without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of the Issuing Bank) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
(b) The Issuing Bank may at any time assign to one or more banks or
financial institutions (each, an "Assignee") all, or a portion of, its rights
and obligations under this Agreement and the other Credit Documents, provided
that Petsmart has provided its prior written consent of the Assignee (which
consent shall not be unreasonably withheld or delayed). Upon the execution and
delivery of an assignment agreement, the Assignee shall be a party to this
Agreement and shall have all the rights and obligations of the Issuing Bank
hereunder to the extent of such assignment with no further consent or action by
any party. Notwithstanding any assignment pursuant to this Section 8.04, the
Issuing Bank shall remain liable under any outstanding Letter of Credit until
such Letter of Credit has expired or is otherwise no longer outstanding.
(c) The Issuing Bank may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of the Issuing Bank, including any pledge or assignment to secure obligations to
any of the twelve Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341, and this Section shall not apply to any such
pledge or assignment of a security interest, provided that no such pledge or
assignment of a security interest shall release the Issuing Bank from any of its
obligations hereunder or substitute any such pledgee or assignee for the Issuing
Bank as a party hereto.
8.05 Survival. All covenants, agreements, representations and warranties
made by Petsmart and the Subsidiary Credit Parties in the Credit Documents and
in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Credit Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Credit Documents and the issuance of any Letters
of Credit, regardless of any investigation made by any such other party or on
its behalf and notwithstanding that the Issuing Bank may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as any Obligations are outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitment has not expired or terminated. The
provisions of Sections 2.12, 2.14 and 8.03 shall survive and remain in full
force and effect
25
regardless of the repayment of the Obligations, the expiration or termination of
the Letters of Credit and the Commitment or the termination of this Agreement or
any provision hereof.
8.06 Counterparts; Integration. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Credit
Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all contemporaneous or previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Issuing Bank and Petsmart and
when the Issuing Bank shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
8.07 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
8.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Issuing Bank and each of its Affiliates is 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 obligations at any time owing
by the Issuing Bank or Affiliate to or for the credit or the account of Petsmart
and the Subsidiary Credit Parties against any of and all the obligations of
Petsmart and the Subsidiary Credit Parties now or hereafter existing under this
Agreement held by the Issuing Bank, irrespective of whether or not the Issuing
Bank shall have made any demand under this Agreement. The rights of the Issuing
Bank under this Section are in addition to other rights and remedies (including
other rights of setoff) that the Issuing Bank may have under the Security
Documents or otherwise.
8.09 Governing Law; Jurisdiction; Consent to Service of Process
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
(b) Each of Petsmart and the Subsidiary Credit Parties hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Superior Court of the Commonwealth of
Massachusetts sitting in Suffolk County and of the United States District Court,
District of Massachusetts, sitting in Boston, Massachusetts, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to any Credit Document, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such Superior Court of the Commonwealth of
26
Massachusetts or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement or
any other Credit Document shall affect any right that the Issuing Bank may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Credit Document against Petsmart and the Subsidiary Credit Parties or
their properties in the courts of any jurisdiction.
(c) Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of any suit, action or proceeding arising out of or relating to this
Agreement or any other Credit Document in any court referred to in paragraph (b)
of this Section.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8.01. Nothing in this
Agreement or any other Credit Document will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.
8.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A JURY IN ANY TRIAL OF ANY CASE
OR CONTROVERSY IN WHICH PETSMART, ANY SUBSIDIARY CREDIT PARTY, OR THE ISSUING
BANK, IS OR BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR
AGAINST PETSMART, ANY SUBSIDIARY CREDIT PARTY OR THE ISSUING BANK, OR IN WHICH
PETSMART, ANY SUBSIDIARY CREDIT PARTY OR THE ISSUING BANK IS JOINED AS A PARTY
LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF, ANY
RELATIONSHIP AMONGST OR BETWEEN PETSMART, ANY SUBSIDIARY CREDIT PARTY OR ANY
OTHER PERSON AND THE ISSUING BANK. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, ISSUING BANK OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
8.11 Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and
shall not affect the construction of, or be taken into consideration in
interpreting, this Agreement.
8.12 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate, together with all fees, charges and
other amounts that are treated as interest on such Letter of Credit or L/C
Disbursement under Applicable Law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
taken, received or reserved by the Issuing Bank in accordance with Applicable
Law, the rate of interest payable, together with all Charges payable, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been
27
payable but were not payable as a result of the operation of this Section shall
be cumulated and the interest and Charges payable to the Issuing Bank in respect
of other periods shall be increased (but not above the Maximum Rate therefor)
until such cumulated amount shall have been received by the Issuing Bank.
8.13 Additional Waivers.
(a) The Obligations are the joint and several obligations of Petsmart
and each Subsidiary Credit Party. Petsmart and each Subsidiary Credit Party
hereby assumes, guarantees, and agrees to discharge all Obligations of all other
obligors. In that regard, any Subsidiary Credit Party for whose account a Letter
of Credit is to be issued shall, prior to the date of issuance, execute and
deliver to the Issuing Bank a joinder to, and assumption of obligations under,
this Agreement (in addition to any letter of credit application or other
documents required by the Issuing Bank) in the form attached hereto as Exhibit
A.
(b) To the fullest extent permitted by Applicable Law, the obligations
of Petsmart and each Subsidiary Credit Party hereunder shall not be affected by
(i) the failure of the Issuing Bank to assert any claim or demand or to enforce
or exercise any right or remedy against any other obligor under the provisions
of this Agreement, any other Credit Document or otherwise, (ii) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of, this Agreement, any other Credit Document, or any other
agreement, including with respect to any other obligor, or (iii) the failure to
perfect any security interest in, or the release of, any of the security held by
or on behalf of the Issuing Bank.
(c) To the fullest extent permitted by Applicable Law, the obligations
of Petsmart and each Subsidiary Credit Party hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason (other than
the payment in full in cash of the Obligations), including any claim of waiver,
release, surrender, alteration or compromise of any of the Obligations, and
shall not be subject to any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each obligor hereunder shall not
be discharged or impaired or otherwise affected by any default, failure or
delay, willful or otherwise, in the performance of the Obligations, or by any
other act or omission that may or might in any manner or to any extent vary the
risk of any obligor or that would otherwise operate as a discharge of any
obligor as a matter of law or equity (other than the payment in full in cash of
all the Obligations).
(d) To the fullest extent permitted by Applicable Law, each obligor
waives any defense based on or arising out of any defense of any other obligor
or the unenforceability of the Obligations or any part thereof from any cause,
or the cessation from any cause of the liability of any other obligor, other
than the payment in full in cash of all the Obligations. The Issuing Bank may,
at its election, foreclose on any security held by it by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with any other obligor, or exercise any other right or remedy
available to it against any other obligor, without affecting or impairing in any
way the liability of any obligor hereunder except to the extent that all the
Obligations have been indefeasibly paid in full in cash. Pursuant to Applicable
Law, each obligor
28
waives any defense arising out of any such election even though such election
operates, pursuant to Applicable Law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such obligor against
any other obligor, as the case may be, or any security.
[SIGNATURE PAGES FOLLOW]
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as a sealed instrument as
of the day and year first above written.
PETSMART, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President,
Chief Financial Officer
BANK OF AMERICA,
N.A., as Issuing Bank
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
Address:
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
SCHEDULE I
ADDITIONAL COLLATERAL
None
EXHIBIT A
FORM OF JOINDER AGREEMENT
JOINDER TO LETTER OF CREDIT AGREEMENT
This Joinder to Letter of Credit Agreement (this "Joinder") is made as of
_________________, by and among:
_________________________, a _________________________ (the "New Subsidiary
Credit Party"), with its principal executive offices at _______________________;
and
BANK OF AMERICA, N.A., as Issuing Bank, a national banking association,
having a place of business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000;
in consideration of the mutual covenants herein contained and benefits to
be derived herefrom.
WITNESSETH:
A. Reference is made to that certain Letter of Credit Agreement dated as of
June 30, 2006 (as modified, amended, supplemented or restated and in effect from
time to time, the "Agreement"), by and among PetSmart, Inc. ("Petsmart"), the
Subsidiary Credit Parties party thereto from time to time (collectively, the
"Subsidiary Credit Parties"), and the Issuing Bank. All capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Agreement.
B. The New Subsidiary Credit Party desires to become a party to, and be
bound by the terms of, the Agreement and the other Credit Documents in the same
capacity and to the same extent as the Subsidiary Credit Parties thereunder.
C. Pursuant to the terms of the Agreement, in order for the New Subsidiary
Credit Party to become party to the Agreement and the other Credit Documents as
provided herein, the New Subsidiary Credit Party is required to execute this
Joinder.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Joinder and Assumption of Obligations. The New Subsidiary Credit Party
hereby acknowledges that it has received and reviewed a copy of the Agreement
and, effective as of the date of this Joinder, hereby:
a. joins in the execution of, and becomes a party to, the Agreement as
a Subsidiary Credit Party, as indicated by its signature below;
b. covenants and agrees to be bound by all covenants, agreements,
liabilities and acknowledgments of the Subsidiary Credit Parties under the
Agreement and the other Credit Documents, in each case, with the same force and
effect as if such New Subsidiary Credit Party was a signatory to the Agreement
and the other Credit Documents and was expressly named as a Subsidiary Credit
Party therein; and
c. assumes and agrees to perform all applicable duties and Obligations
of the Subsidiary Credit Parties under the Agreement and the other Credit
Documents.
2. Representations, Warranties and Covenants. The New Subsidiary Credit
Party hereby makes all representations and warranties, and agrees to abide by
all covenants set forth in the Agreement as of the date hereof.
3. Ratification of Credit Documents. Except as specifically amended by this
Joinder and any other documents executed and delivered in connection herewith,
all of the terms and conditions of the Agreement and of the other Credit
Documents shall remain in full force and effect as in effect prior to the date
hereof, without releasing Petsmart or any existing Subsidiary Credit Party
thereunder or Collateral therefor.
4. Conditions Precedent to Effectiveness. This Joinder shall not be
effective until each of the following conditions precedent has been fulfilled to
the reasonable satisfaction of the Issuing Bank:
a. This Joinder shall have been duly executed and delivered by the
respective parties hereto, and shall be in full force and effect.
b. All action on the part of the New Subsidiary Credit Party necessary
for the valid execution, delivery and performance by it of this Joinder and any
other documentation, instruments, and agreements executed in connection herewith
shall have been duly and effectively taken and evidence thereof reasonably
satisfactory to the Issuing Bank shall have been provided to the Issuing Bank.
c. The New Subsidiary Credit Party shall have delivered the following
to the Issuing Bank, in form and substance reasonably satisfactory to the
Issuing Bank:
(i) Certificate of Legal Existence and Good Standing issued by
the Secretary of the State of its incorporation or organization.
(ii) A certificate of an authorized officer of the New Subsidiary
Credit Party, certifying as to the due adoption and continued effectiveness, and
setting forth the text, of each resolution adopted in connection with this
Joinder, and attesting to the true signatures of each Person authorized as a
signatory to this Joinder or any of the other Credit Documents.
(iii) [Execution and delivery by the New Subsidiary Credit Party
of a Joinder to the Security Documents and such other documents, agreements and
certificates as the Issuing Bank may reasonably require.](1)
d. If requested by the Issuing Bank, the Issuing Bank shall have
received a favorable written legal opinion of the New Subsidiary Credit Party's
counsel addressed to the Issuing Bank, covering such matters relating to the New
Subsidiary Credit Party, the Credit Documents and/or the transactions
contemplated thereby as the Issuing Bank shall reasonably request.
e. [The Issuing Bank shall have received all documents and
instruments, required by law or reasonably requested by the Issuing Bank to
create or perfect the first priority Lien intended to be created under the
Credit Documents and all action required for perfection shall have been taken to
the reasonable satisfaction of the Issuing Bank.](2)
f. All reasonable out-of-pocket expenses incurred by the Issuing Bank
in connection with the preparation and negotiation of this Joinder and related
documents, if any, shall have been paid in full by the New Subsidiary Credit
Party.
g. No Default or Event of Default shall have occurred and be
continuing.
5. Miscellaneous.
a. This Joinder may be executed in several counterparts and by each
party on a separate counterpart, each of which when so executed and delivered
shall be an original, and all of which together shall constitute one instrument.
b. This Joinder expresses the entire understanding of the parties with
respect to the transactions contemplated hereby. No prior negotiations or
discussions shall limit, modify, or otherwise affect the provisions hereof.
c. Any determination that any provision of this Joinder or any
application hereof is invalid, illegal or unenforceable in any respect and in
any instance shall not effect the validity, legality, or enforceability of such
provision in any other instance, or the validity, legality or enforceability of
any other provisions of this Joinder.
d. THIS JOINDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS.
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(1) Joinder to Security Documents to be required only if New Subsidiary Credit
Party is providing additional Collateral to secure the Obligations.
(2) Additional documents/instruments to be required only if New Subsidiary
Credit Party is providing additional Collateral to secure the Obligations.
IN WITNESS WHEREOF, each of the undersigned has caused this Joinder to
be duly executed and delivered by its proper and duly authorized officer as of
the date set forth below.
NEW SUBSIDIARY CREDIT PARTY:
----------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ISSUING BANK:
BANK OF AMERICA, N.A.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ACKNOWLEDGED AND AGREED:
PETSMART, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
