EXECUTION COPY
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SENIOR CREDIT AGREEMENT
dated as of June 27, 2001
among
RITE AID CORPORATION,
The Banks Party Hereto,
CITICORP USA, INC.,
as Senior Administrative Agent,
CITICORP USA, INC.,
as Senior Collateral Agent,
and
THE CHASE MANHATTAN BANK, CREDIT SUISSE FIRST BOSTON and
FLEET RETAIL FINANCE INC.,
as Syndication Agents,
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.....................................................................................2
SECTION 1.02. Accounting Terms and Determinations............................................................29
SECTION 1.03. Classes and Types of Loans.....................................................................29
SECTION 1.04. Terms Defined in Definitions Annex.............................................................30
SECTION 1.05. Other Definitional Provisions..................................................................30
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments....................................................................................30
SECTION 2.02. Loans ......................................................................................31
SECTION 2.03. Borrowing Procedure............................................................................34
SECTION 2.04. Notes and Records..............................................................................35
SECTION 2.05. Senior Fees....................................................................................36
SECTION 2.06. Interest on Loans..............................................................................37
SECTION 2.07. Default Interest...............................................................................38
SECTION 2.08. Termination and Reduction of Commitments.......................................................38
SECTION 2.09. Conversion and Continuation of Borrowings......................................................39
SECTION 2.10. Repayment of Borrowings........................................................................41
SECTION 2.11. Amortization of Term Loans.....................................................................41
SECTION 2.12. Optional Prepayment............................................................................43
SECTION 2.13. Mandatory Prepayments..........................................................................43
SECTION 2.14. Breakage ......................................................................................46
SECTION 2.15. Pro Rata Treatment.............................................................................46
SECTION 2.16. Payments ......................................................................................47
SECTION 2.17. Swingline Loans................................................................................48
SECTION 2.18. Letters of Credit..............................................................................50
SECTION 2.19. Adjustments to Borrowing Base Advance Rates....................................................56
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ARTICLE 3
CONDITIONS
SECTION 3.01. First Credit Event.............................................................................57
SECTION 3.02. All Credit Events..............................................................................62
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power..................................................................63
SECTION 4.02. Corporate and Governmental Authorization; No Contravention.....................................63
SECTION 4.03. Binding Effect.................................................................................64
SECTION 4.04. Financial and Other Information................................................................64
SECTION 4.05. Accuracy of Information........................................................................65
SECTION 4.06. Litigation.....................................................................................65
SECTION 4.07. Compliance with ERISA..........................................................................66
SECTION 4.08. Taxes ......................................................................................66
SECTION 4.09. Subsidiaries...................................................................................66
SECTION 4.10. Environmental Matters..........................................................................66
SECTION 4.11. Other Representations..........................................................................67
SECTION 4.12. Insurance......................................................................................67
SECTION 4.13. Mellon Standby Letters of Credit...............................................................67
SECTION 4.14. Solvency ......................................................................................67
SECTION 4.15. Title to Properties............................................................................68
SECTION 4.16. Investment Company Act; Public Utility Holding Company Act.....................................68
SECTION 4.17. Labor Matters..................................................................................68
ARTICLE 5
COVENANTS
SECTION 5.01. Information...........................................................................69
SECTION 5.02. Payment of Obligations................................................................72
SECTION 5.03. Maintenance of Property; Insurance....................................................73
SECTION 5.04. Conduct of Business and Maintenance of Existence......................................75
(ii)
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SECTION 5.05. Compliance with Laws..................................................................75
SECTION 5.06. Inspection of Property, Books and Records.............................................75
SECTION 5.07. Restriction on Other Agreements, Payment Limitations, Debt
Prepayments, Amendments to Other Agreements...........................................75
SECTION 5.08. Further Assurances....................................................................77
SECTION 5.09. Collateral and Borrowing Base Reviews.................................................77
SECTION 5.10. Subsidiaries..........................................................................78
SECTION 5.11. Intercompany Transfers................................................................78
SECTION 5.12. Inventory Purchasing..................................................................78
SECTION 5.13. Cash Management System................................................................78
SECTION 5.14. Restriction on Sale and Leaseback Transactions........................................79
SECTION 5.15. Restriction on Liens..................................................................79
SECTION 5.16. Capital Expenditures..................................................................81
SECTION 5.17. Maximum Leverage Ratio................................................................82
SECTION 5.18. Minimum Interest Coverage Ratio.......................................................83
SECTION 5.19. Minimum Fixed Charge Coverage Ratio...................................................84
SECTION 5.20. Restriction on Debt...................................................................84
SECTION 5.21. Limitation on Investments and Acquisitions............................................88
SECTION 5.22. Consolidations and Mergers............................................................89
SECTION 5.23. Dispositions of Assets................................................................89
SECTION 5.24. Use of Proceeds.......................................................................90
SECTION 5.25. Restrictions on Asset Holdings by the Borrower........................................91
SECTION 5.26. Restricted Payments...................................................................91
SECTION 5.27. Business of Borrower and Subsidiaries.................................................92
SECTION 5.28. Transactions with Affiliates..........................................................92
SECTION 5.29. New Synthetic Leases..................................................................93
SECTION 5.30. Corporate Separateness................................................................93
SECTION 5.31. Limitation on Derivative Obligations..................................................93
SECTION 5.32. Delivery of Security Opinion..........................................................94
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default.....................................................................94
SECTION 6.02. Notice of Default.....................................................................97
(iii)
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ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization.........................................................97
SECTION 7.02. Agents and Affiliates.................................................................98
SECTION 7.03. Action by Agents......................................................................98
SECTION 7.04. Consultation with Experts.............................................................98
SECTION 7.05. Liability of Agents...................................................................98
SECTION 7.06. Indemnification.......................................................................99
SECTION 7.07. Credit Decision.......................................................................99
SECTION 7.08. Resignation of Agents.................................................................99
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.............................100
SECTION 8.02. Illegality...........................................................................100
SECTION 8.03. Increased Cost and Reduced Return....................................................101
SECTION 8.04. Taxes................................................................................102
SECTION 8.05. Base Rate Loans Substituted for Affected Euro-Dollar Loans...........................105
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices..............................................................................105
SECTION 9.02. No Waivers...........................................................................106
SECTION 9.03. Expenses; Indemnification............................................................106
SECTION 9.04. Setoff; Sharing of Setoffs...........................................................106
SECTION 9.05. Amendments and Waivers; Release of Senior Collateral and
Subsidiary Guarantors................................................................107
SECTION 9.06. Successors and Assigns...............................................................108
SECTION 9.07. Governing Law; Submission to Jurisdiction............................................111
(iv)
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SECTION 9.08. Counterparts; Integration............................................................111
SECTION 9.09. WAIVER OF JURY TRIAL.................................................................111
SECTION 9.10. Collateral Trust and Intercreditor Agreement.........................................111
SECTION 9.11. Cash Sweep...........................................................................112
Annexes
Annex 1 - Initial Revolving Credit Commitments and Term Loan
Commitments
Annex 2 - Administrative Information
Annex 3 - Description of the Transactions
Annex 4 - Definitions Annex
Schedules
Schedule 1.01(a) - Existing Litigation
Schedule 1.01(b) - Mortgaged Properties
Schedule 1.01(c) - Subsidiaries
Schedule 1.01(d) - Subsidiary Guarantors
Schedule 4.07 - ERISA Matters
Schedule 4.12 - Insurance
Schedule 4.13 - Mellon Standby Letters of Credit
Schedule 4.15(b)(i) - Leases on Mortgaged Properties
Schedule 4.15(b)(ii) - Permitted Liens on Mortgaged Properties
Schedule 4.15(c) - Leased Warehouses and Distribution Centers
Schedule 5.08 - Excluded Subsidiaries
Schedule 5.14(a) - Permitted Sale and Leaseback Transactions
Schedule 5.15(g) - Permitted Liens
Schedule 5.20(k) - Permitted Debt
Schedule 5.24(b)(iv) - Permitted Dividends Payable on Capital Stock
Schedule 5.28(b) - Permitted Affiliate Transactions
(v)
Exhibits
Exhibit A-1 - Form of Term Note
Exhibit A-2 - Form of Revolving Credit Note
Exhibit A-3 - Form of Swingline Note
Exhibit B - Form of Borrowing Request
Exhibit C - Form of Continuation/Conversion Request
Exhibit D - Form of Issuance Request
Exhibit E - Form of Borrowing Base Certificate
Exhibit F - Form of Assignment and Acceptance Agreement
Exhibit G - Form of Senior Subsidiary Guarantee Agreement
Exhibit H - Form of Senior Subsidiary Security Agreement
Exhibit I - Form of Senior Indemnity, Subrogation and Contribution
Agreement
Exhibit J - Form of Senior Mortgage
Exhibit K - Form of Second Priority Subsidiary Guarantee Agreement
Exhibit L - Form of Second Priority Subsidiary Security Agreement
Exhibit M - Form of Second Priority Indemnity, Subrogation and Contribution
Agreement
Exhibit N - Form of Second Priority Mortgage
Exhibit O-1 - Form of Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx,
Special New York Counsel to the Borrower
Exhibit O-2 - Form of Opinion of General Counsel of the Borrower
Exhibit P - Form of Administrative Questionnaire
Exhibit Q - Form of Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx,
Special New York Counsel to the Borrower, with respect to certain
security matters
(vi)
SENIOR CREDIT AGREEMENT dated as of June 27, 2001,
among RITE AID CORPORATION, a Delaware corporation ("Rite Aid"
or the "Borrower"), the Banks (as defined in Article 1),
CITICORP USA, INC. ("Citicorp USA"), as a Swingline Bank, as
an Issuing Bank, and as administrative agent for the Banks (in
such capacity, the "Senior Administrative Agent"), CITICORP
USA, INC., as collateral agent for the Banks (in such
capacity, the "Senior Collateral Agent") and THE CHASE
MANHATTAN BANK, CREDIT SUISSE FIRST BOSTON and FLEET RETAIL
FINANCE INC., as syndication agents (in such capacity, the
"Syndication Agents").
The Borrower has requested the Banks to extend credit in the form of
(a) Term Loans on the Initial Borrowing Date in an aggregate principal amount
not in excess of $1,204,000,000, (b) Term Loans at any time and from time to
time prior to the final maturity of the Borrower's 10.5% Notes in an aggregate
principal amount not in excess of $196,000,000 to (i) pay for such 10.5% Notes
as were tendered in the Borrower's tender offer therefor consummated immediately
prior to the Initial Borrowing Date and (ii) purchase at par any 10.5% Notes as
were not tendered in such tender offer, and (c) Revolving Loans at any time and
from time to time before the Maturity Date, in an aggregate principal amount at
any time outstanding not in excess of $500,000,000. The Borrower has requested
the Swingline Banks to extend credit, on an uncommitted basis, at any time and
from time to time before the Maturity Date in the form of Swingline Loans, in an
aggregate principal amount at any time outstanding not in excess of
$100,000,000. The Borrower has requested the Issuing Banks to issue letters of
credit, in an aggregate face amount at any time outstanding not in excess of
$125,000,000, to support payment obligations incurred in the ordinary course of
business by the Borrower on behalf of its Subsidiaries and by the Borrower's
Subsidiaries.
Proceeds of Loans made under this Agreement shall, among other things,
be used to refinance, and this Agreement shall serve as a replacement for, the
Senior Credit Agreement dated as of June 12, 2000, as amended (the "Existing
Credit Agreement"), among the Borrower, the banks party thereto, Citicorp USA,
Inc., as senior administrative agent, Citicorp USA, Inc., as senior collateral
agent, and Xxxxxx Financial, Inc. and Fleet Retail Finance Inc., as syndication
agents.
The Banks and the Swingline Banks are willing to extend credit to the
Borrower and the Issuing Banks are willing to issue letters of credit for the
account of the Borrower on the terms and subject to the conditions set forth
herein. Accordingly, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Account" means any right to payment for goods sold or leased or for
services rendered, whether or not earned by performance.
"Account Debtor" means, with respect to any Account, the obligor with
respect to such Account.
"Accounts Receivable Advance Rate" means the amount determined in
accordance with Section 2.19.
"Adjusted Consolidated Capital Expenditures" means, for any period,
Consolidated Capital Expenditures (i) minus Excess Liquidity and (ii) minus any
Carryforward Amount.
"Adjusted London Interbank Offered Rate" means, with respect to any
Euro-Dollar Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the product of
(a) the London Interbank Offered Rate in effect for such Interest Period and (b)
Statutory Reserves.
"Adjusted Working Capital" means, for any date, current assets (other
than cash and cash equivalents) less current liabilities (other than Debt
permitted hereunder).
"Administrative Questionnaire" means, with respect to each Bank, an
Administrative Questionnaire in the form of Exhibit P, duly completed by such
Bank and submitted to the Senior Administrative Agent (with a copy to the
Borrower).
"Affiliate Transaction" is defined in Section 5.28.
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"Agents" means the Senior Administrative Agent, the Senior Collateral
Agent and the Syndication Agents.
"Aggregate Revolving Credit Exposure" means the aggregate amount of the
Banks' Revolving Credit Exposures.
"Agreement" means this Agreement as the same may be amended from time
to time in accordance with the terms hereof.
"Applicable Date" is defined in Section 8.04(d).
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Base Rate Loans, its Domestic Lending Office and (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Assessment Rate" means for any date the annual rate (rounded upwards,
if necessary, to the next 1/100 of 1%) most recently estimated by the Senior
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by any Bank to the Federal Deposit
Insurance Corporation (or any successor thereto) for insurance by such
Corporation (or such successor) of time deposits made in dollars at the Senior
Administrative Agent's domestic offices.
"Assignee" has the meaning set forth in Section 9.06(c).
"Assignment and Acceptance Agreement" means an assignment and
acceptance agreement in the form of Exhibit F or such other form as may be
approved by the Senior Administrative Agent.
"Bank" means each bank or other institution listed on the signature
pages hereof, each Assignee which becomes a Bank pursuant to Section 9.06(c),
and their respective successors. Unless the context clearly indicates otherwise,
the term "Bank" shall include the Swingline Banks.
"Base CD Rate" means the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate.
"Base Rate" means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) Citibank Base
Rate, (b) the Base CD Rate in effect
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on such day plus 1/2 of 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. If for any reason the Senior Administrative Agent shall
have determined (which determination shall be conclusive absent manifest error)
that it is unable to ascertain the Base CD Rate or the Federal Funds Effective
Rate or both for any reason, including the inability or failure of the Senior
Administrative Agent to obtain sufficient quotations in accordance with the
terms of the definition thereof, the Base Rate shall be determined without
regard to clause (b) or (c), or both, of the preceding sentence, as appropriate,
until the circumstances giving rise to such inability no longer exist. Any
change in the Base Rate due to a change in the Citibank Base Rate, the Base CD
Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in the Citibank Base Rate, the Base CD Rate or the Federal
Funds Effective Rate, respectively.
"Base Rate Borrowing" means a Borrowing comprised of Base Rate Loans.
"Base Rate Loan" means any Base Rate Term Loan or Base Rate Revolving
Loan.
"Base Rate Revolving Loan" means any Revolving Loan bearing interest at
a rate determined by reference to the Base Rate in accordance with the
provisions of Article 2.
"Base Rate Term Borrowing" means a Borrowing comprised of Base Rate
Term Loans.
"Base Rate Term Loan" means any Term Loan bearing interest at a rate
determined by reference to the Base Rate in accordance with the provisions of
Article 2.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrowing" means a group of Loans of a single Type made by the Banks
on a single date and as to which a single Interest Period is in effect.
"Borrowing Base Amount" means, with respect to the Borrower, an amount
in dollars equal to the sum of, without duplication,
(a) the Accounts Receivable Advance Rate multiplied by the
book value of Eligible Accounts Receivable;
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(b) plus the Pharmaceutical Inventory Advance Rate multiplied
by the Eligible Inventory Value of Eligible Inventory consisting of
products that can be dispensed only on order of a licensed
professional;
(c) plus the Other Inventory Advance Rate multiplied by the
Eligible Inventory Value of all other Eligible Inventory;
(d) minus a reserve in an aggregate amount equal to the
Borrower's then-current exposure upon early termination under each of
its existing and future Senior Interest Rate Agreements;
(e) minus a reserve in an amount equal to the aggregate
principal amount then outstanding of the 10.5% Notes;
(f) minus any other reserves established by the Senior
Administrative Agent in the exercise of its reasonable judgment to
reflect Borrowing Base Factors.
The Borrowing Base Amount shall be computed weekly with respect to Eligible
Accounts Receivable and with respect to Eligible Inventory stored at any
location other than a distribution center, and monthly with respect to Eligible
Inventory stored at a distribution center, in each case in accordance with
Section 5.01(g). The Borrowing Base Amount at any time in effect shall be
determined by reference to the Borrowing Base Certificate most recently
delivered hereunder.
"Borrowing Base Certificate" means a certificate substantially in the
form of Exhibit E or such other form as the Senior Administrative Agent may
approve.
"Borrowing Base Factors" means landlord's liens affecting Eligible
Inventory, factors affecting the saleability or collectability of Eligible
Accounts Receivable and Eligible Inventory at retail or in liquidation, factors
affecting the market value of Eligible Inventory or Eligible Accounts
Receivable, other impediments to the Senior Collateral Agent's ability to
realize upon the Eligible Accounts Receivable or the Eligible Inventory and
other factors affecting the credit value to be afforded the Eligible Accounts
Receivable and the Eligible Inventory.
"Borrowing Request" means a request by the Borrower in accordance with
the terms of Section 2.03 (or in the case of Swingline Loans, Section 2.17) and
substantially in the form of Exhibit B.
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"Business Acquisition" means (i) an Investment by the Borrower or any
of its Subsidiaries in any other Person (including an Investment by way of
acquisition of securities of any other Person) pursuant to which such Person
shall become a Subsidiary or shall be merged into or consolidated with the
Borrower or any of its Subsidiaries or (ii) an acquisition by the Borrower or
any of its Subsidiaries of the property and assets of any Person (other than the
Borrower or any of its Subsidiaries) that constitute substantially all the
assets of such Person or any division or other business unit of such Person;
provided, that the acquisition of prescription files and Stores and the
acquisition of Persons substantially all of whose assets consist of fewer than
ten Stores, in each case, in the ordinary course of business and not
inconsistent with the Borrower's business plan delivered pursuant to Section
3.01(l), shall not be a Business Acquisition.
"Carryforward Amount" is defined in Section 5.16.
"Cash Management System" is defined in the Senior Subsidiary Security
Agreement.
"Cash Sweep Cash Collateral Account" is defined in the Senior
Subsidiary Security Agreement.
"Cash Sweep Notice" is defined in the Senior Subsidiary Security
Agreement.
"Cash Sweep Period" is defined in the Senior Subsidiary Security
Agreement.
"Citibank Base Rate" means the rate of interest publicly announced by
Citibank, N.A., in New York City from time to time as its Citibank Base Rate.
"Citibank Concentration Account" is defined in the Senior Subsidiary
Security Agreement.
"Citicorp Standby Letters of Credit" means the standby letters of
credit issued for the account of the Borrower by Citicorp USA outstanding on the
Closing Date in an aggregate face amount of $24,500,000.
"Citicorp USA" is defined in the preamble.
"Class" has the meaning set forth in Section 1.03.
"Commitment" means, with respect to any Bank, such Bank's Revolving
Credit Commitment or Term Loan Commitment.
6
"Concentration Account" is defined in the Senior Subsidiary Security
Agreement.
"Consolidated Capital Expenditures" means, for any period, the
aggregate amount of expenditures by the Borrower and its Consolidated
Subsidiaries for plant, property and equipment and prescription files during
such period (including any such expenditure by way of acquisition of a Person or
by way of assumption of indebtedness or other obligations of a Person, to the
extent reflected as plant, property and equipment), but excluding (i) any such
expenditures made for the replacement or restoration of assets to the extent
financed by Casualty/Condemnation Proceeds relating to the asset or assets being
replaced or restored, (ii) any amounts paid to any party under a Synthetic Lease
in connection with the termination of such Synthetic Lease and the reacquisition
by the Borrower or any of its Subsidiaries of the equipment or other property
subject to such Synthetic Lease and (iii) any such expenditures made for the
purchase or other acquisition from a third party of stores, leases and
prescription files, but only to the extent an equivalent or greater amount is
received from such third party as consideration for the sale or other
disposition to such third party of stores, leases and/or prescription files of a
substantially equivalent value closed at substantially the same time as, and
entered into as part of a single related transaction with, such purchase or
acquisition.
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated EBITDA" means, for any period, without duplication,
Consolidated Net Income for such period, plus (a) to the extent deducted in
determining Consolidated Net Income for such period, the aggregate amount of (i)
consolidated interest expenses, whether cash or non-cash, (ii) provision for
income taxes, (iii) depreciation and amortization, (iv) LIFO Adjustments which
reduced such Consolidated Net Income, (v) store closing expenses and (vi) any
other nonrecurring charge to the extent such nonrecurring charge does not
involve any cash expenditure during such period, (vii) all fees, costs, charges
and expenses in connection with the Transactions, (viii) all fees, costs,
charges and expenses in connection with the restatement of the consolidated
financial statements of the Borrower and its Consolidated Subsidiaries for
periods before February 26, 2000 and litigation expenses (exclusive of damages
or amounts paid in settlement of claims) incurred in connection with litigation,
investigation (including internal review) or other proceedings relating to such
restatement, (ix) non-cash compensation expenses related to stock option and
restricted stock employee benefit plans, (x) the non-cash interest component, as
adjusted from time to time, in respect of reserves and (xi) charges relating to
the investigation of the Borrower pending on the Initial Borrowing Date by the
United States Attorney and by the U.S. Department of Labor and amounts paid in
satisfaction of any judgment, fine or settlement resulting therefrom, less (b)
to the extent not deducted in determining
7
Consolidated Net Income for such period, the aggregate amount of (i) any cash
expenditure during such period in connection with which a nonrecurring charge
was taken and added back to Consolidated Net Income pursuant to clause (a) above
in calculating Consolidated EBITDA in any prior period and (ii) LIFO Adjustments
which increased such Consolidated Net Income.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the
ratio of (i) Consolidated EBITDA plus Consolidated Rent less Adjusted
Consolidated Capital Expenditures to (ii) Consolidated Interest Charges plus
Consolidated Rent plus scheduled amortization payments made pursuant to Section
2.11, in each case for such period.
"Consolidated Interest Charges" means, for any period, the aggregate
amount of interest charges, whether expensed or capitalized, incurred or accrued
by the Borrower and its Consolidated Subsidiaries, solely to the extent paid or
payable in cash, during such period minus non-cash interest expenses during such
period related to (x) litigation reserves, (y) closed store liability reserves
and (z) self-insurance reserves.
"Consolidated Interest Coverage Ratio" means, with respect to any
period, the ratio of Consolidated EBITDA for such period to Consolidated
Interest Charges for such period.
"Consolidated Net Income" means, for any period, the net income (or
loss) of the Borrower and its Consolidated Subsidiaries (exclusive of (a)
extraordinary items of gain or loss or gains or losses from debt modifications,
(b) any gain or loss in connection with any sale of assets other than sales of
inventory in the ordinary course of business, but in the case of loss only to
the extent that such loss does not involve any cash expenditure during such
period and (c) the Borrower's share of the net income (or loss) of
Xxxxxxxxx.xxx), determined on a consolidated basis for such period.
"Consolidated Net Worth" means at any date the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries
determined as of such date. Consolidated Net Worth includes the Borrower's 8%
Convertible Pay-In-Kind Preferred Stock.
"Consolidated Rent" means, for any period, the consolidated rental
expense of the Borrower and its Consolidated Subsidiaries for such period, and
including in any event rental costs of closed stores for such period whether or
not reflected as an expense in the determination of Consolidated Net Income for
such period and including base or basic rent payments under Synthetic Leases.
8
"Consolidated Subsidiary" means, with respect to any Person, at any
date any Subsidiary or other entity the accounts of which would be consolidated
with those of such Person in its consolidated financial statements if such
statements were prepared as of such date.
"Continuation/Conversion Request" means a continuation/conversion
request delivered by the Borrower to the Senior Administrative Agent, in the
form of Exhibit C or such other form as shall be approved by the Senior
Administrative Agent.
"Credit Event" is defined in Section 3.02.
"Credit Exposure" means, with respect to any Bank, the sum of its
Revolving Credit Exposure and its Term Exposure.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Definitions Annex" means the Definitions Annex, attached hereto as
Annex 4.
"Delayed Draw Percentage" of any Bank at any time means the percentage
of the total Delayed Draw Term Loan Commitments of all Banks represented by such
Bank's Delayed Draw Term Loan Commitment.
"Delayed Draw Term Loan Commitment" is defined in Section 2.01(b).
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its
9
Domestic Lending Office) or such other office as such Bank may hereafter
designate as its Domestic Lending Office by notice to the Borrower and the
Senior Administrative Agent.
"Xxxxxxxxx.xxx" means Xxxxxxxxx.xxx, Inc., a Delaware corporation, and
its successors.
"Eligible Accounts Receivable" means at the time of any determination
thereof all Accounts that satisfy at the time of creation and continue to meet
the same at the time of such determination the criteria established from time to
time by the Agents in their reasonable judgment to reflect Borrowing Base
Factors. Initially, those criteria are:
(a) such Account constitutes an "account" or "chattel paper"
within the meaning of the Uniform Commercial Code of the state in which
the Account is located;
(b) all payments on such Account are by the terms of such
Account due not later than 90 days after the date stated in the
original related invoice and are otherwise on terms that are normal and
customary in the business of the Borrower and its Subsidiaries;
(c) such Account has been invoiced and is not more than 90
days past due;
(d) such Account is denominated in dollars;
(e) such Account arose from a completed, outright and lawful
sale of goods or the completed performance of services by the
applicable Subsidiary Guarantor and accepted by the applicable Account
Debtor, and the amount of such Account has been properly recognized as
revenue on the books of the applicable Subsidiary Guarantor;
(f) such Account is owned solely by a Subsidiary Guarantor;
(g) such Account arose in the ordinary course of business of
the applicable Subsidiary Guarantor;
(h) not more than 50% of the aggregate amount of Accounts from
the same Account Debtor and any Affiliates thereof are more than 90
days past due;
(i) to the knowledge of the Borrower and its Subsidiaries, no
event of death, bankruptcy, insolvency or inability to pay creditors
generally of the Account Debtor of such Account has occurred, and no
notice thereof has been received;
10
(j) payment of such Account is not being disputed by the
Account Debtor thereof;
(k) such Account complies in all material respects with the
requirements of all applicable laws and regulations, whether Federal,
state or local, including the Federal Consumer Credit Protection Act,
the Federal Truth in Lending Act and Regulation Z of the Federal
Reserve Board;
(l) with respect to such Account, the Account Debtor (i) is
organized in the United States (or, if such Account Debtor is not
organized in the United States, such Account is supported by a letter
of credit approved by the Senior Administrative Agent in favor of the
applicable Subsidiary Guarantor) and (ii) is not an Affiliate or
Subsidiary of the Borrower or an Affiliate of any of the Borrower's
Subsidiaries;
(m) such Account is subject to a perfected first priority
security interest in favor of the Senior Collateral Agent for the
benefit of the Senior Bank Parties pursuant to the Senior Collateral
Documents and is not subject to any other Lien (other than the Second
Priority Lien);
(n) with respect to such Account (if such Account is for an
amount greater than $5,000,000), the Account Debtor has not been
disapproved by the Majority Banks (based, in such Banks' reasonable
judgment, upon the creditworthiness of such Account Debtor);
(o) the representations and warranties contained in the Senior
Loan Documents with respect to such Account are true and correct in all
material respects; and
(p) such Account is in full force and effect and constitutes a
legal, valid and binding obligation of the Account Debtor enforceable
in accordance with its terms.
"Eligible Inventory" means, at any date of determination thereof, all
inventory (as defined in the Uniform Commercial Code) owned by any Subsidiary
Guarantor that satisfies at the time of such determination the criteria
established from time to time by the Agents in their reasonable judgment to
reflect Borrowing Base Factors. Initially, Eligible Inventory shall exclude,
without duplication:
(a) any such inventory that has been shipped to a customer,
even if on a consignment or "sale or return" basis or is otherwise not
in the possession or control of or any Subsidiary Guarantor or a
warehouseman or bailee of any Subsidiary Guarantor;
11
(b) any inventory against which Subsidiary Guarantor has taken
a reserve, to the extent of such reserve, to the extent specified by
the Senior Collateral Agent from time to time in its reasonable
judgment to reflect Borrowing Base Factors;
(c) any inventory that has been discontinued or is otherwise
of a type (SKU) not currently offered for sale on a regular basis by
the Subsidiary Guarantors (including any such inventory obtained in
connection with a Business Acquisition) to the extent specified by the
Senior Collateral Agent from time to time in its reasonable judgment to
reflect Borrowing Base Factors;
(d) any inventory not located in the United States or located
in a jurisdiction as to which a UCC-1 financing statement has not been
filed or otherwise not subject to a valid and perfected Lien under the
Senior Collateral Documents, subject to no prior or equal Lien;
(e) any supply, scrap or obsolete inventory or inventory that
is otherwise unsaleable;
(f) any inventory that is past its expiration date, is damaged
or not in good condition, is a sample used for marketing purposes or
does not meet all material standards imposed by any governmental
authority having regulatory authority over such inventory, except in
each case to the extent of its net realizable value as determined by
the Senior Collateral Agent from time to time in its reasonable
judgment;
(g) any inventory that is subject to any licensing, patent,
royalty, trademark, trade name or copyright agreement with any third
party from whom any of its Subsidiaries has received notice of a
dispute in respect of such agreement to the extent that such dispute
could reasonably be expected to prevent the sale of such inventory;
(h) any inventory which is subject to a negotiable document of
title and such document of title has not been delivered to the Senior
Collateral Agent;
(i) any inventory to the extent that such inventory is not
comprised of readily marketable materials of a type manufactured,
consumed or held for resale by the Subsidiary Guarantors in the
ordinary course of business;
(j) any inventory to the extent that such inventory consists
of raw materials, component parts and/or work-in-progress;
12
(k) any inventory to which the representations and warranties
of the Senior Loan Documents are not true and correct in all material
respects;
(l) any inventory to which the Subsidiary Guarantors do not
have good title or any inventory which a Subsidiary Guarantor holds on
consignment or on a "sale or return" basis; and
(m) any inventory (as notified by the Senior Administrative
Agent to the Borrower) that the Senior Administrative Agent has deemed
is ineligible in its reasonable judgment to reflect Borrowing Base
Factors;
provided, however, that no inventory which is stored at a distribution center
leased by the Borrower or any other Person shall be considered "Eligible
Inventory" unless the Borrower shall have complied with Section 3.01(cc) (or the
Senior Collateral Agent shall have granted a waiver to such compliance pursuant
to Section 3.01(cc)).
"Eligible Inventory Value" means at the time of any determination
thereof the lower of cost (less any appropriate reserve for obsolete inventory
and any profits accrued in connection with transfers of inventory between the
Borrower and its Subsidiaries or between Subsidiaries of the Borrower) and fair
market value of the Eligible Inventory at such time, in dollars, determined in
accordance with generally accepted accounting principles consistently applied
and on a basis consistent with that used in the preparation of the most recent
audited consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
13
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Borrowing" means a Borrowing comprised of Euro-Dollar
Loans.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Senior Administrative Agent.
"Euro-Dollar Loan" means any Euro-Dollar Revolving Loan or Euro-Dollar
Term Loan.
"Euro-Dollar Revolving Credit Borrowing" means a Borrowing comprised of
Euro- Dollar Revolving Loans.
"Euro-Dollar Revolving Loan" means any Revolving Loan bearing interest
at a rate determined by reference to the Adjusted London Interbank Offered Rate
in accordance with the provisions of Article 2.
"Euro-Dollar Term Borrowing" means a Borrowing comprised of Euro-Dollar
Term Loans.
"Euro-Dollar Term Loan" means any Term Loan bearing interest at a rate
determined by reference to the Adjusted London Interbank Offered Rate in
accordance with the provisions of Article 2.
"Event of Default" has the meaning set forth in Section 6.01.
"Excess Cash Flow" means, for any period, the sum (without duplication)
of Consolidated EBITDA for such period,
plus
14
(a) to the extent not included in Consolidated Net Income in
calculating Consolidated EBITDA, the sum of (1) any
Casualty/Condemnation Proceeds previously received by the Borrower or
any Subsidiary in respect of which the time for reinvestment thereof
(in accordance with the proviso to the definition of
Casualty/Condemnation in respect of Proceeds) has elapsed during such
period without such reinvestment having been effected, and (2) any Net
Cash Proceeds received during such period by the Borrower or any
Subsidiary in respect of Asset Sales;
plus
(b) decreases in Adjusted Working Capital for such period
(other than any portion of such decrease resulting solely from the
reclassification of assets or liabilities as short- term or long-term)
to the extent such decreases are in excess of $200,000,000 in the
aggregate for all periods; provided that for the initial period ending
March 2, 2002, decreases in Adjusted Working Capital shall include any
such decreases occurring during the period from but excluding March 3,
2001 to and including March 2, 2002;
plus
(c) refunds of Taxes paid in prior periods to the extent such
refunds are in excess of $50,000,000 in the aggregate for all periods;
and
minus
(d) Taxes to the extent paid during such period in cash;
minus
(e) Consolidated Interest Charges to the extent paid during
such period in cash;
minus
(f) increases in Adjusted Working Capital for such period
(other than any portion of such increase resulting solely from the
reclassification of assets or liabilities as short- term or long-term);
provided that for the initial period ending March 2, 2002, increases in
Adjusted Working Capital shall include any such increases occurring
during the period from but excluding March 3, 2001 to and including
March 2, 2002;
15
minus
(g) to the extent paid in cash during such period, costs and
expenses referred to in clauses (v), (vii), (viii) and (xi) of the
definition of "Consolidated EBITDA" which were added back to
Consolidated Net Income to calculate Consolidated EBITDA for such
period;
minus
(h) Consolidated Capital Expenditures for such period (except
to the extent attributable to the incurrence of Debt under Capital
Leases, Attributable Debt under Synthetic Leases or otherwise financed
by the incurrence of Debt and except to the extent made with
Casualty/Condemnation Proceeds or Net Cash Proceeds from Basket Asset
Sales);
minus
(i) cash consideration paid by the Borrower or its
Subsidiaries for permitted Business Acquisitions or other capital
acquisitions (except to the extent financed by the incurrence of Debt
and except to the extent made with Casualty/Condemnation Proceeds or
Net Cash Proceeds from Basket Asset Sales);
minus
(j) cash expenditures made during such period in respect of
long-term liabilities (other than Debt) or long-term assets to the
extent such expenditures were not deducted in determining Consolidated
Net Income for such period;
minus
(k) the aggregate principal amount of Debt (including
Attributable Debt in respect of Synthetic Leases) paid or prepaid in
cash by the Borrower or its Subsidiaries during such period (or
immediately after such period in the case of mandatory prepayment of
Debt required to be made with Net Cash Proceeds from Asset Sales
received during such period), in each case to the extent permitted or
required by this Agreement, but excluding (i) Debt in respect of
Revolving Credit Loans and Letters of Credit that can be reborrowed or
otherwise incurred again, (ii) repayments of Debt made with Net Cash
16
Proceeds from Basket Asset Sales, and (iii) repayments or prepayments
of Debt financed by incurring other Debt.
"Excess Liquidity" means (i) for the twelve months ending March 2,
2002, the cash reflected on the consolidated balance sheet of the Borrower as of
the Initial Borrowing Date minus $75,000,000 and (ii) for any other fiscal
period, the cash reflected on the consolidated balance sheet of the Borrower as
of the last day of such most recently ended fiscal year minus (x) the aggregate
principal amount of Revolving Loans and Swingline Loans outstanding on the last
day of the fiscal year of the Borrower most recently ended prior to such fiscal
period and (y) minus $75,000,000; provided, however, that in the event the
amount in clause (i) or (ii) above shall be negative for any period, then Excess
Liquidity for such period shall be deemed to be zero.
"Existing Credit Agreement" is defined in the preamble hereto.
"Existing Litigation" means the matters identified in Schedule 1.01(a).
"Federal Funds Effective Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published 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 of the
quotations for the day for such transactions received by the Senior
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System of the United States of America (or any successor thereto).
"Financial Officer" of any person means the chief financial officer,
principal accounting officer, Treasurer or any executive or senior vice
president finance of such person.
"Fleet National Bank" means Fleet National Bank and its successors.
"Fleet Retail Finance Inc." means Fleet Retail Finance Inc. and its
successors.
"Fleet Standby Letters of Credit" means the standby letters of credit
issued for the account of the Borrower by Fleet National Bank outstanding on the
Closing Date in an aggregate face amount of $8,000,000.
17
"Government Lockbox Account" is defined in the Senior Subsidiary
Security Agreement.
"Government Lockbox Account Agreement" is defined in the Senior
Subsidiary Security Agreement.
"Government Lockbox Account Bank" is defined in the Senior Subsidiary
Security Agreement.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Granting Bank" is defined in Section 9.06(e).
"Hazardous Materials" means all explosive or radioactive substances or
wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Initial Borrowing Date" means the date of the first Credit Event.
"Intercompany Inventory Purchase Agreement" means the Intercompany
Inventory Purchase Agreement, dated as of June 12, 2000, among the Borrower,
Rite Aid Hdqtrs. Corp., each of the Distribution Subsidiaries and each of the
Operating Subsidiaries named therein.
Interest Payment Date" means, the last day of the Interest Period
applicable to any Loan and, in the case of a Euro-Dollar Borrowing with an
Interest Period of more than three months duration, each day that would have
been an Interest Payment Date had successive Interest Periods of three months
duration been applicable to such Loan, and, in addition, the date of any
prepayment of such Loan or continuation or conversion of such Loan as or to a
Loan of a different Type.
18
"Interest Period" means
(a) as to any Euro-Dollar Loan, the period commencing on the
date of any Borrowing and ending on the seventh day thereafter or on
the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1,
1-1/2, 2, 3 or 6 months thereafter, in each case as the Borrower may
elect;
(b) as to any Base Rate Borrowing of a Term Loan or a
Revolving Loan, the period commencing on the date of such Borrowing and
extending through the earliest of (i) the next succeeding March 31,
June 30, September 30 or December 31, (ii) the Maturity Date, and (iii)
the date such Borrowing is converted to a Borrowing of a different Type
in accordance with Section 2.09 or repaid or prepaid in accordance with
Section 2.12 or 2.13; and
(c) as to any Swingline Loan, a period of one week;
provided, however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Euro-Dollar Borrowing having an interest
period of one month or longer, such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day.
"Interest Rate Agreement" means, for any person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect against fluctuations in interest rates.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise. Any
repurchase by the Borrower of its own capital stock shall not constitute an
Investment for purposes of this Agreement. The amount of any Investment shall be
the original principal or capital amount thereof less all returns of principal
or equity thereon (and without adjustment by reason of the financial condition
of such other Person) and shall, if made by the transfer or exchange of property
other than cash, be deemed to have been made in an original principal or capital
amount equal to the fair market value of such property at the time of such
transfer or exchange.
19
"Issuance Request" means a letter of credit issuance request delivered
by the Borrower to the Senior Administrative Agent, in the form of Exhibit D or
such other form as shall be approved by the Senior Administrative Agent and the
applicable Issuing Bank.
"Issuing Bank" is defined in Section 2.18(k), and shall include
Citicorp USA, The Chase Manhattan Bank, Fleet National Bank and, with respect to
the Mellon Standby Letters of Credit that become Letters of Credit under this
Agreement pursuant to Section 2.18, Mellon Bank.
"Issuing Bank Fees" is defined in Section 2.05(e).
"Joint Venture" means with respect to any Person, at any date, any
other Person in whom such Person directly or indirectly holds an Investment, and
whose financial results would not be consolidated under GAAP with the financial
results of such Person on the consolidated financial statements of such Person,
if such statements were prepared as of such date.
"L/C Cash Collateral Account" means the collateral account with
Citibank, N.A., A/C 00000000, at its office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, in the name of the Senior Collateral Agent and under the sole
control and dominion of the Senior Collateral Agent.
"L/C Commitment" means the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.18.
"L/C Disbursement" means a payment or disbursement made by an Issuing
Bank pursuant to a Letter of Credit.
"L/C Exposure" means at any time the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time, plus (b) the aggregate
principal amount of all L/C Disbursements that have not yet been reimbursed at
such time. The L/C Exposure of any Revolving Credit Bank at any time means its
Revolving Percentage of the aggregate L/C Exposure at such time.
"L/C Participation Fee" is defined in Section 2.05(e).
"Letter of Credit" means any letter of credit issued pursuant to
Section 2.18 and includes any Citicorp Standby Letter of Credit, any Fleet
Standby Letter of Credit and any Mellon Standby Letter of Credit that is deemed
to be a Letter of Credit hereunder.
20
"Leverage Ratio" means, with respect to any date during any period, the
ratio of Total Debt as of such date to Consolidated EBITDA for such period (or,
in the case of a period of less than twelve months, annualized Consolidated
EBITDA).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
Capital Lease or other title retention agreement relating to such asset.
"LIFO Adjustments" means, for any period, the net adjustment to costs
of goods sold for such period required by the Borrower's LIFO inventory method,
determined in accordance with generally accepted accounting principles.
"Loans" means the Revolving Loans, the Swingline Loans and the Term
Loans.
"London Interbank Offered Rate" means, with respect to any Euro-Dollar
Borrowing, the rate (rounded upwards, if necessary, to the next 1/16 of 1%) at
which dollar deposits approximately equal in principal amount to the Senior
Administrative Agent's portion of such Euro-Dollar Borrowing, and for a maturity
comparable to such Interest Period are offered to the principal London office of
the Senior Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
before the commencement of such Interest Period.
"Majority Banks" means, at any time, Banks having unused Revolving
Credit Commitments, Revolving Credit Exposure, unused Term Loan Commitments and
outstanding Term Loans representing greater than 50% of the sum of all unused
Revolving Credit Commitments, Revolving Credit Exposures, unused Term Loan
Commitments and outstanding Term Loans at such time.
"Majority Revolving Credit Banks" means, at any time, Revolving Credit
Banks having unused Revolving Credit Commitments and Revolving Credit Exposures
representing greater than 50% of the sum of all unused Revolving Credit
Commitments and Revolving Credit Exposures.
"Material Adverse Effect" means (i) any material adverse effect on the
business, assets, operations, properties, condition (financial or otherwise),
contingent liabilities, prospects or material agreements of the Borrower and its
Consolidated Subsidiaries, considered as a whole,
21
(ii) any material impairment of the legality, validity and enforceability of the
Senior Loan Documents (including without limitation, the validity,
enforceability or priority of security interests to be granted), or the rights
and remedies of the Senior Secured Parties, or (iii) any material impairment of
the Borrower's or the Subsidiary Guarantors' ability to perform its or their
obligations under the Senior Loan Documents.
"Material Financial Obligations" means, without duplication,
(a) the Second Priority Debt Obligations, and
(b) (i) a principal or face amount of Debt (except Debt
outstanding hereunder) and/or (ii) payment or collateralization
obligations in respect of Derivatives Obligations and/or (iii) payment
or collateralization obligations in respect of leases (other than
Capital Leases, which are Debt) of the Borrower and/or one or more of
its Subsidiaries, arising in one or more related or unrelated
transactions, exceeding in the aggregate $25,000,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000,000.
"Maturity Date" means June 27, 2005; provided, however, that to the
extent more than $20,000,000 of the Borrower's 7.625% Senior Notes due April 15,
2005 remain outstanding on December 31, 2004, the term "Maturity Date" shall
mean March 15, 2005.
"Mellon Bank" means Mellon Bank, N.A.
"Mellon Standby Letters of Credit" means the standby letters of credit
issued for the account of the Borrower by Mellon Bank outstanding on the Closing
Date in an aggregate face amount of $16,500,000 specified on Schedule 4.13.
"Mortgaged Properties" means the owned real properties of the
Subsidiary Guarantors specified on Schedule 1.01(b). Each Mortgaged Property
shall include any owned fixtures used in connection with the operation of such
Mortgaged Property.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
22
"Notes" means any Revolving Credit Notes, Swingline Notes or Term
Notes.
"Other Inventory Advance Rate" means the amount determined in
accordance with Section 2.19.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Perfection Certificate" means the Perfection Certificate substantially
in the form of Annex 2 to the Senior Subsidiary Security Agreement.
"Pharmaceutical Inventory Advance Rate" means the amount determined in
accordance with Section 2.19.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Qualified Preferred Stock" means preferred stock of the Borrower that
requires no cash payment before the date that is six months after the Maturity
Date.
"Refunding Borrowing" means a Borrowing which, after application of the
proceeds thereof, results in no net increase in the outstanding principal amount
of Loans of any Class made by any Bank.
"Regulation T, U, or X" means Regulation T, U or X of the Federal
Reserve Board, as in effect from time to time.
23
"Related Fund" means any fund regularly investing in loans of the type
made hereunder that is administered or managed by (a) a Bank, (b) an Affiliate
of a Bank or (c) an entity or an Affiliate of an entity that administers or
manages a Bank.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" means (a) "remedial action" as such term is defined
in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any
Governmental Authority or voluntarily undertaken to: (i) cleanup, remove, treat,
xxxxx or in any other way address any Hazardous Material in the environment;
(ii) prevent the Release or threat of Release, or minimize the further Release
of any Hazardous Material so it does not migrate or endanger or threaten to
endanger public health, welfare or the environment; or (iii) perform studies and
investigations in connection with, or as a precondition to, clause (i) or (ii).
"Restricted Payment" means
(a) any dividend or other distribution on any shares of the
Borrower's or any Subsidiary's capital stock (except dividends payable
solely in shares of the Borrower's common stock or Qualified Preferred
Stock); or
(b) any payment (other than a payment made solely with common
equity) on account of the purchase, redemption, retirement or
acquisition of (i) any shares of the Borrower's or any Subsidiary's
capital stock or (ii) any option, warrant or other right to acquire
shares of the Borrower's or any Subsidiary's capital stock (other than
such payment in connection with employee benefit plans in the ordinary
course of business).
"Revolving Credit Bank" means a Bank with a Revolving Credit
Commitment.
"Revolving Credit Borrowing" means a Borrowing comprised of Revolving
Loans.
"Revolving Credit Commitment" means, with respect to each Bank, the
commitment of such Bank to make Revolving Loans hereunder (or to participate in
Letters of Credit) as set forth in Annex 1, or in the Assignment and Acceptance
pursuant to which such Bank assumed its Revolving Credit Commitment, as
applicable, as the same may be (a) reduced from time to time pursuant to Section
2.08, and (b) reduced or increased from time to time pursuant to assignments by
or to such Bank pursuant to Section 9.06.
24
"Revolving Credit Exposure" means, with respect to any Bank at any
time, the aggregate principal amount at such time of all outstanding Revolving
Loans of such Bank, plus the aggregate amount at such time of such Bank's L/C
Exposure, plus the aggregate amount at such time of such Bank's Swingline
Exposure.
"Revolving Credit Note" means a promissory note of the Borrower,
substantially in the form of Exhibit A-2, evidencing Revolving Loans.
"Revolving Loans" means the revolving loans made by the Banks to the
Borrower pursuant to Section 2.01(c).
"Revolving Percentage" of any Revolving Credit Bank at any time means
the percentage of the total Revolving Credit Commitments of all Revolving Credit
Banks represented by such Bank's Revolving Credit Commitment, or if the
Revolving Credit Commitments shall have expired or terminated, the percentage of
the aggregate Revolving Credit Exposures of all Banks represented by such Bank's
Revolving Credit Exposure.
"SEC" means the Securities and Exchange Commission, or any Person
succeeding to its functions under the Securities Exchange Act of 1934, as
amended.
"Secured Debt" means Debt which is secured by a Lien on property of the
Borrower or any Subsidiary, but shall not include guarantees arising in
connection with the sale, discount, guarantee or pledge of notes, chattel
mortgages, leases, accounts receivable, trade acceptances and other papers
arising, in the ordinary course of business, out of installment or conditional
sales to or by, or transactions involving title retention with, distributors,
dealers or other customers, of merchandise, equipment or services.
"Senior Administrative Agent" means Citicorp USA, in its capacity as
agent for the Banks under the Senior Loan Documents, and its successors in such
capacity.
"Senior Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent with Citicorp
Industrial Credit at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Account No.
00000000, ABA 000000000, Attention: Xxx Xxxx, or such other account as the
Administrative Agent shall specify in writing to the Banks.
"Senior Administrative Agent's Fees" is defined in Section 2.05(c).
25
"Senior Fee Letter" means the Fee Letter dated May 15, 2001, between
the Borrower and the Senior Administrative Agent, relating to this Agreement.
"Senior Revolving Commitment Fee" is defined in Section 2.05(a).
"Senior Term Commitment Fee" is defined in Section 2.05(b).
"Senior Fees" means the L/C Participation Fees, the Issuing Bank Fees,
the Senior Revolving Commitment Fees, the Senior Term Commitment Fees, the fees
described in Section 2.05(d), and the Senior Administrative Agent's Fees.
"SPC" is defined in Section 9.06(e).
"Statutory Reserves" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Federal Reserve Board and any other banking authority,
domestic or foreign, to which the Senior Administrative Agent or any Bank
(including any branch, Affiliate, or other fronting office making or holding a
Loan) is subject (a) with respect to the Base CD Rate, for new negotiable
nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months, in the case of the Base CD Rate (as such
term is used in the definition of "Base Rate"), and (b) with respect to the
Adjusted London Interbank Offered Rate, for Euro-Dollar Liabilities (as defined
in Regulation D of the Federal Reserve Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Euro-Dollar Loans shall be
deemed to constitute Euro-Dollar Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Bank under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"Store" means any retail store (which may include any real property,
fixtures, equipment, inventory and script files related thereto) operated, or to
be operated, by any Subsidiary Guarantor.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Borrower.
26
"Subsidiary Guarantor" means, initially, each Subsidiary listed on
Schedule 1.01(d), and each other Subsidiary that is or becomes a party to a
Senior Subsidiary Guarantee Agreement.
"Supermajority Banks" means, at any time, Banks having unused Revolving
Credit Commitments, Revolving Credit Exposure, unused Term Loan Commitments and
outstanding Term Loans representing at least 66-2/3% of the sum of all unused
Revolving Credit Commitments, Revolving Credit Exposures, unused Term Loan
Commitments and outstanding Term Loans at such time.
"Swingline Bank" means, subject to Section 2.17(g), either Citicorp
USA, or Fleet Retail Finance Inc.
"Swingline Exposure" means at any time the aggregate principal amount
at such time of all outstanding Swingline Loans. The Swingline Exposure of any
Revolving Credit Bank at any time shall equal its Revolving Percentage of the
aggregate Swingline Exposure at such time.
"Swingline Loan" means any loan made by a Swingline Bank pursuant to
Section 2.17.
"Swingline Note" means a promissory note evidencing Swingline Loans,
executed and delivered as provided in Section 2.17 in substantially the form of
Exhibit A-3.
"Syndication Agents" is defined in the preamble.
"Taxes" is defined in Section 8.04(a).
"Term Borrowing" means a Borrowing comprised of Term Loans.
"Term Exposure" means, with respect to any Bank at any time, the
aggregate principal amount at such time of all outstanding Term Loans of such
Bank.
"Term Loan Commitments" means, with respect to each Bank, the
commitment of such Bank to make Term Loans hereunder as set forth on Annex 1, or
in the Assignment and Acceptance pursuant to which such Bank assumed its Term
Loan Commitment, as applicable, as the same may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Bank pursuant to Section 9.06.
"Term Loans" means the term loans made by the Banks to the Borrower
pursuant Section 2.01(a) and (b).
27
"Term Note" means a promissory note of the Borrower, substantially in
the form of Exhibit A-1, evidencing Term Loans.
"The Chase Manhattan Bank" means The Chase Manhattan Bank and its
successors.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Federal Reserve Board through the public information
telephone line of the Federal Reserve Bank of New York (which rate will, under
the current practices of the Federal Reserve Board, be published in Federal
Reserve Statistical Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City received at
approximately 10:00 a.m., New York City time, on such day (or, if such day shall
not be a Business Day, on the next preceding Business Day) by the Senior
Administrative Agent from three New York City negotiable certificate of deposit
dealers of recognized standing selected by it.
"Total Debt" means, as of any date, the aggregate principal amount of
Debt of the Borrower and its Consolidated Subsidiaries outstanding as of such
date that would be reflected on a balance sheet of the Borrower prepared on a
consolidated basis as of such date.
"Transactions" is defined in Annex 3.
"Transaction Costs" is defined in Annex 3.
"Transaction Documents" means the agreements evidencing the
Transactions.
"Type" has the meaning set forth in Section 1.03.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
28
"United States" means the United States of America, including the
States, the District of Columbia and Puerto Rico but excluding its other
territories and possessions.
"Unsecured Note Indenture" means the Indenture dated as of June 27,
2001, between Rite Aid and BNY Midwest Trust Company, as trustee, relating to
the 11.25% Senior Notes due 2008 of the Borrower.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly (through Wholly-Owned Consolidated Subsidiaries) owned by the
Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks; provided that, if the Borrower notifies the Senior Administrative
Agent that the Borrower wishes to amend any covenant in Article 5 to eliminate
the effect of any change in generally accepted accounting principles on the
operation of such covenant (or if the Senior Administrative Agent notifies the
Borrower that the Majority Banks wish to amend Article 5 for such purpose), then
the Borrower's compliance with such covenant shall be determined on the basis of
generally accepted accounting principles in effect immediately before the
relevant change in generally accepted accounting principles became effective,
until either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Borrower and the Majority Banks.
SECTION 1.03. Classes and Types of Loans. Loans hereunder are
distinguished by "Class" and by "Type". The "Class" of a Loan (or of a
Commitment to make such a Loan or of a Borrowing comprised of such Loans) refers
to the determination whether such Loan is a Revolving Loan or a Term Loan, each
of which constitutes a Class. The "Type" of a Loan refers to the determination
whether such Loan is a Euro-Dollar Loan or a Base Rate Loan. Identification of a
Loan (or a Borrowing) by both Class and Type (e.g., a "Term Euro-Dollar Loan")
indicates that such Loan is both a Term Loan and a Euro-Dollar Loan (or that
such Borrowing is comprised of such Loans).
29
SECTION 1.04. Terms Defined in Definitions Annex. Capitalized terms
used in this agreement that are not defined in Section 1.01 have the meanings
provided in the Definitions Annex.
SECTION 1.05. Other Definitional Provisions. References in this
Agreement to "Articles", "Sections", "Annexes", "Schedules" or "Exhibits" shall
be to Articles, Annexes, Sections, Schedules or Exhibits of or to this Agreement
unless otherwise specifically provided. Any of the terms defined in Article 1
may, unless the context otherwise requires, be used in the singular or plural
depending on the reference. "Include" or "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import. "Writing", "written" and
comparable terms refer to printing, typing and other means of reproducing words
in a durable visible form, including telecopy. References to any agreement or
contract are to such agreement or contract as amended, modified or supplemented
from time to time in accordance with the terms hereof and thereof; provided that
amendments to the Indentures, the Unsecured Note Indenture, the 10.5% Note
Documents, the Second Priority Debt Documents, the Synthetic Lease Documents and
the other Transaction Documents after the Closing Date shall be effective for
purposes of references thereto in this Agreement and the other Senior Loan
Documents only if such amendments are permitted hereunder or are consented to in
writing for such purpose by the Majority Banks (or such other percentage of the
Banks as may be specified hereunder). References to any Person include the
successors and assigns of such Person. References "from" or "through" any date
mean, unless otherwise specified, "from and including" or "through and
including", respectively.
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth,
(a) each Bank agrees, severally and not jointly, to make Term
Loans to the Borrower on the Initial Borrowing Date in an aggregate
principal amount not to exceed its Term Loan Commitment,
(b) each Bank indicated on Annex 1 agrees, severally and not
jointly, to the extent the Term Loan Commitments are not fully drawn on
the Initial Borrowing Date, to make Term Loans to the Borrower, at any
time and from time to time after the date hereof, and until the
earliest of (i) the date on which no 10.5% Notes remain outstanding,
(ii) the final
30
maturity of the 10.5% Notes or (iii) the termination of the Term Loan
Commitment of such Bank in accordance with the terms hereof, in an
aggregate principal amount not to exceed the lesser of (x) the excess
of its Term Loan Commitment over the amount of Term Loans made by such
Bank on the Initial Borrowing Date (such Bank's "Delayed Draw Term Loan
Commitment") and (y) such Bank's Delayed Draw Percentage of (A) the
Borrowing Base Amount in effect at such time less (B) the aggregate
Term Exposures and Revolving Credit Exposures at such time, and
(c) to make Revolving Loans to the Borrower, at any time and
from time to time on or after the date hereof, and until the earlier of
the Maturity Date or the termination of the Revolving Credit Commitment
of such Bank in accordance with the terms hereof in an aggregate
principal amount at any time outstanding that will not result in such
Bank's Revolving Credit Exposure exceeding the lesser of
(i) such Bank's Revolving Credit Commitment, and
(ii) such Bank's Revolving Percentage of (A) the
Borrowing Base Amount in effect at such time less (B) the
aggregate Term Exposures of the Banks at such time.
Within the limits set forth above and subject to the terms, conditions and
limitations set forth herein, the Borrower may borrow, pay or prepay and
reborrow Revolving Loans. Amounts paid or prepaid in respect of Term Loans may
not be reborrowed.
SECTION 2.02. Loans. (a) (i) Each Revolving Loan (other than Swingline
Loans) shall be made as part of a Borrowing consisting of Revolving Loans made
by the Banks ratably in accordance with their applicable Revolving Credit
Commitments, (ii) each Term Loan made on the Initial Borrowing Date shall be
made as part of a Borrowing consisting of Term Loans made by the Banks ratably
in accordance with their applicable Term Loan Commitments (excluding, in the
case of any Bank indicated on Annex 1 as having a Delayed Draw Term Loan
Commitment, such Bank's ratable share of the Term Loan Commitments not drawn on
the Initial Borrowing Date) and (iii) each Term Loan made after the Initial
Borrowing Date shall be made as part of one or more Borrowings consisting of
Term Loans made by the Banks indicated on Annex 1 as having Delayed Draw Term
Loan Commitments ratably in accordance with their applicable remaining Delayed
Draw Term Loan Commitments; provided, however, that the failure of any Bank to
make any Loan shall not in itself relieve any other Bank of its obligation to
lend hereunder, and no Bank shall be responsible for the failure of any other
Bank to make any Loan required to be made by such other Bank. Except for Loans
deemed made pursuant to
31
Section 2.02(e) and Swingline Loans, the Loans comprising any Borrowing shall be
in an aggregate principal amount that is
(i) a multiple of $1,000,000 and not less than $5,000,000, or
(ii) equal to the remaining available balance of the
applicable Commitments.
(b) Subject to Sections 8.01 and 8.02, each Borrowing of Revolving
Loans and Term Loans shall be comprised entirely of Base Rate Loans or
Euro-Dollar Loans as the Borrower may request pursuant to Section 2.03 or
Section 2.09. Each Bank may at its option make any Euro-Dollar Loan by causing
any domestic or foreign branch or Affiliate of such Bank to make such Loan;
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement and
the applicable Note. Borrowings of more than one Type may be outstanding at the
same time; provided, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than 10 Euro-Dollar Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.
(c) (i) Except with respect to Loans made pursuant to Section 2.02(e)
and Section 2.03(b)(1), each Bank shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds to such account as the Senior Administrative Agent may designate not later
than 12:00 noon, New York City time, and the Senior Administrative Agent shall
by 1:00 p.m., New York City time, credit the amounts so received to an account
in the name of the Borrower and designated by the Borrower in the applicable
Borrowing Request or, if a Borrowing shall not occur on such date because any
condition precedent herein specified shall not have been met, return the amounts
so received to the respective Banks. (ii) With respect to Loans made pursuant to
Section 2.03(b)(1), each Bank shall make each Loan to be made by it hereunder on
the proposed date thereof by wire transfer of immediately available funds to
such account as the Senior Administrative Agent may designate not later than
3:00 p.m., New York City time, and the Senior Administrative Agent shall by 4:00
p.m., New York City time, credit the amounts so received to an account in the
name of the Borrower and designated by the Borrower in the applicable Borrowing
Request or, if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, return the amounts so
received to the respective Banks.
(d) Unless the Senior Administrative Agent shall have received notice
from a Bank before the date of any Borrowing that such Bank will not make
available to the Senior Administrative
32
Agent such Bank's portion of such Borrowing, the Senior Administrative Agent may
assume that such Bank has made such portion available to the Senior
Administrative Agent on the date of such Borrowing in accordance with clause (c)
and the Senior Administrative Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If the Senior
Administrative Agent shall have so made funds available then, to the extent that
such Bank shall not have made such portion available to the Senior
Administrative Agent, such Bank and the Borrower severally agree to repay to the
Senior Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the Senior
Administrative Agent at (a) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (b) in the
case of such Bank, a rate determined by the Senior Administrative Agent to
represent its cost of overnight or short-term funds in dollars (which
determination shall be conclusive absent manifest error). If such Bank shall
repay to the Senior Administrative Agent such corresponding amount, such amount
shall constitute such Bank's Loan as part of such Borrowing for purposes of this
Agreement.
(e) If an Issuing Bank shall not have received from the Borrower the
payment required to be made by Section 2.18(e) within the time specified in such
Section, such Issuing Bank will promptly notify the Senior Administrative Agent
of the L/C Disbursement and the Senior Administrative Agent will promptly notify
each Revolving Credit Bank of such L/C Disbursement and its Revolving Percentage
thereof. Each Revolving Credit Bank shall pay by wire transfer of immediately
available funds to the Senior Administrative Agent not later than 2:00 p.m., New
York City time, on such date (or, if such Revolving Credit Bank shall have
received such notice later than 12:00 (noon), New York City time, on any day,
not later than 10:00 a.m., New York City time, on the immediately following
Business Day), an amount equal to such Bank's Revolving Percentage of such L/C
Disbursement (and such amount shall be deemed to constitute a Base Rate
Revolving Loan of such Bank and such payment shall be deemed to have reduced the
L/C Exposure), and the Senior Administrative Agent will promptly pay to the
applicable Issuing Bank amounts so received by it from the Revolving Credit
Banks. The Senior Administrative Agent will promptly pay to the applicable
Issuing Bank any amounts received by it from the Borrower pursuant to Section
2.18(e) before the time that any Revolving Credit Bank makes any payment
pursuant to this clause; any such amounts received by the Senior Administrative
Agent thereafter will be promptly remitted by the Senior Administrative Agent to
the Revolving Credit Banks that shall have made such payments and to such
Issuing Bank, as their interests may appear. If any Revolving Credit Bank shall
not have made its Revolving Percentage of such L/C Disbursement available to the
Senior Administrative Agent as provided above, such Bank and the Borrower
severally agree to pay interest on such amount, for each day from and including
the date such amount is required to be paid in accordance with this clause to
33
but excluding the date such amount is paid, to the Senior Administrative Agent
for the account of the applicable Issuing Bank at:
(i) in the case of the Borrower, a rate per annum equal to the
interest rate applicable to Revolving Loans pursuant to Section
2.06(a); and
(ii) in the case of such Bank, for the first such day, the
Federal Funds Effective Rate, and for each day thereafter, the Base
Rate.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing
(other than a Swingline Loan or a deemed Borrowing pursuant to Section 2.02(e),
as to which this Section shall not apply), the Borrower shall hand deliver or
telecopy to the Senior Administrative Agent a duly completed Borrowing Request
(a) in the case of a Euro-Dollar Borrowing, not later than 11:00 a.m., New York
City time, three Business Days before a proposed Borrowing, and (b) in the case
of a Base Rate Borrowing, not later than (1) 10:30 a.m., New York City time, on
the Business Day of the proposed Borrowing, in the case of Borrowings to be made
on the same day as such notice is given or (2) otherwise, 12:00 noon, New York
City time, on the Business Day before the proposed Borrowing. Each Borrowing
Request shall be irrevocable, shall be signed by or on behalf of the Borrower
and shall specify the following information:
(i) whether the Borrowing then being requested is to be a Term
Borrowing or a Revolving Credit Borrowing, and whether such Borrowing
is to be a Euro-Dollar Borrowing or a Base Rate Borrowing;
(ii) the date of such Borrowing (which shall be a Business
Day);
(iii) the number and location of the account to which funds
are to be disbursed;
(iv) the amount of such Borrowing; and
(v) if such Borrowing is to be a Euro-Dollar Borrowing, the
Interest Period with respect thereto;
provided, however, that, notwithstanding any contrary specification in any
Borrowing Request, each requested Borrowing shall comply with the requirements
set forth in Section 2.02. The Senior Administrative Agent shall promptly advise
the applicable Banks of any notice given pursuant to this Section, and of each
Bank's portion of the requested Borrowing.
34
SECTION 2.04. Notes and Records. (a) If any Bank so requests, the
Revolving Loans made by such Bank shall be evidenced by a Revolving Credit Note
duly executed on behalf of the Borrower, dated the Initial Borrowing Date, in
the amount of such Bank's Revolving Credit Commitment. If any Bank so requests,
the Term Loans made by such Bank shall be evidenced by a Term Note duly executed
on behalf of the Borrower, dated the Initial Borrowing Date, in the amount of
such Bank's Term Loan Commitment. If a Swingline Bank so requests, the Swingline
Loans shall be evidenced by a Swingline Note duly executed on behalf of the
Borrower, dated the Initial Borrowing Date, in the amount of $100,000,000. Loans
not evidenced by a Note shall only be assigned or otherwise transferred by
registration of such assignment or transfer of such Loans.
(b) Each Bank shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Bank
resulting from each Loan made by such Bank from time to time, including the
amounts of principal and interest payable and paid such Bank from time to time
under this Agreement. Each Bank shall, and is hereby authorized by the Borrower
to, endorse on the schedule attached to each Note delivered to such Bank (or on
a continuation of such schedule attached to such Note and made a part thereof),
or otherwise to record in such Bank's internal records, an appropriate notation
evidencing the date and amount of each Loan from such Bank, each payment and
prepayment of principal of any such Loan, each payment of interest on any such
Loan and the other information provided for on such schedule; provided, however,
that the failure of any Bank to make such a notation or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans made
by such Bank in accordance with the terms of this Agreement and the applicable
Note.
(c) The Senior Administrative Agent shall maintain accounts in which it
will record the name and address of each Bank issuing a Loan, the amount of each
Loan made hereunder, the Type thereof and the Interest Period applicable
thereto, the amount of any principal or interest due and payable or to become
due and payable from the Borrower to each Bank hereunder and the amount of any
sum received by the Senior Administrative Agent hereunder from the Borrower or
any other Obligor and each Bank's share thereof.
(d) The entries made in the accounts maintained pursuant to clauses (b)
and (c) shall be conclusive evidence, in the absence of demonstrable error, of
the existence and amounts of the obligations therein recorded; provided,
however, that the failure of any Bank or the Senior Administrative Agent to
maintain such accounts or any error therein shall not in any manner affect the
obligations of the Borrower to repay the Loans in accordance with their terms.
35
(e) Promptly upon receipt and in any event not less often than once per
week, the Senior Administrative Agent will distribute to each Bank its share of
the net amount of payments received by the Senior Administrative Agent.
SECTION 2.05. Senior Fees. (a) The Borrower agrees to pay to each Bank,
through the Senior Administrative Agent, on January 1, April 1, July 1 and
October 1 in each year and on each date on which any Revolving Credit Commitment
of such Bank shall expire or be terminated as provided herein, a commitment fee
(a "Senior Revolving Commitment Fee") equal to 0.50% per annum on the daily
unused amount of the Revolving Credit Commitments of such Bank during the
preceding quarter (or other period commencing with the date hereof or ending
with the Maturity Date or the date on which the Revolving Credit Commitments of
such Bank shall expire or be terminated). All Senior Revolving Commitment Fees
shall be computed on the basis of the actual number of days elapsed in a year of
360 days. The Senior Revolving Commitment Fee due to each Bank shall commence to
accrue on the date hereof and shall cease to accrue on the date on which the
Revolving Credit Commitment of such Bank shall expire or be terminated as
provided herein. For purposes of calculating Senior Revolving Commitment Fees
only, no portion of the Revolving Credit Commitments shall be deemed used as a
result of outstanding Swingline Loans.
(b) The Borrower agrees to pay to each Bank, through the Senior
Administrative Agent, on January 1, April 1, July 1 and October 1 in each year
and on each date on which any Term Loan Commitment of such Bank shall expire or
be terminated as provided herein, a commitment fee (a "Senior Term Commitment
Fee") equal to 0.75% per annum on the daily unused amount of the Term Loan
Commitments of such Bank during the preceding quarter (or other period
commencing with the date hereof or ending with the date on which the Term Loan
Commitments of such Bank shall expire or be terminated). All Senior Term
Commitment Fees shall be computed on the basis of the actual number of days
elapsed in a year of 360 days. The Senior Term Commitment Fee due to each Bank
shall commence to accrue on the date hereof and shall cease to accrue on the
date on which the Term Loan Commitment of such Bank shall expire or be
terminated as provided herein.
(c) The Borrower agrees to pay to the Senior Administrative Agent, for
its own account, the administrative fees set forth in the Senior Fee Letter at
the times and in the amounts specified therein (the "Senior Administrative
Agent's Fee").
(d) The Borrower agrees to pay to the Senior Administrative Agent, for
payment to the other Banks (to the extent applicable), on the Initial Borrowing
Date, the other fees specified in
36
the Senior Fee Letter, and the Senior Administrative Agent shall pay to each
Bank on the Initial Borrowing Date that portion of such fees that shall be owing
to such Bank.
(e) The Borrower agrees to pay (i) to each Revolving Credit Bank,
through the Senior Administrative Agent, on January 1, April 1, July 1, and
October 1 of each year and on the date on which the Revolving Credit Commitment
of such Bank shall be terminated as provided herein, a fee (an "L/C
Participation Fee") calculated on such Bank's Revolving Percentage of the daily
aggregate L/C Exposure (excluding the portion thereof attributable to
unreimbursed L/C Disbursements) during the preceding quarter (or shorter period
commencing with the date hereof or ending with the Maturity Date or the date on
which all Letters of Credit have been canceled or have expired and the Revolving
Credit Commitments of all Banks shall have been terminated) at a rate equal to
3.50% per annum, and (ii) to each Issuing Bank with respect to each Letter of
Credit a fronting fee of 1/4% and customary issuance and drawing fees specified
from time to time by such Issuing Bank (the "Issuing Bank Fees"). All L/C
Participation Fees and Issuing Bank Fees shall be computed on the basis of the
actual number of days elapsed in a year of 360 days.
All Senior Fees shall be paid on the dates due, in immediately
available funds, to the Senior Administrative Agent for distribution, if and as
appropriate, among the Banks, except that the Issuing Bank Fees shall be paid
directly to the applicable Issuing Bank. Once paid, none of the Senior Fees
shall be refundable under any circumstances.
SECTION 2.06. Interest on Loans. (a) The Loans comprising each Base
Rate Borrowing, including each Swingline Loan, shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 365 or 366 days,
as the case may be, when the Base Rate is determined by reference to the
Citibank Base Rate and over a year of 360 days at all other times) at a rate per
annum equal to the Base Rate plus 2.50%.
(b) Subject to the provisions of Section 8.01, the Loans comprising
each Euro-Dollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted London Interbank Offered Rate for the Interest Period in effect
for such Borrowing plus 3.50%.
(c) Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period, and shall
be payable on outstanding amounts from and including the date such amount is
borrowed to but excluding the day such amount is repaid. Interest on each Loan
shall be payable on the Interest Payment Dates applicable to such Loan except as
otherwise provided in this Agreement. The applicable Base Rate or Adjusted
London
37
Interbank Offered Rate for each Interest Period or day within an Interest
Period, as the case may be, shall be determined by the Senior Administrative
Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.07. Default Interest. Upon the occurrence and during the
continuation of an Event of Default, at the option of the Administrative Agent
or at the request of the Majority Banks, the Borrower shall on demand from time
to time pay interest, to the extent permitted by law, on the Senior Bank
Obligations to but excluding the date of actual payment (after as well as before
judgment) in the case of principal, at the rate otherwise applicable to such
Loan pursuant to Section 2.06 plus 2.00% per annum, and in all other cases, at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be, when determined by reference to
the Citibank Base Rate and over a year of 360 days at all other times) equal to
the sum of the Base Rate plus 2.00%.
SECTION 2.08. Termination and Reduction of Commitments. (a) Except as
set forth in the immediately succeeding sentence, the Term Loan Commitments
hereunder shall terminate on the earliest of (i) the date on which the Borrower
informs the Banks that it has decided not to proceed with the Transactions, or
(ii) 5:00 p.m., New York City time, on the earlier of the Initial Borrowing Date
or August 31, 2001, if the initial Credit Event is not made on or before such
date. With respect to the Banks indicated on Annex 1, the Delayed Draw Term Loan
Commitments of such Banks shall automatically terminate on the earliest of (i)
the date on which no 10.5% Notes remain outstanding, (ii) the final maturity of
the 10.5% Notes, (iii) the date on which the Borrower informs the Banks that it
has decided not to proceed with the Transactions, or (iv) 5:00 p.m., New York
City time, August 31, 2001, if the initial Credit Event shall not have occurred
by such time. The L/C Commitment and the Revolving Credit Commitments shall
automatically terminate on the earliest of (i) the Maturity Date, (ii) the date
on which the Borrower informs the Banks that it has decided not to proceed with
the Transactions, or (iii) 5:00 p.m., New York City time, August 31, 2001, if
the initial Credit Event shall not have occurred by such time.
(b) The Revolving Credit Commitments, subject to Section 2.13(a), shall
be permanently reduced by the amount of any amount allocated to the Revolving
Loans pursuant to Section 2.13(c);
(c) Upon at least one Business Day prior irrevocable written or
telecopy notice to the Senior Administrative Agent, the Borrower may at any time
in whole permanently terminate, or from time to time in part permanently reduce,
the Term Loan Commitments or the Revolving Credit Commitments; provided,
however, that (i) each partial reduction of the Term Loan
38
Commitments, the Delayed Draw Term Loan Commitments or the Revolving Credit
Commitments shall be in (1) a multiple of $1,000,000 and in a minimum amount of
$5,000,000 or (2) in the full remaining amount of the Term Loan Commitments or
the Revolving Credit Commitments, as the case may be, and (ii) the total
Revolving Credit Commitments shall not be reduced to an amount that is less than
the sum of the Aggregate Revolving Credit Exposure. If no Term Loans are
outstanding, the Revolving Credit Commitments shall automatically be reduced by
the amount of any mandatory prepayment that would otherwise have been applied to
the prepayment of Term Loans pursuant to Section 2.13(c).
(d) Each reduction in the Term Loan Commitments or the Revolving Credit
Commitments hereunder shall be made ratably among the Banks in accordance with
their respective applicable Commitments. The Borrower shall pay to the Senior
Administrative Agent for the account of the applicable Banks, on the date of
each termination or reduction, the Senior Revolving Commitment Fees on the
amount of the Revolving Credit Commitments so terminated or reduced, and the
Senior Term Commitment Fees on the amount of the Term Loan Commitments so
terminated or reduced, in each case accrued to but excluding the date of such
termination or reduction.
SECTION 2.09. Conversion and Continuation of Borrowings. The Borrower
shall have the right at any time by delivery of a Continuation/Conversion
Request to the Senior Administrative Agent (a) not later than 12:00 (noon), New
York City time, one Business Day before conversion, to convert any Euro-Dollar
Borrowing into a Base Rate Borrowing, (b) not later than 10:00 a.m., New York
City time, three Business Days before conversion or continuation, to convert any
Base Rate Borrowing into a Euro-Dollar Borrowing or to continue any Euro-Dollar
Borrowing as a Euro-Dollar Borrowing for an additional Interest Period, and (c)
not later than 10:00 a.m., New York City time, three Business Days before
conversion, to convert the Interest Period with respect to any Euro-Dollar
Borrowing to another permissible Interest Period, subject in each case to the
following:
(i) each conversion or continuation shall be made pro rata
among the Banks in accordance with the respective principal amounts of
the Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
39
(iii) each conversion shall be effected by each Bank and the
Senior Administrative Agent by recording for the account of such Bank
the new Loan of such Bank resulting from such conversion and reducing
the Loan (or portion thereof) of such Bank being converted by an
equivalent principal amount; accrued interest on any Euro-Dollar Loan
(or portion thereof) being converted shall be paid by the Borrower at
the time of conversion;
(iv) if any Euro-Dollar Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Banks pursuant to
Section 2.14;
(v) any portion of a Borrowing maturing or required to be
repaid in less than seven days may not be converted into or continued
as a Euro-Dollar Borrowing;
(vi) any portion of a Euro-Dollar Borrowing that cannot be
converted into or continued as a Euro-Dollar Borrowing by reason of the
two immediately preceding clauses shall be automatically converted at
the end of the Interest Period in effect for such Borrowing into a Base
Rate Borrowing;
(vii) no Interest Period may end later than the Maturity Date;
and
(viii) upon notice to the Borrower from the Senior
Administrative Agent given at the request of the Majority Banks, after
the occurrence and during the continuance of a Default or Event of
Default, no outstanding Loan may be converted into, or continued after
the expiration of an Interest Period as, a Euro-Dollar Loan.
Each notice pursuant to this Section shall be irrevocable and shall
refer to this Agreement and specify
(i) the identity and amount of the Borrowing that the Borrower
requests be converted or continued,
(ii) whether such Borrowing is to be converted to or continued
as a Euro-Dollar Borrowing or a Base Rate Borrowing,
(iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day), and
40
(iv) if such Borrowing is to be converted to or continued as a
Euro-Dollar Borrowing, the Interest Period with respect thereto.
If no election as to the Type of Borrowing is specified in any such notice, then
the requested Borrowing shall be a Base Rate Borrowing. If no Interest Period is
specified in any such notice with respect to any conversion to or continuation
as a Euro-Dollar Borrowing, the Borrower shall be deemed to have given notice
for an Interest Period of one month's duration. The Senior Administrative Agent
shall advise the Banks of any notice given pursuant to this Section and of each
Bank's portion of any converted or continued Borrowing. If the Borrower shall
not have given notice in accordance with this Section to continue any Borrowing
into a subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section to convert such Borrowing), such Borrowing shall,
at the end of the Interest Period applicable thereto (unless repaid pursuant to
the terms hereof), automatically be continued into a new Interest Period as a
Base Rate Borrowing.
SECTION 2.10. Repayment of Borrowings. (a) To the extent not previously
paid, all Term Loans shall be due and payable on the Maturity Date,
(b) To the extent not previously paid, all Revolving Loans shall be due
and payable on the Maturity Date.
(c) To the extent not previously paid, all Swingline Loans shall be due
and payable the earlier of (i) on the last day of the Interest Period applicable
to such Loan, and (ii) the Maturity Date.
(d) All repayments pursuant to this Section shall be subject to Section
2.14, but shall otherwise be without premium or penalty.
SECTION 2.11. Amortization of Term Loans. (a) Subject to adjustment
pursuant to Section 2.11(b), the Borrower shall repay Term Borrowings in
quarterly installments of principal, payable on the first Business Day following
the end of each fiscal quarter set forth below, and a final repayment on the
Maturity Date, in each case in the amount set forth opposite such fiscal quarter
below:
41
--------------------------------------------------------------------------------
Date Amount
--------------------------------------------------------------------------------
March 2, 2002......................................... $5,000,000
--------------------------------------------------------------------------------
May 31, 2002.......................................... $7,500,000
--------------------------------------------------------------------------------
August 31, 2002....................................... $7,500,000
--------------------------------------------------------------------------------
November 30, 2002..................................... $7,500,000
--------------------------------------------------------------------------------
March 1, 2003......................................... $7,500,000
--------------------------------------------------------------------------------
May 31, 2003.......................................... $7,500,000
--------------------------------------------------------------------------------
August 31, 2003....................................... $7,500,000
--------------------------------------------------------------------------------
November 30, 2003..................................... $15,000,000
--------------------------------------------------------------------------------
February 28, 2004..................................... $15,000,000
--------------------------------------------------------------------------------
May 31, 2004.......................................... $15,000,000
--------------------------------------------------------------------------------
August 31, 2004....................................... $15,000,000
--------------------------------------------------------------------------------
November 30, 2004..................................... $15,000,000
--------------------------------------------------------------------------------
February 26, 2005..................................... $15,000,000
--------------------------------------------------------------------------------
Maturity Date......................................... Remaining
Outstanding
Term
Borrowings
--------------------------------------------------------------------------------
(b) Any mandatory prepayment of a Term Borrowing shall be
applied to reduce the subsequent scheduled repayments of the Term Borrowings to
be made pursuant to this Section as follows: (i) 50% of such prepayment amount
shall be applied to reduce such subsequent scheduled repayments in direct order
of maturity and (ii) after giving effect to the application as set forth in
clause (i), 50% of such prepayment amount shall be applied to reduce any
remaining scheduled repayments in inverse order of maturity. Any optional
prepayment of a Term Borrowing shall be applied to reduce subsequent scheduled
repayments of the Term Borrowings to be made pursuant to this Section in the
manner selected by the Borrower.
(c) Prior to any repayment of any Term Borrowing, the Borrower
shall select the Borrowing or Borrowings to be repaid and shall notify the
Senior Administrative Agent by prior written or telecopy notice (or telephone
notice promptly confirmed by written or telecopy notice) of such selection not
later than 11:00 a.m., New York City time, three Business Days before the
scheduled date of such repayment. Each repayment of a Term Borrowing shall be
applied ratably to the Term Loans included in the repaid Term Borrowing.
Repayments of Term Borrowings shall be accompanied by accrued interest on the
amount repaid.
42
SECTION 2.12. Optional Prepayment. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing, in whole or in
part, upon at least one Business Day prior written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) to the Senior
Administrative Agent before 11:00 a.m., New York City time; provided, however,
that each partial prepayment shall be in an amount that is a multiple of
$1,000,000 and not less than $5,000,000.
(b) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments under this Section
shall be subject to Section 2.14 but otherwise without premium or penalty. All
prepayments under this Section shall be accompanied by accrued interest on the
principal amount being prepaid to the date of payment.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any
termination of all the Revolving Credit Commitments, the Borrower shall repay or
prepay all its outstanding Revolving Credit Borrowings and all outstanding
Swingline Loans on the date of such termination. In the event of any partial
reduction of the Revolving Credit Commitments, then (i) at or before the
effective date of such reduction, the Senior Administrative Agent shall notify
the Borrower and the Revolving Credit Banks of the Aggregate Revolving Credit
Exposure after giving effect thereto and (ii) if the Aggregate Revolving Credit
Exposure at the time would exceed the total Revolving Credit Commitments after
giving effect to such reduction or termination, then the Borrower shall, on the
date of such reduction or termination, repay or prepay Revolving Credit
Borrowings or Swingline Loans (or a combination thereof), or cash collateralize
Letters of Credit in a dollar amount sufficient to eliminate such excess.
(b) If on any date the Aggregate Revolving Credit Exposure and the
aggregate Term Exposures of the Banks shall exceed the Borrowing Base Amount,
the Borrower shall on such date apply an amount equal to such excess first, to
prepay the then outstanding Revolving Loans (if any) and Swingline Loans (if
any), second, to the extent of any remaining excess (after the prepayment of
Revolving Loans and Swingline Loans), to replace outstanding Letters of Credit
and/or deposit an amount in cash in a cash collateral account (to the extent
such cash collateralization would not result in an obligation to grant a
security interest in such cash collateral to the holders of notes under any
Indenture) established with the Senior Collateral Agent for the benefit of the
Senior Bank Parties, and third to prepay the then outstanding Term Loans (if
any).
43
(c) Not later than two Business Days following the receipt of Net Cash
Proceeds from any Reduction Event, the Borrower shall apply to the prepayment of
the Loans and the permanent reduction of the Revolving Credit Commitments the
entire amount of such Net Cash Proceeds, which shall be applied between Term
Loans and Revolving Credit Commitments pro rata based on the Term Exposure and
the Revolving Credit Commitments on the date the Net Cash Proceeds are paid to
the Senior Administrative Agent; provided, however, that the foregoing
prepayment and commitment reduction requirements shall be applicable only to the
extent that the cumulative value of the proceeds received in respect of all such
Reduction Events exceeds $50,000,000. Amounts allocated to the Revolving Credit
Commitments shall be applied pursuant to Section 2.08(b), and if applicable,
Section 2.13(a). Amounts allocated to the Term Exposure shall be applied to
prepay the Term Loans in the manner set forth in Section 2.11(b).
Notwithstanding the foregoing, after the occurrence of a Triggering Event, any
proceeds in respect of the sale of, or other realization upon, any Collateral
shall be applied in accordance with the provisions of Section 4.01(a) of the
Collateral Trust and Intercreditor Agreement.
(d) Not later than two Business Days following the receipt of Net Cash
Proceeds from any Capital Markets Transaction, the Borrower shall apply the
entire amount of such Net Cash Proceeds as follows: (i) first, if after giving
effect to any prepayments made under Section 2.13(b) with funds other than Net
Cash Proceeds from a Capital Markets Transaction, on the date such Net Cash
Proceeds are paid to the Senior Administrative Agent the Aggregate Revolving
Credit Exposure and the aggregate Term Exposures of the Banks shall exceed the
Borrowing Base Amount, to prepay in an amount equal to such excess the then
outstanding Revolving Loans (if any), Swingline Loans (if any) and Term Loans
(if any), such amount to be applied pro rata based on the Revolving Credit
Exposure and Term Exposure on such date; (ii) second, to the extent of any
remaining Net Cash Proceeds in an amount not to exceed $300,000,000 in the
aggregate from all Capital Markets Transactions, to (A) repay or defease the
Borrower's 5.25% Convertible Subordinated Notes due 2002 and 6.00% Dealer
Remarketable Securities due 2003; provided; however, that until such time as
such securities by their terms may be called at par, the Borrower may deposit in
a cash collateral account established with the Senior Collateral Agent for the
benefit of the Senior Secured Parties an amount of such Net Cash Proceeds
required to repay such securities in full at par and (B) to general corporate
purposes of the Borrower in an amount not to exceed $300,000,000 less amounts
applied as required by clause (A) above; and (iii) to the extent of any
remaining Net Cash Proceeds (x) to prepay Term Loans in an amount equal to 75%
of such remaining Net Cash Proceeds and (y) after application thereof pursuant
to clause (x), any remaining Net Cash Proceeds may be retained by the Borrower
for general corporate purposes.
44
(e) On each Business Day during a Cash Sweep Period, the Senior
Collateral Agent will use funds on deposit in any Citibank Concentration Account
as follows:
(i) after the occurrence of a Triggering Event in accordance
with the provisions of Section 4.01(a) of the Collateral Trust and
Intercreditor Agreement; and
(ii) at any other time, first to repay the Revolving Credit
Borrowings (without any reduction of the Commitments) and second, to be
deposited into the Cash Sweep Cash Collateral Account in accordance
with the provisions of Section 2(c) (ii) of Schedule 5 of the Senior
Subsidiary Security Agreement. Upon termination of any Cash Sweep
Period, funds in the Cash Sweep Cash Collateral Account shall be
released to the Concentration Account within three Business Days after
the end of such Cash Sweep Period.
(f) Not later than the earlier of (i) 120 days after the end of each
fiscal year of the Borrower, beginning with the fiscal year ending March 2,
2002, and (ii) the date on which the financial statements for such fiscal year
are delivered pursuant to Section 5.01(a), the Borrower shall make a prepayment
of the Loans and a permanent reduction of the Revolving Credit Commitments in an
amount equal to 50% of Excess Cash Flow for, in the case of the fiscal year
ending March 2, 2002, the eight months ended March 2, 2002, and in the case of
each fiscal year thereafter, such fiscal year, to be applied as follows:
(i) at any time when the Loans have been accelerated pursuant
to Section 6.01, to pay Senior Bank Obligations pro rata based on the
amounts of such obligations; and
(ii) at any other time, to be applied to prepay outstanding
Term Loans in the manner set forth in Section 2.11(b) on the date the
applicable amounts are paid to the Senior Administrative Agent.
(g) The Borrower shall deliver to the Senior Administrative Agent, at
the time of each Loan prepayment or Revolving Credit Commitment reduction
required under this Section, (i) a certificate signed by a Financial Officer of
the Borrower setting forth in reasonable detail the calculation of the amount of
such prepayment and (ii) to the extent practicable, at least three days prior
written notice of such prepayment. Each notice of prepayment shall specify the
prepayment date, the Type of each Loan being prepaid and the principal amount of
each Loan (or portion thereof) to be prepaid. All prepayments of Borrowings
under this Section shall be subject to Section 2.14, but shall otherwise be
without premium or penalty.
45
SECTION 2.14. Breakage. The Borrower shall indemnify each Bank against
any loss or expense that such Bank may sustain or incur as a consequence of any
event, other than a default by such Bank in the performance of its obligations
hereunder, which results in such Bank receiving or being deemed to receive any
amount on account of the principal of any Euro-Dollar Loan before the end of the
Interest Period in effect therefor (including as a result of acceleration of a
Loan), the conversion of any Euro-Dollar Loan to a Loan of another Type, or the
conversion of the Interest Period with respect to any Euro-Dollar Loan other
than on the last day of the Interest Period in effect therefor, or any
Euro-Dollar Loan to be made by such Bank (including any Euro-Dollar Loan to be
made pursuant to a conversion or continuation under Section 2.09) not being made
after notice of such Loan shall have been given (or deemed given pursuant to
Section 2.09) by the Borrower hereunder (any of the events referred to in this
clause (a) being called a "Breakage Event") or (b) any default in the making of
any payment or prepayment required to be made hereunder. In the case of any
Breakage Event, such loss shall include an amount equal to the excess, as
reasonably determined by such Bank, of (i) its cost of obtaining funds for
Euro-Dollar Loans that is the subject of such Breakage Event for the period from
the date of such Breakage Event to the last day of the Interest Period in effect
(or that would have been in effect) for such Loan over (ii) the amount of
interest likely to be realized by such Bank in redeploying the funds released or
not utilized by reason of such Breakage Event for such period. A certificate of
any Bank setting forth any amount or amounts which such Bank is entitled to
receive pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower may determine, in consultation
with the Senior Administrative Agent, which Loans will be repaid with amounts to
be applied to the repayment of Loans pursuant to Section 2.12 or 2.13, subject
to Sections 2.13(c), (d) and (e) and Section 2.15. Any amount payable by the
Borrower pursuant to this Section will be payable to the Senior Administrative
Agent for the account of each applicable Bank.
SECTION 2.15. Pro Rata Treatment. (a) Except as provided in this
Section with respect to Swingline Loans and as provided in clause (b), each
Borrowing, each payment or prepayment of principal of any Borrowing of a Class,
each payment of interest on the Loans of a Borrowing, each payment of the Senior
Revolving Commitment Fees or Senior Term Commitment Fees, each reduction of the
Term Loan Commitments or the Revolving Credit Commitments and each conversion of
any Borrowing to or continuation of any Borrowing as a Borrowing of any Type
within a Class shall be allocated pro rata among the Banks in accordance with
their respective applicable Commitments (or, if such Commitments shall have
expired or been terminated, in accordance with the respective principal amounts
of their applicable Loans). For purposes of determining the available Revolving
Credit Commitments of the Banks at any time, each outstanding Swingline Loan
shall be deemed to have utilized the Revolving Credit Commitments of the Banks
(including those Banks which shall not have made Swingline Loans)
46
pro rata in accordance with such respective Revolving Credit Commitments. Each
Bank agrees that in computing such Bank's portion of any Borrowing to be made
hereunder, the Senior Administrative Agent may, in its discretion, round each
Bank's percentage of such Borrowing to the next higher or lower whole dollar
amount.
(b) If any Bank shall obtain any payment of or recovery with respect to
any Senior Bank Obligations with proceeds of any sale of or other realization on
any Collateral (including any Mortgaged Property) in which the Banks as a whole
do not have a pro rata Lien, and such payment or recovery is in excess of its
pro rata share of payments or recovery with respect to all Senior Bank
Obligations then outstanding, such Bank shall purchase from the other Banks such
participations in Senior Bank Obligations made by such other Banks as shall be
necessary to cause such purchasing Bank to share the excess payment or other
recovery ratably with each of such other Banks; provided, however, that if all
or any portion of the excess payment or other recovery is thereafter recovered
from such purchasing Bank, the purchase shall be rescinded and each Bank which
has sold a participation to the purchasing Bank shall repay to the purchasing
Bank the purchase price to the ratable extent of such recovery together with an
amount equal to such selling Bank's ratable share (according to the proportion
of (a) the amount of such selling Bank's required repayment to the purchasing
Bank to (b) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered. The Borrower agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation. If under any applicable bankruptcy,
insolvency or other similar law, any Bank receives a secured claim in lieu of a
setoff to which this Section applies, such Bank shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Banks entitled under this Section to share in
the benefits of any recovery on such secured claim.
SECTION 2.16. Payments. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement or
any Senior Fees or other amounts) hereunder and under any other Senior Loan
Document not later than 12:00 (noon), New York City time, on the date when due
in immediately available funds, without setoff, defense or counterclaim. Each
such payment (other than Issuing Bank Fees, which shall be paid directly to the
applicable Issuing Bank, and principal of and interest on Swingline Loans, which
shall be paid directly to the applicable Swingline Bank except as otherwise
provided in Section 2.17(e)) shall be made to the Senior Administrative Agent's
Account. Each such payment shall be made in dollars.
47
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Senior Fees or other amounts) hereunder or under any other
Senior Loan Document shall become due, or otherwise would occur, on a day that
is not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of interest or Senior Fees, if applicable.
SECTION 2.17. Swingline Loans. (a) Uncommitted Loans. Each Swingline
Bank may, in its sole discretion, from time to time make Swingline Loans on an
uncommitted basis. The Borrower acknowledges that neither Swingline Bank has any
obligation to make any Swingline Loan, and that the Swingline Banks may decline
to make any Swingline Loan at any time for any reason or no reason. The
Swingline Banks are prohibited from making any Swingline Loan:
(i) to refinance any outstanding Swingline Loan;
(ii) on or after the Maturity Date or the termination of the
Revolving Credit Commitments in accordance with the terms hereof;
(iii) if at the time of the Borrowing of such Swingline Loans,
the Borrower, in the Swingline Banks' reasonable judgment, does not or
would be unable to satisfy the conditions set forth in Section 3.02;
(iv) if after giving effect thereto, the aggregate principal
amount of all Swingline Loans would exceed $100,000,000; or
(v) if after giving effect thereto, the Aggregate Revolving
Credit Exposure would exceed the lesser of
(A) the total Revolving Credit Commitments; and
(B) the Borrowing Base Amount in effect at such time
less the aggregate Term Exposures of the Banks at such time.
Each Swingline Loan shall be in a principal amount that is a multiple of
$1,000,000. Within the foregoing limits, the Borrower may request, pay or prepay
Swingline Loans hereunder, subject to the terms, conditions and limitations set
forth herein.
(b) Borrowing Procedure. The Borrower shall notify the Senior
Administrative Agent by telecopy, or by telephone (confirmed by telecopy), not
later than 1:00 p.m., New York City time,
48
on the day of a proposed Swingline Loan. Such notice shall be delivered on a
Business Day, shall be irrevocable and shall refer to this Agreement and shall
specify the requested date (which shall be a Business Day) and amount of such
Swingline Loan. The Senior Administrative Agent will promptly advise the
Swingline Banks of any notice received from the Borrower pursuant to this clause
(b). If a Swingline Bank determines in its sole discretion to make a Swingline
Loan, such Swingline Bank shall make such Swingline Loan available to the
Borrower by means of a credit or wire transfer to the account of the Borrower
referred to in Section 2.02(c) by 3:00 p.m. on the date such Swingline Loan is
so requested.
(c) Denomination and Prepayment. Each Swingline Loan shall be
denominated in dollars. The Borrower shall have the right at any time and from
time to time to prepay any Swingline Loan, in whole or in part, without premium
or penalty upon giving written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) to the applicable Swingline Bank and to
the Senior Administrative Agent before 12:00 (noon), local time on the date of
prepayment at such Swingline Bank's address for notices specified on Annex 2.
(d) Interest. Each Swingline Loan denominated in dollars shall be a
Base Rate Loan and, subject to the provisions of Section 2.07, shall bear
interest as provided in Section 2.06(a). Interest on each Swingline Loan shall
be payable on the Interest Payment Date with respect thereto.
(e) Conversion to Revolving Loans. The Senior Administrative Agent
shall (i) at any time when Swingline Loans in an aggregate principal amount of
$10,000,000 or more are outstanding, at the request of either Swingline Bank
that has made outstanding Swingline Loans in its sole discretion, or (ii) on the
last day of the Interest Period of such Swingline Loan, deliver on behalf of the
Borrower a Borrowing Request pursuant to Section 2.03 for a Base Rate Borrowing
in the amount of such Swingline Loans; provided, however, that the obligations
of the Banks to fund such Borrowing shall not be subject to Section 3.02.
(f) Participations. If the Borrower does not fully repay a Swingline
Loan on or before the last day of the Interest Period with respect thereto, the
applicable Swingline Bank shall promptly notify the Senior Administrative Agent
thereof (by telecopy or by telephone, confirmed in writing), and the Senior
Administrative Agent shall promptly notify each Revolving Credit Bank thereof
(by telecopy or by telephone, confirmed in writing) and of its Revolving
Percentage of such Swingline Loan. Upon such notice but without any further
action, such Swingline Bank hereby agrees to grant to each Bank, and each Bank
hereby agrees to acquire from such Swingline Bank, a participation in such
defaulted Swingline Loan equal to such Bank's Revolving Percentage of the
aggregate principal amount of such defaulted Swingline Loan. In
49
furtherance of the foregoing, each Revolving Credit Bank hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
Senior Administrative Agent, for the account of such Swingline Bank, such Bank's
Revolving Percentage of each Swingline Loan that is not repaid on the last day
of the Interest Period with respect thereto. Each Bank agrees that its
obligation to acquire participations in Swingline Loans pursuant to this clause
is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default or an Event of
Default, and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. Each Bank shall comply with its obligation
under this clause by wire transfer of immediately available funds, in the same
manner as provided in Section 2.02(c) with respect to Loans made by such Bank
(and Section 2.02(c) shall apply, mutatis mutandis, to the payment obligations
of the Banks) and the Senior Administrative Agent shall promptly pay to such
Swingline Bank the amounts so received by it from the Banks. The Senior
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this clause and thereafter payments in
respect of such Swingline Loan shall be made to the Senior Administrative Agent
and not to such Swingline Bank. Any amounts received by such Swingline Bank from
the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan after receipt by such Swingline Bank of the proceeds of a sale of
participations therein shall be promptly remitted to the Senior Administrative
Agent; any such amounts received by the Senior Administrative Agent shall be
promptly remitted by the Senior Administrative Agent to the Banks that shall
have made their payments pursuant to this clause and to such Swingline Bank, as
their interests may appear. The purchase of participations in a Swingline Loan
pursuant to this clause shall not relieve the Borrower (or other party liable
for obligations of the Borrower) of any default in the payment thereof.
(g) Swingline Banks. As between themselves, Citicorp USA and Fleet
Retail Finance Inc. agree that (i) Citicorp USA shall have the option of first
refusal with respect to any request for a Swingline Loan, to the extent that
after giving effect to the making of such Swingline Loan and all other Swingline
Loans of Citicorp USA will not exceed $50,000,000, and (ii) Fleet Retail Finance
Inc. shall have the option of first refusal with respect to any other request
for a Swingline Loan.
SECTION 2.18. Letters of Credit. (a) General. The Borrower may request
the issuance of a Letter of Credit for its own account, by delivering an
Issuance Request, at any time and from time to time while the Revolving Credit
Commitments remain in effect. This Section shall not be construed to impose an
obligation upon any Issuing Bank to issue any Letter of Credit that is
inconsistent with the terms and conditions of this Agreement. Subject to clauses
(b) and (c), and effective at the time of the initial Credit Event, the Citicorp
Standby Letters of Credit, the Fleet
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Standby Letters of Credit and the Mellon Standby Letters of Credit will be
deemed to be Letters of Credit outstanding under this Agreement, issued by
Citicorp USA, Fleet National Bank and Mellon Bank, respectively, as Issuing
Bank.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit, or to cause a Citicorp Standby
Letter of Credit, a Fleet Standby Letter of Credit or a Mellon Standby Letter of
Credit to become a Letter of Credit under this Agreement), the Borrower shall
hand deliver, electronically transmit or telecopy to the applicable Issuing Bank
and the Senior Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) an Issuance Request requesting the
issuance of a Letter of Credit, or identifying the Letter of Credit to be
amended, renewed or extended, and specifying the date of issuance, amendment,
renewal or extension, the date on which such Letter of Credit is to expire
(which shall comply with clause (c)), the amount of such Letter of Credit, the
name and address of the beneficiary thereof, the applicable Issuing Bank (if
other than Citicorp USA) and such other information as shall be necessary to
prepare such Letter of Credit. By requesting the initial Credit Event, the
Borrower will be deemed to have requested that each Citicorp Standby Letter of
Credit, Fleet Standby Letter of Credit and Mellon Standby Letter of Credit be
deemed to be issued under this Agreement. A Letter of Credit shall be issued,
amended, renewed or extended or deemed to be issued under this Agreement only
if, and upon issuance, amendment, renewal or extension of each Letter of Credit
the Borrower shall be deemed to represent and warrant that, and it shall be the
case that, after giving effect to such issuance, amendment, renewal or extension
(and the making or repayment of any other Credit Events to be made at or before
such time):
(i) the L/C Exposure shall not exceed $125,000,000; and
(ii) the Aggregate Revolving Credit Exposure shall not exceed
the lesser of
(A) the total Revolving Credit Commitments; and
(B) the Borrowing Base Amount in effect at such time
less the aggregate Term Exposures of the Banks at such time.
(c) Expiration Date. Each Letter of Credit shall expire at the close of
business on the earlier of the date one year after the date of the issuance of
such Letter of Credit (subject to customary automatic renewal provisions) and
the date that is five Business Days before the Maturity Date, unless such Letter
of Credit expires by its terms on an earlier date.
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(d) Participations. By the issuance of a Letter of Credit and without
any further action on the part of the applicable Issuing Bank or the Banks, the
applicable Issuing Bank hereby grants to each Revolving Credit Bank, and each
such Bank hereby acquires from the applicable Issuing Bank, a participation in
such Letter of Credit equal to such Bank's Revolving Percentage of the aggregate
amount available to be drawn under such Letter of Credit, effective upon the
issuance of such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Credit Bank hereby absolutely and unconditionally
agrees to pay to the Senior Administrative Agent, for the account of such
Issuing Bank, such Bank's Revolving Percentage of each L/C Disbursement made by
such Issuing Bank and not reimbursed by the Borrower (or, if applicable, another
party pursuant to its obligations under any other Senior Loan Document)
forthwith on the date due as provided in Section 2.02(e), in dollars. Each
Revolving Credit Bank agrees that its obligation to acquire participations
pursuant to this clause in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If an Issuing Bank shall make any L/C Disbursement
in respect of a Letter of Credit, the Borrower shall pay to such Issuing Bank an
amount equal to such L/C Disbursement not later than 3:30 p.m., New York City
time, on the date that the Borrower shall have received notice from such Issuing
Bank that payment of such draft will be made, or, if the Borrower shall have
received such notice later than 10:00 a.m., New York City time, on any Business
Day, not later than 1:00 p.m., New York City time, on the immediately following
Business Day.
(f) Obligations Absolute. The Borrower's obligations to reimburse L/C
Disbursements as provided in clause (e) shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, under any and all circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Senior Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Senior
Loan Document;
(iii) the existence of any claim, setoff, defense or other
right that the Borrower, any other party guaranteeing, or otherwise
obligated with, the Borrower, any Subsidiary or other Affiliate thereof
or any other Person may at any time have against the beneficiary
52
under any Letter of Credit, the applicable Issuing Bank, the Senior
Administrative Agent or any Bank or any other Person, whether in
connection with this Agreement, any other Senior Loan Document or any
other related or unrelated agreement or transaction;
(iv) any draft or other document presented under a 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;
(v) payment by the applicable Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of
any Issuing Bank, the Banks, the Senior Administrative Agent or any
other Person or any other event or circumstance 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 the
Borrower's obligations hereunder.
Without limiting the generality of the foregoing, the absolute and
unconditional obligation of the Borrower hereunder to reimburse L/C
Disbursements will not be excused by the gross negligence or wilful misconduct
of any Issuing Bank. However, the foregoing shall not be construed to excuse the
applicable Issuing Bank from liability to the Borrower to the extent of any
direct damages (as opposed to consequential damages, claims in respect of which
are hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by applicable Issuing Bank's gross
negligence or wilful misconduct in determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof. The
applicable Issuing Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary and, in making any payment under any
Letter of Credit (i) the applicable Issuing Bank's exclusive reliance on the
documents presented to it under such Letter of Credit as to any and all matters
set forth therein, including reliance on the amount of any draft presented under
such Letter of Credit, whether or not the amount due to the beneficiary
thereunder equals the amount of such draft and whether or not any document
presented pursuant to such Letter of Credit proves to be insufficient in any
respect, if such document on its face appears to be in order, and whether or not
any other statement or any other document presented pursuant to such Letter of
Credit proves to be forged or invalid or any statement therein proves to be
inaccurate or untrue in any respect whatsoever and (ii) any noncompliance in any
immaterial respect of the documents presented under such Letter of Credit with
the terms thereof shall, in each case, be
53
deemed not to constitute wilful misconduct or gross negligence of the applicable
Issuing Bank. Without limiting any other provision of this Agreement, the Senior
Administrative Agent and any Issuing Bank and any of their correspondents may
rely upon any oral, telephonic, telegraphic, facsimile, electronic, written or
other communication believed in good faith to have been authorized by the
Borrower, whether or not given or signed by an authorized person.
(g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The applicable Issuing
Bank shall as promptly as possible give telephonic notification, confirmed by
telecopy or electronic transmission, to the Senior Administrative Agent and the
Borrower of such demand for payment and whether such Issuing Bank has made or
will make an L/C Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse such Issuing Bank and the Revolving Credit Banks with respect to any
such L/C Disbursement. The Senior Administrative Agent shall promptly give each
Revolving Credit Bank notice thereof.
(h) Interim Interest. If the applicable Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of such Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of the
date of payment by the Borrower or the date on which interest shall commence to
accrue thereon as provided in Section 2.02(e), at the rate per annum that would
apply to such amount if such amount were a Base Rate Loan.
(i) Resignation or Removal of an Issuing Bank. Any Issuing Bank may
resign at any time by giving 180 days prior written notice to the Senior
Administrative Agent, the Banks and the Borrower, and may be removed at any time
by the Borrower by notice to the applicable Issuing Bank, the Senior
Administrative Agent and the Banks, to be effective only upon the appointment of
a successor Issuing Bank pursuant to the following sentence. Subject to the next
succeeding clause, upon the acceptance of any appointment as a successor Issuing
Bank hereunder by a Bank that shall agree to serve as successor Issuing Bank,
such successor shall succeed to and become vested with all the interests, rights
and obligations of the retiring Issuing Bank and the retiring Issuing Bank shall
be discharged from its obligations to issue additional Letters of Credit
hereunder. At the time such removal or resignation shall become effective, the
Borrower shall pay all accrued and unpaid fees pursuant to Section 2.05(e)(ii).
The acceptance of any appointment as an Issuing Bank hereunder by a successor
Bank shall be evidenced by an agreement entered into by such successor, in a
form satisfactory to the Borrower and the Senior Administrative Agent, and, from
and after the effective date of such agreement, such successor
54
Bank shall have all the rights and obligations of the previous Issuing Bank
under this Agreement and the other Senior Loan Documents and references herein
and in the other Senior Loan Documents to the term "Issuing Bank" shall be
deemed to refer to such successor or to any previous Issuing Bank, or to such
successor and all previous Issuing Banks, as the context shall require. After
the resignation or removal of an Issuing Bank hereunder, the retiring Issuing
Bank shall remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement and the other Senior Loan
Documents with respect to Letters of Credit issued by it before such resignation
or removal, but shall not be required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, and to the extent any such cash collateralization will not result in
an obligation to grant a security interest in such cash collateral to holders of
notes under any Indenture, the Borrower shall, on the Business Day it receives
notice from the Senior Administrative Agent or the Majority Revolving Credit
Banks (or, if the maturity of the Loans has been accelerated, Revolving Credit
Banks holding participations in outstanding Letters of Credit representing
greater than 50% of the aggregate undrawn amount of all outstanding Letters of
Credit) thereof and of the amount to be deposited, deposit in the L/C Cash
Collateral Account, for the benefit of the Revolving Credit Banks, an amount in
cash equal to the L/C Exposure as of such date. Such deposits shall be held by
the Senior Collateral Agent as collateral for the payment and performance of the
Senior Obligations. The Senior Collateral Agent shall have exclusive dominion
and control, including the exclusive right of withdrawal, over such account.
Such deposits shall be invested in Temporary Cash Investments, to be selected by
the Senior Collateral Agent in its sole discretion, and interest earned on such
deposits shall be deposited in such account as additional collateral for the
payment and performance of the Senior Obligations. Interest or profits, if any,
on such investments shall accumulate in such account. Moneys in such account
shall (i) automatically be applied by the Senior Administrative Agent to
reimburse the applicable Issuing Bank for L/C Disbursements for which it has not
been reimbursed, (ii) be held for the satisfaction of the reimbursement
obligations of the Borrower for the L/C Exposure at such time and (iii) if the
maturity of the Loans has been accelerated, be applied to satisfy the Senior
Obligations. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived (or
during a Cash Sweep Period, paid into the Citibank Concentration Account).
(k) Additional Issuing Banks. The Borrower may, at any time and from
time to time with the consent of the Senior Administrative Agent (which consent
shall not be unreasonably withheld) and such Bank, designate one or more
additional Banks to act as an issuing bank under
55
the terms of the Agreement. Any Bank designated as an issuing bank pursuant to
this clause (k) shall be deemed to be an "Issuing Bank" (in addition to being a
Bank) in respect of Letters of Credit issued or to be issued by such Bank, and,
with respect to such Letters of Credit, such term shall thereafter apply to the
other Issuing Bank and such Bank.
SECTION 2.19. Adjustments to Borrowing Base Advance Rates. (a) As of
the Initial Borrowing Date, the Accounts Receivable Advance Rate will be 85%,
the Pharmaceutical Inventory Advance Rate will be 59.9%, and the Other Inventory
Advance Rate will be 51.4%.
(b) Subject to clause (c), the Senior Collateral Agent may, in the
exercise of its reasonable judgment, increase the Pharmaceutical Inventory
Advance Rate up to a level of 63.9%, and increase the Other Inventory Advance
Rate up to a level of 54.8%.
(c) Any increase in the Pharmaceutical Inventory Advance Rate or the
Other Inventory Advance Rate above 80% of orderly liquidation value thereof, as
determined by periodic appraisals, or the Accounts Receivable Advance Rate above
85%, will require the consent of all of the Banks.
(d) The Senior Collateral Agent, in the exercise of its reasonable
judgment to reflect Borrowing Base Factors, may reduce the Accounts Receivable
Advance Rate, the Pharmaceutical Inventory Advance Rate and the Other Inventory
Advance Rate from time to time.
(e) The Senior Collateral Agent will give prompt written notice to the
Borrower and the Banks of any adjustments effected pursuant to this Section
2.19.
56
ARTICLE 3
CONDITIONS
The obligations of the Banks to make Loans (other than a Borrowing
pursuant to Section 2.02(e) or Section 2.17(e)) and of the Issuing Banks to
issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:
SECTION 3.01. First Credit Event. On the Initial Borrowing Date, each
of the following conditions shall have been satisfied (or waived in accordance
with Section 9.05):
(a) Counterparts of this Agreement. The Senior Administrative Agent
shall have received counterparts of this Agreement signed by each of the
Borrower, the Agents and the Banks (or, in the case of any party as to which an
executed counterpart shall not have been received, receipt by the Senior
Administrative Agent in form satisfactory to it of telegraphic, telex or other
written confirmation from such party of execution of a counterpart hereof by
such party).
(b) Notes. The Senior Administrative Agent shall have received for the
account of each Bank which so requests pursuant to Section 2.04 a Revolving
Credit Note, a Term Note and/or a Swingline Note, as applicable, in each case
dated as of the Initial Borrowing Date and complying with the provisions of
Section 2.04.
(c) Senior Subsidiary Guarantee Agreement. The Senior Subsidiary
Guarantee Agreement shall have been duly executed by each Subsidiary Guarantor,
shall have been delivered to the Senior Collateral Agent and shall be in full
force and effect.
(d) Senior Indemnity, Subrogation and Contribution Agreement. The
Senior Indemnity, Subrogation and Contribution Agreement shall have been duly
executed by the parties thereto, shall have been delivered to the Senior
Collateral Agent and shall be in full force and effect.
(e) Senior Subsidiary Security Agreement. The Senior Subsidiary
Security Agreement shall have been duly executed by each Subsidiary Guarantor
and shall have been delivered to the Senior Collateral Agent and shall be in
full force and effect on such date and each document (including each Uniform
Commercial Code financing statement and in the case of Intellectual Property (as
defined in the Senior Subsidiary Security Agreement) appropriate filings in
United States Patent and Trademark Office and the United States Copyright
Office) required by law to be filed, registered or recorded in order to create
and perfect or continue in favor of the Senior Collateral Agent for the benefit
of the Senior Bank Parties a valid, legal and perfected first-priority security
interest in and lien on the Senior Collateral shall have been delivered to the
Senior Collateral Agent.
57
(f) Senior Mortgages. (i) The Agents shall have received (i)
counterparts of a Senior Mortgage with respect to each Mortgaged Property duly
executed, acknowledged and delivered by the record owner of such Mortgaged
Property and in recordable form, and (ii) mortgage and lien searches
satisfactory to the Senior Administrative Agent; provided, however, that in the
case of Mortgaged Properties in respect of which mortgage and lien searches were
performed in connection with the Existing Credit Agreement, such searches shall
be limited to updates of the searches previously performed.
(g) Collateral Trust and Intercreditor Agreement. The Collateral Trust
and Intercreditor Agreement shall have been duly executed by the Borrower and
each other party thereto, shall have been delivered to the Senior Collateral
Agent, and shall be in full force and effect.
(h) Perfection Certificates. The Senior Collateral Agent shall have
received a Perfection Certificate with respect to each Subsidiary Guarantor
dated the Initial Borrowing Date and duly executed by a Financial Officer of the
Borrower.
(i) Lien Searches. The Senior Collateral Agent shall have received the
results of a search of the Uniform Commercial Code (or equivalent filings)
filings made with respect to the Borrower and each other Obligor in the states
(or other jurisdictions) in which the chief executive office of each such Person
is located, any offices of such Persons in which records have been kept relating
to Accounts and the other jurisdictions in which Uniform Commercial Code filings
(or equivalent filings) are to be made pursuant to the preceding clause,
together with copies of the financing statements (or similar documents)
disclosed by such search, and accompanied by evidence satisfactory to the Senior
Collateral Agent that the Liens indicated in any such financing statement (or
similar document) would be permitted under Section 5.15 or have been released
(or arrangements shall have been made for the release or discharge thereof
reasonably satisfactory to the Senior Administrative Agent).
(j) Approvals and Consents. All requisite material governmental
authorities and third parties shall have approved or consented to the
transactions contemplated hereby to the extent required, all applicable appeal
periods shall have expired and there shall be no governmental or judicial
action, actual or threatened, that could reasonably be expected to restrain,
prevent or impose burdensome conditions on the transactions contemplated hereby.
58
(k) Working Capital. The Agents shall be reasonably satisfied with the
sufficiency of amounts available under this Agreement, and immediately following
the consummation of the Transactions, actual borrowing availability under the
Revolving Credit Commitments shall be at least $200,000,000.
(l) Business Plan. There shall not have been any material changes to
the five-year business plan of the Borrower which has been previously provided
to the Agents.
(m) 10.5% Notes. The tender offer for the 10.5% Notes shall have been
consummated on an any and all basis by the Borrower, on terms reasonably
satisfactory to the Senior Administrative Agent.
(n) Borrowing Base Certificate. The Senior Administrative Agent shall
have received a Borrowing Base Certificate dated the Initial Borrowing Date,
containing information as of a date not more than eight Business Days (or, in
the case of information with respect to Eligible Inventory stored at a
distribution center, 30 days) before the Initial Borrowing Date, and executed by
a Financial Officer of the Borrower. The Borrowing Base Amount shall be
sufficient to support the initial Credit Events.
(o) Collateral Appraisal and Field Examination. The Senior
Administrative Agent shall have received such valuations and appraisals of the
inventory and prescription files that are part of the Collateral by independent
appraisal firms reasonably satisfactory to the Senior Administrative Agent as
the Senior Administrative Agent shall reasonably request. The Senior
Administrative Agent shall have completed a field examination, the results of
which shall be satisfactory to the Agents.
(p) Opinions of Borrower's Counsel. The Senior Administrative Agent
shall have received opinions of:
(i) Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, special New York
counsel for the Borrower, substantially in the form of Exhibit O-1
hereto; and
(ii) Xxxxxx X. Xxxxxx, General Counsel of the Borrower,
substantially in the form of Exhibit O-2 hereto.
The Borrower hereby requests such counsel to deliver such opinions.
59
(q) Corporate Documents. The Senior Administrative Agent shall have
received all documents it may reasonably request relating to the existence of
the Borrower and the Subsidiary Guarantors, the corporate authority for and the
validity of this Agreement and the other Senior Loan Documents, and any other
matters relevant hereto, all in form and substance satisfactory to the Senior
Administrative Agent.
(r) Payments of Senior Fees, Etc. The Senior Administrative Agent shall
have received all Senior Fees and other amounts due and payable on or before the
Initial Borrowing Date, including, to the extent invoiced, reimbursement or
payment of all out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Senior Loan Document.
(s) Consummation of Transactions. The Transactions shall have been
consummated substantially concurrently with the initial Credit Event in
accordance with Annex 3, and the capital structure of the Borrower shall be as
set forth in Annex 3. All of the conditions precedent set forth in the
Transaction Documents shall have been satisfied or waived, and no material
provision of the Transaction Documents shall have been amended, supplemented,
waived or otherwise modified without the prior written consent of the Agents.
The Agents shall be satisfied with the Transaction Documents in all respects.
(t) Cash Management System. The Borrower shall have established a cash
management system reasonably satisfactory to the Senior Administrative Agent
that complies with Section 5.13.
(u) Insurance. The Senior Administrative Agent shall have received a
copy of, or a certificate as to coverage under, the insurance policies required
by Section 5.03 and the applicable provisions of the Senior Collateral
Documents, each of which shall be endorsed or otherwise amended to include a
"standard" or "New York" lender's loss payable endorsement and to name the
Senior Collateral Agent as additional insured, in form and substance
satisfactory to the Senior Administrative Agent.
(v) Environmental Assessment. The Agents shall have received such
information as they may reasonably request, from an environmental consulting
firm reasonably satisfactory to the Agents, as to any environmental hazards,
liabilities or Remedial Action to which the Borrower or any of the Subsidiaries
may be subject.
(w) Environmental and Employee Matters. The Agents and the Banks shall
be reasonably satisfied as to the amount and nature of any environmental and
employee health and safety
60
exposures to which the Borrower and the Subsidiaries may be subject and the
plans of the Borrower with respect thereto.
(x) Officer's Certificate. The Senior Administrative Agent shall have
received a certificate, dated the Initial Borrowing Date and signed by a
Financial Officer of the Borrower, confirming compliance with the conditions
precedent set forth in Section 3.02, and as to such other matters relating to
the satisfaction of the conditions specified in this Section 3.01 as the Senior
Administrative Agent may reasonably request.
(y) Second Priority Collateral Documents. Each of the Second Priority
Mortgages, the Second Priority Subsidiary Security Agreement, the Second
Priority Subsidiary Guarantee Agreements shall be in form and substance
satisfactory to the Agents, shall have been duly executed by each Subsidiary
Guarantor, and by or on behalf of the Second Priority Debt Parties, and shall be
in full force and effect and copies of such documents shall have been delivered
to the Senior Collateral Agent.
(z) Transaction Documents. The Senior Administrative Agent shall have
received, with a copy for each Bank, a copy of each Transaction Document
reasonably requested by the Senior Administrative Agent, certified by a
Financial Officer of the Borrower.
(aa) No Litigation. There shall be no litigation or administrative
proceeding commenced (other than in connection with the Existing Litigation)
that would have a Material Adverse Effect.
(bb) No Material Adverse Change. There shall have been no material
adverse change in the business, assets, operations, properties, condition
(financial or otherwise), contingent liabilities, prospects or material
agreements of the Borrower and its Subsidiaries considered as a whole since
March 3, 2001.
(cc) Landlord's Waivers. Each of the waivers from the lessor of each
leased distribution center of the Subsidiary Guarantors of any statutory, common
law or contractual landlord's lien with respect to any inventory of any
Subsidiary Guarantor (other than with respect to inventory located at leased
warehouses having a value in the aggregate not to exceed $40,000,000), as
previously delivered to the Senior Administrative Agent, shall be in full force
and effect.
(dd) Intercompany Inventory Purchase Agreement. The Intercompany
Inventory Purchase Agreement shall be in full force and effect.
61
(ee) Legal Matters. All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder and the other Senior Loan
Documents shall be reasonably satisfactory to the Banks.
(ff) Flood Hazard Certificates. The Senior Administrative Agent shall
have received standard flood hazard determination certificates in the form
required by 12 CFR 22.6 for each Mortgaged Property.
(gg) Termination of Existing Credit Agreement. The Existing Credit
Agreement shall have been or shall simultaneously be terminated, all amounts
outstanding thereunder shall have been paid in full and all commitments
thereunder terminated and all Liens securing the obligations thereunder shall
have been released, and the Senior Administrative Agent shall have received such
evidence as it shall reasonably have requested as to the satisfaction of such
conditions.
SECTION 3.02. All Credit Events. On the date of each issuance of a
Letter of Credit and each Borrowing of a Loan (each such event being called a
"Credit Event") (other than a Borrowing pursuant to Section 2.02(e) or a
Borrowing pursuant to Section 2.17(e)) each of the following conditions shall
have been satisfied (or waived in accordance with Section 9.05):
(a) Request. The Borrower shall have delivered a Borrowing Request to
the Senior Administrative Agent, or an Issuance Request to the Senior
Administrative Agent and the applicable Issuing Bank, or a Swingline Request to
the Senior Administrative Agent and the Swingline Banks, as the case may be.
(b) Representations and Warranties. The fact that the representations
and warranties of the Borrower contained in this Agreement (except, in the case
of a Refunding Borrowing, the representations and warranties set forth in
Sections 4.04(iii) and Section 4.06 as to any matter which has theretofore been
disclosed in writing by the Borrower to the Banks) shall be true in all material
respects on and as of the date of such Credit Event (unless any representation
expressly relates to an earlier date, in which case it shall be true in all
material respects on and as of such earlier date).
(c) No Default. The fact that, immediately after such Credit Event, no
Default shall have occurred and be continuing.
(d) Borrowing Base. The Borrowing Base Amount shall be sufficient to
support such Credit Event.
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Each Credit Event shall be deemed to constitute a representation and warranty by
the Borrower on the date of such Credit Event as to the matters specified in
clauses (b) (except as aforesaid) and (c) of this Section, and the Borrower
expects the proceeds of such Credit Event (other than the issuance of a Letter
of Credit) will be applied to uses of proceeds which are permitted pursuant to
Section 5.24 and which are reasonably anticipated to be made within the five
Business Days following such Credit Event.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation and each Subsidiary Guarantor is a corporation (or other entity)
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization (except as otherwise indicated in Schedule
1.01(c)), and has all corporate (or other organizational) powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted, except, with respect to the
Subsidiary Guarantors, where the failure to be so organized, validly existing or
in good standing, or the failure to have such power and all such licenses,
authorizations, consents and approvals, could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. (a) The execution, delivery and performance by the Borrower and
each Subsidiary Guarantor of each Senior Loan Document to which it is a party
are within the Borrower's corporate powers or such Subsidiary Guarantor's
corporate (or other organizational) powers, have been duly authorized by all
necessary corporate or other action, require no action by or in respect of, or
filing with, any governmental body, agency or official (except as may be
required to perfect Liens) and do not contravene, or constitute a default under,
any provision of applicable law or regulation or of the certificate of
incorporation or by-laws (or other organizational documents) of the Borrower or
such Subsidiary Guarantor or of any agreement or instrument evidencing or
governing Debt of the Borrower or any Subsidiary or any other material
agreement, instrument, judgment, injunction, order or decree binding upon the
Borrower or any Subsidiary or result in the creation or imposition of any Lien
on any asset of the Borrower or any Subsidiary pursuant to any such agreement,
instrument, judgment, injunction, order or decree (other than the Liens created
by the Senior Collateral Documents). None of the Borrower or any of the
Subsidiaries is in default in any manner under any provision of any Material
Financial Obligation, or any other
63
material agreement or instrument to which it is a party or by which it or any of
its properties or assets are or may be bound, where such default could
reasonably be expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the Borrower and each
Subsidiary Guarantor of each Transaction Document (other than the Senior Loan
Documents) to which it is a party are within the Borrower's corporate powers or
such Subsidiary Guarantor's corporate (or other organizational) powers, have
been duly authorized by all necessary corporate or other action, require no
action by or in respect of, or filing with, any governmental body, agency or
official (except as may be required to perfect Liens) and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the certificate of incorporation or by- laws (or other organizational documents)
of the Borrower or such Subsidiary Guarantor or of any agreement or instrument
evidencing or governing Debt of the Borrower or any Subsidiary or any other
material agreement, instrument, judgment, injunction, order or decree binding
upon the Borrower or any Subsidiary or result in the creation or imposition of
any Lien on any asset of the Borrower or any Subsidiary pursuant to any such
agreement, instrument, judgment, injunction, order or decree (other than the
Liens permitted by Section 5.15).
SECTION 4.03. Binding Effect. This Agreement and each other Senior Loan
Document constitutes a valid and binding agreement of the Borrower and the
Subsidiary Guarantors, and each Note, when executed and delivered in accordance
with this Agreement, will constitute a valid and binding obligation of the
Borrower, in each case enforceable in accordance with its terms.
SECTION 4.04. Financial and Other Information. (i) The consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of March 3,
2001 and each following fiscal year end of the Borrower and its Consolidated
Subsidiaries and the related consolidated statements of income and cash flows
for the fiscal year then ended, reported on by Deloitte & Touche (or other
independent public accountants of nationally recognized standing) fairly
present, in conformity with generally accepted accounting principles, the
consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such fiscal year;
(ii) the consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of such fiscal quarter end and each following
fiscal quarter end of the Borrower and its Consolidated Subsidiaries (other than
the fourth fiscal quarter of any fiscal year) and the related consolidated
statements of income and cash flows for the fiscal quarter then ended, set forth
in the Borrower's quarterly report on Form 10-Q for the fiscal quarter then
ended, a copy of which
64
will be delivered to each of the Banks, fairly present, in conformity with
generally accepted accounting principles applied on a basis consistent with the
most recent audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Banks, the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for such fiscal period,
subject to normal year-end adjustments; and
(iii) there has been no material adverse change in the business,
assets, operations, properties, condition (financial or otherwise), contingent
liabilities, prospects or material agreements of the Borrower and its
Consolidated Subsidiaries, considered as a whole since March 3, 2001.
SECTION 4.05. Accuracy of Information. (a) All information (other than
financial projections) that has been or will hereafter be made available to the
Agents or any Bank by or on behalf of the Borrower or any of its representatives
in connection with the transactions contemplated hereby is and will be complete
and correct in all material respects and does not and will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not misleading in light of the
circumstances under which such statements were or are made.
(b) Each Borrowing Base Certificate that has been or will hereafter be
made available to the Agents or any Bank is and will be complete and correct in
all material respects.
(c) All financial projections, if any, that have been or will be
prepared by or on behalf of the Borrower or any of its representatives and made
available to the Agents or any Bank have been or will be prepared in good faith
based upon assumptions that are reasonable at the time made and at the time the
related financial projections are made available to the Agents.
(d) The Borrower has disclosed to the Banks in writing any and all
facts which materially and adversely affect the business, operations or
condition, financial or otherwise, of the Borrower and its Subsidiaries or the
Borrower's ability to perform its obligations under this Agreement.
SECTION 4.06. Litigation. Other than the Existing Litigation, there has
been no litigation or administrative proceeding that would have a Material
Adverse Effect. There has been no litigation or administrative proceeding that
could impair the validity, enforceability or priority of the security interests
to be granted in favor of the Banks under the Senior Loan Documents.
65
SECTION 4.07. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and, except for events occurring
prior to the Initial Borrowing Date and arising out of litigation described on
Schedule 4.07, is in compliance in all material respects with the presently
applicable provisions of ERISA and the Internal Revenue Code with respect to
each Plan, except to the extent that the failure to do so could not reasonably
be expected to have a Material Adverse Effect. No member of the ERISA Group has
(i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA, in each case except to the extent
that the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
SECTION 4.08. Taxes. The Borrower and its Subsidiaries have filed all
United States Federal income tax returns, and the Borrower and its Subsidiaries
have filed all other material tax returns, which are required to be filed by
them and have paid all material taxes due pursuant to such returns or pursuant
to any assessment received by the Borrower or any Subsidiary Guarantor except
where the payment of any such taxes is being contested in good faith by
appropriate proceedings. The charges, accruals and reserves on the books of the
Borrower and its Consolidated Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate.
SECTION 4.09. Subsidiaries. Schedule 1.01(c) sets forth a complete and
correct list of the Borrower's Subsidiaries as of the Initial Borrowing Date.
Each of the Borrower's corporate Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except where the failure to be so
incorporated, validly existing or in good standing, or the failure to have such
power and all such licenses, authorizations, consents and approvals, could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each of the Borrower's Subsidiaries as of the Initial Borrowing
Date is an "Unrestricted Subsidiary" as referred to in Section 5.10.
SECTION 4.10. Environmental Matters. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of Environmental
Laws on the business,
66
operations and properties of the Borrower and its Subsidiaries, in the course of
which it identifies and evaluates associated liabilities and costs (including,
without limitation, any capital or operating expenditures required for clean-up
or closure of properties presently or previously owned, any capital or operating
expenditures required to achieve or maintain compliance with environmental
protection standards imposed by law or as a condition of any license, permit or
contract, any related constraints on operating activities, including any
periodic or permanent shutdown of any facility or reduction in the level of or
change in the nature of operations conducted thereat, any costs or liabilities
in connection with off-site disposal of wastes or hazardous substances, and any
actual or potential liabilities to third parties, including employees, and any
related costs and expenses). On the basis of this review, the Borrower has
reasonably concluded that such associated liabilities and costs, including the
costs of compliance with Environmental Laws, are unlikely to have a Material
Adverse Effect.
SECTION 4.11. Other Representations. The representations and warranties
of the Borrower and each Subsidiary Guarantor set forth in each other Senior
Loan Document and in each other Transaction Document are true and correct in all
material respects on the date they were made.
SECTION 4.12. Insurance. Schedule 4.12 sets forth a true, complete and
correct description of all liability, property and casualty insurance maintained
by the Borrower or by the Borrower for its Subsidiaries as of the Initial
Borrowing Date. Such insurance is in full force and effect and all premiums have
been duly paid. The Borrower and its Subsidiaries have insurance in such amounts
and covering such risks and liabilities as are in accordance with normal
industry practice and as required by the Senior Loan Documents.
SECTION 4.13. Mellon Standby Letters of Credit. Schedule 4.13 sets
forth all of the Mellon Standby Letters of Credit of the Borrower and its
Subsidiaries as of the Initial Borrowing Date which will continue to be
outstanding in accordance with their terms after the Initial Borrowing Date. The
Borrower and the Subsidiaries are account parties of no other letters of credit
as of the Initial Borrowing Date other than letters of credit issued by an
Issuing Bank other than Mellon Bank.
SECTION 4.14. Solvency. Immediately after the consummation of the
Transactions to occur on the Initial Borrowing Date and immediately following
the making of each Loan made on the Initial Borrowing Date and after giving
effect to the application of the proceeds of such Loans, the fair value of the
assets of the Borrower and the other Obligors, taken as a whole, at a fair
valuation, will exceed their debts and liabilities, subordinated, contingent or
otherwise; the present fair saleable value of the property of the Borrower and
the other Obligors, taken as a
67
whole will be greater than the amount that will be required to pay the probable
liability of their debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; the
Borrower and the other Obligors, taken as a whole will be able to pay their
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and the Borrower and the other Obligors
will not have unreasonably small capital with which to conduct the business in
which they are engaged as such business is now conducted and is proposed to be
conducted following the Initial Borrowing Date.
SECTION 4.15. Title to Properties. (a) Each of the Borrower and the
Subsidiaries has good and marketable title to, or valid leasehold interests in,
all its material real properties (including all Mortgaged Properties) and valid
title to all other assets material to the operation of their business, except
for minor defects in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties and assets for
their intended purposes. All such material properties and assets are free and
clear of Liens that secure indebtedness for borrowed money, other than Liens
expressly permitted by Section 5.15 and as set forth in Schedule 4.15(b)(ii) (or
arrangements reasonably satisfactory to the Senior Administrative Agent have
been made for the release or discharge of such Liens).
(b) Schedule 1.01(b) sets forth the address of each Mortgaged Property
on the Initial Borrowing Date. As of the Initial Borrowing Date, none of the
Mortgaged Properties are subject to leases, license agreements or subleases
under which the Borrower or any Subsidiary is the lessor/licensor except as set
forth on Schedule 4.15(b)(i). Each Mortgaged Property is free of Liens that
secure indebtedness for borrowed money except for the Second Priority Mortgages
and as set forth on Schedule 4.15(b)(ii) (or arrangements reasonably
satisfactory to the Senior Administrative Agent have been made for the release
of such Liens).
(c) Schedule 4.15(c) sets forth the address of every leased warehouse
or distribution center in which inventory owned by the Company and or any
Subsidiary is located.
SECTION 4.16. Investment Company Act; Public Utility Holding Company
Act. None of the Borrower or any Subsidiary is an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or a "holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 4.17. Labor Matters. As of the Initial Borrowing Date, there
are no strikes, lockouts or slowdowns against the Borrower or any Subsidiary
pending or, to the knowledge of the Borrower, threatened which could result in a
Material Adverse Effect. The hours worked by
68
and payments made to employees of the Borrower and the Subsidiaries have not
been in violation in any material respect of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters.
All payments due from the Borrower or any Subsidiary, or for which any claim may
be made against the Borrower or any Subsidiary, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of the Borrower or such Subsidiary. The consummation of
the Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Borrower or any Subsidiary is bound.
ARTICLE 5
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any Loan or other amount payable remains unpaid or any Letter of
Credit remains outstanding:
SECTION 5.01. Information. The Borrower will deliver to each of the
Banks:
(a) with respect to each fiscal year of the Borrower ended on
or after March 2, 2002, as soon as available and in any event within 90
days (or within such longer period of time, not greater than 120 days,
to which the SEC may extend the filing deadline for the Borrower's
Annual Report on Form 10-K) after the end of each such fiscal year, a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on without any material
qualification by Deloitte & Touche (or other independent public
accountants of nationally recognized standing);
(b) with respect to each fiscal quarter of the Borrower (other
than the last fiscal quarter of a fiscal year) as soon as available and
in any event within 45 days (or within such longer period of time, not
greater than 60 days, to which the SEC may extend the filing deadline
for the Borrower's Quarterly Report on Form 10-Q) after the end of each
such fiscal quarter, a consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of the end of such quarter and the
related consolidated statements of income and cash flows for such
quarter and for the portion of the Borrower's fiscal year ended at the
end of such quarter, setting forth in each case in comparative form (i)
the figures for the corresponding quarter and the corresponding portion
of the Borrower's
69
previous fiscal year and (ii) the figures for the corresponding periods
in the forecast most recently delivered pursuant to Section 5.01(k),
all certified (subject to normal year-end adjustments) as to fairness
of presentation, generally accepted accounting principles and
consistency by a Financial Officer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of a
Financial Officer of the Borrower (i) setting forth in reasonable
detail the calculations required to establish whether the Borrower was
in compliance with the requirements of Sections 5.11, 5.16, 5.17, 5.18
and 5.19 on the date of such financial statements, (ii) stating whether
any Default exists on the date of such certificate and, if any Default
then exists, setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto and (iii)
in the case of the certificate delivered together with the financial
statements referred to in clause (a) above, a calculation of Excess
Cash Flow for the applicable period specified in Section 2.13(f) and
the amount required for Reductions hereunder, if any, in respect
thereof;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
whether anything has come to their attention to cause them to believe
that any Default existed on the date of such statements and (ii)
confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith pursuant to clause (c) above;
(e) within three Business Days after the end of each fiscal
month a certificate of a Financial Officer of the Borrower setting
forth in reasonable detail, a description of each disposition of assets
not in the ordinary course of business for which the book value or fair
market value of the assets of the Borrower or the Subsidiaries disposed
or the consideration received therefor was greater than $10,000,000;
(f) (i) within five days after any officer of the Borrower
obtains knowledge of any Default, if such Default is then continuing, a
certificate of a Financial Officer of the Borrower setting forth
information with respect thereto in reasonable detail and the action
which the Borrower is taking or proposes to take with respect thereto,
and (ii) within five days after the general counsel of the Borrower
obtains knowledge of the filing or commencement of any action, suit or
proceeding, whether at law or in equity or by or before any court,
governmental authority or other tribunal, against the Borrower or any
Affiliate thereof that could reasonably be expected to result in a
Material Adverse Effect a
70
certificate of such general counsel of the Borrower setting forth
information with respect thereto in reasonable detail and the action
which the Borrower is taking or proposes to take with respect thereto;
(g) (i) within four Business Days after the end of each fiscal
week a Borrowing Base Certificate showing the Borrowing Base Amount as
of the close of business on the last day of such fiscal week, each such
Borrowing Base Certificate to be certified as complete and correct on
behalf of the Borrower by a Financial Officer of the Borrower; provided
that the amount with respect to Eligible Inventory stored at
distribution centers included in such Borrowing Base Amount shall be
the amount certified in the Borrowing Base Certificate most recently
delivered pursuant to clause (ii), and (ii) within 14 days after the
end of each fiscal month a Borrowing Base Certificate showing the
Borrowing Base Amount with respect to Eligible Inventory stored at
distribution centers as of the close of business on the last day of
such fiscal month, each such Borrowing Base Certificate to be certified
as complete and correct on behalf of the Borrower by a Financial
Officer of the Borrower;
(h) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports and
proxy statements so mailed;
(i) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower
shall have filed with the SEC;
(j) within five days, if and when any member of the ERISA
Group (i) gives or any Financial Officer becomes aware that such member
is required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of
ERISA, or any Financial Officer knows that the plan administrator of
any Plan has given or any Financial Officer becomes aware that such
member is required to give notice of any such reportable event, a copy
of the notice of such reportable event given or required to be given to
the PBGC; (ii) receives notice of complete or partial withdrawal
liability under Title IV of ERISA or notice that any Multiemployer Plan
is in reorganization, is insolvent or has been terminated, a copy of
such notice; (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer, any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding
71
standard under Section 412 of the Internal Revenue Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information
filed with the PBGC; (vi) gives notice of withdrawal from any Plan
pursuant to Section 4063 of ERISA, a copy of such notice; or (vii)
fails to make any payment or contribution to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement or makes any amendment to
any Plan or Benefit Arrangement which has resulted or could result in
the imposition of a Lien or the posting of a bond or other security, a
certificate of a Financial Officer of the Borrower setting forth
details as to such occurrence and action, if any, which the Borrower or
applicable member of the ERISA Group is required or proposes to take;
(k) on or prior to the 60 days following the end of each
fiscal year of the Borrower (or, in the reasonable discretion of the
Senior Administrative Agent, no later than 30 days thereafter),
forecasts for the Borrower and its Consolidated Subsidiaries of (i)
quarterly consolidated balance sheet data and related consolidated
statements of income and cash flows for each quarter in the next
succeeding fiscal year and (ii) consolidated balance sheet data and
related consolidated statements of income and cash flows for each
fiscal year ending on or prior to 2006 fiscal year; and
(l) from time to time such additional information regarding
the financial position or business of the Borrower and its Subsidiaries
or the Collateral as the Senior Administrative Agent, at the request of
any Bank, may reasonably request.
Information required to be delivered pursuant to clauses (a), (b), (h) and (i)
shall be deemed to have been delivered on the date on which the Borrower
provides notice to the Banks that such information has been posted on the
Borrower's website on the Internet at the website address listed on the
signature pages hereof, at xxx.xxx/xxxxx/xxxxxxxx.xxx or at another website
identified in such notice and accessible by the Banks without charge; provided
that (i) such notice may be included in a certificate delivered pursuant to
clause (c), and (ii) the Borrower shall deliver paper copies of the information
referred to in clauses (a), (b), (h) and (i) to any Bank which requests such
delivery.
SECTION 5.02. Payment of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, pay and discharge, as the same shall become due and
payable, (i) all material claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons prior to the time such claims or
demands give rise to a material Lien upon any of its property or assets or a
material risk of forfeiture of a Mortgaged Property, and (ii) all material
taxes, assessments and governmental charges or levies upon it or its property or
assets, except
72
where any of the items in clause (i) or (ii) above may be contested in good
faith by appropriate proceedings, and the Borrower or such Subsidiary, as the
case may be, shall have set aside on its books, in accordance with generally
accepted accounting principles, appropriate reserves, if any, for the accrual of
any such items.
SECTION 5.03. Maintenance of Property; Insurance. (a) The Borrower will
keep, and will cause each Subsidiary to keep, all property useful in its
business in good working order and condition, ordinary wear and tear excepted.
(b) The Borrower will, and will cause each of its Subsidiaries to,
maintain (either in the name of the Borrower or in such Subsidiary's own name)
with financially sound and responsible insurance companies, insurance on all
their respective properties in at least such amounts and against at least such
risks (and with such risk retention) as are usually insured against in the same
general area by companies of established repute engaged in the same or a similar
business; and will furnish to the Banks, upon request from the Senior
Administrative Agent, information presented in reasonable detail as to the
insurance so carried. The Borrower will, and will cause each of its Subsidiaries
to, maintain such insurance in a coverage amount of not less than 90% of the
coverage amount as of the Initial Borrowing Date, with deductibles, risks
covered and other provisions (other than amount of premiums) not materially less
favorable to the Borrower and its Subsidiaries as of the Initial Borrowing Date.
(c) The Borrower will, and will cause each of the Subsidiary Guarantors
to, cause all such policies to be endorsed or otherwise amended to include a
"standard" or "New York" lender's loss payable endorsement, in form and
substance satisfactory to the Senior Administrative Agent and the Senior
Collateral Agent, which endorsement shall provide that, from and after the
Initial Borrowing Date, if the insurance carrier shall have received written
notice from the Senior Administrative Agent or the Senior Collateral Agent of
the occurrence of an Event of Default, the insurance carrier shall pay all
proceeds otherwise payable to the Borrower and any other Obligor under such
policies directly to the Senior Collateral Agent for application pursuant to the
Collateral Trust and Intercreditor Agreement; cause all such policies to provide
that neither the Borrower, the Senior Administrative Agent, the Senior
Collateral Agent nor any other party shall be a coinsurer thereunder and to
contain a "Replacement Cost Endorsement", without any deduction for
depreciation, and such other provisions as the Senior Administrative Agent or
the Senior Collateral Agent may reasonably require from time to time to protect
their interests; deliver broker's certificates to the Senior Collateral Agent;
cause each such policy to provide that it shall not be canceled or not renewed
by reason of nonpayment of premium upon not less than 10 days prior written
notice thereof by the insurer to the Senior Administrative Agent and the Senior
Collateral Agent (giving the Senior Administrative Agent and the Senior
Collateral Agent
73
the right to cure defaults in the payment of premiums) or for any other reason
upon not less than 30 days' prior written notice thereof by the insurer to the
Senior Administrative Agent and the Senior Collateral Agent; deliver to the
Senior Administrative Agent and the Senior Collateral Agent, before the
cancellation or nonrenewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy previously
delivered to the Senior Administrative Agent and the Senior Collateral Agent)
together with evidence reasonably satisfactory to the Senior Administrative
Agent and the Senior Collateral Agent of payment of the premium therefor.
(d) [Reserved].
(e) The Borrower will, and will cause each of the Subsidiary Guarantors
to, with respect to any Mortgaged Property, carry and maintain comprehensive
general liability insurance including the "broad form CGL endorsement" and
coverage on an occurrence basis against claims made for personal injury
(including bodily injury, death and property damage) and umbrella liability
insurance against any and all claims, in no event for a combined single limit of
less than $10,000,000, naming the Senior Collateral Agent (for the benefit of
the Senior Bank Parties) as an additional insured, on forms satisfactory to the
Senior Collateral Agent.
(f) The Borrower will notify the Senior Administrative Agent and the
Senior Collateral Agent promptly whenever any separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section is taken out by the Borrower or its Subsidiaries; and
promptly deliver to the Senior Administrative Agent and the Senior Collateral
Agent a duplicate original copy of such policy or policies.
(g) In connection with the covenants set forth in this Section, it is
agreed that:
(i) none of the Senior Administrative Agent, the Banks, or
their respective agents or employees shall be liable for any loss or
damage insured by the insurance policies required to be maintained
under this Section, and (A) the Borrower and each other Obligor shall
look solely to their insurance companies or any other parties other
than the aforesaid parties for the recovery of such loss or damage and
(B) such insurance companies shall have no rights of subrogation
against the Senior Administrative Agent, the Senior Collateral Agent,
the Banks or their agents or employees. If, however, the insurance
policies do not provide waiver of subrogation rights against such
parties, as required above, then the Borrower hereby agrees, to the
extent permitted by law, to waive its right of recovery, if any,
against the Senior Administrative Agent, the Senior Collateral Agent,
the Banks and their agents and employees; and
74
(ii) the designation of any form, type or amount of insurance
coverage by the Senior Administrative Agent, the Senior Collateral
Agent or the Majority Banks under this Section shall in no event be
deemed a representation, warranty or advice by the Senior
Administrative Agent, the Senior Collateral Agent or the Banks that
such insurance is adequate for the purposes of the business of the
Borrower and the Subsidiaries or the protection of their properties.
SECTION 5.04. Conduct of Business and Maintenance of Existence. Except
as otherwise permitted in this Agreement, the Borrower will continue, and will
cause each Subsidiary to continue, to engage in business of the same general
type as now conducted by the Borrower and its Subsidiaries, and will preserve,
renew and keep in full force and effect, and will cause each Subsidiary (except
where such Subsidiary merges into a Subsidiary Guarantor) to preserve, renew and
keep in full force and effect their respective legal existence and their
respective rights, privileges and franchises necessary or desirable in the
normal conduct of business; provided that the foregoing will not prohibit any
merger or liquidation of, or sale of assets by, a Subsidiary that is permitted
by Section 5.22.
SECTION 5.05. Compliance with Laws. The Borrower will comply, and cause
each Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) applicable to it or its property except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to comply would not have a Material Adverse
Effect.
SECTION 5.06. Inspection of Property, Books and Records. The Borrower
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause each Subsidiary to permit, representatives of any Bank (at such
Bank's expense, unless a Default has occurred and is continuing, in which case
at the Borrower's expense), after such Bank has consulted the Senior
Administrative Agent with respect thereto, to visit and inspect any of their
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
SECTION 5.07. Restriction on Other Agreements, Payment Limitations,
Debt Prepayments, Amendments to Other Agreements. (a) The Borrower will not, and
will not
75
permit any Subsidiary to, enter into any agreement which imposes a limitation on
incurrence by the Borrower and its Subsidiaries of Liens that (i) would restrict
any Subsidiary from granting Liens on any of its assets (including assets in
addition to the then-existing Collateral to secure the Senior Obligations), or
(ii) is more restrictive than the limitation on Liens set forth in this
Agreement or (iii) imposes other covenants more restrictive than those set forth
in this Agreement except, in each case, (A) agreements with respect to Debt
secured by Liens permitted by Section 5.15 containing restrictions on the
ability to transfer or grant Liens on the assets securing such Debt, (B)
customary restrictions contained in purchase and sale agreements limiting the
transfer of the subject assets pending closing, (C) customary non-assignment
provisions in leases and other contracts entered into in the ordinary course of
business, (D) pursuant to applicable law, (E) agreements in effect as of the
Initial Borrowing Date and not entered into in contemplation of the Transactions
and (F) the 10.5% Note Documents, the Unsecured Note Indenture, the Exchange
Note Documents and the Synthetic Lease Documents as in effect on the Initial
Borrowing Date.
(b) The Borrower will not, and will not permit any Subsidiary to, enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (i) make Restricted Payments in
respect of any capital stock of such Subsidiary held by, or pay any Debt owed
to, the Borrower or any other Subsidiary, (ii) make any Investment in the
Borrower or any other Subsidiary, or (iii) transfer any of its assets to the
Borrower or any other Subsidiary, except for such encumbrances or restrictions
existing under or by reason (A) any restriction existing under the Senior Loan
Documents, the 10.5% Note Documents, the Unsecured Note Indenture, the Exchange
Note Documents, the Synthetic Lease Documents or the Indentures, (B) customary
non-assignment provisions in leases and other contracts entered into in the
ordinary course of business, and (C) as required by applicable law.
(c) Other than in respect of the 10.5% Note Obligations, the Synthetic
Lease Obligations and, pursuant to Section 2.13(d), the obligations of the
Borrower under its 5.25% Convertible Subordinated Notes due 2002 and 6.00%
Dealer Remarketable Securities due 2003, the Borrower will not, and will not
permit any Subsidiary to, make or offer to make any optional or voluntary
payment, prepayment, repurchase or redemption, or otherwise voluntarily or
optionally defease, the obligations of the Borrower under the Unsecured Notes
Indenture, the Exchange Note Obligations, any Additional Senior Second Priority
Debt Obligations, any Additional Second Priority Debt Obligations or any other
Debt for borrowed money of the Borrower or any Subsidiary, or segregate funds
for any such payment, prepayment, repurchase, redemption or defeasance, except
for refinancings, refundings and exchanges pursuant to Section 5.20(d), (e),
(f), (g), (h) or (i) or repurchases or redemption of such Debt for consideration
consisting solely of
76
common stock of the Borrower or Qualified Preferred Stock or prepayments of
Capital Leases in connection with the sale, closing or relocation of Stores; or
(d) The Borrower shall not, and will not permit any Subsidiary party to
the Intercompany Inventory Purchase Agreement to, amend, terminate, or otherwise
modify the Intercompany Inventory Purchase Agreement in any manner materially
adverse to the Senior Bank Parties or their interests under the Senior Loan
Documents without the prior written approval of the Senior Collateral Agent,
provided, however, the foregoing shall not limit the Borrower's responsibilities
pursuant to Section 3.2 of the Intercompany Inventory Purchase Agreement.
SECTION 5.08. Further Assurances. The Borrower will cause each of the
Subsidiary Guarantors to execute any and all further documents, financing
statements, recordations, agreements and instruments, and take all further
action (including filing Uniform Commercial Code and other financing statements,
recordations, mortgages and deeds of trust) that may be required under
applicable law, or that the Majority Banks, the Syndication Agents, the Senior
Administrative Agent or the Senior Collateral Agent may reasonably request, in
order to effectuate the transactions contemplated by the Senior Loan Documents
and in order to grant, preserve, protect and perfect the validity and first
priority of the security interests created or intended to be created by the
Senior Collateral Documents. The Borrower will cause any subsequently acquired
or organized Domestic Subsidiary to execute a Senior Subsidiary Guarantee
Agreement, Senior Indemnity, Subrogation and Contribution Agreement, Senior
Subsidiary Security Agreement and any applicable financing statement or other
recordation from time to time, and to comply with the terms thereof. The
Borrower agrees to cause to be provided such evidence as the Senior Collateral
Agent shall reasonably request as to the perfection and priority status of each
such security interest and Lien. Notwithstanding any other provision of this
Agreement, (i) no Subsidiary listed on Schedule 5.08 shall be required to be a
Subsidiary Guarantor and (ii) no other Subsidiary shall be required to be a
Subsidiary Guarantor unless and until such time as such Subsidiary has assets in
excess of $1,000,000 or acquires assets in excess of $1,000,000 or has revenue
in excess of $500,000 per annum.
SECTION 5.09. Collateral and Borrowing Base Reviews. (a) The Borrower
will, and will cause each of the Subsidiary Guarantors to, from time to time
upon the request of the Senior Collateral Agent or the Majority Banks through
the Senior Administrative Agent, or upon any request to increase the
Pharmaceutical Advance Rate above 63.9%, the Other Inventory Advance Rate above
54.8% or the Accounts Receivable Advance Rate above 85%, permit the Senior
Collateral Agent or professionals (including field examiners, investment
bankers, consultants, accountants, lawyers and appraisers) retained by the
Senior Collateral Agent to conduct evaluations and appraisals of (i) the
Borrower's practices in the computation of the Borrowing
77
Base Amount and (ii) the assets included in the Senior Collateral, and pay the
reasonable fees and expenses of such professionals.
(b) The Borrower will, and will cause each of the Subsidiary Guarantors
to, in connection with any evaluation and appraisal relating to the computation
of the Borrowing Base Amount, maintain such additional reserves (for purposes of
computing the Borrowing Base Amount) in respect of Eligible Accounts Receivable
and Eligible Inventory and make such other adjustments to its parameters for
including Eligible Accounts Receivable and Eligible Inventory in the Borrowing
Base Amount as the Senior Collateral Agent shall require based upon the results
of such evaluation and appraisal in its reasonable judgment to reflect Borrowing
Base Factors.
SECTION 5.10. Subsidiaries. The Borrower will cause all of its
Subsidiaries that own Eligible Accounts Receivable or Eligible Inventory to be
"Unrestricted Subsidiaries" as defined in, and for all purposes of, each of the
Indentures and will deliver such documents to the trustees under each of the
Indentures and take such actions thereunder as may be necessary to effect the
foregoing.
SECTION 5.11. Intercompany Transfers. The Borrower shall maintain
accounting systems capable of tracing intercompany transfers of funds and other
assets.
SECTION 5.12. Inventory Purchasing. (a) The Borrower shall, and shall
cause each Subsidiary party to the Intercompany Inventory Purchase Agreement, at
all times to maintain in all material respects the vendor inventory purchasing
system and the intercompany inventory purchasing system in accordance with the
terms of the Intercompany Inventory Purchase Agreement.
(b) The Borrower shall not permit any Operating Subsidiary (as defined
in the Intercompany Inventory Purchase Agreement) to purchase any Inventory (as
defined in the Intercompany Inventory Purchase Agreement) from any Direct
Delivery Vendor (as defined in the Intercompany Inventory Purchase Agreement)
other than (i) acquisition of inventory from McKesson Corporation consistent
with past practice, and (ii) foodstuffs, beverages, periodicals, greeting cards
and similar items which are either paid for in cash substantially concurrently
with the time of delivery or otherwise consistent with past practice.
SECTION 5.13. Cash Management System. The Borrower will cause each
Subsidiary Guarantor to at all times maintain a Cash Management System that
complies with Schedule 5 of the Senior Subsidiary Security Agreement. The
Borrower will cause each Subsidiary Guarantor
78
to comply with each obligation thereof under the Cash Management System. The
Borrower will cause each Subsidiary Guarantor to comply with each of its
obligations under the Cash Management System, and shall cause each Subsidiary
Guarantor to use its best efforts to cause any applicable third party to
effectuate the Cash Management System.
SECTION 5.14. Restriction on Sale and Leaseback Transactions. Except
for a sale or transfer by a Subsidiary to a Subsidiary Guarantor, the Borrower
will not, and will not permit any Subsidiary to, enter into any Sale and
Leaseback Transaction after the Closing Date other than
(a) a Sale and Leaseback Transaction listed on Schedule
5.14(a),
(b) with respect to any property other than a Mortgaged
Property owned by the Borrower or any Subsidiary Guarantor as of the
Initial Borrowing Date, for a lease for a period, including renewals,
not exceeding 24 months, by the end of which period it is intended that
the use of such property or equipment by the lessee will be
discontinued; provided, however, that such Sale and Leaseback
Transaction will be subject to Section 5.23(b),
(c) with respect to any property other than a Mortgaged
Property and other property owned by the Borrower or a Subsidiary
Guarantor on the Initial Borrowing Date, if entered into in respect of
property acquired, developed or constructed by the Borrower or a
Subsidiary after the Initial Borrowing Date, if such Sale and Leaseback
Transaction is entered into within 24 months from the date of
completion of such acquisition, development or construction (which, in
the case of any Store, shall be deemed to be 24 months from the date of
the opening of such Store),
(d) any Sale and Leaseback permitted by Section 5.20(i) or
5.20(o), or
(e) if none of clauses (a) through (d) above are applicable,
any other Sale and Leaseback Transaction not involving a Mortgaged
Property, subject to Section 5.23(b).
SECTION 5.15. Restriction on Liens. The Borrower will not, and will not
permit any Subsidiary to, create, issue, incur, assume or guarantee any Secured
Debt; provided that the foregoing covenant shall not apply to the following:
(a) (i) any Lien on any property in connection with a Sale and
Leaseback Transaction permitted by Section 5.14, (ii) the acquisition
by the Borrower or a Subsidiary of property subject to any Lien upon
such property existing at the time of
79
acquisition thereof, whether or not assumed by the Borrower or such
Subsidiary and not created in anticipation of such acquisition which
acquisition is not otherwise prohibited by this Agreement, or (iii) any
conditional sales agreement or other title retention agreement with
respect to any property hereafter acquired; provided that the Lien does
not attach to other property except unimproved real property previously
owned upon which any new construction has taken place and subsequent
additions to such acquired or constructed property;
(b) any Lien created for the sole purpose of extending,
renewing or refunding, in whole or part, any Lien permitted by this
Section 5.15 or any Lien securing the Debt of the Borrower or of any
Subsidiary on the date of this Agreement or of a corporation at the
time such corporation becomes a Subsidiary, or any extensions, renewals
or refundings of any such Lien; provided that the principal amount of
Debt secured thereby shall not exceed the principal amount of Debt so
secured at the time of such extension, renewal or refunding and that
such extension, renewal or refunding Lien shall be limited to all or
that part of the same property which secured the Debt so extended,
renewed or refunded;
(c) any Lien securing Debt of a Subsidiary owing to a
Subsidiary Guarantor;
(d) any Lien created by the Senior Loan Documents;
(e) any Lien created or permitted by the Second Priority
Collateral Documents with respect to the Second Priority Debt
Obligations in favor of the Second Priority Debt Parties; provided that
such Lien is created simultaneously with or after an equivalent Lien
under the Senior Collateral Documents on the applicable Collateral and
is subject to the Collateral Trust and Intercreditor Agreement, and any
Lien on the proceeds of such Collateral permitted by the Collateral
Trust and Intercreditor Agreement;
(f) Liens under the Synthetic Leases permitted pursuant to
Sections 5.20(e)(i) and 5.29;
(g) Liens identified on Schedule 5.15(g); provided, however,
that such Liens do not attach to any other property other than that
identified in such Schedule;
(h) Liens in respect of secured Debt permitted under Sections
5.20(g), (h) and (i);
(i) Liens in respect of Debt or Attributable Debt permitted
under Sections 5.20(k), (l), (m), (n) and (o) so long as such Liens
attach only to (i) the equipment subject to such
80
financing, (ii) the property to which they attach on the Initial
Borrowing Date (or in the case of any lease which is reclassified as a
Capital Lease, any property subject to such lease on the Initial
Borrowing Date), or (iii) the property or assets constructed, developed
or purchased with such financing;
(j) any Lien on Net Cash Proceeds of Reduction Events
allocated to the 10.5% Note Obligations or the Second Priority Debt
Obligations in accordance with the Collateral Trust and Intercreditor
Agreement, which Lien arises pursuant to Section 10.14 of the 10.5%
Note Indenture or equivalent provisions in the Second Priority Debt
Documents.
SECTION 5.16. Capital Expenditures. The aggregate amount of
Consolidated Capital Expenditures for any period set forth below shall not
exceed the amount set forth below opposite such period, plus (a) Excess
Liquidity for such period, plus (b) an amount (the "Carryforward Amount") equal
to the sum of (i) any amount by which the amount set forth below opposite the
immediately preceding period, if any, exceeds the Consolidated Capital
Expenditures during such immediately preceding period and (ii) in the case of
the twelve months ending February 28, 2004, any amount by which the sum of (x)
the amount set forth below opposite the twelve months ending March 1, 2003 plus
(y) any increase in such amount pursuant to clause (i) above exceeds the
Consolidated Capital Expenditures for the twelve months ending March 1, 2003:
--------------------------------------------------------------------------------
Period Amount
--------------------------------------------------------------------------------
Twelve months ending March 2, 2002.............................. $200,000,000
--------------------------------------------------------------------------------
Twelve months ending March 1, 2003.............................. $200,000,000
--------------------------------------------------------------------------------
Twelve months ending February 28, 2004.......................... $200,000,000
--------------------------------------------------------------------------------
Twelve months ending February 26, 2005.......................... $200,000,000
--------------------------------------------------------------------------------
February 27, 2005 through June 27, 2005......................... $100,000,000
--------------------------------------------------------------------------------
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SECTION 5.17. Maximum Leverage Ratio. At no time shall the Leverage
Ratio as of any date during any period set forth below be greater than the
amount set forth opposite such period:
--------------------------------------------------------------------------------
Period Amount
--------------------------------------------------------------------------------
Nine months ending December 1, 2001............................. 8.25 to 1.00
--------------------------------------------------------------------------------
Twelve months ending March 2, 2002.............................. 7.75 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2002............................... 7.75 to 1.00
--------------------------------------------------------------------------------
Twelve months ending August 31, 2002............................ 7.50 to 1.00
--------------------------------------------------------------------------------
Twelve months ending November 30, 2002.......................... 7.00 to 1.00
--------------------------------------------------------------------------------
Twelve months ending March 1, 2003.............................. 6.50 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2003............................... 6.00 to 1.00
--------------------------------------------------------------------------------
Twelve months ending August 31, 2003............................ 5.75 to 1.00
--------------------------------------------------------------------------------
Twelve months ending November 30, 2003.......................... 5.25 to 1.00
--------------------------------------------------------------------------------
Twelve months ending February 28, 2004.......................... 4.75 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2004............................... 4.50 to 1.00
--------------------------------------------------------------------------------
Twelve months ending August 31, 2004............................ 4.25 to 1.00
--------------------------------------------------------------------------------
Twelve months ending November 30, 2004.......................... 4.00 to 1.00
--------------------------------------------------------------------------------
Twelve months ending February 26, 2005.......................... 3.75 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2005............................... 3.50 to 1.00
--------------------------------------------------------------------------------
82
SECTION 5.18. Minimum Interest Coverage Ratio. At no time shall the
Consolidated Interest Coverage Ratio for any period be less than the amount set
forth below opposite such period:
--------------------------------------------------------------------------------
Period Amount
--------------------------------------------------------------------------------
Nine months ending December 1, 2001......................... 1.25 to 1.00
--------------------------------------------------------------------------------
Twelve months ending March 2, 2002.......................... 1.35 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2002........................... 1.35 to 1.00
--------------------------------------------------------------------------------
Twelve months ending August 31, 2002........................ 1.45 to 1.00
--------------------------------------------------------------------------------
Twelve months ending November 30, 2002...................... 1.60 to 1.00
--------------------------------------------------------------------------------
Twelve months ending March 1, 2003.......................... 1.75 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2003........................... 1.85 to 1.00
--------------------------------------------------------------------------------
Twelve months ending August 31, 2003........................ 2.00 to 1.00
--------------------------------------------------------------------------------
Twelve months ending November 30, 2003...................... 2.15 to 1.00
--------------------------------------------------------------------------------
Twelve months ending February 28, 2004...................... 2.25 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2004........................... 2.35 to 1.00
--------------------------------------------------------------------------------
Twelve months ending August 31, 2004........................ 2.50 to 1.00
--------------------------------------------------------------------------------
Twelve months ending November 30, 2004...................... 2.60 to 1.00
--------------------------------------------------------------------------------
Twelve months ending February 26, 2005...................... 2.70 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2005........................... 2.80 to 1.00
--------------------------------------------------------------------------------
83
SECTION 5.19. Minimum Fixed Charge Coverage Ratio. At no time shall the
Consolidated Fixed Charge Coverage Ratio for any period set forth below be less
than the amount set forth below opposite such period:
--------------------------------------------------------------------------------
Period Amount
--------------------------------------------------------------------------------
Nine months ending December 1, 2001.......................... 0.90 to 1.00
--------------------------------------------------------------------------------
Twelve months ending March 2, 2002........................... 0.90 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2002............................ 0.90 to 1.00
--------------------------------------------------------------------------------
Twelve months ending August 31, 2002......................... 0.95 to 1.00
--------------------------------------------------------------------------------
Twelve months ending November 30, 2002....................... 1.00 to 1.00
--------------------------------------------------------------------------------
Twelve months ending March 1, 2003........................... 1.00 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2003............................ 1.05 to 1.00
--------------------------------------------------------------------------------
Twelve months ending August 31, 2003......................... 1.05 to 1.00
--------------------------------------------------------------------------------
Twelve months ending November 30, 2003....................... 1.10 to 1.00
--------------------------------------------------------------------------------
Twelve months ending February 28, 2004....................... 1.15 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2004............................ 1.20 to 1.00
--------------------------------------------------------------------------------
Twelve months ending August 31, 2004......................... 1.20 to 1.00
--------------------------------------------------------------------------------
Twelve months ending November 30, 2004....................... 1.25 to 1.00
--------------------------------------------------------------------------------
Twelve months ending February 26, 2005....................... 1.25 to 1.00
--------------------------------------------------------------------------------
Twelve months ending May 31, 2005............................ 1.25 to 1.00
--------------------------------------------------------------------------------
SECTION 5.20. Restriction on Debt. The Borrower will not, and will not
permit any of its Subsidiaries to, incur or at any time be liable with respect
to any Debt or any Attributable Debt in respect of any Sale and Leaseback
Transaction except:
(a) Debt under the Senior Loan Documents;
84
(b) 11.25% Senior Notes due 2008 of the Borrower issued under
the Unsecured Note Indenture, and other unsecured Debt of the Borrower
that is not Guaranteed by any Subsidiary of the Borrower and matures no
earlier than, and has terms no more restrictive than those of, the
11.25% Senior Notes due 2008, in an aggregate principal amount not to
exceed $400,000,000;
(c) Debt under the 10.5% Note Documents in a principal amount
not greater than the principal amount thereof on the Initial Borrowing
Date after giving effect to the Transactions;
(d) the Exchange Note Obligations (including any Replacement
Second Priority Debt in respect thereof) and Debt under the Indentures,
in each case in a principal amount not greater than the principal
amount thereof on the Initial Borrowing Date after giving effect to the
Transactions; provided that no Subsidiary Guarantor will have any
liability thereon except its obligations under the Second Priority
Collateral Agreements;
(e) (i) the Synthetic Lease Obligations (including any
Replacement Senior Second Priority Debt in respect thereof and any
unsecured Debt extending, or having the effect of extending, the
maturity of, or refunding, refinancing or exchanging, in whole or in
part such Synthetic Lease Obligations, which unsecured Debt meets the
requirements set forth in clauses (i) through (iv) of Section 5.20(f))
so long as the amount financed thereunder does not exceed $107,000,000,
plus amounts permitted pursuant to Section 5.29 (including in each case
Guarantees by the Borrower and Rite Aid Realty Corp. in respect of such
Synthetic Leases); provided that no Subsidiary Guarantor (other than
Rite Aid Realty Corp.) will have any liability thereon except its
obligations under the Second Priority Collateral Agreements and (ii)
Attributable Debt in respect of any Sale and Leaseback Transactions in
existence on the Closing Date;
(f) unsecured Debt of the Borrower extending, or having the
effect of extending, the maturity of, or refunding, refinancing or
exchanging, in whole or in part, Debt described in clauses (b), (c) and
(d), provided that (i) the terms of any such extending, refunding,
refinancing or exchanging Debt, and of any agreement entered into and
of any instrument issued in connection therewith, are otherwise
permitted by the Senior Loan Documents, (ii) the maturity of any such
extending, refunding, refinancing or exchanging of Debt is no earlier
than September 1, 2005, (iii) the terms relating to principal amount,
amortization, convertibility and subordination (if any), and other
material terms taken as a whole, of any such extending, refunding,
refinancing or exchanging of Debt, and of any agreement entered into
and of any instrument issued in connection therewith, are no less
85
favorable in any material respect to the Borrower and the Subsidiaries
or the Senior Bank Parties than the terms of any agreement or
instrument governing the Debt being extended, refunded, refinanced or
exchanged and the interest rate applicable to such extending, refunding
or refinancing Debt does not exceed the then applicable market interest
rate, and (iv) the principal amount of such extending, refunding,
refinancing or exchanging of Debt shall not be increased above the
principal amount of the Debt being extended, refunded, refinanced or
exchanged outstanding immediately prior to such extension, refunding,
refinancing or exchanging;
(g) Additional Senior Second Priority Debt of the Borrower
(including any Replacement Senior Second Priority Debt in respect
thereof and any unsecured Debt extending, or having the effect of
extending, the maturity of, or refunding, refinancing or exchanging, in
whole or in part such Additional Senior Second Priority Debt, which
unsecured Debt meets the requirements set forth in clauses (i) through
(iv) of Section 5.20(f)), in an aggregate principal amount at any time
outstanding not to exceed $200,000,000 less the aggregate amount of
Attributable Debt outstanding at any time in respect of the Synthetic
Lease Obligations and Debt extending, refunding, refinancing or
exchanging such Synthetic Lease Obligations incurred pursuant to clause
(e) above (without regard to any amounts incurred thereunder and
permitted by Section 5.29); provided that (i) the terms and conditions
of such Debt shall be satisfactory to the Supermajority Banks and (ii)
such Debt shall by its terms provide that it is subordinated only to
the Senior Obligations;
(h) Additional Second Priority Debt (including any Replacement
Second Priority Debt in respect thereof and any unsecured Debt
extending, or having the effect of extending, the maturity of, or
refunding, refinancing or exchanging, in whole or in part such
Additional Second Priority Debt, which unsecured Debt meets the
requirements set forth in clauses (i) through (iv) of Section 5.20(f))
in an aggregate principal amount not exceeding $300,000,000 and having
a final maturity date after January 1, 2006;
(i) Debt or Attributable Debt, including any Debt or
Attributable Debt extending, or having the effect of extending, the
maturity of, or refunding, refinancing or exchanging, in whole or in
part such Debt or Attributable Debt, in an aggregate principal amount
not exceeding $150,000,000 at any time outstanding secured by Liens on
real property or in the form of Sale and Leaseback Transactions in
respect of such real property and having a final maturity date after
January 1, 2006; provided that such Liens do not attach to, and such
Sale and Leaseback Transactions shall not be in respect of, any
86
property or assets other than such real property and shall not, in any
event, attach to, or be in respect of, any of the Mortgaged Properties;
(j) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(k) Debt for borrowed money and Capital Leases existing on the
date hereof and set forth in Schedule 5.20(k), but not any extensions,
renewals or replacements of such Debt for borrowed money;
(l) Debt or Attributable Debt in respect of Capital Leases
(whether or not in the form of Sale and Leaseback Transactions or
Synthetic Leases) so long as such Capital Leases were leases existing
as of the Initial Borrowing Date, which are reclassified from operating
leases to Capital Leases;
(m) Debt (including Capital Leases) and Attributable Debt in
respect of Synthetic Leases and Sale and Leaseback Transactions in
respect of equipment financing or leasing in the ordinary course of
business of the Borrower and its Subsidiaries consistent with past
practices;
(n) Debt (including Capital Leases) and Attributable Debt in
respect of Synthetic Leases and Sale and Leaseback Transactions
incurred to finance the acquisition, development, construction or
opening of any Store after the Initial Borrowing Date which is not
inconsistent with the Borrower's business plan referenced in Section
3.01(l); provided that such Debt or Attributable Debt is (A) incurred
within 24 months of the completion of the acquisition, development,
construction or opening thereof, and any Lien securing such Debt or
Attributable Debt is limited to the Store financed with the proceeds
thereof, or (B) in the case of a Sale and Leaseback Transaction,
permitted under Section 5.14(a), (b) or (c);
(o) Debt (including Capital Leases) and Attributable Debt in
respect of Synthetic Leases and Sale and Leaseback Transactions
incurred to finance the acquisition after the Initial Borrowing Date of
property or assets provided that (i) such Debt or Attributable Debt is
incurred within 24 months of the acquisition of such property or
assets, (ii) any Lien securing such Debt or Attributable Debt is
limited to the property or assets financed with the proceeds thereof
and (iii) the aggregate principal amount of Debt and Attributable Debt
incurred pursuant to this clause (o) shall not exceed $100,000,000 at
any time outstanding; and
87
(p) Debt of the Borrower and its Subsidiaries in respect of
intercompany investments permitted under Section 5.21(a).
SECTION 5.21. Limitation on Investments and Acquisitions. (a) Neither
the Borrower nor any Subsidiary will make or acquire any Investment in any
Person other than:
(i) Investments in Subsidiary Guarantors;
(ii) Investments of the Borrower and the Subsidiary Guarantors
in existence on the Initial Borrowing Date;
(iii) Temporary Cash Investments;
(iv) Investments received as consideration for any sale or
other disposition permitted by Section 5.23;
(v) Investments in Xxxxxxxxx.xxx existing on the date hereof;
(vi) Investments by the Subsidiaries of the Borrower in the
Borrower, but only to the extent that the uses of the proceeds of such
Investments would be permitted as uses of proceeds of the Loans
pursuant to Section 5.24(b);
(vii) any Investment by a Subsidiary Guarantor in a Person
other than a Subsidiary that is not otherwise permitted by the
foregoing clauses of this Section if, immediately after such Investment
is made or acquired, the aggregate net book value of all Investments
permitted by this clause (vii) does not exceed at any one time
outstanding the greater of (A) $200,000,000 and (B) 10% of Consolidated
Net Worth; and
(viii) usual and customary loans and advances to employees,
officers and directors;
(ix) Investments by the Borrower or any of its Subsidiaries in
Joint Ventures not to exceed $5,000,000 in the aggregate in any fiscal
year of the Borrower; and
(x) Investments in charitable foundations organized under
Section 501(c) of the Internal Revenue Code not to exceed $1,000,000 in
any calendar year.
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(b) The Borrower will not, and will not permit any Subsidiary to,
consummate any Business Acquisition to the extent that the aggregate
consideration paid or payable by the Borrower or any Subsidiary (including Debt
assumed or consolidated in accordance with generally accepted accounting
principles) in connection with all such Business Acquisitions on or after the
Initial Borrowing Date would exceed $50,000,000.
SECTION 5.22. Consolidations and Mergers. (a) Without limiting the
restrictions on Business Acquisitions set forth above, the Borrower will not
consolidate or merge with or into any other Person; provided that the Borrower
may merge with another Person if (i) the Borrower is the corporation surviving
such merger, (ii) immediately after giving effect to such merger, no Default
shall have occurred and be continuing, and (iii) if such other Person is a
Subsidiary Guarantor, such Subsidiary Guarantor shall have no property that
constitutes Senior Collateral.
(b) No Subsidiary Guarantor will consolidate or merge with or into any
other Person, except, without limiting the restrictions on Business Acquisitions
set forth above, a Subsidiary Guarantor may merge with another Person if (A)
either (1) a Subsidiary Guarantor is the corporation surviving such merger, or
(2) the Subsidiary Guarantor that merges with such Person shall have no property
that constitutes Senior Collateral, and (B) immediately after giving effect to
such merger, no Default shall have occurred and be continuing.
SECTION 5.23. Dispositions of Assets. (a) The Borrower will not dispose
of any capital stock of any Subsidiary Guarantor other than to another
Subsidiary Guarantor, or permit any Subsidiary Guarantor to issue capital stock
to any Person other than the Borrower or another Subsidiary Guarantor.
(b) The Borrower will not, and will not permit any Subsidiary Guarantor
to, dispose of any property or assets except
(i) any Permitted Disposition;
(ii) any sale or other disposition of the stock of
Xxxxxxxxx.xxx;
(iii) any other disposition of property or assets of the
Borrower or any Subsidiary for fair value not in the ordinary course of
business;
(iv) any sale or other disposition of the real property
described as X.X. 00xx Xxxxxx and Mountainview Road, Scottsdale,
Arizona, together with any improvements thereon; and
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(v) any sale or disposition to a third party of stores, leases
and prescription files closed at substantially the same time as, and
entered into as part of a single related transaction with, the purchase
or other acquisition from such third party of stores, leases and
prescription files of a substantially equivalent value;
provided that, with respect to sales or dispositions under clauses (ii) and
(iii) and, with respect to any net consideration received from any transaction
described in clause (v), (1) at least 75% of the consideration therefor shall
consist of cash, and (2) the Net Cash Proceeds of such sale or disposition or
consideration are applied as provided in Section 2.13(c).
SECTION 5.24. Use of Proceeds. (a) The proceeds of the Term Loans will
be used by the Borrower exclusively (i) to refinance outstanding Debt, (ii) to
pay transaction costs for the Transactions, and (iii) for purposes set forth in
clause (b).
(b) The proceeds of the Revolving Loans and Swingline Loans will be
used by the Borrower solely for the following purposes:
(i) loans or other transfers to Rite Aid Hdqtrs. Corp. for
purposes of financing inventory purchases pursuant to the Intercompany
Inventory Purchase Agreement and advancing funds to Subsidiary
Guarantors for their general corporate purposes, including working
capital, permitted Capital Expenditures and permitted Business
Acquisitions;
(ii) transfers to an operating account for the payment of
operating expenses (including rent, utilities, taxes, wages, repair and
similar expenses) of, and intercompany Investments permitted under
Section 5.21(a) in, the Borrower or any Subsidiary Guarantors;
(iii) payment by the Borrower of principal, interest, fees and
expenses with respect to its Debt when due (including associated costs,
fees and expenses) and payment of the Borrower's taxes, administrative,
operating and other expenses; and
(iv) dividends required to be made in respect of the capital
stock listed on Schedule 5.24(b)(iv) or described in Section 5.26(c).
(c) Letters of Credit may be issued in the ordinary course of the
Borrower's business for permitted general corporate purposes.
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(d) No use of the proceeds of the Loans or the issuance of Letters of
Credit will be for the purpose of prepaying commercial paper prior to the
maturity thereof and no such use of proceeds will be, directly or indirectly,
for the purpose, whether immediate, incidental or ultimate, of buying or
carrying any "margin stock" within the meaning of Regulation U. The Borrower
will ensure that no such use of proceeds or issuance of Letters of Credit will
violate Regulation T, U or X.
SECTION 5.25. Restrictions on Asset Holdings by the Borrower. The
Borrower will not at any time:
(i) make or hold any Investments other than investments in the
capital stock of Xxxxxxxxx.xxx and its Subsidiaries (including any
distributions or other assets received in respect thereto), Investments
received as consideration in connection with a disposition of
Xxxxxxxxx.xxx, intercompany advances to Subsidiaries and Investments
permitted by clause (iii) below;
(ii) acquire or hold any Stores, other capital assets,
inventory or accounts receivable, other than any real estate which the
Borrower holds only as lessor, and which is leased and operated by
another Person; or
(iii) acquire or hold cash, cash equivalents, Temporary Cash
Investments or balances in bank accounts other than such amounts as are
reasonably anticipated (at the time so acquired or held) to be utilized
within five Business Days to pay costs, expenses and other obligations
of the Borrower referred to in Section 5.24(b).
SECTION 5.26. Restricted Payments. After the date hereof, neither the
Borrower nor any Subsidiary will declare or make any Restricted Payment other
than
(a) payments of dividends to Subsidiary Guarantors;
(b) payments of cash dividends (i) to the Borrower for
purposes permitted as uses of the proceeds of the Loans pursuant to
Section 5.24(b), and (ii) required to be made in respect of the capital
stock listed on Schedule 5.24(b)(iv);
(c) payments of cash dividends required to be made in respect
of capital stock issued in connection with exchanges of Debt for common
stock of the Borrower in an aggregate amount not to exceed $1,000,000
in any calendar year; and
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(d) so long as immediately prior and immediately after giving
effect to any such repurchase or other acquisition, no Default or Event
of Default has occurred and is continuing, the repurchase or other
acquisition of shares of or options to purchase shares of, capital
stock of the Borrower or any of its Subsidiaries from employees, former
employees, directors or former directors of the Borrower or any of its
Subsidiaries (or permitted transferees of such employees, former
employees, directors or former directors), pursuant to the terms of the
agreements (including employment agreements) or plans (or amendments
thereto) approved by the board of directors of the Borrower under which
such individuals purchase or sell or are granted the option to purchase
or sell, shares of such capital stock; provided, however, that the
aggregate amount of such repurchases and other acquisitions shall not
exceed $10,000,000.
SECTION 5.27. Business of Borrower and Subsidiaries. The Borrower will
not, and will not cause or permit any of the Subsidiaries to, engage at any time
in any business or business activity other than the business conducted on the
Initial Borrowing Date by it and business activities reasonably incidental
thereto.
SECTION 5.28. Transactions with Affiliates. The Borrower will not, and
will not cause or permit any of the Subsidiaries to, directly or indirectly
enter into or conduct any transactions or series of transactions (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any Affiliate of the Borrower, other than
the payment of transaction costs approved by the Senior Administrative Agent
before the Initial Borrowing Date (an "Affiliate Transaction"), other than
(a) the payment of compensation to directors, officers, and
employees of the Borrower and its Subsidiaries in the ordinary course
of business;
(b) payments in respect of Affiliate Transactions required to
be made pursuant to agreements or arrangements in effect on the Initial
Borrowing Date and set forth in Schedule 5.28(b) hereto;
(c) Affiliate Transactions involving the acquisition of
inventory in the ordinary course of business, provided that (i) the
terms of such Affiliate Transaction are (A) set forth in writing, (B)
in the best interests of the Borrower or such Subsidiary as the case
may be, and (C) no less favorable to the Borrower or such Subsidiary,
as the case may be, than those that could be obtained in a comparable
arm's length transaction with a person that is not an Affiliate of the
Borrower, and (ii) if such Affiliate Transaction involves aggregate
payments or value in excess of $50,000,000, the board of directors of
the
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Borrower (including a majority of the disinterested members of the
board of directors) approves such Affiliate Transaction and, in its
good faith judgment, believes that such Affiliate Transaction complies
with clauses (i)(B) and (C) of this paragraph;
(d) any other Affiliate Transaction, provided that (i) the
terms of such Affiliate Transaction are (A) set forth in writing, (B)
in the best interests of the Borrower or such Subsidiary, as the case
may be, and (C) no less favorable to the Borrower or such Subsidiary,
as the case may be, than those that could be obtained in a comparable
arm's length transaction with a person that is not an Affiliate of the
Borrower, and (ii) if such Affiliate Transaction involves aggregate
payments or value in excess of $25,000,000 in any 12-month period, the
board of directors of the Borrower (including a majority of the
disinterested members of the board of directors) approves such
Affiliate Transaction and, in its good faith judgment, believes that
such Affiliate Transaction complies with clauses (i)(B) and (C) of this
paragraph and (iii) if such Affiliate Transaction involves aggregate
payments or value in excess of $50,000,000 in any 12-month period, the
Borrower obtains a written opinion from an independent investment
banking firm or appraiser of national prominence, as appropriate to the
effect that such transaction is fair to the Borrower or such
Subsidiary, as the case may be, from a financial point of view; and
(e) Affiliate Transactions between or among the Borrower
and/or one or more Subsidiary Guarantors.
SECTION 5.29. New Synthetic Leases. Neither the Borrower nor any
Subsidiary will enter into any Synthetic Lease after the Initial Borrowing Date
if, after giving effect thereto, the aggregate amount financed under all
Synthetic Leases entered into in any period of twelve consecutive calendar
months commencing after the date hereof would exceed $35,000,000 unless such
Synthetic Lease is otherwise permitted under Section 5.20(m), (n) or (o).
SECTION 5.30. Corporate Separateness. The Borrower will, and will cause
each Subsidiary to, take all necessary steps to maintain its identity as a
separate legal entity from other Persons and to make it manifest to third
parties that it is an entity with assets and liabilities distinct from those of
each of other Person.
SECTION 5.31. Limitation on Derivative Obligations. The Borrower will
not, and will not permit any of its Subsidiaries to, incur or at any time be
liable with respect to any monetary liability under any Derivative Obligations;
unless such Derivative Obligations are entered into for bona fide hedging
purposes of the Borrower or its Subsidiary Guarantors (as determined in good
faith by the senior management of the Borrower) and correspond in terms of
notional amount,
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duration, currencies and interest rates, as applicable, to Debt of the Borrower
or its Subsidiary Guarantors incurred without violation of this Agreement or to
business transactions of the Borrower or its Subsidiary Guarantors on customary
terms entered into in the ordinary course of business, and do not exceed an
amount equal to the aggregate principal amount of the Loans and the Second
Priority Debt Obligations.
SECTION 5.32. Delivery of Security Opinion. On or prior to July 2,
2001, the Borrower shall deliver the opinion of Skadden, Arps, Slate, Xxxxxxx &
Xxxx, Special New York Counsel to the Borrower, which opinion shall be dated
July 2, 2001 and shall be substantially in the form of Exhibit Q hereto.
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
any Loan, or shall fail to pay within five days of the due date thereof
any interest, fees or other amount payable hereunder;
(b) the Borrower or any Subsidiary Guarantor shall fail to
observe or perform any covenant contained in Sections 5.01(f)(i), 5.07,
5.12, 5.13, 5.14, 5.15, 5.16, 5.17, 5.18, 5.19, 5.20, 5.21, 5.22, 5.23,
5.24, 5.26, 5.27, 5.28, 5.29 and 5.32;
(c) the Borrower or any Subsidiary Guarantor shall fail to
observe or perform any covenant or agreement contained in the Senior
Loan Documents (other than those covered by clause (a) or (b) above) in
the case of covenants contained in Section 5.06 or 5.09, for 5 days, in
the case of covenants contained in Section 5.01 (other than Section
5.01(f)(i)), for 10 days, and in the case of any other covenant, for 20
days after written notice thereof has been given to the Borrower by the
Senior Administrative Agent or by the Majority Banks acting through the
Senior Administrative Agent;
(d) any representation, warranty, certification or statement
made (or deemed made) by the Borrower or any Subsidiary Guarantor in
any Senior Loan Document or in any certificate, financial statement or
other document delivered pursuant to any Senior
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Loan Document shall prove to have been incorrect in any material
respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of any Material Financial Obligations, including any
obligation to reimburse letter of credit obligations or to post cash
collateral with respect thereto, when due or within any applicable
grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Financial Obligations or
enables (or, if such event or condition does not otherwise give rise to
a Default hereunder, which with the giving of notice or lapse of time
or both would enable) the holder of such Material Financial Obligations
or any Person acting on such holder's behalf to accelerate the maturity
thereof;
(g) the Borrower or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorize any of
the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against the Borrower or any Subsidiary
under the federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $5,000,000 which it shall
have become liable to pay under Title IV of ERISA; or notice of intent
to terminate a Material Plan shall be filed under Title IV of ERISA by
any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV
95
of ERISA to terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer, any Material Plan; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $25,000,000;
(j) judgments or orders, individually or in the aggregate, for
the payment of money in excess of $25,000,000 shall be rendered against
the Borrower or any Subsidiary and such judgment or order shall
continue unsatisfied and unstayed for a period of 30 days;
(k) (i) any Lien created by any Senior Collateral Document
shall at any time fail to constitute a valid and (to the extent
required by such Senior Collateral Document) perfected Lien on all of
the Senior Collateral purported to be subject thereto, securing the
obligations purported to be secured thereby, with the priority required
by the Senior Loan Documents; provided, however, if such failure does
not result in a prepayment obligation pursuant to Section 2.13(b), such
failure continues uncured for 30 days, or (ii) the Borrower or any
Subsidiary shall so assert in writing, or any Senior Loan Document
shall become invalid or the Borrower or any Subsidiary shall so assert
in writing;
(l) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
other than Green Equity Investors III, L.P., and its Affiliates shall
have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the SEC under said Act) of 20% or more of the
outstanding shares of common stock of the Borrower; or, during any
period of 12 consecutive calendar months, individuals who were
directors of the Borrower on the first day of such period shall cease
to constitute a majority of the board of directors of the Borrower; or
(m) any Subsidiary Guarantor shall amend or revoke any
instruction in the Government Lockbox Account Agreement to any
Government Lockbox Account Bank in respect of a Government Lockbox
Account unless the Senior Administrative Agent shall have given its
prior written consent;
then, and in every such event, the Senior Administrative Agent shall (i) if
requested by the Majority Revolving Credit Banks, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, (ii) if requested
by Banks holding more than 50% of the unused
96
Delayed Draw Term Loan Commitments, by notice to the Borrower terminate the
Delayed Draw Term Loan Commitments and they shall thereupon terminate and (ii)
if requested by Banks holding more than 50% in aggregate principal amount of the
Loans, by notice to the Borrower declare the Loans (together with accrued
interest thereon) to be, and the Loans (together with accrued interest thereon)
shall thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; provided that in the case of any of the Events of Default specified in
clause (g) or (h) above with respect to the Borrower, without any notice to the
Borrower or any other act by the Senior Administrative Agent or the Banks, the
Commitments shall thereupon terminate and the Loans (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.
SECTION 6.02. Notice of Default. The Senior Administrative Agent shall
give notice to the Borrower under Section 6.01(c) promptly upon being requested
to do so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Senior Administrative Agent, the Senior Collateral
Agent and the Syndication Agents to take such action as agent on its behalf and
to exercise such powers under the Senior Loan Documents as are delegated to such
Agent by the terms thereof, together with all such powers as are reasonably
incidental thereto. The Senior Administrative Agent is hereby expressly
authorized by the Banks and the Issuing Banks, without hereby limiting any
implied authority, (a) to receive on behalf of the Banks and the Issuing Banks
all payments of principal of and interest on the Loans, all payments in respect
of L/C Disbursements and all other amounts due to the Banks hereunder, and
promptly to distribute to each Bank its proper share of each payment so
received; (b) to give notice on behalf of each of the Banks or the Issuing Banks
to the Borrower of any Event of Default specified in this Agreement of which the
Senior Administrative Agent has actual knowledge acquired in connection with its
agency hereunder; and (c) to distribute to each Bank copies of all notices,
financial statements and other materials delivered by the Borrower or any other
Obligor pursuant to this Agreement or the other Senior Loan Documents as
received by the Senior Administrative Agent. Without limiting the generality of
the foregoing, the Agents are hereby expressly authorized to execute any and all
documents (including releases) with respect to the Senior Collateral and the
rights of the Senior
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Bank Parties with respect thereto, as contemplated by and in accordance with the
provisions of this Agreement and the Senior Collateral Documents.
SECTION 7.02. Agents and Affiliates. Each of Citicorp USA, The Chase
Manhattan Bank, Credit Suisse First Boston and Fleet Retail Finance Inc. shall
have the same rights and powers under the Senior Loan Documents as any other
Bank and may exercise or refrain from exercising the same as though it were not
an Agent, and Citicorp USA, The Chase Manhattan Bank, Credit Suisse First Boston
and Fleet Retail Finance Inc. and their affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Borrower or
any Subsidiary or affiliate of the Borrower as if it were not an Agent.
SECTION 7.03. Action by Agents. The obligations of the Agents under the
Senior Loan Documents are only those expressly set forth therein. Without
limiting the generality of the foregoing, no Agent shall be required to take any
action with respect to any Default, except as expressly provided in the Senior
Loan Documents. The Banks hereby acknowledge that no Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Majority Banks or the Supermajority Banks, as the case may be.
SECTION 7.04. Consultation with Experts. Each of the Agents may consult
with legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agents. Neither any Agent nor any of their
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it or any of them in
connection herewith (i) with the consent or at the request of the Majority Banks
(or such other number or percentage of Banks as may be specified in the Senior
Loan Documents for particular purposes) or (ii) in the absence of its or their
own gross negligence or willful misconduct. Neither any Agent nor any of their
affiliates nor any of their respective directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into or verify
(i) any statement, warranty or representation made in connection with the Senior
Loan Documents or any Borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower; (iii) the satisfaction of
any condition specified in Article 3, except receipt of items required to be
delivered to the Agents; or (iv) the validity, effectiveness or genuineness of
any Senior Loan Document or any other instrument or writing furnished in
connection herewith. No Agent shall incur any liability by acting in reliance
upon any notice, consent, certificate, statement, or other writing (which may be
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a bank wire, telex or similar writing) believed by it to be genuine or to be
signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Credit Exposure, indemnify the Agents, their affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any other
Loan Document or any action taken or omitted by such indemnitees hereunder or
thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon any Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon any Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Resignation of Agents. Subject to the appointment and
acceptance of a successor Senior Administrative Agent or Senior Collateral Agent
as provided in this paragraph, the Senior Administrative Agent or the Senior
Collateral Agent, as the case may be, may resign at any time by notifying the
Banks, the Swingline Banks, the Issuing Banks and the Borrower. Upon any such
resignation, the Majority Banks shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Majority Banks and shall have accepted such appointment within 30 days
after the retiring Senior Administrative Agent or Senior Collateral Agent, as
the case may be, gives notice of its resignation, then the retiring Senior
Administrative Agent or Senior Collateral Agent, as the case may be, may, on
behalf of the Banks, the Swingline Banks and the Issuing Banks, appoint a
successor Senior Administrative Agent or Senior Collateral Agent, as the case
may be, which shall be a bank with an office in New York, New York, or an
Affiliate of any such bank. Upon the acceptance of its appointment as Senior
Administrative Agent or Senior Collateral Agent, as the case may be, hereunder
by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Senior Administrative
Agent or Senior Collateral Agent, as the case may be, and the retiring Senior
Administrative Agent or Senior Collateral Agent, as the case may be, shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Senior Administrative Agent or Senior Collateral Agent,
as the case may be, shall be the same as those payable to its predecessor
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unless otherwise agreed between the Borrower and such successor. After the
Senior Administrative Agent's or Senior Collateral Agent's resignation
hereunder, the provisions of this Article and Section 9.03 shall continue in
effect for the benefit of such retiring Senior Administrative Agent or Senior
Collateral Agent, as the case may be, its sub-agents and their respective
Affiliates in respect of any actions taken or omitted to be taken by any of them
while it was acting as Senior Administrative Agent or Senior Collateral Agent,
as the case may be.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any Euro-Dollar
Borrowing:
(a) the Senior Administrative Agent determines that deposits
in dollars (in the applicable amounts) are not being offered to the
Senior Administrative Agent in the London interbank market for such
Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments of the relevant Class advise the Senior Administrative Agent that
the Adjusted London Interbank Offered Rate as determined by the Senior
Administrative Agent will not adequately and fairly reflect the cost to such
Banks of funding their Euro-Dollar Loans for such Interest Period,
the Senior Administrative Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Senior Administrative Agent notifies
the Borrower that the circumstances giving rise to such suspension no longer
exist, the obligations of the Banks to make Euro-Dollar Loans or to continue or
convert outstanding Loans as or into Euro-Dollar Loans, shall be suspended, and
each outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on
the last day of the then current Interest Period applicable thereto. Unless the
Borrower notifies the Senior Administrative Agent at least two Domestic Business
Days before the date of any Euro-Dollar Borrowing for which a Borrowing Request
has previously been given that it elects not to borrow on such date, such
Borrowing shall instead be made as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by
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any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and
such Bank shall so notify the Senior Administrative Agent, the Senior
Administrative Agent shall forthwith give notice thereof to the other Banks and
the Borrower, whereupon until such Bank notifies the Borrower and the Senior
Administrative Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Senior Administrative Agent pursuant
to this Section, such Bank shall designate a different Euro-Dollar Lending
Office if such designation will avoid the need for giving such notice and will
not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. If
such notice is given, each Euro-Dollar Loan of such Bank then outstanding shall
be converted to a Base Rate Loan either (a) on the last day of the then current
Interest Period applicable to such Euro-Dollar Loan if such Bank may lawfully
continue to maintain and fund such Loan as a Euro-Dollar Loan to such day or (b)
immediately if such Bank shall determine that it may not lawfully continue to
maintain and fund such Loan as a Euro-Dollar Loan to such day. Interest and
principal on any such Base Rate Loan shall be payable on the same dates as, and
on a pro rata basis with, the interest and principal payable on the related
Euro-Dollar Loans of the other Banks.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after the
date of this Agreement, the adoption of any applicable law, rule or regulation,
or any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Federal Reserve Board, but excluding any such requirement
included in Statutory Reserves), special deposit, insurance assessment or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Bank (or its Euro-Dollar Lending Office) or shall impose
on any Bank (or its Euro-Dollar Lending Office) or on the London interbank
market any other condition affecting its Euro-Dollar Loans, its Note or its
obligation to make Euro-Dollar Loans and the result of any of the foregoing is
to increase the cost to such Bank (or its Euro-Dollar Lending Office) of making
or maintaining any Euro-Dollar Loan, or to reduce the amount of any sum received
or receivable by such Bank (or its Euro-Dollar Lending Office) under this
Agreement or under its Note with respect thereto, by an amount deemed by such
Bank to be material, then, within 15 days after demand by such Bank (with a copy
to the Senior Administrative Agent), the Borrower shall pay to such Bank (on an
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after-tax basis) such additional amount or amounts as will compensate such Bank
for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Senior Administrative Agent), the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) (on an after-tax basis) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Senior
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation pursuant to this
Section and will designate a different Euro-Dollar Lending Office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. A certificate of any Bank claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of clearly demonstrable error. In determining such
amount, such Bank may use any reasonable averaging and attribution methods.
SECTION 8.04. Taxes. (a) Any and all payments by the Borrower to or for
the account of any Bank or the Senior Administrative Agent hereunder or under
any Note shall be made free
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and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding,
(i) in the case of each Bank and the Senior Administrative
Agent, taxes imposed on its income, and franchise or similar taxes
imposed on its net income,
(A) by the jurisdiction or any political subdivision
thereof under the laws of which such Bank or the Senior
Administrative Agent (as the case may be) is organized, or
(B) by any jurisdiction or any political subdivision
thereof in which such Bank or the Senior Administrative Agent
(as the case may be) carries on business (but only if such
taxes are imposed as a result of the carrying on of such
business in that jurisdiction) or,
(C) in the case of each Bank, by the jurisdiction or
any political subdivision thereof where such Bank's Applicable
Lending Office is located or carries on business, and
(ii) taxes to which a Bank becomes subject after the
Applicable Date as a result of a change in the residence, place of
incorporation, or principal place of business of such Bank, a change in
the Applicable Lending Office of such Bank or other similar
circumstances, or as a result of the recognition by such Bank of gain
on the sale, assignment or participation by such Bank of the
participating interests in its creditor positions hereunder,
(all such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note to any Bank or the Senior Administrative
Agent, (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section) such Bank or the Senior Administrative Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions, (iii)
the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv) the
Borrower shall furnish to the Senior Administrative Agent, at its address
referred to in Section 9.01, the original or a certified copy of a receipt
evidencing payment thereof.
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(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any Note or
from the execution or delivery of, or otherwise with respect to, any Senior Loan
Document (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Bank and the Senior
Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 8.04) paid by such Bank or
the Senior Administrative Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 15 days from the date such
Bank or the Senior Administrative Agent (as the case may be) makes demand
therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank
(the "Applicable Date"), and from time to time thereafter if requested in
writing by the Borrower (but only so long as such Bank remains lawfully able to
do so), shall provide the Borrower with Internal Revenue Service Form 1001 or
W-8BEN, 4224 or W-8ECI, as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that (i) each of such
Bank and such Bank's Applicable Lending Office is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the rate
of withholding tax on payments of interest, (ii) the income receivable pursuant
to this Agreement is effectively connected with the conduct of a trade or
business in the United States or (iii) Loans, or distributions of interest in
respect thereof, pursuant to this agreement are otherwise exempt from United
States withholding taxes. If the form provided by a Bank at the time such Bank
first becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form pursuant to Section 8.04(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.04(c) with respect to
Taxes imposed by the United States; provided, however, that should a Bank, which
is otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
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(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, then such Bank will change
the jurisdiction of its Applicable Lending Office so as to eliminate or reduce
any such additional payment which may thereafter accrue if such change, in the
judgment of such Bank, is not otherwise disadvantageous to such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (a) the obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (b) any Bank has demanded compensation
under Section 8.03 or 8.04 with respect to its Euro-Dollar Loans and the
Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such
Bank through the Senior Administrative Agent, have elected that the provisions
of this Section shall apply to such Bank, then, unless and until such Bank
notifies the Borrower that the circumstances giving rise to such suspension or
demand for compensation no longer exist, all Loans which would otherwise be made
by such Bank as (or continued as or converted into) Euro-Dollar Loans shall
instead be Base Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks). If
such Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist, the principal amount of
each such Base Rate Loan shall be converted into a Euro-Dollar Loan on the first
day of the next succeeding Interest Period applicable to the related Euro-Dollar
Loans of the other Banks.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party at
its address or telex number set forth in Annex 2, in an Administrative
Questionnaire pursuant to Section 9.06(c), or at such other address or telex
number as such party may specify from time to time for the purpose by notice to
the Senior Administrative Agent and the Borrower. Each such notice, request or
other communication shall be effective (a) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the appropriate
answerback is received, (b) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid or (c) if given by any other means, when delivered at the address
specified in this Section; provided that notices to the Senior Administrative
Agent under Article 2 or Article 8 shall not be effective until received.
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SECTION 9.02. No Waivers. No failure or delay by the Senior
Administrative Agent or any Bank in exercising any right, power or privilege
under any Senior Loan Document shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided in the Senior Loan Documents shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses of the Senior Administrative Agent,
including fees and disbursements of special counsel for the Senior
Administrative Agent, in connection with the preparation and administration of
the Senior Loan Documents, any waiver or consent thereunder or any amendment
thereof or any Default or alleged Default hereunder and (ii) if an Event of
Default occurs, all out-of-pocket expenses incurred by the Senior Administrative
Agent and each Bank, including fees and disbursements of counsel, in connection
with such Event of Default and collection, bankruptcy, insolvency and other
enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Senior Administrative Agent
and each Bank, their respective affiliates and the respective directors,
officers, agents, employees, investment advisors of any fund and trustees of the
foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees and disbursements of
counsel, which may be incurred by such Indemnitee in connection with any
administrative or judicial proceeding (whether or not such Indemnitee shall be
designated a party thereto) brought or threatened relating to or arising out of
this Agreement, the other Loan Documents or any actual or proposed use of
proceeds of Loans hereunder; provided that no Indemnitee shall have the right to
be indemnified hereunder for such Indemnitee's own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
SECTION 9.04. Setoff; Sharing of Setoffs. (a) If an Event of Default
shall have occurred and be continuing, each Bank 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 Indebtedness at any time owing by such Bank
to or for the credit or the account of any Subsidiary Guarantor against any or
all the obligations of such Subsidiary Guarantor now or hereafter existing under
this Agreement and the other Senior Loan Documents held by such Bank,
irrespective of whether or not such Bank shall have made any demand under this
Agreement or any other Senior Loan Document and although such obligations may be
unmatured and regardless of the adequacy of any collateral. The rights
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of each Bank under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Bank may have.
(b) Each Bank agrees that if it shall, by exercising any right of
setoff or counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest due with respect to any Loan held by
it which is greater than the proportion received by any other Bank in respect of
the aggregate amount of principal and interest due with respect to any Loan held
by such other Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Loan held by the other Banks, and such
other adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Loans held by the Banks shall be
shared by the Banks pro rata; provided that nothing in this Section shall impair
the right of any Bank to exercise any right of setoff or counterclaim it may
have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness under the Loans. The
Borrower agrees, to the fullest extent it may effectively do so under applicable
law, that any holder of a participation in a Loan acquired pursuant to the
foregoing arrangements may exercise rights of setoff or counterclaim and other
rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.05. Amendments and Waivers; Release of Senior Collateral and
Subsidiary Guarantors. (a) Any provision of this Agreement or the Notes may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Borrower, by the Majority Banks (or if such provision by its terms
requires the consent of the Supermajority Banks or all of the Banks, by the
Supermajority Banks or all of the Banks, as the case may be, and if the rights
or duties of the Senior Administrative Agent are affected thereby, by the Senior
Administrative Agent); provided that no such amendment or waiver shall, unless
signed by all the Banks, (i) increase or decrease the Commitment of any Bank
(except for a ratable decrease in the Commitments of all Banks) or subject any
Bank to any additional obligation, (ii) reduce the principal of or rate of
interest on any Loan or any fees hereunder, (iii) postpone the date fixed for
any payment of principal of or interest on any Loan or any fees hereunder or for
termination of any Commitment, including the postponement of any scheduled date
of payment of the principal amount of any Term Loan under Section 2.11, (iv)
waive any condition for the initial Credit Event, (v) amend or waive any
provision of Section 2.13 or Section 2.19, the definitions of "Term Exposure"
and "Borrowing Base Amount", including indirectly through the amendment of any
defined term used therein, or Section 4.03 of the Collateral Trust and
Intercreditor Agreement (other than the last sentence of Section 4.03(a)
thereof), (vi) amend Section 2.15 in a manner that would alter the pro rata
sharing of payments required thereby, or (vii) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans, or the
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number of Banks, the definitions of "Majority Banks", "Majority Revolving Credit
Banks" or "Supermajority Banks", which shall be required for the Banks or any of
them to take any action under this Section or any other provision of this
Agreement.
(b) Any provision of any Senior Collateral Document may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
the Borrower and the Senior Administrative Agent with the consent of the
Majority Banks; provided that no such amendment or waiver shall, unless signed
by all the Banks, (i) alter the priorities set forth in Section 4.01 of the
Collateral Trust and Intercreditor Agreement or (ii) effect or permit a release
of all or substantially all of the Senior Collateral. Notwithstanding the
foregoing, (i) Senior Collateral shall be released from the Lien of the Senior
Collateral Documents from time to time as necessary to effect any sale of Senior
Collateral permitted by the Senior Loan Documents, and the Senior Administrative
Agent shall execute and deliver all release documents reasonably requested to
evidence such release; provided that arrangements satisfactory to the Senior
Administrative Agent shall have been made for application of the cash proceeds
thereof in accordance with Section 2.13 and for the pledge of any non-cash
proceeds thereof pursuant to the Senior Collateral Documents, and (ii) if a
Subsidiary Guarantor ceases to be a Subsidiary of the Borrower in accordance
with this Agreement, or ceases to own any property that constitutes Senior
Collateral, at the request of and at the expense of the Borrower, such
Subsidiary Guarantor shall be released from the Senior Subsidiary Guarantee
Agreement, the Senior Subsidiary Security Agreement and each other Senior Loan
Document to which it is a party.
SECTION 9.06. 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, except that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks, funds
regularly investing in loans of the type made hereunder or other institutions
(each a "Participant") participating interests in its Commitments or any or all
of its Loans. In the event of any such grant by a Bank of a participating
interest to a Participant, whether or not upon notice to the Borrower and the
Senior Administrative Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the Senior
Administrative Agent shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower hereunder including, without limitation,
the right to approve any amendment, modification or waiver of any provision of
this Agreement; provided
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that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause (i),
(ii) or (iii) of Section 9.05(a) without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Article 8 with respect
to its participating interest. An assignment or other transfer which is not
permitted by clause (c) or (d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in accordance
with this clause (b).
(c) Any Bank may at any time assign to one or more banks, funds
regularly in the business of lending money or, solely in the case of an
assignment of Term Loans, funds regularly investing in term loans of the type
made hereunder, or other institutions (each an "Assignee") all, or a part, of
its rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Acceptance Agreement hereto executed by such Assignee and such transferor Bank,
with (and subject to) notice to, and the subscribed consent of, the Borrower, so
long as no Default shall have occurred and be continuing, and the Senior
Administrative Agent (such consent of the Borrower and the Senior Administrative
Agent not to be unreasonably withheld or delayed); provided that (i) if an
Assignee is an affiliate of a Bank, a Related Fund or is a Bank prior to giving
effect to such assignment, such notice shall be given but no such consent shall
be required, and (ii) in the case of an assignment of less than all of the
rights and obligations of a Bank hereunder, such assignment shall be in a
minimum amount of, in the case of a Revolving Credit Commitment and/or Revolving
Loans, $5,000,000 and, in the case of a Term Loan Commitment and/or Term Loans,
$1,000,000, and multiples of $1,000,000. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with Loans, participations and
Commitments as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this clause (c), the transferor Bank,
the Senior Administrative Agent and the Borrower shall make appropriate
arrangements so that, if required, a new Note is issued to the Assignee. In
connection with any such assignment, the transferor Bank shall pay to the Senior
Administrative Agent an administrative fee for processing such assignment in the
amount of $1,000 (with only one such fee payable in connection with simultaneous
assignments to Related Funds), and the transferee Bank shall deliver a completed
Administrative Questionnaire to the Senior Administrative Agent. If the Assignee
is not incorporated under the laws of the United States of America or a state
thereof, it shall, prior to the first date on which interest or fees are payable
hereunder for its account, deliver to the Borrower and the Senior Administrative
Agent
109
certification as to exemption from deduction or withholding of any United States
federal income taxes in accordance with Section 8.04.
(d) Any Bank may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement and its Note to secure
obligations of such Bank, including without limitation (i) any pledge or
assignment to secure obligations to a Federal Reserve Bank and (ii) in the case
of any Bank that is a fund, any pledge or assignment of all or any portion of
such Bank's rights under this Agreement and such Bank's Note to any holders of
obligations owed, or securities issued, by such Bank as security for such
obligations or securities, or to any trustee for, or any other representative
of, such holders, and this Section 9.06 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 transferor Bank from its obligations
hereunder or substitute any such pledgee or assignee for such Bank as a party
hereto and in no event shall the applicable pledgee or assignee be considered to
be a "Bank" or be entitled to require the transferor Bank to take or omit to
take any action hereunder, and any transfer of the rights and obligations of a
"Bank" hereunder to any Person upon the foreclosure of any pledge or security
interest referred to in clause (ii) may only be made pursuant to the provisions
of Sections 9.06(c) governing assignments of interests in the Loans.
(e) Notwithstanding anything to the contrary contained herein, any Bank
("Granting Bank") may grant to a special purpose funding vehicle (an "SPC"),
identified as such in writing from time to time by the Granting Bank to the
Senior Administrative Agent and the Borrower, the option to provide to the
Borrower all or any part of any Loan that such Granting Bank would otherwise be
obligated to make to the Borrower pursuant to this Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan and
(ii) if an SPC elects not to exercise or otherwise fails to provide all or any
part of such Loan, the Granting Bank shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the Commitment of the Granting Bank to the same extent, and as if, such
Loan were made by such Granting Bank. Each party hereto hereby agrees that no
SPC shall be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting Bank). In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against, or
join any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof. In addition, notwithstanding
anything to the contrary contained in this Section 9.06, any SPC may (i) with
notice to, but without the prior written consent of, the Borrower and the Senior
Administrative
110
Agent and without paying any processing fee therefor, assign all or a portion of
its interests in any Loans to the Granting Bank or to any financial institutions
(consented to by the Borrower and the Senior Administrative Agent) providing
liquidity and/or credit support to or for the account of such SPC to support the
funding or maintenance of Loans and (ii) disclose on a confidential basis any
non-public information relating to its Loans to any rating agency, commercial
paper dealer or provider of any surety, guarantee or credit or liquidity
enhancement to such SPC. This Section 9.06(e) may not be amended with the
written consent of the SPC.
(f) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 than such
Bank would have been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written consent or by
reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to
designate a different Applicable Lending Office under certain circumstances or
at a time when the circumstances giving rise to such greater payment did not
exist.
SECTION 9.07. Governing Law; Submission to Jurisdiction. This Agreement
and each Note shall be governed by and construed in accordance with the laws of
the State of New York. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
SECTION 9.08. Counterparts; Integration. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
SECTION 9.09. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENTS
AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.10. Collateral Trust and Intercreditor Agreement. Each Bank,
Issuing Bank and Agent hereby authorizes the Senior Administrative Agent to
enter into the Collateral
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Trust Agreement and each other Senior Collateral Document on its behalf, and
agrees that the Senior Administrative Agent and the Senior Collateral Agent may
enforce the rights and remedies of the Senior Bank Parties under each Senior
Loan Document to the extent provided in the Senior Collateral Documents and the
Collateral Trust and Intercreditor Agreement.
SECTION 9.11. Cash Sweep. (a) On any day which:
(i) an Event of Default exists, or
(ii) the lesser of (x) the average Revolving Credit
Commitments (after deducting the average Aggregate Revolving Credit
Exposure) over any 30-day period and (y) the average Borrowing Base
Amount (after deducting the average Aggregate Revolving Credit Exposure
and the average aggregate Term Exposures of the Banks) over any 30- day
period, in each case, together with all amounts then on deposit in the
Cash Sweep Cash Collateral Account, is less than $50,000,000,
the Senior Collateral Agent, upon its determination or upon request by the
Majority Banks, shall be immediately be entitled to deliver Cash Sweep Notices.
(b) During a Cash Sweep Period, if:
(i) there is no Event of Default, and
(ii) the lesser of (x) the average Revolving Credit
Commitments (after deducting the average Aggregate Revolving Credit
Exposure) over any 30-day period and (y) the average Borrowing Base
Amount (after deducting the average Aggregate Revolving Credit Exposure
and the average aggregate Term Exposures of the Banks) over any 30- day
period, in each case, together with all amounts then on deposit in the
Cash Sweep Cash Collateral Account, is greater than $75,000,000,
the Senior Collateral Agent shall automatically rescind any Cash Sweep Notice.
(c) The Senior Collateral Agent reserves the right to send a Cash Sweep
Notice on each occasion of the occurrence of the events set forth in Section
9.11(a).
112
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
RITE AID CORPORATION
By:
---------------------------------------------
Name:
Title:
113
CITICORP USA, INC., as Senior Administrative
Agent, Senior Collateral Agent, Issuing Bank and
Swingline Bank
By:
---------------------------------------------
Name:
Title:
000
XXX XXXXX XXXXXXXXX BANK, as
Syndication Agent and Issuing Bank
By:
---------------------------------------------
Name:
Title:
115
CREDIT SUISSE FIRST BOSTON, as Syndication
Agent
By:
---------------------------------------------
Name:
Title:
116
FLEET RETAIL FINANCE INC., as Syndication
Agent and Swingline Bank
By:
---------------------------------------------
Name:
Title:
FLEET NATIONAL BANK, as Issuing Bank,
By:
---------------------------------------------
Name:
Title:
117
MELLON BANK, N.A., as Issuing Bank solely
with respect to the Mellon Standby Letters of Credit
By:
------------------------------------------------
Name:
Title:
118
Annex 1
Initial Revolving Credit Commitments and Term Loan Commitments
Term Loan Commitment
Funded in full
on the Delayed Draw
Initial Term Loan Total Term Loan Revolving Credit Total
Bank Borrowing Date Commitment Commitment Commitment Commitment
Citicorp USA, Inc.
The Chase Manhattan Bank
Credit Suisse First Boston
Fleet Retail Finance Inc.
TOTAL COMMITMENTS $1,400,000,000.00 $500,000,000 $00 1,900,000,000.00
Annex 2
Administrative Information
------------------------------------------------------------------------------------------------------------------
Name and Address Telephone Telecopy Attention
------------------------------------------------------------------------------------------------------------------
Rite Aid Corporation (000) 000-0000 (000) 000-0000 Chief Financial
00 Xxxxxx Xxxx Xxxxxxx
Xxxx Xxxx, XX 00000
xxx.xxxxxxx.xxx
------------------------------------------------------------------------------------------------------------------
Citicorp USA, Inc., as Senior
Administrative Agent
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
------------------------------------------------------------------------------------------------------------------
Citicorp USA, Inc., as Senior
Collateral Agent
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
------------------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank,
as Syndication Agent
Loan and Agency Services
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston, as
Syndication Agent
------------------------------------------------------------------------------------------------------------------
Fleet Retail Finance Inc., as 000-000-0000 000-000-0000 Xxxx Xxxxxx
Syndication Agent 000-000-0000 000-000-0000 Xxxxxxx Xxxxx
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
------------------------------------------------------------------------------------------------------------------
Citicorp USA, Inc., as Swingline
Bank
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
------------------------------------------------------------------------------------------------------------------
Fleet Retail Finance Inc., as
Swingline Bank
[Address]
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Name and Address Telephone Telecopy Attention
------------------------------------------------------------------------------------------------------------------
Citicorp USA, Inc., as Issuing Bank
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
------------------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank, as
Issuing Bank
------------------------------------------------------------------------------------------------------------------
Fleet National Bank, as Issuing
Bank
[Address]
------------------------------------------------------------------------------------------------------------------
Mellon Bank, N.A., as Issuing
Bank
[Address]
------------------------------------------------------------------------------------------------------------------
[Name of Bank]
Notices:
Domestic Lending Office:
Euro-Dollar Lending Office:
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
2
------------------------------------------------------------------------------------------------------------------
Name and Address Telephone Telecopy Attention
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
3
Annex 3
Description of the Transactions
All capitalized terms used herein but not defined herein shall have the
meanings provided in the Senior Credit Facility to which this Annex 3 is
attached and the Definitions Annex referred to therein. The following
transactions are referred to herein as the "Transactions".
1. Rite Aid will obtain a new senior secured credit facility pursuant
to the Senior Credit Facility in an aggregate principal amount of
$1,900,000,000. The Revolving Credit Commitments under the Senior Credit
Facility will incorporate the Citicorp Standby Letters of Credit, the Fleet
Standby Letters of Credit and the Mellon Standby Letters of Credit as Letters of
Credit under the Senior Credit Facility.
2. The Senior Bank Obligations will be unconditionally guaranteed by
the Subsidiary Guarantors pursuant to the Senior Subsidiary Guarantee Agreement
and the Senior Bank Obligations and 10.5% Note Obligations will be secured by a
first priority security interest in the Senior Collateral pursuant to the Senior
Subsidiary Security Agreement and the Senior Mortgages.
3. Rite Aid will consummate a tender offer for the 10.5% Notes on an
any and all basis, on terms reasonably satisfactory to the Agents.
4. An amount equal to $152,000,000 aggregate principal amount of 10.5%
Notes will be exchanged for an equivalent principal amount of Exchange Notes
plus 3,000,000 warrants with an exercise price of $6.00 per share;
5. The terms of the Exchange Notes will include (i) a Second Priority
Lien on the Senior Collateral that will be shared with the Additional Second
Priority Debt, if any, on a pari passu basis, and will be junior in right of
payments in respect of the Collateral to the Synthetic Lease Obligations and the
Additional Senior Second Priority Debt Obligations, if any, pursuant to the
Second Priority Subsidiary Security Agreement, (ii) an unconditional
subordinated guarantee by all of the Subsidiary Guarantors pursuant to the
Second Priority Subsidiary Guarantee Agreement and (iii) a maturity date of
September 15, 2006.
6. Rite Aid will issue $150,000,000 aggregate principal amount of
11.25% Senior Notes due 2008;
7. Rite Aid will establish the Synthetic Lease Facility with an
aggregate discounted present value of approximately $107,000,000 and use the
proceeds thereof, together with a portion of the proceeds from the remaining
Transactions, to refinance and terminate the existing Synthetic Leases.
8. Rite Aid will have consummated $170,981,000 in previously negotiated
debt for equity exchanges. Rite Aid will consummate the exchange of $132,658,503
of debt for shares of Convertible Preferred Stock of Rite Aid.
9. Rite Aid will consummate the sale of $150,000,000 shares of its
common stock. $125,000,000 of the shares are priced at $5.50 per share
(22,727,273 shares) and $25,000,000 are priced at $6.50 (3,846,154). Rite Aid
will consummate the sale of approximately $402.4 million shares of its common
stock at a purchase price of $7.50 per share.
10. Using the proceeds of the Transactions, Rite Aid will prepay in
full and terminate the Existing Facilities (as defined in the Existing Credit
Agreement) and the Existing Credit Agreement and all Liens securing obligations
thereunder shall be released.
11. Costs and expenses (including, without limitation, all fees and
amounts payable under the Senior Fee Letters) incurred in connection with the
foregoing transactions will be paid in an amount up to approximately $94,000,000
(the "Transaction Costs").
13. All Transactions which are contemplated by the Senior Loan
Documents or the Second Priority Debt Documents to have been consummated on the
Closing Date or substantially concurrently with the Closing Date shall have been
consummated.
14. The application of funds on the Closing Date will be as set forth
in a funds flow memo dated the Closing Date which is satisfactory to the Senior
Administrative Agent.
2
