EXECUTION
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of May 22, 1998 by and between BEST BUY
CO., INC. (the "Company"), a Minnesota corporation, the lenders from time to
time party hereto (such lenders being hereinafter sometimes referred to
collectively as the "Banks" and individually as a "Bank"), U.S. BANK NATIONAL
ASSOCIATION, as agent for the Banks (in such capacity, the "Agent"), and THE
BANK OF NOVA SCOTIA, BANK ONE, N.A. and FIRST UNION NATIONAL BANK, as
Co-Agents.
RECITALS
A. The Company has requested that the Banks provide it with a
revolving credit facility with an aggregate commitment amount, as of the date
hereof, of $220,000,000.
B. The Banks are prepared to provide such revolving credit
facility on the terms and subject to the conditions hereinafter set forth.
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 CERTAIN DEFINED TERMS. As used herein and, unless
otherwise defined therein, in each Exhibit and Schedule, the following terms
shall have the following respective meanings (such meanings to be equally
applicable to both the singular and plural form of the terms defined, as the
context may require):
"ADJUSTED EURODOLLAR RATE": with respect to each Interest Period
applicable to a Eurodollar Advance, the rate (rounded upward, if necessary,
to the next higher one hundredth of one percent) determined by dividing the
Eurodollar Rate for such Interest Period by 1.00 minus the Eurodollar Reserve
Percentage.
"ADVANCE": a Reference Rate Advance or a Eurodollar Advance.
"AFFILIATE": when used with respect to a specified Person, another
Person that directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified. For purposes hereof,
"control" shall have the meaning given such term in Rule 12b-2 under the
Securities Exchange Act of 1934, and "controlled" shall have a correlative
meaning.
"AGGREGATE COMMITMENT AMOUNT": as of any date of determination,
the sum of the commitment Amounts of all of the Banks.
"AGREEMENT": this Credit Agreement, as amended, supplemented,
restated or otherwise modified and in effect from time to time.
"APPLICABLE COMMITMENT FEE PERCENTAGE": subject to the last two
sentences of this definition, for the period beginning on the tenth day of
the first month after the financial statements described in Section 5.01(b)
for each fiscal quarter are required to be delivered and ending on the ninth
day of the first month after the month in which the financial statements
described in Section 5.01(b) for following fiscal quarter are required to be
delivered, the percentage specified as the Applicable Commitment Fee
Percentage based on the Interest Coverage Ratio calculated as of the end of
such fiscal quarter:
Interest Coverage Ratio Applicable Commitment
(in each case, to 1.00) Fee Percentage
------------------------- ---------------------
Less than 2.25 0.35%
2.25 to 2.49 0.30
2.50 to 2.99 0.25
3.00 or greater 0.25
During the period beginning on the Effective Date and ending on July 10,
1998, the Applicable Commitment Fee Percentage shall be 0.35%.
Notwithstanding the foregoing, if the Borrower has not furnished the
quarterly financial statements required under Sections 5.01(b) for any fiscal
quarter by the last day of the month in which such financial statements are
required to be delivered, the Applicable Commitment Fee Percentage shall be
0.35% for the period from the tenth day of the following month until the
ninth day of the first month after the month in which such financial
statements are delivered.
"APPLICABLE LETTER OF CREDIT FEE PERCENTAGE": (a) with respect to
Letters of Credit having a scheduled expiration date more than six months
after the date of issuance, the Applicable Margin for Eurodollar Advances,
and (b) with respect to Letters of Credit having a scheduled expiration date
six months or less after the date of issuance, the greater of (i) the
Applicable Margin for Eurodollar Rate Advances minus 0.25% or (ii) 0.75%.
"APPLICABLE MARGIN": subject to the last three sentences of this
definition, for the period beginning on the tenth day of the first month
after the financial statements described in Section 5.01(b) for each fiscal
quarter are required to be delivered and ending on the ninth day of the first
month after the month in which the financial statements described in Section
5.01(b) for following fiscal quarter are required to be delivered, the
percentage specified as the Applicable Margin for Eurodollar Advances or
Reference Rate Advances, as applicable, based on the Interest Coverage Ratio
calculated as of the end of such fiscal quarter:
Interest Coverage Ratio Eurodollar Reference
(in each case to 1.00) Advances Rate Advances
----------------------- ---------- -------------
Less than 2.25 1.250% 0.00%
2.25 to 2.49 1.000 0.00
2.50 to 2.99 0.875 0.00
3.00 or greater 0.750 0.00
During the period beginning on the Effective Date and ending on July 10,
1998, the Applicable Margin for Eurodollar Advances shall be 1.250%.
Notwithstanding the foregoing, if the Borrower has not furnished the
quarterly financial statements required under Sections 5.01(b) for any fiscal
quarter by the last day of the month in which such financial statements are
required to be delivered, the Applicable Margin shall be determined for the
period from the tenth day of the following month until the ninth day of the
first month after the month in which such financial statements are delivered
as if the Interest Coverage Ratio, calculated as of the end of such fiscal
quarter, were less than 2.25 to 1.00. The Applicable Margin for any
Eurodollar Advance during any Interest Period applicable thereto shall be the
Applicable Margin in effect on the first day of such Interest Period.
"BB CONCEPTS": Best Buy Concepts, Inc., a Nevada corporation.
"BB INVESTMENTS": BBC Investment Co., a Nevada corporation.
"BB PROPERTY": BB Property Company, a Nebraska general partnership.
"BB PROPERTY LEASE AGREEMENT": the Lease Agreement dated as of
April 15, 1993 between BB Property and the Company, as the same may be
amended, restated, supplemented or otherwise modified and in effect from time
to time, and any other agreement between BB Property and the Company relating
to the Lease of any real property.
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"BB PROPERTY LEASE DOCUMENTS": the BB Property Lease Agreement,
together with any agreement, document or instrument entered into in
connection with any credit extended to BB Property and secured by such Lease
Agreement, other agreement or the properties covered thereby, including,
without limitation, the Note Purchase Agreement dated as of April 15, 1993
among BB Property, the Company and Teachers Insurance and Annuity Association
of America, and the "Deed of Trust" and the "Assignment" (as defined in such
Note Purchase Agreement).
"BEST BUY CAPITAL": Best Buy Capital, L.P., a Delaware limited
partnership.
"BOARD": the Board of Governors of the Federal Reserve System of
the United States.
"BORROWING BASE": as of a date of determination, (a) 40% of the
lower of: (i) cost (determined on an average cost basis) of Eligible
Inventory LESS (y) the amount of Indebtedness of the Company or any
Subsidiary secured by Liens on inventory and (z) the amount accrued for
losses due to missing inventory (shrink accrual) or (ii) market value of
Eligible Inventory LESS (y) the amount of Indebtedness of the Company or any
Subsidiary secured by Liens on inventory and (z) the amount accrued for
losses due to missing inventory (shrink accrual), MINUS (b) the amount of any
unsecured Indebtedness incurred by the Company pursuant to Section 5.13(g).
"BORROWING BASE CERTIFICATE": a certificate in the form of Exhibit A.
"BORROWING BASE DEFICIENCY": at the time of any determination, the
amount by which the Total Outstandings exceed the Borrowing Base.
"BORROWING DATE": each Business Day or Eurodollar Business Day on
which the Banks are to make Loans to the Company pursuant to Section 2.01(a),
or U.S. Bank is to make a Swing-Line Loan to the Company pursuant to Section
2.01(b).
"BUSINESS DAY": any day (other than a Saturday, Sunday or legal
holiday) on which banks are permitted to be open for business in all of the
cities where any Bank has its principal office in the United States of
America.
"CAPITAL EXPENDITURES": with respect to any Person for any
specified period, the aggregate of all gross expenditures during such period
for any fixed assets, or for improvements, replacements, substitutions or
additions therefor or thereto, which are reflected as additions to property
and equipment on statements of cash flows of
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such Person in accordance with GAAP, excluding acquisitions permitted under
Section 5.14(h) hereof.
"CASH FLOW LEVERAGE RATIO": at any date of determination, the
ratio of (a) the Interest-bearing Indebtedness of the Company and its
Subsidiaries, excluding the Interest-bearing Indebtedness evidenced by the
MIPS Debenture, plus eight times Rental and Lease Expense for the four fiscal
quarters ended on such date, to (b) the sum for the Measurement Period ending
on such date of (i) Earnings Before Interest, Income Taxes and Depreciation
and (ii) Rental and Lease Expense, in all cases as set forth in the Company's
financial statements delivered hereunder.
"CODE": the Internal Revenue Code of 1986, as amended or any
successor thereto.
"COMMITMENT": as to any Bank, the obligation of such Bank to make
Loans pursuant to Sections 2.01(a) and 2.13 and, as to U.S. Bank, its
obligation to issue Letters of Credit pursuant to Section 2.09.
"COMMITMENT AMOUNT": as to any Bank, the amount set opposite such
Bank's name as its "Commitment Amount" in Schedule 1.01(a), as the same may
be reduced from time to time pursuant to Section 2.15.
"COMMITMENT FEE": as such term is defined in Section 2.17(b).
"COMPLIANCE CERTIFICATE": a certificate in the form of Exhibit B.
"DOCUMENTARY LETTER OF CREDIT": a letter of credit which requires
that the drafts thereunder be accompanied by a document of title covering or
securing title to the goods acquired with the proceeds of such drafts.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE": any trade or business (whether or not
incorporated) that is a member of a group of which the Company is a member
and which is treated as a single employer under Section 414 of the Code.
"EARNINGS BEFORE INTEREST, INCOME TAXES AND DEPRECIATION: for any
period of determination, the consolidated net income of the Company and its
Subsidiaries before deductions for income taxes, net interest expense, and
provisions for depreciation
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and amortization of goodwill and intangibles accounted for in calculating
consolidated net income, all as determined in accordance with GAAP, excluding
therefrom (a) nonoperating gains (including, without limitation,
extraordinary or unusual gains, gains from discontinuance of operations,
gains arising from the sale of assets and other nonrecurring gains) of the
Company and its Subsidiaries during the applicable period and (b) similar
nonoperating losses (including, without limitation, losses arising from the
sale of assets and other nonrecurring losses) of the Company and its
Subsidiaries during such period.
"EFFECTIVE DATE": the date on or after the execution and delivery
of this Agreement by the Company, the Banks and the Agent on which all of the
conditions precedent set forth in Section 3.01 shall have been satisfied or
waived in writing by the Banks.
"ELIGIBLE INVENTORY": all inventory held by the Company or any
Operating Subsidiary for retail sale in the ordinary course of business of
the product classes listed on Schedule 1.01(b) hereto or otherwise approved
by the Agent and which:
(a) is free and clear of all Liens except such as are permitted
by Section 5.12 (f);
(b) is not so identified to a contract to sell that it is
evidenced by an account receivable;
(c) is of good and merchantable quality free from any defects
which would affect the market value thereof;
(d) is not, as reasonably determined by the Agent, nonsalable in
the ordinary course of the Company's or such Operating Subsidiary's
business;
(e) is insured against loss or damage in accordance with the
provisions of the Credit Agreement;
(f) is not subject to or covered by a negotiable document of
title, including, without limitation, negotiable warehouse receipts and
negotiable bills of lading;
(g) is not stored in a public warehouse or held by any Person as
bailee, unless the terms of such storage or bailment are satisfactory to
the Agent;
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(h) is not a product that has been discontinued by the
manufacturer or by the vendor from which the Company or such Operating
Subsidiary purchased such inventory (close-out inventory); and
(i) is not being held for repair at the Company's service center
(service center inventory) or being held for return to the vendor from
which the Company or such Operating Subsidiary purchased it (defective
center inventory);
PROVIDED, that the Agent shall, notwithstanding the foregoing, have the
right, in the reasonable exercise of its discretion following consultation
with the Company, to establish reserves against the aggregate amount of
Eligible Inventory.
"EURODOLLAR ADVANCE": a portion of the Loans, other than
Swing-Line Loans, with respect to which the interest rate is determined by
reference to the Adjusted Eurodollar Rate.
"EURODOLLAR BUSINESS DAY": a Business Day which is also a day for
trading by and between banks in United States dollar deposits in the
interbank eurodollar market and a day on which banks are open for business in
New York, New York.
"EURODOLLAR RATE": with respect to each Interest Period applicable
to a Eurodollar Advance, the average offered rate for deposits in United
States dollars (rounded upward, if necessary, to the nearest 1/16 of 1%) for
delivery of such deposits on the first day of such Interest Period, for the
number of days in such Interest Period, which appears on the Telerate page
3750 as of 11:00 a.m., London time (or such other time as of which such rate
appears) two Eurodollar Business Days prior to the first day of such Interest
Period, or the rate for such deposits determined by the Agent at such time
based on such other published service of general application as shall be
selected by the Agent for such purpose (including without limitation the
Reuters Screen LIBO page); provided, that in lieu of determining the rate in
the foregoing manner, the Agent may determine the rate based on rates at
which United States dollar deposits are offered to the Agent in the interbank
Eurodollar market at such time for delivery in Immediately Available Funds on
the first day of such Interest Period in an amount approximately equal to the
Advance by the Agent to which such Interest Period is to apply (rounded
upward, if necessary, to the nearest 1/16 of 1%). "Reuters Screen LIBO page"
means the display designated as page "LIBO" on the Reuters Monitor Money Rate
Screen (or such other page as may replace the LIBO page on such service for
the purpose of displaying London interbank offered rates of major banks for
United States dollar deposits), and "Telerate page 3750" means the display
designated as such on Telerate System Incorporated (or such other page as may
replace page 3750 or that service for the
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purpose of displaying London interbank offered rates of major banks for U.S.
Dollar deposits).
"EURODOLLAR RESERVE PERCENTAGE": as of any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System, with deposits comparable in amount to those held by the
Agent, in respect of "Eurocurrency Liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate of Eurodollar Advances is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States office of a Bank to United States residents). The rate of interest
applicable to any outstanding Eurodollar Advances shall be adjusted
automatically on and as of the effective date of any change in the Eurodollar
Reserve Percentage.
"EVENT OF DEFAULT": any event described in Section 6.01.
"EXISTING CREDIT AGREEMENT": the Amended and Restated Credit
Agreement dated as of August 25, 1995 by and among the Company, U.S. Bank
(then known as First Bank National Association), as agent for the lenders
party thereto, and such lenders, as the same has been amended, supplemented
or otherwise modified and is in effect immediately prior to the Effective
Date.
"FEDERAL FUNDS RATE": for any date of determination, the effective
rate charged to the Agent for overnight Federal funds transactions with
member banks of the Federal Reserve System.
"GAAP": generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, which are applicable to the circumstances as of
the Signing Date.
"GENERAL CAPITAL EXPENDITURES": Capital Expenditures of the
Company or any Subsidiary other than Real Estate Capital Expenditures.
"GOVERNMENTAL AUTHORITY": any federal, state, local or foreign
court or governmental agency, authority, department, board, instrumentality
or regulatory body.
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"GUARANTEE": with respect to any Person at the time of any
determination, without duplication, any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness of any other Person (the "primary obligor") in any manner,
whether directly or otherwise: (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or to purchase (or to
advance or supply funds for the purchase of) any direct or indirect security
therefor, (b) to purchase property, securities, or services for the purpose
of assuring the owner of such Indebtedness of the payment of such
Indebtedness, (c) to maintain working capital, equity capital, or other
financial statement condition of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or otherwise to protect the owner
thereof against loss in respect thereof, or (d) entered into for the purpose
of assuring in any manner the owner of such Indebtedness of the payment of
such Indebtedness or to protect the owner against loss in respect thereof;
PROVIDED, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.
"GUARANTY": a guaranty, in the form of Exhibit F, of the
Obligations, executed and delivered to the Agent in connection with this
Agreement.
"HOLDING ACCOUNT": an interest-bearing account established by the
Agent, which shall be under the Agent's sole dominion and control, for the
benefit of U.S. Bank, as the issuer of the Letters of Credit, and the Banks,
into which the Company shall, as required hereunder, deposit funds, and from
which the Agent may disburse funds, to pay the obligations of the Company
under Section 2.12 or Section 6.02, to reimburse U.S. Bank for any amount
drawn on any Letter of Credit, and to pay any other obligation of the Company
to the Banks arising in connection with any Letter of Credit.
"IMMEDIATELY AVAILABLE FUNDS": funds with good value on the day
and in the city in which payment is received.
"INDEBTEDNESS": with respect to any Person at the time of any
determination, without duplication, all obligations, contingent or otherwise,
of such Person which in conformity with GAAP should be classified upon the
balance sheet of such Person as liabilities, but in any event shall include:
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (c) all obligations of such Person upon which interest charges
are customarily paid or accrued, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
purchased by such Person, (e) all obligations of such Person issued or
assumed as the deferred
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purchase price of property or services, (f) all obligations of others secured
by any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all capitalized lease
obligations of such Person, (h) all obligations of such Person in respect of
interest rate protection agreements, (i) all obligations of such Person,
actual or contingent, as an account party in respect of letters of credit or
bankers' acceptances, (j) all obligations of any partnership or joint venture
as to which such Person is or may become personally liable, and (k) all
Guarantees by such Person of Indebtedness of others.
"INTEREST-BEARING INDEBTEDNESS": At the time of any determination,
all Indebtedness of the Company and its Subsidiaries (a) for borrowed money
or (b) to third party financers to finance the purchase of inventory, to the
extent not paid before interest begins to accrue.
"INTEREST COVERAGE RATIO": for any period of determination, the
ratio of (a) the sum of (i) Earnings Before Interest, Income Taxes and
Depreciation, and (ii) Rental and Lease Expense, as set forth in the
financial statements of the Company delivered hereunder, to (b) the sum of
(A) Rental and Lease Expense, and (B) consolidated net interest expense of
the Company and its Subsidiaries, as included in the Company's financial
statements delivered pursuant hereto, as set forth in the financial
statements delivered hereunder.
"INTEREST PERIOD": with respect to each Eurodollar Advance, the
period commencing on the date of such Advance and ending seven or fourteen
days or one, two or three months thereafter, as the Company may elect in the
applicable Notice of Borrowing, Continuation or Conversion; PROVIDED, that:
(1) Any Interest Period which would otherwise end on a day which
is not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Interest Period is one month or longer
and such Eurodollar Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Eurodollar
Business Day;
(2) Any Interest Period of one month or longer which begins on
the last Eurodollar Business Day of a calendar month (or a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Eurodollar Business Day of a
calendar month; and
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(3) No Interest Period may end after the date set forth in
clause (a) of the definition of Termination Date.
"INVESTMENTS": as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of, or a beneficial interest in,
stock or other securities of any other Person, or any direct or indirect
loan, advance (other than advances to employees for moving and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business) or capital contribution by such Person to any other Person,
including all Indebtedness and accounts receivable from that other Person
which did not arise from sales to such other Person in the ordinary course of
business. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment.
"LETTER OF CREDIT": an irrevocable letter of credit issued by U.S.
Bank for the account of the Company pursuant to Section 2.09, which shall not
be a Documentary Letter of Credit and shall not include letters of credit
issued by U.S. Bank pursuant to that certain Letter of Credit Agreement dated
as of February 1, 1989, as heretofore and hereafter amended, and that certain
Covenant Rider dated as of October 30, 1992, as heretofore and hereafter
amended, between U.S. Bank and the Company.
"LETTER OF CREDIT FEE": as defined in Section 2.18.
"LETTER OF CREDIT LOAN": a loan made by a Bank to or for the
account of the Company pursuant to Section 2.13.
"LETTER OF CREDIT USAGE": as of any date, the amount equal to the
sum of (a) the amount of all Unpaid Draws PLUS (b) the amount available to be
drawn under all outstanding Letters of Credit.
"LIEN": with respect to any Person, any security interest,
mortgage, pledge, lien, charge, encumbrance, title retention agreement or
analogous instrument or device (including but not limited to the interest of
each lessor under any capitalized lease), in, of or on any assets or
properties of such Person, now owned or hereafter acquired, whether arising
by agreement or operation of law.
"LOAN": a loan made by a Bank to or for the account of the Company
pursuant to Section 2.01, a Letter of Credit Loan or a Swing-Line Loan.
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"LOAN DOCUMENTS": this Agreement, the Notes, the Letters of
Credit, the Guaranties and all other agreements, documents, certificates and
instruments delivered pursuant hereto or in connection herewith, in each case
as amended, supplemented, restated or otherwise modified and in effect from
time to time.
"MAJORITY BANKS": at any time, Banks whose Pro Rata Shares
(determined under clause (b) of the definition thereof if any Loans are
outstanding, and otherwise under clause (a) of such definition) aggregate
more than 50%.
"MATERIAL ADVERSE EFFECT": with respect to any Person, (a) a
materially adverse effect on the business, assets, operations, or financial
condition of such Person and its Subsidiaries taken as a whole, (b) material
impairment of the ability of such Person to perform any material obligation
under any Loan Document to which such Person is or becomes a party or (c)
material impairment of any of the material rights of, or benefits available
to, the Agent or the Banks under any Loan Document.
"MEASUREMENT PERIOD": each period of four fiscal quarters ending
on the last day of a fiscal quarter of the Company.
"MIPS": the Monthly Income Preferred Securities of Best Buy
Capital, containing substantially the terms described in the Company's Form
S-3 Registration Statement filed with the Securities Exchange Commission on
September 30, 1994, provided there are no material changes to the terms of
the MIPS or the MIPS Debenture unless such changes are approved by the
Majority Banks.
"MIPS DEBENTURE": the debenture issued by the Company to Best Buy
Capital to evidence the Company's obligations to Best Buy Capital in respect
of a loan from Best Buy Capital to the Company in an amount equal to the net
proceeds of the issuance and sale of MIPS.
"MULTIEMPLOYER PLAN": as such term is defined in Section
4001(a)(3) of ERISA, which is maintained (on the Signing Date, within the
five years preceding the Signing Date, or at any time after the Signing Date)
for employees of Company or any ERISA Affiliate.
"NOTES": the Revolving Notes and the Swing-Line Note.
"NOTICE OF BORROWING, CONTINUATION OR CONVERSION": the written
notice, substantially in the form of Exhibit C, delivered in accordance with,
and within the period specified in, Section 2.02 or 2.05, as applicable.
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"OBLIGATIONS": (a) the Company's obligations in respect of the due
and punctual payment of principal and interest on the Loans when and as due,
whether at maturity, by acceleration, or otherwise, (b) the Company's
obligations to reimburse U.S. Bank in the amount of each draw under a Letter
of Credit on the date of such draw, and to make deposits into the Holding
Account in respect of Letters of Credit pursuant to Sections 2.07(a), (c) or
(d), 2.15 or 6.02, and (c) all fees, expenses, indemnities, reimbursements
and other obligations, monetary or otherwise, owed to the Agent and the Banks
under this Agreement or any other Loan Document.
"OPERATING SUBSIDIARY": any Subsidiary of the Company other than a
Real Estate Subsidiary that owns inventory, operates retail stores or
otherwise conducts a business permitted pursuant to Section 5.11(d).
"PBGC": the Pension Benefit Guaranty Corporation created by
Section 4002(a) of ERISA or any Governmental Authority succeeding to the
functions thereof.
"PERSON": any natural person, corporation, partnership, joint
venture, firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether
acting in an individual, fiduciary or other capacity.
"PLAN": each employee benefit plan (whether in existence on the
Signing Date or thereafter instituted), as such term is defined in Section 3
of ERISA, maintained for the benefit of employees, officers or directors of
Company or of any ERISA Affiliate.
"PROHIBITED TRANSACTION": as such term is defined in Section 4975
of the Code or Section 406 of ERISA.
"PRO RATA SHARE": with respect to each Bank, in each case
expressed as a percentage:
(a) as such term pertains to such Bank's obligation to make
Loans, right to receive Commitment Fees and Letter of Credit Fees, and
obligation to reimburse the Agent pursuant to Section 7.09, the percentage
set forth opposite such Bank's name as its "Commitment Percentage" in
Schedule 1.01, and
(b) as such term pertains to such Bank's right to receive
payment of interest on and principal of its outstanding Loans and for all
other purposes, the fraction which the amount of the unpaid principal
balance of its outstanding
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Loans is to the aggregate unpaid principal balance of all outstanding
Loans (excluding, for purposes of this calculation, Swing-Line Loans).
"REAL ESTATE CAPITAL EXPENDITURES": Capital Expenditures of the
Company or any Subsidiary for land and buildings.
"REAL ESTATE SUBSIDIARY": any Subsidiary of the Company that is
not an Operating Subsidiary and the only assets of which are ownership or
leasehold interests in real property held for lease or sublease to the
Company or Operating Subsidiaries.
"REFERENCE RATE": the greater of (a) the rate of interest from
time to time publicly announced by U.S. Bank as its "reference rate" or (b)
the Federal Funds Rate plus 1.5%. U.S. Bank may lend to its customers at
rates that are at, above or below the Reference Rate. For purposes of
determining any interest rate hereunder or under the Notes which is based on
the Reference Rate, such interest rate shall change as and when the Reference
Rate shall change.
"REFERENCE RATE ADVANCE": a portion of the Loans with respect to
which the interest rate is determined by reference to the Reference Rate.
"REGULATION D": Regulation D of the Board as from time to time in
effect and all official rulings and interpretations thereunder and thereof.
"REGULATION G": Regulation G of the Board as from time to time in
effect and all official rulings and interpretations thereunder and thereof.
"REGULATION U": Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder and thereof.
"REGULATION X": Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder and thereof.
"REGULATORY CHANGE": with respect to any Bank, any change after
the Signing Date in federal, state or foreign laws or regulations or the
adoption or making after such date of any interpretations, directives or
requests, in either case applying to a class of banks including such Bank
under any federal, state or foreign laws or regulations (whether or not
having the force of law) by any court or Governmental Authority charged with
the interpretation or administration thereof.
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"RENTAL AND LEASE EXPENSE": for any period of determination, all
amounts paid by the Company or any Subsidiary under all capital leases and
other leases of real or personal property, other than any portion thereof
included in calculating consolidated net interest expense of the Company for
such period.
"REPORTABLE EVENT": as such term is defined in Section 4043 of
ERISA and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event, PROVIDED, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of
ERISA shall be a Reportable Event regardless of the issuance of any such
waivers in accordance with Section 412(d) of the Code.
"RESTRICTED PAYMENTS": with respect to any Person, collectively,
all dividends or other distributions of any nature (cash, securities (other
than common stock of such Person), assets or otherwise) declared or paid, and
all payments made, by such Person on any class of equity securities
(including, without limitation, warrants, options or rights therefor) issued
by such Person or any of its Subsidiaries, whether such securities are
authorized or outstanding on the Signing Date or at any time thereafter,
including, with respect to the Company, any payments made by the Company
(other than scheduled or deferred payments of principal and interest under
the MIPS Debenture) in respect of the MIPS.
"REVOLVING NOTES": as defined in Section 2.04.
"SIGNING DATE": the Business Day on which counterparts of this
Agreement, duly executed by the Company, the Banks and the Agent, have been
delivered to the Agent.
"SUBORDINATED INDEBTEDNESS": (a) the Company's 9.95% Subordinated
Notes due 1999, (b) the Company's 8 5/8% Senior Subordinated Notes due 2000,
(c) the Indebtedness evidenced by the MIPS Debenture and (d) any other
Indebtedness of the Company incurred after the Signing Date which is
subordinated to the obligations of the Company to the Banks hereunder and
under the Notes in a manner and to an extent which the Banks have reasonably
determined to be satisfactory by a writing sent to the Company.
"SUBSIDIARY": with respect to any Person, any corporation,
partnership, trust or other Person of which more than 50% of the outstanding
capital stock (or similar property right in the case of partnerships and
trusts) having ordinary voting power to
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elect a majority of the board of directors of such corporation (or similar
governing body or Person with respect to partnerships and trusts)
(irrespective of whether or not at the time capital stock of any other class
or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such
Person, or by one or more other Subsidiaries of such Person.
"SWING-LINE FACILITY": the discretionary revolving credit facility
provided by U.S. Bank to the Company described in Section 2.01(b).
"SWING-LINE FACILITY AMOUNT": $15,000,000.
"SWING-LINE LOAN": a loan made by U.S. Bank to the Company
pursuant to the Swing-Line Facility.
"SWING-LINE NOTE": as defined in Section 2.04.
"SWING-LINE RATE": the greater of (a) the rate of interest from
time to time publicly announced by U.S. Bank as its "reference rate" minus
0.5%, or (b) the Federal Funds Rate plus 1.5%.
"TANGIBLE NET WORTH": as of any date of determination, the sum of
the amounts set forth on the consolidated balance sheet of the Company as the
sum of the common stock, preferred stock, additional paid-in capital and
retained earnings of the Company (excluding treasury stock), less the book
value of all assets of the Company and its Subsidiaries that would be treated
as intangibles under GAAP, including, without limitation, all such items as
goodwill, trademarks, trade names, service marks, copyrights, patents,
licenses, unamortized debt discount and expenses and the excess of the
purchase price of the assets of any business acquired by the Company or any
Subsidiary over the book value of such assets, and PLUS the book value of the
interests of the holders of the MIPS to the extent otherwise excluded in
calculating the sum of common stock, preferred stock, additional paid-in
capital and retained earnings.
"TERMINATION DATE": the earliest to occur of (a) June 30, 2000, as
the same may be extended pursuant to Section 2.30, (b) the date on which the
Commitments are terminated pursuant to Section 2.15 or (c) the date on which
the Commitments are terminated pursuant to Section 6.02.
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"TOTAL OUTSTANDINGS": as of any date of determination, the sum of
(a) the aggregate unpaid principal balance of Loans outstanding on such date,
PLUS (b) the Letter of Credit Usage.
"UNFUNDED LIABILITIES": (a) in the case of Plans subject to Title
IV of ERISA (other than Multiemployer Plans), the amount (if any) by which
the present value of all vested nonforfeitable benefits under such Plan
exceeds the fair market value of all Plan assets allocable to such benefits,
all determined as of the then most recent valuation report prepared by the
actuary for such Plan, and (b) in the case of Multiemployer Plans, the
withdrawal liability of the Company and the ERISA Affiliates.
"UNMATURED EVENT OF DEFAULT": any event which, with the giving of
notice (whether such notice is required under Section 6.01, or under some
other provision of this Agreement, or otherwise) or lapse of time, or both,
would constitute an Event of Default.
"UNPAID DRAW": the obligation of the Company to reimburse U.S.
Bank for a draw under a Letter of Credit, to the extent not reimbursed by the
Company in accordance with Section 2.12.
"UNUSED COMMITMENT AMOUNT": at the time of any determination, the
Aggregate Commitment Amount less the Used Amount.
"U.S. BANK": U.S. Bank National Association, a national banking
association, in its individual capacity.
"USED AMOUNT": at any time of determination, Total Outstandings
minus the aggregate unpaid principal balance of Swing-Line Loans outstanding
on such date.
Section 1.02 ACCOUNTING TERMS AND CALCULATIONS. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be
made in conformity with GAAP. To the extent any change in GAAP after the
Signing Date affects any computation or determination required to be made
pursuant to this Agreement, such computation or determination shall be made
as if such change in GAAP had not occurred unless the Company and the Banks
agree in writing on an adjustment to such computation or determination to
account for such change in GAAP.
Section 1.03 COMPUTATION OF TIME PERIODS. In this Agreement, in
the computation of a period of time from a specified date to a later
specified date, unless
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otherwise stated the word "from" means "from and including" and the word "to"
or "until" each means "to but excluding".
Section 1.04 PRINCIPLES OF CONSTRUCTION. In this Agreement, the
singular includes the plural and the plural the singular; words imparting any
gender include the other genders; references to "Section", "Exhibit",
"Schedule" and like references shall be to sections of, and exhibits and
schedules to, this Agreement unless otherwise specifically provided; the
words "hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; references to "writing" include
printing, typing, lithography and other means of reproducing words in a
visible form; references to agreements and other contractual instruments
shall be deemed to include all subsequent amendments thereto or changes
therein entered into in accordance with their respective terms; and
references to Persons include their permitted successors and assigns. Unless
the context in which used herein otherwise clearly requires, "or" has the
inclusive meaning represented by the phrase "and/or."
ARTICLE II
TERMS OF THE CREDIT FACILITY
PART A -- TERMS OF LENDING
Section 2.01 LENDING FACILITIES.
(a) THE COMMITMENTS. On the terms and subject to the conditions
hereof, each Bank severally agrees to make Loans to the Company on a
revolving basis at any time and from time to time from the Effective Date
to the Termination Date, during which period the Company may borrow, repay
and reborrow in accordance with the provisions hereof, PROVIDED, that no
Loan will be made (i) in any amount which after giving effect thereto,
would cause the Total Outstandings to exceed the Aggregate Commitment
Amount, or (ii) if, after giving effect to such Loan, a Borrowing Base
Deficiency would exist; and PROVIDED, FURTHER, that no Bank shall be
required to make any Loan if, after giving effect thereto, the sum of the
outstanding principal balance of such Bank's Revolving Note plus such
Bank's Pro Rata Share of the sum of the Letter of Credit Usage and the
outstanding principal balance of the Swing-Line Note would exceed such
Bank's Commitment Amount. Loans (other than Swing-Line Loans) hereunder
shall be made by the Banks ratably based on their respective Pro Rata
Shares. Loans (other than Swing-Line Loans) may be obtained and
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maintained, at the election of the Company but subject to the limitations
hereof, as Reference Rate Advances or Eurodollar Advances.
(b) DISCRETIONARY SWING-LINE FACILITY. On the terms and subject
to the conditions hereof, during the period from the Effective Date to the
Termination Date, U.S. Bank, in its sole discretion, may make loans to the
Company at such times and in such amounts as the Company shall request, up
to an aggregate principal amount at any time outstanding equal to the
Swing-Line Facility Amount, during which period the Company may borrow,
repay and reborrow in accordance with the provisions hereof; PROVIDED, that
U.S. Bank will not make a Swing-Line Loan if either of the limitations set
forth in Section 2.01(a)(i) or 2.01(a)(ii) would be exceeded.
Section 2.02 PROCEDURE FOR LOANS. Any request by the Company to
borrow hereunder shall be made to the Agent by telephone, promptly confirmed
by giving the Agent a Notice of Borrowing, Continuation or Conversion, and
must be received by the Agent not later than 12:00 noon (Minneapolis time)
three Eurodollar Business Days prior to the requested Borrowing Date if the
Loans are requested as Eurodollar Advances and not later than 12:00 noon
(Minneapolis time) on the requested Borrowing Date if the Loans are requested
as Reference Rate Advances or Swing-Line Loans. Each request to borrow
hereunder shall be irrevocable and shall be deemed a representation by the
Company that on the requested Borrowing Date and after giving effect to the
requested Loans the applicable conditions specified in Section 2.01(a) and
Article III have been and will be satisfied. Each request to borrow
hereunder shall specify (a) the requested Borrowing Date, (b) the aggregate
amount of Loans to be made on such date, which shall be in a minimum amount
of $5,000,000 or an integral multiple of $1,000,000 in excess thereof, to the
extent such Loans are to be funded as Eurodollar Advances, or $2,000,000 or
an integral multiple of $500,000 in excess thereof to the extent such Loans
are to be funded as Reference Rate Advances or Swing-Line Loans, (c) whether
such Loans are to be made as Swing-Line Loans, Reference Rate Advances or
Eurodollar Advances, and (d) in the case of Eurodollar Advances, the duration
of the initial Interest Period applicable thereto. Without in any way
limiting the Company's obligation to confirm in writing any telephone request
to borrow hereunder, the Agent may rely on any such request which it believes
in good faith to be genuine; and the Company hereby waives any claim against
the Agent or the Banks based on a dispute with the Agent's record of the
terms of such telephone request. Except in the case of requests for
Swing-Line Loans, the Agent shall promptly notify each other Bank of the
receipt of such request, the matters specified therein, and of such Bank's
Pro Rata Share of the requested Loans on the date it receives such request.
On the requested Borrowing Date, each Bank shall provide its Pro Rata Share
of the requested Loans or, in the case of
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Swing-Line Loans, U.S. Bank shall, to the extent it determines to do so,
provide the amount of the requested Swing-Line Loans, to the Agent in
Immediately Available Funds not later than 4:00 P.M. (Minneapolis time).
Unless the Agent determines that any applicable condition specified in
Article III has not been satisfied, the Agent will make available to the
Company at the Agent's principal office in Minneapolis, Minnesota in
Immediately Available Funds not later than 4:00 P.M. (Minneapolis time) on
the requested Borrowing Date the amount of the requested Loans. If the Agent
has made a Loan on behalf of a Bank but has not received the amount of such
Loan (or a Federal Reserve Bank reference number for the wire transfer of the
amount of such Loan) from such Bank by 4:00 P.M. (Minneapolis time) on the
requested Borrowing Date, such Bank shall pay interest to the Agent on the
amount so advanced at the Federal Funds Rate from the date of such Loan to
the date funds are received by the Agent from such Bank, such interest to be
payable with such remittance from such Bank of the principal amount of such
Loan (PROVIDED, HOWEVER, that the Agent shall not make any Loans on behalf of
a Bank if the Agent has received prior notice from such Bank that it will not
make such Loan). If the Agent does not receive payment from such Bank by the
next Business Day after the date of any Loan, the Agent shall be entitled to
recover such Loan, with interest thereon at the rate then applicable to the
such Loan, on demand, from the Company, without prejudice to the Agent's and
the Company's rights against such Bank. If such Bank pays the Agent the
amount herein required with interest at the Federal Funds Rate before the
Agent has recovered from the Company, such Bank shall be entitled to the
interest payable by the Company with respect to the Loan in question accruing
from the date the Agent made such Loan.
Section 2.03 REFINANCING OF SWING-LINE LOANS.
(a) PERMISSIVE FINANCINGS OF SWING-LINE LOANS. U.S. Bank, at
any time in its sole and absolute discretion, may notify the Agent, not
later than 12:00 noon (Minneapolis time) on any Business Day, that it
desires to have any portion of the outstanding Swing-Line Loans refunded
with Loans (which shall not be considered Swing-Line Loans) made by the
Banks under Section 2.01(a), whereupon the Agent shall promptly request
that each Bank (including U.S. Bank) make a Loan in an amount equal to its
Pro Rata Share of the Loans to be made to repay to U.S. Bank the portion of
the aggregate unpaid principal amount of the Swing-Line Loans specified in
such notice. The Agent shall promptly notify the Company of its receipt of
any such notice from U.S. Bank.
(b) MANDATORY REFINANCINGS OF SWING-LINE LOANS. On the second
Business Day of each week, the Agent shall notify each Bank of the
aggregate amount of Swing-Line Loans outstanding as of the end of the
previous day and
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the amount of Loans (which shall not be considered Swing-Line Loans)
required to be made by each Bank to refinance such outstanding Swing-
Line Loans (which shall be in the amount of each Lender's Pro Rata
Share of such outstanding Swing-Line Loans).
(c) LENDERS' OBLIGATION TO FUND REFINANCINGS OF SWING-LINE
LOANS. Upon its receipt of a request from the Agent under Section 2.03(a)
or 2.03(b), each Bank (including U.S. Bank) shall make a Loan (which shall
not be considered a Swing-Line Loan) in an amount equal to its Pro Rata
Share of the aggregate principal amount of Swing-Line Loans to be
refinanced, and make the proceeds of such Loans available to U.S. Bank, in
Immediately Available Funds, at the main office of the Agent in Minneapolis
not later than 3:00 p.m. (Minneapolis time) on the date such notice was
received; PROVIDED, HOWEVER, that a Bank shall not be obligated to make any
such Loan unless (A) U.S. Bank believed in good faith that all conditions
to making the subject Swing-Line Loan were satisfied at the time such
Swing-Line Loan was made, or (B) such Bank had actual knowledge, by receipt
of the statements furnished to it pursuant to Section 5.01 or otherwise,
that any such condition had not been satisfied and failed to notify U.S.
Bank in a writing received by U.S. Bank prior to the time it made such
Swing-Line Loan that U.S. Bank was not authorized to make a Swing-Line Loan
until such condition has been satisfied, or (C) the satisfaction of any
such condition that was not satisfied had been waived in a writing by the
requisite Banks in accordance with the provisions of this Agreement. The
proceeds of Loans made pursuant to the preceding sentence shall be
delivered to U.S. Bank (and not to the Company) and applied to the
outstanding Swing-Line Loans, and the Company authorizes the Agent to
charge any account maintained by it with the Agent in order to immediately
pay U.S. Bank the amount of such Swing-Line Loans to the extent amounts
received from the other Banks are not sufficient to repay in full the
outstanding Swing-Line Loans requested or required to be refinanced. Upon
the making of a Loan by a Bank pursuant to this Section 2.03(c), the amount
so funded shall become an Obligation evidenced by such Lender's Revolving
Note and shall no longer be an Obligation evidenced by the Swing-Line Note.
If for any reason any Bank is unable to make a Loan to the Company to
refinance a Swing-Line Loan hereunder, then such Bank shall immediately
purchase from U.S. Bank a participation interest in such Swing-Line Loan,
at par, in an amount equal to such Bank's Pro Rata Share of such Swing-Line
Loan, which participation interest shall, for all purposes hereunder except
Section 2.01 and 2.02, be deemed a Loan made by such Bank hereunder. If
any portion of any such amount paid to U.S. Bank should be recovered by or
on behalf of the Company from U.S. Bank in bankruptcy or otherwise, the
loss of the
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amount so recovered shall be ratably shared among all the Banks in
accordance with their respective Pro Rata Shares. Each Bank's obligation
to make Loans referred to in this Section 2.03(c) shall, subject to the
proviso to the first sentence of this Section 2.03(c), be absolute and
unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any setoff, counterclaim, recoupment, defense or
other right which such Bank may have against U.S. Bank, the Company or
anyone else for any reason whatsoever; (ii) the occurrence or continuance
of an Event of Default or Unmatured Event of Default; (iii) any adverse
change in the condition (financial or otherwise) of the Company; (iv) any
breach of this Agreement by the Company, the Agent or any Bank; or (v) any
other circumstance, happening or event whatsoever, whether or not similar
to any of the foregoing; PROVIDED, that in no event shall a Bank be
obligated to make a Loan if, after giving effect thereto, the outstanding
principal amount of such Bank's Revolving Note plus such Bank's Pro Rata
Share of the sum of the Letter of Credit Usage and the outstanding
principal balance of the Swing-Line Note (after giving effect to the
repayment thereof to be funded with such Loan and Loans made the same day
by the other Banks) would exceed such Bank's Commitment Amount.
(d) FUNDING OF LOANS. Each Loan made to refund Swing-Line Loans
pursuant to Section 2.03(c) shall be funded as a Reference Rate Advance,
but the Company may elect to convert such Reference Rate Advances to
Eurodollar Advances on the date made pursuant to Section 2.05.
Section 2.04 NOTES. The Loans made by each Bank (other than the
Swing-Line Loans made by U.S. Bank) shall be evidenced by a single promissory
note of the Company payable to the order of such Bank in the form of Exhibit
D, in a principal amount equal to the amount of such Bank's Commitment
originally in effect (each, together with any such promissory note hereafter
executed and delivered to a Bank to evidence the Loans, a "Revolving Note"
and, collectively, the "Revolving Notes"). The Swing-Line Loans shall be
evidenced by a single promissory note of the Company payable to the order of
U.S. Bank in the form of Exhibit E, in a principal amount equal to the
Swing-Line Facility Amount (together with any such promissory note hereafter
executed and delivered to U.S. Bank to evidence the Swing-Line Loans, the
"Swing-Line Note"). Each Bank shall enter in its ledgers and records the
amount of each Loan, the various Advances made, converted or continued and
the payments made thereon, and each Bank is authorized by the Company to
enter on a schedule attached to its Note(s) a record of such Loans, Advances
and payments; PROVIDED, HOWEVER that the failure by any Bank to make any such
entry or any error in making such entry shall not limit or otherwise affect
the obligation of the Company hereunder and on the Notes, and, in all
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events, the principal amount owing by the Company in respect of each
Revolving Note shall be the aggregate amount of all Loans made by the Bank to
which such Revolving Note is payable (other than Swing-Line Loans made by
U.S. Bank) less all payments of principal thereof made by the Company, and
the principal amount owing by the Company in respect of the Swing-Line Note
shall be the aggregate amount of all Swing-Line Loans less all payments of
principal thereof made by the Company or pursuant to Section 2.03.
Section 2.05 CONVERSIONS AND CONTINUATIONS. On the terms and
subject to the limitations hereof, the Company shall have the option at any
time and from time to time to convert all or any portion of the Loans (other
than Swing-Line Loans) into Reference Rate Advances or Eurodollar Advances,
or to continue a Eurodollar Advance as such (in a minimum amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, with
respect to any conversion into or continuation as Eurodollar Advances, or
$2,000,000 or an integral multiple of $500,000 in excess thereof, with
respect to any conversion into Reference Rate Advances); PROVIDED, HOWEVER
that (i) a Eurodollar Advance may be converted or continued only on the last
day of the Interest Period applicable thereto, and (ii) no Advance may be
converted into or continued as a Eurodollar Advance if an Unmatured Event of
Default or Event of Default has occurred and is continuing on the proposed
date of continuation or conversion. The Company shall give the Agent a Notice
of Borrowing, Continuation or Conversion with respect to the continuation or
conversion of any Advance so as to be received by the Agent not later than
12:00 noon (Minneapolis time) three Eurodollar Business Days prior to
requested date of conversion or continuation in the case of the continuation
of, or conversion to, Eurodollar Advances and not later than 12:00 noon
(Minneapolis time) on the date of any requested conversion to Reference Rate
Advances. Each such notice shall specify (a) the amount to be continued or
converted, (b) the date for the continuation or conversion (which must be (i)
the last day of the preceding Interest Period and a Eurodollar Business Day
in the case of conversions to or continuations of Eurodollar Advances, and
(ii) a Business Day in the case of conversions to Reference Rate Advances),
and (c) in the case of conversions to or continuations of Eurodollar
Advances, the Interest Period applicable thereto. Any notice given by the
Company under this Section 2.05 shall be irrevocable. If the Company shall
fail to notify the Agent of the continuation of any Eurodollar Advances or of
the conversion of Eurodollar Advances within the time required by this
Section 2.05, such Advances shall, on the last day of the Interest Period
applicable thereto, automatically be converted into Reference Rate Advances
of the same principal amount. All conversions to and continuations of
Advances shall be made uniformly and ratably among the Banks.
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Section 2.06 INTEREST RATES, INTEREST PAYMENTS AND DEFAULT
INTEREST. Interest shall accrue and be payable as follows:
(a) Each Eurodollar Advance shall bear interest on the unpaid
principal amount thereof during the Interest Period applicable thereto at a
rate per annum equal to the sum of (i) the Adjusted Eurodollar Rate for
such Interest Period PLUS (ii) the Applicable Margin.
(b) Each Reference Rate Advance shall bear interest on the
unpaid principal amount thereof at a floating rate per annum equal to the
sum of (i) the Reference Rate PLUS (ii) the Applicable Margin.
(c) Each Swing-Line Loan shall bear interest on the unpaid
principal amount thereof at a floating rate per annum equal to the
Swing-Line Rate.
(d) Any Advance or Swing-Line Loan not paid when due, whether at
the date scheduled therefor or earlier upon acceleration, shall bear
interest until paid in full (i) during the balance of any Interest Period
applicable to such Advance, at a rate per annum equal to the sum of the
rate applicable to such Advance during such Interest Period PLUS 2.0%, and
(ii) otherwise, at a rate per annum equal to the sum of the Reference Rate
PLUS the Applicable Margin PLUS 2.00%.
(e) Interest accrued through each date of payment shall be
payable (i) with respect to each Eurodollar Advance, on the last day of the
Interest Period applicable thereto; (ii) with respect to any Reference Rate
Advance and each Swing-Line Loan, on the first day of each month; and
(iii) with respect to all Advances and Swing-Line Loans, on the Termination
Date; PROVIDED that interest under Section 2.06(d) shall also be payable on
demand.
(f) Interest payments received by the Agent shall be applied
first, to accrued, unpaid interest on the Swing-Line Note then due and
payable, and second, to accrued, unpaid interest on the Revolving Notes
then due and payable.
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Section 2.07. REPAYMENT; MANDATORY PREPAYMENTS; DEPOSITS INTO
HOLDING ACCOUNT.
(a) Principal of all Loans, together with all accrued, unpaid
interest thereon, shall be due and payable on the Termination Date. If any
Letters of Credit are outstanding on the Termination Date, the Company
shall deposit into the Holding Account an amount sufficient to cause the
amount deposited in the Holding Account to equal the aggregate undrawn face
amount of all outstanding Letters of Credit. At any time after such
deposit is made and all outstanding Obligations, other than Obligations
with respect to outstanding Letters of Credit, have been paid in full, if
an outstanding Letter of Credit expires or is reduced without the full
amount thereof having been drawn, the Agent shall withdraw from the Holding
Account and deliver to the Company an amount equal to the amount by which
the amount on deposit in the Holding Account exceeds the aggregate undrawn
face amount of outstanding Letters of Credit (after giving effect to such
expiration or reduction).
(b) Between December 1 of each year and March 31 of the
following year, the Company shall reduce the outstanding principal balance
of the Loans for a period of not less than 30 consecutive days to not more
than $50,000,000 PLUS, on each day during such period, the amount of cash
and cash equivalents held by the Company and its Subsidiaries.
(c) If at any time a Borrowing Base Deficiency shall exist, the
Company will immediately prepay the outstanding Loans in the amount of such
Borrowing Base Deficiency and, if such Borrowing Base Deficiency exceeds
the amount of outstanding Loans, deposit into the Holding Account, in
Immediately Available Funds, an aggregate amount equal to such excess. To
the extent that, prior to the occurrence of any Event of Default, the
Borrowing Base increases, the Agent shall, at the request of the Company,
deliver to the Company an amount equal to the amount by which the deposits
held in the Holding Account pursuant to this Section 2.07(c) exceed the
Borrowing Base Deficiency.
(d) If at any time the Total Outstandings exceed the Aggregate
Commitment Amount, the Company shall prepay the Loans in the amount of such
excess.
Section 2.08 OPTIONAL PREPAYMENTS. The Company may prepay
Reference Rate Advances, in whole or in part, at any time, without premium or
penalty. Each partial prepayment shall be in an aggregate amount for all the
Banks of $2,000,000
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or an integral multiple of $500,000 in excess thereof, and shall be
distributed to the Banks in accordance with their respective Pro Rata Shares.
Except upon an acceleration following an Event of Default, upon termination
of the Commitments in whole under Section 2.15, or upon the occurrence of a
Borrowing Base Deficiency, the Company may pay Eurodollar Advances only on
the last day of the Interest Period applicable thereto. Amounts paid (unless
following an acceleration or upon termination of the Commitments in whole) or
prepaid under this Section 2.08 may be reborrowed upon the terms and subject
to the conditions and limitations of this Agreement. All principal paid or
prepaid under Section 2.07, this Section 2.08 or Section 2.15 shall be
applied first, to the outstanding principal balance of the Swing-Line Note
and thereafter, to the outstanding principal balance of each Bank's Revolving
Note (in accordance with such Bank's Pro Rata Share).
PART B -- TERMS OF THE LETTER OF CREDIT FACILITY
Section 2.09 LETTERS OF CREDIT. The letters of credit issued by
U.S. Bank for the account of the Company and described on Schedule 2.09 shall
be "Letters of Credit" hereunder from and after the Effective Date, and the
rights and obligations of U.S. Bank, the Agent, the Banks and the Company
with respect to such letters of credit shall be those set forth therein and,
to the extent not inconsistent therewith, those set forth herein with respect
to Letters of Credit. Upon the terms and subject to the conditions of this
Agreement, U.S. Bank agrees to issue Letters of Credit for the account of the
Company from time to time between the Effective Date and the Termination Date
in such amounts as the Company shall request; PROVIDED that no Letter of
Credit will be issued in any amount which, after giving effect to such
issuance, would cause (i) Total Outstandings to exceed the Aggregate
Commitment Amount, (ii) a Borrowing Base Deficiency to exist or increase, or
(iii) the Letter of Credit Usage to exceed $100,000,000.
Section 2.10 PROCEDURES FOR LETTERS OF CREDIT. Each request for a
Letter of Credit shall be made by the Company in writing and received by U.S.
Bank by 1:00 p.m. (Minneapolis time) not later than one Business Day
preceding the requested date of issuance (which shall also be a Business
Day). Each request for a Letter of Credit shall be deemed a representation
by the Company that on the date of issuance of such Letter of Credit and
after giving effect thereto the conditions specified in Article III have been
and will be satisfied. U.S. Bank may require that such request be made on
such letter of credit application and reimbursement agreement form as U.S.
Bank may from time to time specify. U.S. Bank shall promptly notify the
Agent, and the Agent shall notify the other Banks by 1:00 P.M (Minneapolis
time) on the date U.S. Bank issues any Letter of Credit, of the issuance of
each Letter of Credit, and each Bank's Pro Rata Share thereof,
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and U.S. Bank will promptly provide to the Agent, and the Agent will promptly
provide to the other Banks, a copy of each Letter of Credit issued hereunder.
Section 2.11 TERMS OF LETTERS OF CREDIT. Letters of Credit shall
be issued in support of obligations of the Company incurred in the ordinary
course of its business. No Letter of Credit may have an expiration date more
than two years after the date of its issuance.
Section 2.12 AGREEMENT TO REPAY LETTER OF CREDIT DRAWS. If U.S.
Bank has decided that it will a pay a draw made on any Letter of Credit, it
will notify the Agent and the Company of that fact. The Company shall
reimburse U.S. Bank in an amount equal to the amount of such draw by 11:00
A.M. (Minneapolis time) on the day on which such draw is to be paid in
Immediately Available Funds. To the extent funds are available in the
Holding Account, U.S. Bank may, in its discretion, withdraw the amount of
such draw from the Holding Account and apply such amount to the Company's
reimbursement obligations in respect of such draw. To the extent the amount
of funds available in the Holding Account equals or exceeds the Letter of
Credit Usage as of the date of such draw, U.S. Bank shall withdraw the amount
of such draw from the Holding Account and apply such amount to the Company's
reimbursement obligations in respect of such draw. If U.S. Bank is not
reimbursed for the amount of such draw as provided in the three preceding
sentences, U.S. Bank shall notify the Agent thereof by 1:00 P.M. (Minneapolis
time) on the date such draw is to be paid.
Section 2.13 LOANS TO COVER UNPAID DRAWS. Whenever the Agent
receives notice from U.S. Bank of an Unpaid Draw pursuant to Section 2.12,
the Agent shall promptly give the other Banks notice to that effect,
specifying the amount thereof, in which event each Bank is authorized (and
the Company does here so authorize each Bank) to, and shall, make a Loan (as
a Reference Rate Advance) to the Company in an amount equal to such Bank's
Pro Rata Share of the amount of the Unpaid Draw. Each Bank shall make such
Loan, regardless of noncompliance with the applicable conditions precedent
specified in Article III hereof and regardless of whether an Event of Default
then exists or the Commitments have been terminated, and provide U.S. Bank
with the proceeds of such Loan in Immediately Available Funds, at the office
of U.S. Bank, not later than 4:00 P.M. (Minneapolis time) on the day on which
such Bank received such notice. U.S. Bank shall apply the proceeds of such
Loans directly to reimburse itself for such Unpaid Draw. If any portion of
any such amount paid to U.S. Bank should be recovered by or on behalf of the
Company from U.S. Bank in bankruptcy, by assignment for the benefit of
creditors or otherwise, the loss of the amount so recovered shall be ratably
shared between and among the Banks in the manner contemplated by Section
7.10. If at the time the Banks make funds available to U.S. Bank pursuant to
the
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provisions of this Section 2.13 the applicable conditions precedent specified
in Article III shall not have been satisfied, the Company shall pay to the
Agent for the account of the Banks interest on the funds so advanced at a
floating rate per annum equal to the Reference Rate plus the Applicable
Margin plus two percent (2.00%). If for any reason any Bank is unable to
make a Loan to the Company to reimburse U.S. Bank for an Unpaid Draw, then
such Bank shall immediately purchase from U.S. Bank a risk participation in
such Unpaid Draw, at par, in an amount equal to such Bank's Pro Rata Share of
the Unpaid Draw, which risk participation shall, for all purposes hereunder
except Sections 2.01 and 2.02, be deemed a Loan made by such Bank hereunder.
Section 2.14 OBLIGATIONS ABSOLUTE. The obligations of the Company
to repay U.S. Bank for the amount of any draw on a Letter of Credit pursuant
to Section 2.12 and to repay any Letter of Credit Loans shall be absolute,
unconditional and irrevocable, shall continue for so long as any Letter of
Credit, Unpaid Draw or Letter of Credit Loan is outstanding notwithstanding
any termination of this Agreement, and shall be paid strictly in accordance
with the terms of this Agreement, under all circumstances whatsoever,
including without limitation the following circumstances:
(a) any lack of validity or enforceability of any Letter of
Credit;
(b) the existence of any claim, setoff, defense or other right
which the Company may have or claim at any time against any beneficiary,
transferee or holder of any Letter of Credit (or any Person for whom any
such beneficiary, transferee or holder may be acting), the Agent, U.S. Bank
or any Bank or any other Person, whether in connection with a Letter of
Credit, this Agreement, the transactions contemplated hereby, or any
unrelated transaction; or
(c) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever.
Neither the Agent, U.S. Bank, any other Bank nor the officers, directors,
agents or employees of any thereof shall be liable or responsible for, and
the obligations of the Company to U.S. Bank and the Banks shall not be
impaired by:
(i) the use which may be made of any Letter of Credit or
for any acts or omissions of any beneficiary, transferee or holder thereof
in connection therewith;
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(ii) the validity, sufficiency or genuineness of documents,
or of any endorsements thereon, even if such documents or endorsements
should, in fact, prove to be in any or all respects invalid, insufficient,
fraudulent or forged;
(iii) the acceptance by U.S. Bank of documents that appear on
their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary; or
(iv) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit.
Notwithstanding the foregoing, the Company shall have a claim against U.S.
Bank, and U.S. Bank shall be liable to the Company, to the extent, but only
to the extent, of any direct, as opposed to consequential, damages suffered
by the Company which the Company proves were caused by U.S. Bank's willful
misconduct or gross negligence in determining whether documents presented
under any Letter of Credit comply with the terms thereof.
PART C -- GENERAL
Section 2.15 OPTIONAL REDUCTION OR TERMINATION OF COMMITMENTS.
The Company may, at any time, upon not less than ten Business Days' prior
written notice to the Agent, reduce the Commitments, ratably, with any such
reduction in a minimum aggregate amount for all the Banks of $5,000,000, or
an integral multiple thereof, or terminate the Commitments in their entirety;
PROVIDED, HOWEVER, that (a) the Company may not at any time reduce the
Aggregate Commitment Amount below the Letter of Credit Usage as of the date
of such reduction unless the Company reduces the Aggregate Commitment Amount
to zero and deposits with U.S. Bank in the Holding Account an amount equal to
the Letter of Credit Usage as of such date; and (b) the Company may not
reduce the Commitments if the payment required by the next sentence as a
result of such reduction would result in any outstanding Eurodollar Advances
being repaid, in whole or in part, prior to the last day of the Interest
Period applicable to such Advances. Upon any reduction in the Commitments
pursuant to this Section 2.15, the Company shall pay to the Agent for the
account of the Banks the amount, if any, by which the Total Outstandings
exceed the Aggregate Commitment Amount after giving effect to such reduction.
Upon termination of the Commitments pursuant to this Section, the Company
shall pay to the Agent for the account of the Banks the full amount of all
outstanding Loans, all accrued and unpaid interest thereon, all unpaid
Commitment Fees accrued to the date of such termination, any indemnities
payable pursuant to Section 2.26 and all other unpaid obligations of the
Company to the
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Banks and the Agent hereunder, and shall deposit with U.S. Bank in the
Holding Account an amount equal to the Letter of Credit Usage as of such date.
Section 2.16 AGENT'S FEES. The Company shall pay to the Agent
fees in accordance with the terms of a letter agreement between the Company
and the Agent concerning such fees. The Agent may separately agree with any
Bank to pay a portion of such fees to such Bank, but shall not be obligated
to pay such portion to such Bank unless and until the same is received from
the Company.
Section 2.17 COMMITMENT FEES. The Company shall pay to the Agent,
for the account of the Banks, for the period from May 22, 1998 until the
Termination Date, fees (the "Commitment Fees") in an amount equal to the
Applicable Commitment Fee Percentage per annum (determined daily on a
floating basis) of the average daily Unused Commitment Amount. Such
Commitment Fees are payable quarterly in arrears on the first day of the
following calendar quarter and on the Termination Date.
Section 2.18 LETTER OF CREDIT FEES. For each Letter of Credit
issued or extended, the Company shall pay to the Agent for the account of the
Banks, in advance on the date of issuance or extension, a fee (a "Letter of
Credit Fee") in an amount equal to the Applicable Letter of Credit Fee
Percentage per annum, as in effect on the date of issuance or extension, of
the original face amount of the Letter of Credit for the period from the date
of issuance or extension to the scheduled expiration date of such Letter of
Credit. The Company shall also pay to U.S. Bank, for its own account, on
demand, all issuance, amendment, drawing and other fees regularly charged by
U.S. Bank to its letter of credit customers and all out-of-pocket expenses
incurred by U.S. Bank in connection with the issuance, amendment,
administration or payment of any Letter of Credit.
Section 2.19 COMPUTATION. Commitment Fees, Letter of Credit Fees
and interest on Advances shall be computed on the basis of actual days
elapsed (or, in the case of Letter of Credit Fees which are paid in advance,
actual days to elapse) and a year of 360 days.
Section 2.20 PAYMENTS. Payments and prepayments of principal of,
and interest on, the Notes and all fees, expenses and other obligations under
this Agreement payable to the Agent or the Banks shall be made without setoff
or counterclaim in Immediately Available Funds not later than 12:00 noon
(Minneapolis time) (except as otherwise provided herein) on the dates called
for under this Agreement to the Agent at its main office in Minneapolis,
Minnesota. Payments payable to U.S. Bank for its own account in respect of
Letters of Credit and the Swing-Line Note under this Agreement
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shall be made without setoff or counterclaim in Immediately Available Funds
not later than 12:00 noon (Minneapolis time) (except as otherwise provided
herein) on the dates called for in this Agreement to U.S. Bank at its main
office in Minneapolis, Minnesota. Funds received after such time shall be
deemed to have been received on the next Business Day. The Agent will
promptly distribute in like funds to each Bank its Pro Rata Share of each
payment of principal or interest applied to the Revolving Notes, and each
payment of Commitment Fees, Letter of Credit Fees or other amounts received
by the Agent for the account of the Banks. If the Agent does not make any
such distribution (or provide Federal Reserve Bank reference numbers for the
wire transfer of the amount thereof) by 3:00 P.M. (Minneapolis time) on the
date such payment of principal, interest or other amounts is received or
deemed received under this Section 2.20, the Agent will pay interest to each
Bank entitled to receive a portion of such distribution on the amount
distributable to it at the Federal Funds Rate from the date such payment was
received or deemed received until the date such distribution is made, such
interest to be payable with such distribution. Whenever any payment to be
made hereunder or on the Notes shall be stated to be due on a day which is
not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time, in the case of a payment of
principal, shall be included in the computation of any interest on such
principal.
Section 2.21 USE OF LOAN PROCEEDS. The proceeds of the Loans
shall be used for the general corporate purposes of the Company and its
Subsidiaries in a manner not in conflict with any of the covenants in this
Agreement.
Section 2.22 INTEREST RATE NOT ASCERTAINABLE, ETC. If, on or
prior to the date for determining the Adjusted Eurodollar Rate in respect of
the Interest Period, any Bank reasonably determines (which determination
shall be conclusive and binding, absent error) that:
(a) deposits in dollars (in the applicable amount) are not being
made available to such Bank in the relevant market for such Interest
Period, or
(b) the Adjusted Eurodollar Rate will not adequately and fairly
reflect the cost to such Bank of funding or maintaining Eurodollar Advances
for such Interest Period,
such Bank shall forthwith give notice to the Agent and the Company and the
other Banks of such determination, whereupon the obligation of such Bank to
make or continue, or to convert any Advances to, Eurodollar Advances shall be
suspended until such Bank notifies the Company and the Agent that the
circumstances giving rise to
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such suspension no longer exist. While any such suspension continues, all
further Advances by such Bank shall be made as Reference Rate Advances. No
such suspension shall affect the interest rate then in effect during the
applicable Interest Period for any Eurodollar Advance outstanding at the time
such suspension is imposed.
Section 2.23 INCREASED COST. If, after the date hereof, any
Regulatory Change:
(a) shall subject any Bank (or its applicable lending office) to
any tax, duty or other charge with respect to its Eurodollar Advances, its
Note(s), its obligation to make Eurodollar Advances, its issuance of
Letters of Credit or its obligation to make Letter of Credit Loans, or
shall change the basis of taxation of payment to any Bank (or its
applicable lending office) of the principal of or interest on its
Eurodollar Advances, or any other amounts due under this Agreement in
respect of its Eurodollar Advances, its obligation to make Eurodollar
Advances, its obligation to issue Letters of Credit or its obligation to
make Letter of Credit Loans (except for changes in the rate of tax on the
overall net income of such Bank or its applicable lending office imposed by
the jurisdiction in which such Bank's principal office or applicable
lending office is located); or
(b) shall impose, modify or deem applicable any reserve, special
deposit, capital requirement or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding with respect to any Eurodollar
Advance any such requirement to the extent included in calculating the
applicable Adjusted Eurodollar Rate) against assets of, deposits with or
for the account of, or credit extended by, any Bank's applicable lending
office or shall impose on any Bank (or its applicable lending office) or on
the interbank eurodollar market any other condition affecting its
Eurodollar Advances, its Note(s), its obligation to make Eurodollar
Advances, its obligation to issue Letters of Credit or its obligations to
make Letter of Credit Loans;
and the result of any of the foregoing is to increase the cost to such Bank
(or its applicable lending office) of making or maintaining any Eurodollar
Advance, issuing or maintaining Letters of Credit or making Letter of Credit
Loans, or to reduce the amount of any sum received or receivable by such Bank
(or its applicable lending office) under this Agreement or under its Note(s),
then, within 30 days after demand by such Bank (with a copy to the Agent),
the Company shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction. Each
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Bank will promptly notify the Company and the Agent of any Regulatory Change
of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section 2.23 and will
designate a different applicable 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 2.23,
setting forth the additional amount or amounts to be paid to it hereunder and
stating in reasonable detail the basis for the charge and the method of
computation, shall be conclusive in the absence of error. In determining
such amount, any Bank may use any reasonable averaging and attribution
methods. The Company shall not be obligated to pay any such amount that is
attributable to the period ending 91 days prior to the date of the first
notice delivered by any Bank under the third preceding sentence with respect
to any Regulatory Change (the "Excluded Period"), except to the extent any
amount is attributable to the Excluded Period as a result of the retroactive
application of the applicable Regulatory Change. Failure on the part of any
Bank to demand compensation for any increased costs or reduction in amounts
received or receivable with respect to any Interest Period or other
applicable period shall not constitute a waiver of such Bank's rights to
demand compensation for any increased costs or reduction in amounts received
or receivable in any subsequent Interest Period or other applicable period.
Section 2.24 ILLEGALITY. If, after the date of this Agreement,
any Regulatory Change shall make it unlawful or impossible for such Bank to
make, maintain or fund any Eurodollar Advances, such Bank shall notify the
Company and the Agent, whereupon the obligation of such Bank to make or
continue, or to convert any Advances to, Eurodollar Advances shall be
suspended until such Bank notifies the Company and the Agent that the
circumstances giving rise to such suspension no longer exist. Before giving
any such notice, such Bank shall designate a different applicable 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 Bank determines that it may not lawfully continue to maintain
any Eurodollar Advances to the end of the applicable Interest Periods, all of
the affected Advances shall be automatically converted to Reference Rate
Advances as of the date of such Bank's notice, and upon such conversion the
Company shall indemnify such Bank in accordance with Section 2.26.
Section 2.25 CAPITAL ADEQUACY. In the event that any Bank shall
have reasonably determined that any Regulatory Change has or shall have the
effect of reducing the rate of return on such Bank's capital or the capital
of its parent corporation as a consequence of its Commitment, the Advances
and/or the Letters of Credit or its
-33-
obligations to make Loans to cover Unpaid Draws to a level below that which
such Bank or its parent corporation could have achieved but for such
Regulatory Change (taking into account such Bank's policies and the policies
of its parent corporation with respect to capital adequacy), then the Company
shall, within ten days after written notice and demand from such Bank (with a
copy to the Agent), pay to such Bank additional amounts sufficient to
compensate such Bank or its parent corporation for such reduction; PROVIDED,
that the Company shall not be obligated to pay any such additional amount (i)
unless such Bank shall first have notified the Company in writing that it
intends to seek such compensation pursuant to this Section 2.26 and (ii) that
is attributable to the period ending 91 days prior to the date of such notice
with respect to any Regulatory Change (the "Excluded Period"), except to the
extent any amount is attributable to the Excluded Period as a result of the
retroactive application of the applicable Regulatory Change. Any
determination by such Bank under this Section and any certificate as to the
amount of such reduction given to the Company by such Bank shall be final,
conclusive and binding for all purposes, absent error.
Section 2.26 FUNDING LOSSES. The Company shall compensate each
Bank, upon its written request, for all losses, expenses and liabilities
(including, without limitation, any interest paid by such Bank to lenders of
funds borrowed by it to make or carry Eurodollar Advances to the extent not
recovered by such Bank in connection with the re-employment of such funds and
including loss of anticipated profits) which such Bank may sustain: (a) if
for any reason, other than a default by such Bank, a funding of a Eurodollar
Advance does not occur on the date specified therefor in the Company's
request or notice as to such Advance under Section 2.02 or 2.05, or (b) if,
for whatever reason (including, but not limited to, acceleration of the
maturity of Advances following an Event of Default), any repayment or
prepayment of a Eurodollar Advance, or a conversion pursuant to Section 2.24,
occurs on any day other than the last day of the Interest Period applicable
thereto. A Bank's request for compensation shall set forth the basis for the
amount requested and shall be final, conclusive and binding, absent error.
Section 2.27 DISCRETION OF BANKS AS TO MANNER OF FUNDING. Each
Bank shall be entitled to fund and maintain its funding of Eurodollar
Advances in any manner it may elect, it being understood, however, that for
the purposes of this Agreement all determinations hereunder (including, but
not limited to, determinations under Section 2.26, but excluding
determinations of the Eurodollar Rate that the Agent may elect to make from
the Telerate or Reuters screen) shall be made as if such Bank had actually
funded and maintained each Eurodollar Advance during the Interest Period for
such Advance through the purchase of deposits having a maturity corresponding
to the last day of the applicable Interest Period and an interest rate equal
to the Eurodollar Rate.
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Section 2.28 SETOFF. Whenever an Event of Default shall have
occurred and be continuing, the Company hereby irrevocably authorizes each
Bank to set off the Obligations owed to it (including, without limitation,
any participation in the Obligations of other Banks purchased pursuant to
Section 7.10 or 7.11) against all deposits and credits of the Company with,
and any and all claims of the Company against, such Bank. Such right shall
exist whether or not the Agent shall have made any demand hereunder or under
any other Loan Document, whether or not such indebtedness, or any part
thereof, or deposits and credits held for the account of the Company is or
are matured or unmatured, and regardless of the existence or adequacy of any
collateral, guaranty or any other security, right or remedy available to the
Banks. Each Bank agrees that, as promptly as is reasonably possible after
the exercise of any such setoff right, it shall notify the Agent and the
Company of its exercise of such setoff right; PROVIDED, HOWEVER, that the
failure of any Bank to provide such notice shall not effect the validity of
the exercise of such setoff rights. Nothing in this Agreement shall be
deemed a waiver or prohibition of or restriction on any rights of banker's
lien, setoff and counterclaim available to any Bank pursuant to law.
Section 2.29 WITHHOLDING TAXES.
(a) BANKS TO SUBMIT FORMS. Each Bank represents to the Company and
the Agent that it is either (i) organized under the laws of the United States or
any State thereof or (ii) is entitled to complete exemption from United States
withholding tax imposed on or with respect to any payments, including fees, to
be made pursuant to this Agreement (x) under an applicable provision of a tax
convention to which the United States is a party or (y) because it is acting
through a branch, agency or office in the United States and any payment to be
received by it hereunder is effectively connected with a trade or business in
the United States. Each Bank that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) shall submit to the Company and
the Agent, on or before the Closing Date or the day on which such Bank becomes
such under Section 8.02(b) or 8.05(b), duly completed and signed copies of
either Form 1001 (relating to such Bank and entitling it to a complete exemption
from withholding on all payments to be received by such Bank hereunder) or Form
4224 (relating to all payments to be received by such Bank hereunder) of the
United States Internal Revenue Service. Thereafter and from time to time, each
such Bank shall submit to the Company and the Agent such additional duly
completed and signed copies of one or the other of such Forms (or such successor
Forms as shall be adopted from time to time by the relevant United States taxing
authorities) as may be (i) reasonably requested by the Company or the Agent and
(ii) required and permitted under then-current United States law or regulations
to avoid United States withholding taxes on payments in respect of all payments
to be received by such Bank hereunder.
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Upon the request of the Company or the Agent, each Bank that is a United
States person (as such term is defined in Section 7701(a)(30) of the Code)
shall submit to the Company and the Agent a certificate in such form as is
reasonably satisfactory to the Company and the Agent to the effect that it is
such a United States person.
(b) INABILITY OF A BANK. If any Bank that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code)
determines that, as a result of any Regulatory Change, the Company is
required by law or regulation to make any deduction, withholding or backup
withholding of any taxes, levies, imposts, duties, fees, liabilities or
similar charges of the United States of America, any possession or territory
of the United States of America (including the Commonwealth of Puerto Rico)
or any area subject to the jurisdiction of the United States of America
("U.S. TAXES") from any payments to a Bank pursuant to any Loan Document in
respect of the Obligations payable to such Bank then or thereafter
outstanding, the amount payable will be increased to the amount which, after
deduction from such increased amount of all U.S. Taxes required to be
withheld or deducted therefrom, will yield the amount required under any Loan
Document to be paid with respect thereto; PROVIDED, that the Company shall
not be required to pay any additional amount pursuant to this Section 2.29(b)
to any Bank (i) that is not, either on the date this Agreement is executed by
such Bank or on the date such Bank becomes such under Section 8.02(b) or
8.05(b), either (x) entitled to submit Form 1001 (relating to such Bank and
entitling it to a complete exemption from withholding on all payments to be
received by such Bank hereunder) or Form 4224 (relating to all payments to be
received by such Bank hereunder) or (y) a United States person (as such term
is defined in Section 7701(a)(30) of the Code), or (ii) that has failed to
submit any form or certificate that it was required to file pursuant to
subsection (a) and entitled to file under applicable law or (iii) arising
from such Bank's failure to comply with any certification, identification or
other similar requirement under United States income tax laws or regulations
(including backup withholding) to establish entitlement to exemption from
such U.S. Taxes; and P
ROVIDED, FURTHER, that if a Bank, as a result of any
amount paid by the Company to such Bank pursuant to this Section 2.29, shall
realize a tax credit or refund, which tax credit or refund would not have
been realized but for the Company's payment of such amount, such Bank shall
pay to the Company an amount equal to such tax credit or refund. Each Bank
may determine the portion, if any, of any tax credit or refund attributable
to the Company's payments using such attribution and accounting methods as
such Bank reasonably selects, and such Bank's determination of the portion of
any tax credit or refund attributable to the Company's payments shall be
conclusive in the absence of manifest error. The obligation of the Company
under this Section 2.29(b) shall survive the payment in full of the
Obligations and the termination of the Commitments of such Bank.
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(c) SUBSTITUTION OF BANK. In the event the Company is required
pursuant to this Section 2.29 to pay any additional amount to any Bank, such
Bank shall, if no Event of Default or Unmatured Event of Default has occurred
and is continuing, upon the request of the Company to such Bank and the
Agent, assign, pursuant to and in accordance with the provisions of Section
8.05(b), all of its rights and obligations under this Agreement and under the
Loan Documents to another Bank or an assignee selected by the Company and
reasonably satisfactory to the Agent, in consideration for (i) the payment by
such assignee to the assigning Bank of the principal of, and interest accrued
and unpaid to the date of such assignment on, the Note of such Bank, (ii) the
payment by the Company to the assigning Bank of any and all other amounts
owing to such Bank under any provision of this Agreement accrued and unpaid
to the date of such assignment and (iii) the Company's release of the
assigning Bank from any further obligation or liability under this Agreement.
Notwithstanding anything to the contrary in this Section 2.29(c), in no
event shall the replacement of any Bank result in a decrease in the aggregate
Commitment Amounts without the written consent of the Majority Banks.
Section 2.30 EXTENSION OF TERMINATION DATE. If the Company shall
provide to the Agent, on March 31, 2000, evidence satisfactory to the Agent
that either (a) no Subordinated Debt is outstanding on such date or (b) no
principal payment on any Subordinated Debt that remains outstanding is
scheduled to be made before June 30, 2001, and provided that at such time no
Event of Default or Unmatured Event of Default has occurred and is
continuing, the Termination Date shall automatically be extended to June 30,
2001.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01 CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation
of the Banks to make the initial Loans hereunder, and the obligation of U.S.
Bank to issue the initial Letter of Credit hereunder, shall be subject to the
prior or simultaneous fulfillment of each of the following conditions:
(a) the Agent shall have received the following:
(i) Revolving Notes payable to the Banks and a
Swing-Line Note payable to U.S. Bank, duly executed by the Company,
complying with the requirements of Section 2.04;
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(ii) Guaranties of BB Concepts, BB Investments and each
Operating Subsidiary, duly executed by such Subsidiary;
(iii) copies of the articles or certificate of
incorporation or organization, including all amendments thereto, of
the Company, BB Concepts, BB Investments and each Operating
Subsidiary, certified as of a recent date prior to the Effective Date
by the appropriate governmental official of the jurisdiction of its
incorporation or organization;
(iv) long-form certificates of good standing of the
Company, BB Concepts, BB Investments and each Operating Subsidiary, as
of a recent date, from such governmental official;
(v) certificates of the Secretary or an Assistant
Secretary of the Company, BB Concepts, BB Investments and each
Operating Subsidiary, dated the Effective Date, certifying (A) that
attached thereto is a true and complete copy of the by-laws of the
Company or such Subsidiary as in effect on such date, (B) that
attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors, sole shareholder or other governing
body of the Company or such Subsidiary, authorizing the execution,
delivery and performance of the Loan Documents to which it is a party
and, in the case of the Company, the borrowings thereunder, and
certifying that such resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that the articles or
certificate of incorporation or organization of the Company or such
Subsidiary have not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant
to Section 3.01(a)(iv), and (D) as to the authority, incumbency and
specimen signature of each officer executing any Loan Document or any
other document delivered in connection herewith or therewith on behalf
of the Company or such Subsidiary;
(vi) the favorable written opinion of Robins, Kaplan,
Xxxxxx & Xxxxxx, counsel for the Company and its Subsidiaries,
addressed to the Banks, as to the matters and to the effect set forth
in Exhibit G;
(vii) a copy of a letter from the Company to the
accounting firm that audited the financial statements referred to in
Section 4.05, informing such accounting firm that the Banks are
extending credit in reliance on such statements;
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(viii) an initial Compliance Certificate; and
(ix) a certificate of the Senior Vice President and
Treasurer of the Company to the effect that, as of the Effective Date,
the representations and warranties of the Company set forth herein and
of BB Concepts, BB Investments and each Operating Subsidiary set forth
in its Guaranty are true and correct, and that no event of Default or
Unmatured Event of Default has occurred or will exist.
(b) the Agent shall have received evidence satisfactory to it
that, simultaneously with the effectiveness of this Agreement, the Existing
Credit Agreement will have terminated and all obligations of the Company to
the agent and the lenders thereunder will have been paid and performed in
full;
(c) the Agent and the Banks shall have received all fees and
other amounts due and payable by the Company to the Agent and the Banks
under, or as contemplated by, this Agreement or any other Loan Document on
or prior to the Effective Date, including, but not limited to, the
reasonable fees and expenses of counsel to the Agent payable pursuant to
Section 8.03(a); and
(d) the Company shall have performed and complied with all
agreements, terms and conditions contained in this Agreement required to be
performed or complied with by the Company prior to or simultaneously with
the Effective Date.
Section 3.02 CONDITIONS PRECEDENT TO EACH LOAN. The obligation of
the Banks to make all Loans (including the initial Loan) other than Letter of
Credit Loans, to continue any Eurodollar Advances as such or to convert any
outstanding Advances to Eurodollar Advances, and the obligation of U.S. Bank
to issue Letters of Credit, shall be subject to the fulfillment of the
following conditions:
(a) the representations and warranties of the Company contained
in Article IV and of BB Concepts, BB Investments and each Operating
Subsidiary contained in its Guaranty shall be true and correct on and as of
the date on which each Loan is requested to be made, on which each Advance
is requested to be continued or converted or on which each Letter of Credit
is requested to be issued, with the same force and effect as if made on and
as of such date, and the giving of the relevant Notice of Borrowing,
Continuation or Conversion or the making of the relevant request for the
issuance of a Letter of Credit shall constitute a representation and
warranty to such effect;
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(b) no Event of Default or Unmatured Event of Default shall have
occurred and be continuing on the Borrowing Date or would exist after
giving effect to the making of the requested Loan, the requested
continuation or conversion of an Advance or the issuance of the requested
Letter of Credit; and
(c) the Agent shall have received a timely and properly
completed Notice of Borrowing, Continuation or Conversion, as required
under Section 2.02 or Section 2.05, or U.S. Bank shall have received a
timely and properly completed written request for the issuance of a Letter
of Credit, as required under Section 2.09.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement, to grant their
respective Commitments and to make Loans thereunder, and to induce U.S. Bank
to issue Letters of Credit and Swing-Line Loans hereunder, the Company hereby
represents and warrants to the Banks that:
Section 4.01 ORGANIZATION, STANDING, ETC. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted, to
enter into this Agreement and to perform its obligations under each Loan
Document to which it is a party. Each Subsidiary of the Company is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite power and authority to
carry on its business as now conducted. The Company and each Subsidiary (a)
holds all certificates of authority, licenses and permits necessary to carry
on its business as presently conducted in each jurisdiction in which it is
carrying on such business, except where the failure to hold such
certificates, licenses or permits would not have a Material Adverse Effect,
and (b) is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character of the properties owned, leased or
operated by it or the business conducted by it makes such qualification
necessary and the failure so to qualify would permanently preclude it from
enforcing its rights with respect to any assets or expose it to any
liability, which in either case would be material to it.
Section 4.02 AUTHORIZATION AND VALIDITY. The execution, delivery
and performance by the Company of each Loan Document to which it is a party
have been duly authorized by all necessary corporate action, and this
Agreement and each other Loan Document to which the Company is a party
constitutes the legal, valid and
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binding obligations of the Company, enforceable against the Company in
accordance with its respective terms, subject to limitations as to
enforceability which might result from bankruptcy, insolvency, moratorium and
other similar laws affecting creditors' rights generally and general
principles of equity. The execution, delivery and performance by BB
Concepts, BB Investments and each Operating Subsidiary of its Guaranty have
been duly authorized by all necessary corporate action, and each Guaranty
constitutes the legal, valid and binding obligations of the Subsidiary party
to it, enforceable against such Subsidiary in accordance with its respective
terms, subject to limitations as to enforceability which might result from
bankruptcy, insolvency, moratorium and other similar laws affecting
creditors' rights generally and general principles of equity.
Section 4.03 COMPLIANCE WITH LAW AND OTHER AGREEMENTS. The
execution, delivery and performance by the Company, BB Concepts, BB
Investments and each Operating Subsidiary of each Loan Document to which it
is a party will not (a) violate any provision of any law, statute, rule or
regulation or any order, writ, judgment, injunction, decree, determination or
award of any Governmental Authority applicable to the Company or any
Subsidiary, (b) violate or contravene any provision of the Articles or
Certificate of Incorporation or bylaws of the Company or any Subsidiary, or
(c) result in a breach of or constitute a default under any indenture, loan
or credit agreement or any other agreement, lease or instrument to which the
Company or any Subsidiary is a party or by which the Company, any Subsidiary
or any of their properties may be bound, or result in the creation of any
Lien thereunder. Neither the Company nor any Subsidiary is in default under
or in violation of any law, statute, rule or regulation, order, writ,
judgment, injunction, decree, determination or award of any Governmental
Authority applicable to it or any indenture, loan or credit agreement or
other agreement, lease or instrument to which it is a party or by which it or
any of its properties may be bound in any case in which the consequences of
such default or violation would have a Material Adverse Effect.
Section 4.04 GOVERNMENTAL CONSENT. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by, any Governmental Authority is required on the part of
the Company or any Subsidiary to authorize, or is required in connection
with, the execution, delivery and performance of, or the legality, validity,
binding effect or enforceability of, the Loan Documents.
Section 4.05 FINANCIAL STATEMENTS AND NO MATERIAL ADVERSE CHANGE.
The Company's audited financial statements as of February 28, 1998, and its
consolidated unaudited financial statements as of April 4, 1998, as
heretofore furnished to the Banks, have been prepared in conformity with GAAP
on a consistent basis (except for year-end
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audit adjustments as to the unaudited statements) and fairly present the
consolidated financial condition of the Company as at such dates and the
results of its operations and cash flow for the respective periods then
ended. As of the dates of such financial statements, neither the Company nor
any Subsidiary had any material obligation, contingent liability, liability
for taxes or long-term lease obligations or unusual forward or long-term
commitment which is not either reflected in such financial statements or in
the notes thereto. Since the date of the Company's most recent audited
financial statements delivered to the Banks, there has been no material
adverse change in the business, operations, property, assets or condition,
financial or otherwise, of the Company or any Subsidiary.
Section 4.06 LITIGATION. There are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against
or affecting the Company, any Subsidiary or any of their properties before
any arbitrator or any Governmental Authority which has had, or, if determined
adversely to the Company or such Subsidiary, would likely have, a Material
Adverse Effect.
Section 4.07 ERISA. Each Plan complies with all material
applicable requirements of ERISA and the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and
the Code setting forth those requirements. No Reportable Event has occurred
and is continuing with respect to any Plan. All of the minimum funding
standards applicable to such Plans have been satisfied and there exists no
event or condition which would permit the institution of proceedings to
terminate any Plan under Section 4042 of ERISA. The current value of the
Plans' benefits guaranteed under Title IV of ERISA does not exceed the
current value of the Plans' assets allocable to such benefits. As of the
Signing Date, neither the Company nor any ERISA Affiliate is a party to or
has any liability to any Multiemployer Plan.
Section 4.08 ENVIRONMENTAL, HEALTH AND SAFETY LAWS. There does
not exist any violation by the Company or any Subsidiary of any applicable
federal, state or local law, rule or regulation or order of any government,
governmental department, board, agency or other instrumentality relating to
environmental, pollution, health or safety matters which will or threatens to
impose a material liability on the Company or a Subsidiary or which would
require a material expenditure by the Company or such Subsidiary to cure.
Neither the Company nor any Subsidiary has received any notice to the effect
that any part of its operations or properties is not in material compliance
with any such law, rule, regulation or order or notice that it or its
property is the subject of any governmental investigation evaluating whether
any remedial action is needed to respond to any release of any toxic or
hazardous waste or substance into the
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environment, which non-compliance or remedial action could reasonably be
expected to have a Material Adverse Effect on the Company.
Section 4.09 FEDERAL RESERVE REGULATIONS. Neither the Company nor
any Subsidiary is engaged principally or as one of its important activities
in the business of extending credit for the purpose of purchasing or carrying
margin stock and no part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately,
(a) to purchase or carry margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock or to refund indebtedness
originally incurred for such purpose or (b) for any purpose which entails a
violation of, or which is inconsistent with, the provisions of Regulations G,
U or X. The value of all margin stock owned by the Company and its
Subsidiaries does not constitute more than 25% of the value of the
consolidated assets of the Company.
Section 4.10 TITLE TO PROPERTY; POSSESSION UNDER LEASES. Each of
the Company and its Subsidiaries has good title, free of all Liens other than
those permitted by Section 5.12 hereof, to all of the properties and assets
reflected in the most recent financial statements delivered to the Banks
hereunder as being owned by it and all assets acquired subsequent to the date
of such financial statements, except for assets disposed of in the ordinary
course of business. To the knowledge of the Company, there are no actual,
threatened or alleged material defaults with respect to any leases of any
real or personal property under which the Company or any of its Subsidiaries
is lessor.
Section 4.11 TAXES. The Company and its Subsidiaries have filed
all federal, state, local and foreign tax returns required to be filed by
them and have paid or made provision for the payment of all taxes due and
payable pursuant to such returns and pursuant to any assessments made against
them or any of their property and all other taxes, fees and other charges
imposed on them or any of their property by any Governmental Authority (other
than taxes, fees or charges the amount or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been set aside on the books of the Company or
such Subsidiary in conformity with GAAP). No tax Liens have been filed and
no material claims are being asserted with respect to any such taxes, fees or
charges. The charges, accruals and reserves on the books of the Company and
each Subsidiary in respect of taxes and other governmental charges are
adequate and the Company knows of no proposed material tax assessment against
it or any Subsidiary or any basis therefor. The United States income tax
returns of the Company and its Subsidiaries have been audited by the Internal
Revenue Service, or the period for audit thereof has expired, for all fiscal
years of the Company ending on or before March 31, 1993.
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Section 4.12 TRADEMARKS, PATENTS. Each of the Company and its
Subsidiaries possesses or has the right to use all of the patents,
trademarks, trade names, service marks and copyrights, and applications
therefor, and all technology, know-how, processes, methods and designs used
in or necessary for the conduct of its business, without known conflict with
the rights of others except conflicts that would not be likely to have a
Material Adverse Effect on the Company.
Section 4.13 BUSINESS AND PROPERTIES OF COMPANY AND ITS
SUBSIDIARIES. Since the date of the most recent financial statements
delivered to the Banks hereunder, the business, properties and other assets
of the Company and its Subsidiaries have not been materially and adversely
affected in any way as the result of any fire or other casualty, strike,
lockout, or other labor trouble, embargo, sabotage, confiscation,
condemnation, riot, civil disturbance, activity of armed forces or act of God.
Section 4.14 SECURITIES LAWS. Neither the Company nor any
Subsidiary has issued any unregistered securities in violation of the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, or any other federal, state or foreign law, nor is the Company or
any Subsidiary violating any rule, regulation or requirement under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, or other federal, state or foreign law in any material respect.
Section 4.15 INVESTMENT COMPANY ACT. The Company is not an
"investment company" or a company "controlled" by an investment company
within the meaning of the Investment Company Act of 1940, as amended.
Section 4.16 PUBLIC UTILITY HOLDING COMPANY ACT. The Company is
not a "holding company" or a "subsidiary company" of a holding company or an
"affiliate" of a holding company or of a subsidiary company of a holding
company within the meaning of the Public Utility Holding Company Act of 1940,
as amended.
Section 4.17 RETIREMENT BENEFITS. Except as required under
Section 4980B of the Code, Section 601 of ERISA or applicable state law,
neither the Company nor any Subsidiary is obligated to provide
post-retirement medical or insurance benefits with respect to employees or
former employees.
Section 4.18 INDEBTEDNESS. The Company and its Subsidiaries have
no outstanding Indebtedness except Indebtedness permitted pursuant to Section
5.13.
Section 4.19 SUBSIDIARIES. Schedule 4.19 sets forth the name of
each of the Company's Subsidiaries as of the Signing Date and, as to each
Subsidiary, the
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jurisdiction of its incorporation, the authorized and outstanding capital
stock thereof by class and number, the name of each Person owning such
capital stock and a description (by type and amount) of each Investment by
the Company therein other than the ownership of its capital stock. There are
no warrants, options or other rights to purchase any such capital stock.
Section 4.20 SENIOR INDEBTEDNESS. All of the Obligations
(including, without limitation, all contingent Obligations in respect of
outstanding Letters of Credit) are entitled to the benefit of all of the
subordination provisions applicable to all Subordinated Indebtedness.
Section 4.21 MILLENNIUM COMPLIANCE. The Company has conducted a
review of its information systems and the information systems of its
Subsidiaries and has evaluated the costs of updating their computer systems
and applications in preparation for the year 2000, including costs related to
remediation, testing, conversion, replacement and upgrading system
applications, depreciation and amortization of new package systems,
remediation to bring current systems into compliance and writing off legacy
systems. On the basis of this review and evaluation, the Company has
reasonably concluded that the incremental cost to the Company and its
Subsidiaries of such updating will not result in a Material Adverse Effect.
Section 4.22 FULL DISCLOSURE. Subject to the following sentence,
neither the financial statements delivered to the Banks hereunder nor any
other certificate, written statement, exhibit or report furnished by or on
behalf of the Company in connection with or pursuant to this Agreement
contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements contained therein not
misleading. Certificates or statements furnished by or on behalf of the
Company to the Agent or any Bank consisting of projections or forecasts of
future results or events have been prepared in good faith and are based on
good faith estimates and assumptions of the management of the Company, and
the Company has no reason to believe that such projections or forecasts are
not reasonable.
ARTICLE V
COVENANTS
Until the Commitments shall have expired or been terminated and all
of the Obligations shall have been paid in full, unless the Majority Banks
shall otherwise consent in writing, the Company will:
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Section 5.01 FINANCIAL STATEMENTS. Furnish to the Agent, with a
copy for each Bank:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Company, a copy of the consolidated
financial statements of the Company consisting of at least statements of
income, a reconciliation of changes in equity accounts and cash flow
statements for such fiscal year and balance sheets as at the end of such
fiscal year, setting forth in each case in comparative form corresponding
figures from the preceding year audit, certified without qualification as
to scope, as to the going concern nature of the Company or as to any other
matter deemed material by the Majority Banks, by Ernst & Young or other
independent certified public accountants of recognized national standing
selected by the Company and acceptable to the Agent, together with (i) to
the extent not previously delivered to such accounting firm under the terms
hereof, a letter from the Company to such accounting firm advising such
accounting firm that the Banks are extending credit in reliance on such
financial statements and (ii) a statement of the accounting firm performing
such audit to the effect that in the course of performing its examination
nothing came to its attention that caused it to believe that the Company
was not in compliance with Sections 5.21, 5.22 or 5.23;
(b) as soon as available and in any event within (i) in the case
of the last fiscal quarter of each year, 60 days and (ii) in all other
cases, 30 days, after the end of each fiscal quarter, a copy of the
unaudited consolidated financial statements of the Company consisting of at
least statements of income for said fiscal quarter and for the period from
the beginning of the fiscal year to the end of such fiscal quarter, cash
flow statements for such fiscal quarter and for the period from the
beginning of the fiscal year to the end of such fiscal quarter and balance
sheets as at the end of such fiscal quarter, setting forth, in each case,
comparative figures for the corresponding period of the preceding fiscal
year and forecasted figures for such period, certified by the chief
financial officer of the Company or his designee as being true and prepared
in accordance with GAAP, except for year-end audit adjustments and the
absence of footnotes;
(c) as soon as available and in any event within (i) in the case
of the last fiscal quarter of each year, 60 days and (ii) in all other
cases, 30 days after the end of each fiscal quarter, and together with the
financial statements required pursuant to Section 5.01(b), a properly
completed Compliance Certificate, signed by the Senior Vice President and
Treasurer of the Company or his designee;
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(d) as soon as available and in any event within ten days after
the end of each month during which (i) any Loans were at any time
outstanding or (ii) the Letter of Credit Usage at any time exceeded
$25,000,000, and in all events prior to the making of any Loans or the
issuance of any Letter of Credit that would cause the Letter of Credit
Usage to exceed $25,000,000, for the month prior to the month in which the
Company requested the making of such Loans or the issuance of such Letter
of Credit, a properly completed Borrowing Base Certificate as of the end of
such month, signed by the Senior Vice President and Treasurer of the
Company or his designee;
(e) promptly after the sending or filing thereof, copies of all
regular and periodic financial reports which the Company or any Subsidiary
shall file with the Securities and Exchange Commission or any national
securities exchange;
(f) as soon as practicable and in any event on or before the
last Business Day of the second month of each fiscal year of the Company,
projections, in reasonable detail, on a monthly basis for such fiscal year,
including projected earnings statements and cash flow statements for each
month during such fiscal year and the period from the beginning of such
fiscal year through the end of such month, and accompanying balance sheets
as of the end of such month, signed by the chief financial officer of the
Company or his designee;
(g) together with the financial statements delivered for each
fiscal quarter pursuant to Section 5.01(b), comparable store sales data
for such quarter; and
(h) such other information respecting the financial condition
and results of operations of the Company as the Agent or any Bank may
from time to time reasonably request.
Section 5.02 CORPORATE EXISTENCE. Except as permitted by Section
5.11(b), maintain, and cause each Subsidiary to maintain, its corporate
existence in good standing under the laws of its jurisdiction of
incorporation and its qualification to transact business in each jurisdiction
where failure so to qualify would permanently preclude the Company or such
Subsidiary from enforcing its rights with respect to any material asset or
would expose the Company or such Subsidiary to any material liability, and do
or cause to be done, and cause each Subsidiary to do or cause to be done, all
things necessary to obtain, preserve, renew, extend and keep in full force
and effect the
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rights, licenses, permits, franchises and authorizations material to the
conduct of its business.
Section 5.03 COMPLIANCE WITH LAWS, ETC. Comply, and cause each
Subsidiary to comply, in all material respects with all applicable laws,
rules, regulations and orders of any Governmental Authority applicable to the
Company or such Subsidiary, whether now in effect or hereafter enacted, the
failure to comply with which has had or would likely have a Material Adverse
Effect on the Company.
Section 5.04 INSURANCE. Keep, and cause each Subsidiary to keep,
its insurable properties adequately insured at all times by financially sound
and reputable insurers; maintain, and cause each Subsidiary to maintain, such
other insurance, in such amounts and against such risks, as is customary with
companies in the same or similar businesses, including (i) public liability
insurance against such tort claims which may be asserted against it, and (ii)
fire and other risks insured against by extended coverage; and maintain, and
cause each Subsidiary to maintain, such other insurance as may be required by
law or agreement.
Section 5.05 PAYMENT OF INDEBTEDNESS, TAXES AND CLAIMS. Pay, and
cause each of its Subsidiaries to pay, its Indebtedness and other obligations
promptly and in accordance with their terms; file, and cause each of its
Subsidiaries to file, all tax returns and reports which are required by law
to be filed by it; pay, and cause each of its Subsidiaries to pay, before
they become delinquent, all taxes, assessments and governmental charges and
levies imposed upon it or its property and all claims or demands of any kind
(including but not limited to those of suppliers, mechanics, carriers,
warehousemen, landlords and other like Persons) which, if unpaid, might
result in the creation of a Lien upon its property; PROVIDED that the
foregoing items need not be paid if they are being contested in good faith by
appropriate proceedings, and as long as the Company's or such Subsidiary's
title to its property is not materially adversely affected, its use of such
property in the ordinary course of its business is not materially interfered
with and adequate reserves with respect thereto have been set aside on the
Company's or such Subsidiary's books in conformity with GAAP.
Section 5.06 BOOKS AND RECORDS; INSPECTIONS; AUDITS. Keep, and
cause each Subsidiary to keep, proper books and records of account in which
full, true and correct entries will be made of all its dealings, business and
affairs in accordance with GAAP consistently applied and consistent with the
principles applied in the preparation of the financial statements referred to
in Section 4.05; permit, and cause each Subsidiary to permit, any Person
designated by any Bank to visit and inspect any of its properties, corporate
books and financial records and to copy and make extracts therefrom and to
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discuss its affairs and finances with its officers and independent certified
public accountants, all at such times as such Bank shall reasonably request;
and permit the Agent or its designee to conduct audits of the Company's
inventory annually, and after the occurrence and during the continuance of an
Event of Default or an Unmatured Event of Default, at any time at the option
of the Agent. The Agent shall provide to each of the Banks a copy of the
report prepared by or for the Agent concerning such audits. The Company
shall reimburse the Agent for its costs and expenses of conducting the audits
of the Company's inventory described in the second preceding sentence.
Section 5.07 MAINTENANCE OF PROPERTIES. Maintain, and cause each
Subsidiary to maintain, its properties used or useful in the conduct of its
business in good condition, repair and working order, and supplied with all
necessary equipment, and make all necessary repairs, renewals, replacements,
betterments and improvements thereto, all as may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times.
Section 5.08 ERISA. Establish, maintain and operate each Plan in
compliance with all material applicable requirements of ERISA and of the Code
and with all material applicable rulings and regulations issued under the
provisions of ERISA and of the Code, and will not, and will not permit any
ERISA Affiliate to, (a) engage in any transaction in connection with which
the Company or any ERISA Affiliate would be subject to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975
of the Code, in either case in an amount exceeding $100,000, (b) fail to make
full payment when due of all amounts which, under the provisions of any Plan,
the Company or any ERISA Affiliate is required to pay as contributions
thereto, or permit to exist any accumulated funding deficiency (as such term
is defined in Section 302 of ERISA and Section 412 of the Code), whether or
not waived, with respect to any Plan in an aggregate amount exceeding
$1,000,000 or (c) fail to make any payments in an aggregate amount exceeding
$1,000,000 to any Multiemployer Plan that the Company or any ERISA Affiliate
may be required to make under any agreement relating to such Multiemployer
Plan or any law pertaining thereto.
Section 5.09 LITIGATION AND OTHER NOTICES. Furnish to the Agent,
with a copy for each Bank, written notice of the following promptly after any
officer of the Company or any Subsidiary becomes aware of the same:
(a) any Event of Default or Unmatured Event of Default,
specifying the nature and extent thereof and the corrective action (if any)
proposed to be taken with respect thereto;
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(b) the filing or commencement of, or receipt of notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against the Company or any Subsidiary which has had or would
likely have a Material Adverse Effect on the Company;
(c) any development affecting or relating to the Company or any
Subsidiary, including without limitation any development in litigation,
that in the reasonable judgment of the Company has had, or would likely
have, a Material Adverse Effect on the Company;
(d) the issuance by any Governmental Authority of any
injunction, order, decision or other restraint prohibiting, or having the
effect of prohibiting, the Loans or Letters of Credit, or the initiation of
any litigation or similar proceeding seeking any such injunction, order or
other restraint;
(e) the occurrence of any Reportable Event with respect to any
Plan and the action which is proposed to be taken with respect thereto,
together with a copy of the notice of such Reportable Event to the PBGC;
(f) any violation as to any environmental matter by the Company
or any Subsidiary or the commencement of any judicial or administrative
proceeding relating to health, safety or environmental matters (i) in which
an adverse determination or result could result in the revocation of or
have a material adverse effect on any operating permits, air emission
permits, water discharge permits, hazardous waste permits or other permits
held by the Company or any Subsidiary which are material to the operations
of the Company or such Subsidiary, or (ii) which will or threatens to
impose a material liability on the Company or such Subsidiary to any Person
or which will require a material expenditure by the Company or such
Subsidiary to cure any alleged problem or violation; or
(g) the issuance by any Governmental Authority of any
injunction, order or decision, or the entry by the Company or any
Subsidiary into an agreement with any Governmental Agency, materially
restricting the business of the Company or any Subsidiary or concerning any
material business practice of the Company or any Subsidiary.
Section 5.10 SUPPLEMENTAL DISCLOSURE. From time to time as may be
necessary (in the event that such information is not otherwise delivered by the
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Company to the Banks pursuant to this Agreement), as promptly as is
reasonable under the circumstances after any executive officer of the Company
or any Subsidiary has knowledge with respect thereto, and at least quarterly,
supplement or amend and deliver to the Agent, with a copy for each Bank, each
Schedule or representation herein with respect to any matter hereafter
arising which, if existing or occurring at the Signing Date, would have been
required to be set forth or described in such Schedule or as an exception to
such representation or which is necessary to correct any information in such
Schedule or representation which has been rendered inaccurate thereby. No
supplement to any Schedule or representation provided by the Company
hereunder shall amend this Agreement (including, without limitation, the
applicable Schedule) unless such amendment is agreed to by the requisite
Banks as provided in Section 8.01(a).
Section 5.11 RESTRICTIONS ON FUNDAMENTAL CHANGES. Not, and not
permit any Subsidiary to:
(a) in the case of Best Buy Capital, engage in any business
activities other than the issuance of the MIPS and the lending of the
proceeds thereof, together with all or any part of any Investment made by the
Company in Best Buy Capital, to the Company;
(b) in the case of BB Concepts, own any assets other than the
"Best Buy" trademark and related intellectual property rights, license
agreements with respect to those trademarks and related intellectual
property rights with the Company and any Operating Subsidiary and other
assets not to exceed $5,000,000 (excluding amounts due to or from
Affiliates of the Company) incident to its ownership or licensing of the
foregoing, or incur any liabilities other than operating liabilities
relating to its ownership and licensing of the trademarks and related
intellectual property rights described above, its Guaranty, liabilities to
the Company and any Operating Subsidiary and Guarantees of other
liabilities of the Company;
(c) in the case of BB Investments, own any assets other than
shares of the capital stock of, limited partnership interests in, or
similar ownership interests in Operating Subsidiaries, and incur any
liabilities other than its Guaranty and Guarantees of liabilities of the
Company;
(d) engage in any business activities or operations if, as a
result thereof, the general nature of the business of the Company or the
Company and
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its Subsidiaries taken as a whole would be substantially changed from
that conducted on the Signing Date;
(e) enter into any transaction of merger or consolidation or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), except for the merger of any Subsidiary with and into the
Company or any other Subsidiary, or with any other Person in connection
with an acquisition permitted pursuant to Section 5.14(h);
(f) convey, sell, lease, transfer or otherwise dispose of (or
enter into any commitment to convey, sell, lease, transfer or otherwise
dispose of), in one or more transactions, all or any part of its
business or assets, whether now owned or hereafter acquired, other than
the sale of inventory and sales of private label credit card receivables
in the ordinary course of business, except (i) the Company or an
Operating Subsidiary may sell the store properties (but not any
equipment other than building fixtures), provided that such store
properties are leased back to the Company or an Operating Subsidiary and
that no Event of Default or Unmatured Event of Default exists or would
exist as a result of such sale and lease back and (ii) in addition, the
Company and its Subsidiaries may dispose of any of their respective
assets if, after giving effect to any such disposal, the aggregate book
value of all assets disposed of by the Company and its Subsidiaries
during the period from the Signing Date to the Termination Date (other
than inventory sold in the ordinary course of business) does not exceed,
on a cumulative basis at the time of any such disposition, ten percent
of the Company's Tangible Net Worth as of the end of the most recently
completed fiscal year;
(g) acquire by purchase or otherwise all or substantially all
the business or property of, or stock or other evidence of beneficial
ownership of, any Person; or
(h) create, acquire or own any Subsidiary other than (i) the
Subsidiaries listed on Schedule 4.19, (ii) BB Concepts and BB Investments,
(iii) Operating Subsidiaries, provided that (A) all of the issued and
outstanding shares of each class of capital stock, partnership interests in
or other ownership interests in each such Operating Subsidiary is owned,
directly or indirectly, by the Company and (B) each such Operating
Subsidiary shall have executed and delivered to the Agent a Guaranty,
together with such certificates and opinions as the Agent may reasonably
request in connection therewith, and (iv) Real Estate Subsidiaries.
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Section 5.12 LIENS. Not, and not permit any Subsidiary to,
create, incur, assume or suffer to be created, incurred or exist any Lien, or
enter into or make any commitment to enter into any arrangement for the
acquisition of any property through conditional sale, lease-purchase, or
other title retention agreements with respect to property now owned or
hereafter acquired by the Company or any Subsidiary, except:
(a) Liens existing on the Signing Date and described in
Schedule 5.12, and Liens on the same property securing any Indebtedness the
proceeds of which are used solely to refinance the Indebtedness secured by
such existing Liens;
(b) deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other social
security obligations, incurred in the ordinary course of business of the
Company;
(c) Liens for taxes, fees, assessments and governmental charges
not delinquent or which are being contested in good faith by appropriate
proceedings and for which whatever reserves required by GAAP have been
established;
(d) Liens consisting of easements, rights-of-way, zoning
restrictions, restrictions on the use of real property, and defects and
irregularities in the title thereto, landlords' liens and other similar
liens and encumbrances none of which interfere materially with the use of
the property covered thereby in the ordinary course of the business of the
Company or such Subsidiary and which do not materially detract from the
value of such properties;
(e) subject to the requirements of Section 5.17 and 5.24, Liens
created or assumed in connection with the acquisition of real or personal
property by the Company or any Subsidiary, provided that such Liens attach
only to the property acquired and secure only Indebtedness incurred solely
to finance the acquisition of such property, and Liens on the same property
securing any Indebtedness the proceeds of which are used solely to
refinance such Indebtedness;
(f) subject to the limitation set forth in Section 5.13(e),
Liens on inventory of the Company or any Subsidiary and proceeds thereof
pursuant to agreements with the suppliers of inventory or inventory lenders
to the Company or such Subsidiary, provided that such Liens attach only to
inventory financed
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pursuant to such agreements and secure only Indebtedness incurred solely
to finance the acquisition of such inventory by the Company or such
Subsidiary; and
(g) subject to the requirements of Sections 5.17 and 5.24, Liens
on real property (but not any equipment other than building fixtures),
provided that such Liens secure only Indebtedness incurred solely to
finance, or reimburse the Company for the cost of, Capital Expenditures for
the acquisition or construction of such real property.
Section 5.13 INDEBTEDNESS. Not, and not permit any Subsidiary to,
incur, create, issue, assume or remain liable for any Indebtedness, except:
(a) the Obligations;
(b) other Indebtedness existing on the Signing Date and
described in Schedule 5.13, and Indebtedness the proceeds of which are used
solely to refinance such Indebtedness;
(c) Subordinated Indebtedness;
(d) Indebtedness secured by Liens permitted under
Section 5.12(e) or Section 5.12(g);
(e) Indebtedness secured by Liens permitted under Section
5.12(f), provided the amount of such Indebtedness at any time outstanding
does not exceed thirty-five percent of the lower of cost (determined on an
average cost basis) or market value of the Company's inventory;
(f) Indebtedness in respect of Documentary Letters of Credit
incurred in the ordinary course of business;
(g) unsecured Indebtedness of the Company in an amount not to
exceed $50,000,000;
(h) current liabilities, other than for borrowed money, incurred
in the ordinary course of business;
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(i) Indebtedness incurred after the date hereof in an amount not
to exceed $25,000,000 to finance the acquisition and construction of a
distribution center in Dinuba, California.
Section 5.14 INVESTMENTS. Not, and not permit any Subsidiary to,
make or maintain any Investment, except:
(a) Investments existing on the Signing Date as described in
Schedule 5.14(a);
(b) Investments in Subsidiaries listed on Schedule 4.19 or
created or acquired after the Signing Date and permitted pursuant to
Section 5.11(h);
(c) Investments made in accordance with the Best Buy Co., Inc.
Investment Objectives and Policies set forth on Schedule 5.14(c);
(d) travel advances in the ordinary course of business to
officers and employees;
(e) other loans and advances made in connection with the hiring
or transfer of employees which, when added to loans and advances permitted
solely by this Section 5.14(e), do not exceed $3,000,000 in the aggregate
at any time outstanding;
(f) Investments, valued at cost, made in connection with the
acquisition of new store locations, subject to the requirements of
Section 5.24;
(g) Investments by Best Buy Capital in the MIPS Debenture; and
(h) Acquisitions by the Company or any wholly-owned Subsidiary of
all or part of the real and personal property of, or all of the capital
stock of, another Person, or all or part of the real and personal property
of any business or the assets comprising such business, provided that, with
respect to each such acquisition, (i) no Event of Default or Unmatured
Event of Default exists or would exist after giving effect to such
acquisition, (ii) the Company has provided to the Banks projected financial
statements for the four fiscal quarters ending after the date of such
acquisition, demonstrating that, after giving effect to such acquisition,
it will continue to be in compliance with the requirements of Sections
5.21, 5.22, 5.23 and 5.24 at the end of each such fiscal quarter, (iii) the
aggregate amount of the consideration paid (including, without limitation,
Interest-bearing
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Indebtedness assumed) for all such acquisitions made during the then-
current fiscal year, after giving effect to such acquisition, does not
exceed 15% of the Company's Tangible Net Worth after giving effect to the
proposed transaction, (iv) the business being acquired is engaged, or
promptly after such acquisition will be engaged, in a line of business
permitted under Section 5.11(d) hereof, to that of the Company, and (v) the
board or directors or other governing body of the Person being acquired has
approved the terms of such acquisition.
Section 5.15 GUARANTEES. Not, and not permit any Subsidiary to,
be or become liable on any Guarantee, except (a) Guarantees of the
Indebtedness of (i) the Company and (ii) Operating Subsidiaries permitted
pursuant to Section 5.11(h), and (b) a subordinated Guarantee by the Company
of certain obligations of Best Buy Capital in respect of the MIPS; PROVIDED,
that the Company may not amend or cancel the subordination provisions thereof.
Section 5.16 RESTRICTED PAYMENTS. Not make Restricted Payments
unless (a) both before and after giving effect thereto, no Event of Default
or Unmatured Event of Default will have occurred or be continuing, and (b)
the Company has provided to the Banks a pro-forma Compliance Certificate
based on its results at the end of the most recently completed fiscal month
and giving effect to such Restricted Payments, demonstrating that such
Restricted Payments will not cause a breach of any of the covenants described
therein.
Section 5.17 GENERAL CAPITAL EXPENDITURES. Not, and not permit
its Subsidiaries to, make General Capital Expenditures in an aggregate amount
exceeding (a) $175,000,000 in the Company's fiscal year ended February 27,
1999, and (b) $200,000,000 in any subsequent fiscal year of the Company.
Section 5.18 FEDERAL RESERVE REGULATIONS. Not use any part of the
proceeds of any Loan directly or indirectly (a) to purchase or carry margin
stock or to extend credit to others for the purpose of purchasing or carrying
margin stock or to refund Indebtedness originally incurred for such purpose
or (b) for any purpose which entails a violation of, or which is inconsistent
with, the provisions of Regulations G, U or X.
Section 5.19 ENVIRONMENTAL MATTERS. Observe and comply with, and
cause each Subsidiary to observe and comply with, all laws, rules,
regulations and orders of any government or government agency relating to
health, safety, pollution, hazardous materials or other environmental matters
to the extent non-compliance could result in a Material Adverse Effect on the
Company.
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Section 5.20 PAYMENT OF SUBORDINATED INDEBTEDNESS. Not, and not
permit any Subsidiary to: make any prepayment of principal of, or acquire,
redeem or otherwise retire any Subordinated Indebtedness, except for (a)
retirement upon the conversion or exchange of all or any part of the MIPS
Debenture for common or preferred stock of the Company, and retirement of the
remaining principal balance of the MIPS Debenture for cash in an amount not
to exceed $11,300,000 (in respect of principal plus premium) after such
conversion or exchange for common or preferred stock of the Company, (b)
redemption of the Company's 9.95% Senior Subordinated Notes due 1999 for cash
in an amount not to exceed $18,000,000 (in respect of principal plus
applicable premium), and (c) provided no Loans are outstanding on the date of
such redemption, redemption of up to $150,000,000 plus applicable premium of
the Company's 8 5/8% Senior Subordinated Notes due 2000 for cash, in each
case unless an Event of Default or Unmatured Event of Default has occurred
and is continuing or will exist as a result of such prepayment; make any
payment of principal or interest on any Subordinated Indebtedness if an Event
of Default or Unmatured Event of Default exists; amend or cancel the
subordination provisions thereof; take or omit to take any action whereby the
subordination of such indebtedness or any part thereof to the Notes might be
terminated, impaired or adversely affected; or omit to give the Banks prompt
written notice of any notice received from any holder of Subordinated
Indebtedness of any default under any agreement or instrument relating to any
Subordinated Indebtedness by reason whereof such Subordinated Indebtedness
might become or be declared to be due or payable.
Section 5.21 MINIMUM TANGIBLE NET WORTH. Not at any time permit
Tangible Net Worth to be less than the sum of (i) $700,000,000 PLUS (ii) for
each fiscal year of the Company ending after March 1, 1998, fifty percent of
the Company's consolidated net income for such fiscal year, if positive, PLUS
(iii) one hundred percent of the amount added to the net worth of the Company
as a result of the issuance and sale by the Company of additional shares of
its capital stock (excluding shares issued upon the conversion or exchange of
all or any part of the MIPS Debenture for common or preferred stock of the
Company) after March 1, 1998.
Section 5.22 CASH FLOW LEVERAGE RATIO. Not permit the Cash Flow
Leverage Ratio (a) at the end of any fiscal year of the Company to exceed the
ratio set forth for such fiscal year below:
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Maximum Cash Flow
Fiscal Year Ending Leverage Ratio
------------------ ------------------
1999 4.00 to 1.0
2000 3.75 to 1.0
thereafter 3.50 to 1.0
or (b) at the end of each fiscal quarter (other than the last fiscal quarter)
during any such fiscal year to exceed the ratio set forth below for such
fiscal year:
Maximum Cash Flow
Fiscal Year Ending Leverage Ratio
------------------ -----------------
1999 4.50 to 1.0
2000 4.25 to 1.0
thereafter 4.00 to 1.0
Section 5.23 INTEREST COVERAGE RATIO. Not permit the Interest
Coverage Ratio for any Measurement Period to be less than 2.0 to 1.0.
Section 5.24 OWNED LAND AND BUILDINGS. Not permit the sum of (a)
the aggregate amount of owned land and buildings of the Company and its
Subsidiaries, excluding the property located at 0000 Xxxxxx Xxxxx Xxxxx, Xxxx
Xxxxxxx, Xxxxxxxxx, PLUS (b) without duplication, the amount of any
Investments of the type described in Section 5.14(f), to exceed $100,000,000
at any time.
Section 5.25 NEGATIVE PLEDGES. Not, and not permit any Subsidiary
to, enter into any agreement, bond, note or other instrument for the benefit
of any Person other than the Agent and the Banks that would (a) prohibit the
Company or such Subsidiary from granting, or otherwise limit the ability of
the Company or such Subsidiary to grant, any Lien on any of its property to
the Agent, for the benefit of the Banks, or to lenders providing credit
facilities to replace the Commitments or refinance the Obligations, except
limitations created in agreements creating Liens on, and applicable only to,
property on which a Lien is granted by the Company as permitted in Sections
5.12(e), (f) or (g), or (b) require the Company or such Subsidiary to xxxxx x
Xxxx to any other Person if the Company or such Subsidiary grants Liens to
the Agent, for the benefit of the Banks, or to lenders providing credit
facilities to replace the Commitments or refinance the Obligations.
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Section 5.26 AMENDMENTS TO AGREEMENTS. Not, and not permit any
Subsidiary to, enter into or consent to any amendment to any BB Property
Lease Document, any agreement, document or instrument executed in connection
with any Subordinated Debt, any agreement, document or instrument relating to
any other Indebtedness of, or commitment to extend credit to, the Company or
any Subsidiary in an amount in excess of $5,000,000, or any agreement,
document or instrument relating to any lease of real property with an
aggregate fair market value in excess of $10,000,000 by the Company or any
Subsidiary, if such amendment would increase any amount, or the rate for
calculating any amount, due thereunder, require any payment thereunder to be
made on a date earlier than that previously provided for therein, require the
Company or any Subsidiary to grant any Lien not previously provided for
therein, make any financial performance covenant or covenant relating to
Indebtedness, Liens, Investments or capital expenditures more restrictive, or
otherwise be unfavorable to the Company or the Banks.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.01 EVENTS OF DEFAULT. The occurrence of any one or more
of the following events shall constitute an Event of Default:
(a) the Company shall fail to make when due, whether by
acceleration of maturity, required prepayment or otherwise, any payment of
principal of or interest on the Notes, any reimbursement obligation in
respect of a draw under a Letter of Credit or any other Obligation required
to be paid to the Agent or any Bank pursuant to this Agreement or any other
Loan Document, or fails to make, when due, any deposit into the Holding
Account required hereunder; or
(b) any representation or warranty made by or on behalf of the
Company or any Subsidiary in this Agreement or any other Loan Document or
in any certificate, statement, report or document herewith or hereafter
furnished to the Agent or any Bank pursuant to this Agreement or any other
Loan Document shall prove to have been false or misleading in any material
respect on the date as of which the facts set forth are stated or
certified; or
(c) the Company shall fail to preserve its corporate existence
under the laws of the jurisdiction of its incorporation or shall fail to
comply with any term, covenant or agreement contained in Sections 5.11,
5.12, 5.13, 5.14, 5.15, 5.16, 5.17, 5.18, 5.20, 5.21, 5.22, 5.23, 5.24,
5.25 or 5.26; or
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(d) the Company shall fail to comply with any other agreement,
covenant, condition, provision or term contained in this Agreement (other
than those hereinabove set forth in this Section 6.01) or any other Loan
Document and such failure to comply shall continue for 30 days after
whichever of the following dates is the earliest: (i) the date the Company
gives notice of such failure to the Agent, (ii) the date the Company should
have given notice of such failure to the Agent pursuant to Section 5.09, or
(iii) the date the Agent gives notice of such failure to the Company; or
(e) the Company or any Subsidiary shall become insolvent or
shall generally not pay its debts as they mature or shall apply for, shall
consent to, or shall acquiesce in the appointment of a custodian, trustee
or receiver of the Company or any Subsidiary or for a substantial part of
the property of any of them or, in the absence of such application, consent
or acquiescence, a custodian, trustee or receiver shall be appointed for
the Company or any Subsidiary or for a substantial part of the property of
any of them or the Company or any Subsidiary shall make an assignment for
the benefit of creditors; or
(f) any bankruptcy, receivership, custodianship, reorganization,
debt arrangement or other proceedings under any bankruptcy or insolvency
law shall be instituted by or against the Company or any Subsidiary, and,
if instituted against the Company or any Subsidiary, shall have been
consented to or acquiesced in by the Company or such Subsidiary, as
applicable, or shall not have been dismissed within 60 days, or an order
for relief shall have been entered against the Company or such Subsidiary,
as applicable; or
(g) any dissolution or liquidation proceeding shall be
instituted by or against the Company or any Subsidiary and, if instituted
against the Company or any Subsidiary, shall be consented to or acquiesced
in by the Company or such Subsidiary or shall not have been dismissed
within 60 days; or
(h) one or more judgments for the payment of money in an
aggregate amount in excess of $10,000,000 shall be rendered against the
Company or any Subsidiary (unless such judgment is covered by insurance and
the insurer has offered to defend such judgment or acknowledged, in
writing, its liability with respect thereto) and the same shall remain
undischarged for a period of 60 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Company or any
Subsidiary to enforce any such judgment; or
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(i) the Company or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of Indebtedness
in a principal amount aggregating in excess of $5,000,000, when and as the
same shall become due and payable (after giving effect to any applicable
grace period specified in the instrument evidencing or governing such
Indebtedness), or (ii) fail to observe or perform any other term, covenant
or provision contained in any instrument evidencing or governing such
Indebtedness in a principal amount aggregating in excess of $5,000,000
(after giving effect to any applicable grace period specified in the
instrument evidencing or governing such Indebtedness) if the effect of any
such failure is to cause, or to permit the holder or holders of such
Indebtedness or a trustee or other Person acting on behalf of such holder
or holders to cause, such Indebtedness to become due prior to its stated
maturity or to realize on any collateral given as security for such
Indebtedness; PROVIDED, HOWEVER, that any of the foregoing occurrences with
respect to any Indebtedness arising from the purchase of goods or services
by the Company that is being contested in good faith by appropriate
proceedings shall not constitute an Event of Default as long as the
Company's or such Subsidiary's title to any substantial part of its
property is not materially adversely affected, its use of such property in
the ordinary course of its business is not materially interfered with and
adequate reserves with respect thereto have been set aside on its books in
conformity with GAAP; or
(j) any execution or attachment shall be issued whereby any
substantial part of the property of the Company or any Subsidiary shall be
taken or attempted to be taken and the same shall not have been vacated or
stayed within 60 days after the issuance thereof; or
(k) (i) a Reportable Event as defined in Section 4043(b),
subdivision (5), of ERISA shall have occurred with respect to any Plan
subject to Title IV of ERISA (other than any Multiemployer Plan)
unless a waiver of the failure to meet minimum funding standards under
Section 412 of the Code shall have been timely applied for and shall
not have been denied; or
(ii) a Reportable Event as defined in Section 4043(b),
subdivision (6), of ERISA shall have occurred with respect to any Plan
subject to Title IV of ERISA (other than any Multiemployer Plan); or
(iii) the Company or any ERISA Affiliate shall have
engaged in any Prohibited Transaction and either (1) the Prohibited
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Transaction shall not have been corrected within the correction period
applicable to it under Section 502(i) of ERISA or Section 4975(b) of
the Code, or (2) an exemption shall not be applicable or have been
obtained under Section 408 of ERISA or Section 4975 of the Code; or
(iv) the PBGC shall have terminated any Plan other than
any Multiemployer Plan under Title IV of ERISA or the Company or any
ERISA Affiliate shall have received notice from the PBGC of the
intention of the PBGC to terminate any such Plan or to appoint a
Trustee to administer any such Plan, which notice shall not have been
withdrawn within 14 days of the date thereof; or
(v) the Company or any ERISA Affiliate shall have
voluntarily terminated any Plan subject to Title IV of ERISA (other
than a Multiemployer Plan), pursuant to a distress termination under
Title IV of ERISA; or
(vi) the Company or any ERISA Affiliate, as an employer
under a Multiemployer Plan, shall have made a complete or partial
withdrawal from such Multiemployer Plan;
and, upon the occurrence of any of the foregoing, the aggregate amount of
the Unfunded Liabilities of all Plans subject to Title IV of ERISA shall
exceed in the aggregate $2,000,000 or the Company shall incur liability in
excess of $2,000,000 in the aggregate; or
(l) BB Property, any lender to BB Property, or any trustee, agent
or other representative of any lender to, or the holders of any securities
issued by, BB Property, shall exercise, give any required formal written
notice of intent to exercise, or otherwise express in writing any present
or unconditional intent to exercise, any remedy it may have with respect to
any default occurring under any of the BB Property Lease Documents, unless
all remedies exercised, or that are the subject of such written notice, if
exercised, would not materially affect the Company's or any Subsidiary's
operations at any leased property or require the Company or any Subsidiary
to pay any lease payment prior to its scheduled due date or make any
termination or other extraordinary payment; or
(m) the Company's independent certified public accountants
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shall qualify their opinion with respect to the Company's financial
statements in any respect as a result of any default or event that could,
with the passage of time, the giving of notice or otherwise, become a
default under any BB Property Lease Document or other documents relating to
the lease by the Company of real property, or any such default or event
asserted to have occurred thereunder (whether or not such default or event
has actually occurred); or
(n) lessors under leases of real property with an aggregate fair
market value (determined under the most recent available appraisals
thereof) in excess of $ 10,000,000 to which the Company or any Subsidiary
is a party, any lender to any such lessor(s), or any trustee, agent or
other representatives of any lender to, or the holders of any securities
issued by, any such lessor(s), shall exercise, give any required formal
written notice of intent to exercise, or otherwise express in writing any
present or unconditional intent to exercise, any remedy they may have
against the Company, any Subsidiary or any leased property that involves
(i) payment by the Company or any Subsidiary of an amount in excess of
$5,000,000 or (ii) any material interference with the Company's or any
Subsidiary's operations at any leased property.
Section 6.02 REMEDIES. If (x) any Event of Default described in
Section 6.01(e) or (f) shall occur, the Commitments shall automatically
terminate, the Obligations shall automatically become immediately due and
payable, the Company shall automatically become obligated to pay to U.S.
Bank, for deposit in the Holding Account, an amount equal to the outstanding
Letter of Credit Usage as of such date and the Agent, at the direction of the
Majority Banks, may enforce all rights and exercise all remedies of the Agent
or the Banks under the Loan Documents and under applicable law, or (y) any
other Event of Default shall occur and be continuing, then, the Agent, at the
direction of the Majority Banks, may at any time and from time to time do any
or all of the following: (i) declare the Commitments terminated, whereupon
the Commitments shall be terminated, (ii) declare the Obligations to be
forthwith due and payable, whereupon the Obligations shall immediately become
due and payable, in each case without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived, anything in
this Agreement or the other Loan Documents to the contrary notwithstanding,
(iii) demand that the Company pay to U.S. Bank for deposit in the Holding
Account an amount equal to the outstanding Letter of Credit Usage as of the
date of such demand, whereupon the Company shall pay such amount to U.S.
Bank, and (iv) enforce all rights and exercise all remedies of the Agent or
the Banks under the Loan Documents and under applicable law.
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ARTICLE VII
THE AGENT
The following provisions shall govern the relationship of the Agent
with the Banks.
Section 7.01 APPOINTMENT AND AUTHORIZATION. Each Bank appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such respective powers under the Loan Documents as are delegated to
the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto. Neither the Agent nor any of its directors, officers or
employees shall be liable for any action taken or omitted to be taken by it
under or in connection with the Loan Documents, except for its own gross
negligence or willful misconduct. The Agent shall act as an independent
contractor in performing its obligations as Agent hereunder and nothing
herein contained shall be deemed to create any fiduciary relationship among
or between the Agent, the Company or the Banks.
Section 7.02 NOTE HOLDERS. The Agent may treat the payee of any
Note as the holder of the Obligations evidenced thereby until written notice
of transfer shall have been filed with it, signed by such payee and in form
satisfactory to the Agent.
Section 7.03 CONSULTATION WITH COUNSEL. The Agent may consult
with legal counsel selected by it and shall not be liable for any action
taken or suffered in good faith by it in accordance with the advice of such
counsel.
Section 7.04 LOAN DOCUMENTS. The Agent shall not be under a duty
to examine or pass upon the validity, effectiveness, genuineness or value of
any of the Loan Documents or any other instrument or document furnished
pursuant thereto, and the Agent shall be entitled to assume that the same are
valid, effective and genuine and what they purport to be.
Section 7.05 U.S. BANK AND AFFILIATES. With respect to its
Commitment and the Loans made by it, U.S. Bank shall have the same rights and
powers under the Loan Documents as any other Bank and may exercise the same
as though it were not the Agent consistent with the terms thereof, and U.S.
Bank and its affiliates may accept deposits from, lend money to, issue
Documentary Letters of Credit for the account of and generally engage in any
kind of business with the Company as if it were not the Agent.
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Section 7.06 ACTION BY AGENT. Except as may otherwise be
expressly stated in this Agreement, the Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any
rights which may be vested in it by, or with respect to taking or refraining
from taking any action or actions which it may be able to take under or in
respect of, the Loan Documents. The Agent shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Banks, and such
instructions shall be binding upon all holders of Notes; PROVIDED, HOWEVER,
that the Agent shall not be required to take any action which exposes the
Agent to personal liability or which is contrary to the Loan Documents or
applicable law. The Agent shall incur no liability under or in respect of
any of the Loan Documents by acting upon any notice, consent, certificate,
warranty or other paper or instrument believed by it to be genuine or
authentic or to be signed by the proper party or parties and to be consistent
with the terms of this Agreement.
Section 7.07 CREDIT ANALYSIS. Each Bank has made, and shall
continue to make, its own independent investigation or evaluation of the
operations, business, property and condition, financial and otherwise, of the
Company in connection with entering into this Agreement and has made its own
appraisal of the creditworthiness of the Company. Except as explicitly
provided herein, the Agent has no duty or responsibility, either initially or
on a continuing basis, to provide any Bank with any credit or other
information with respect to such operations, business, property, condition or
creditworthiness, whether such information comes into its possession on or
before the first Event of Default or at any time thereafter.
Section 7.08 NOTICES OF EVENT OF DEFAULT, ETC. In the event that
any Bank shall have acquired actual knowledge of any Event of Default or
Unmatured Event of Default, other than as a result of its receipt of
financial statements delivered to it pursuant to Section 5.01, such Bank
shall promptly give notice thereof to the Agent. The Agent shall, promptly
upon receipt of any such notice provide a copy thereof to the other Banks.
Upon receipt from any Bank of a request that the Agent give notice to the
Company of the occurrence of an Event of Default or Unmatured Event of
Default, the Agent shall promptly forward such request to the other Banks and
will take such action and assert such rights under this Agreement and the
other Loan Documents as the Majority Banks shall direct in writing.
Section 7.09 INDEMNIFICATION. Each Bank agrees to indemnify the
Agent, as Agent (to the extent not reimbursed by the Company), according to
such Bank's Pro Rata Share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be
imposed on or incurred by the Agent in any way
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relating to or arising out of the Loan Documents or any action taken or
omitted by the Agent under the Loan Documents, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. No
payment by any Bank under this Section 7.09 shall relieve the Company of any
of its obligations under this Agreement.
Section 7.10 PAYMENTS AND COLLECTIONS. All funds received by the
Agent in respect of any payments made by the Company on the Revolving Notes,
Commitment Fees or Letter of Credit Fees shall be distributed by the Agent
among the Banks on the date received or deemed received pursuant to Section
2.20, in like currency and funds as received, ratably according to each
Bank's Pro Rata Share. If the Agent does not make any distribution on the
date any such payment is received or deemed received pursuant to Section
2.20, the Agent will pay interest to each Bank entitled to receive a portion
of such distribution on the amount distributable to it at the Federal Funds
Rate from such date until the date distribution is made, such interest to be
payable with such distribution. After any Event of Default has occurred, all
funds received by the Agent, whether as payments by the Company or as
realization on collateral or on any guaranties, shall (except as may
otherwise be required by law) be distributed by the Agent in the following
order: (a) first to the Agent or any Bank who has incurred unreimbursed
costs of collection with respect to any Indebtedness of the Company
hereunder, ratably to the Agent and each Bank in the proportion that the
costs incurred by the Agent or such Bank bear to the total of all such costs
incurred by the Agent and all Banks; (b) next to U.S. Bank in payment of any
Unpaid Draws outstanding, to satisfy any requirement that the Company make
payments to U.S. Bank for deposit in the Holding Account to cover any
outstanding Letters of Credit and for application on the Swing-Line Note; (c)
next to the Banks (in accordance with their respective Pro Rata Shares) for
application on the Revolving Notes; and (d) last to the Banks (in accordance
with their respective Pro Rata Shares) for any unpaid Commitment Fees or
Letter of Credit Fees owing by the Company hereunder. To the extent the
Agent or any Bank receives any payment on the Obligations, whether from the
Company or otherwise, that is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such recovery, the
Obligations originally intended to be satisfied by such payment shall be
revived and continued in full force and effect as if such payment had not
been received, and each Bank shall purchase from the Agent or such Bank, for
cash, at face value and without recourse, such participations in the revived
Obligations as shall be necessary to cause such revived Obligations to be
shared ratably among all of the Banks. The Agent
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or such Bank, as the case may be, shall promptly notify the other Banks and,
if applicable, the Agent, of any such recovery.
Section 7.11 SHARING OF PAYMENTS. If any Bank shall receive and
retain any payment, voluntary or involuntary, whether by setoff, application
of deposit balance or security, or otherwise, in respect of Indebtedness
under this Agreement or the Notes in excess of such Bank's share thereof as
determined under this Agreement, then such Bank shall purchase from the other
Banks for cash and at face value and without recourse, such participation in
the Notes held by such other Banks as shall be necessary to cause such excess
payment to be shared ratably as aforesaid with such other Banks; PROVIDED,
that if such excess payment or part thereof is thereafter recovered from such
purchasing Bank, the related purchases from the other Banks shall be
rescinded ratably and the purchase price restored as to the portion of such
excess payment so recovered, but without interest.
Section 7.12 ADVICE TO BANKS. The Agent shall forward to the
Banks copies of all notices, financial reports and other communications
received hereunder from the Company by it as Agent, excluding, however,
notices, reports and communications which by the terms hereof are to be
furnished by the Company directly to each Bank.
Section 7.13 SUCCESSOR AGENT. The Agent may resign at any time by
giving ten days written notice thereof to the Banks and the Company. The
Majority Banks may remove the Agent at any time with or without cause by
giving the Agent and the Company ten days written notice thereof. Upon any
such resignation or removal, the Majority Banks shall have the right to
appoint a successor Agent, which successor Agent shall (unless an Event of
Default has occurred and is continuing) be reasonably acceptable to the
Company. If no successor Agent shall have been so appointed and shall have
accepted such appointment within 30 days after the retiring Agent's giving of
notice of its resignation or the removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint an Agent which shall be a
Bank or a commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of
at least $100,000,000, which successor Agent shall (unless an Event of
Default has occurred and is continuing) be reasonably acceptable to the
Company. Any such resignation or removal shall be effective upon the
appointment of a successor Agent. Upon the acceptance of any appointment as
the Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations, under this Agreement and the other Loan
Documents. After the retiring Agent's resignation or removal hereunder as
the Agent, the provisions of this Article VII shall inure to its
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benefit as to any actions taken or omitted to be taken by it while it was
acting as the Agent under this Agreement and any other Loan Document.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 AMENDMENTS AND WAIVERS; NO WAIVER OF RIGHTS AND
REMEDIES.
(a) Except as otherwise provided in Section 8.01(b), none of
this Agreement, any Loan Document or any provision hereof or thereof may be
amended, modified or waived unless the same shall be in writing signed by
the Company and the Majority Banks; PROVIDED, that (i) no amendment, waiver
or consent shall, unless in writing and signed by all the Banks, do any of
the following: (A) reduce the amount of the principal of, or the amount of
or rate of interest on, any Note or any Loan or any fees or other amount
payable hereunder, (B) postpone any date fixed for any payment of principal
of, or interest on, the Loans or any fees or other amounts payable
hereunder, (C) amend the definitions of "Borrowing Base", or "Eligible
Inventory" (except in a manner that would be more restrictive), or the
definition of "Pro Rata Share" or "Majority Banks", (D) amend Section 3.01
or Section 3.02, (E) amend this Section 8.01(a) or (F) release any
Guaranty; (ii) no amendment, waiver or consent shall, unless in writing and
signed by Banks whose Pro Rata Shares (determined under clause (b) of the
definition thereof if any Loans are outstanding and otherwise under clause
(a) of such definition) aggregate 66 2/3% or more, amend Section 5.12(f) or
Section 5.13(e) (except in a manner that would be more restrictive;
(iii) no amendment, waiver or consent shall, unless in writing and signed
by the Agent in addition to the requisite Banks indicated above to take
such action, affect the rights or duties of the Agent under this Agreement;
(iv) no amendment may increase any Bank's Commitment Amount unless it is in
writing and signed by such Bank; and (v) no amendment, waiver or consent
shall reduce the amount payable with respect to, or postpone any date fixed
for any payment with respect to, any draw under any Letter of Credit or any
Swing-Line Loan, or amend or modify Section 2.01(b), 2.02 (with respect to
Swing-Line Loans), 2.03, 2.04 (with respect to Swing-Line Loans), 2.05
(with respect to Swing-Line Loans), 2.09, 2.10, 2.11, 2.12, 2.13 or 2.14,
unless it is in writing and signed by U.S. Bank. Any such amendment,
modification or waiver or any other consent to any departure from any such
provision by the Company shall in any event be effective only in the
specific instance or for the specific purpose for which given.
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No notice to, or demand on, the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
(b) From time to time, the Company may agree, with the prior
written consent of the Agent, to (i) permit a Bank to increase its
Commitment Amount, or (ii) add a bank, financial institution or other
Person generally engaged in the business of making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business (a
"New Bank") as a "Bank" under this Agreement with a Commitment, for the
purpose of increasing the Aggregate Commitment Amount; provided that upon
giving effect to any such new Commitment, the Commitment Amount of the New
Bank shall not be less than $7,500,000; and PROVIDED, FURTHER, that the
Aggregate Commitment Amount, after giving effect to any such increase,
shall not exceed $250,000,000. The Company and each Bank increasing its
Commitment Amount or New Bank shall agree on the date as of which the
increased Commitment Amount or the New Bank's Commitment Amount shall
become effective, and each New Bank shall execute and deliver an instrument
in the form prescribed by the Agent to evidence its agreement to be bound
by this Agreement and the other Loan Documents. Upon the effective date of
an increase in any Bank's Commitment Amount or inclusion of a New Bank as a
lender under this Agreement, the Agent shall deliver to the Company and
each of the Banks a revised Schedule 1.01(a) reflecting the revised
Aggregate Commitment Amount and the Company shall execute and deliver to
the Bank increasing its Commitment Amount or the New Bank a Revolving Note.
(c) No failure or delay on the part of the Agent or any Bank in
exercising, and no course of dealing with respect to, any right, power or
privilege hereunder or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power or privilege, or any abandonment or discontinuance of the enforcement
thereof, preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies of the Agent
and the Banks hereunder and under any other Loan Document are cumulative
and not exclusive of any right or remedy which the Agent or any Bank
otherwise has.
Section 8.02 NOTICES. Except as otherwise specifically provided
for herein, all notices, requests, demands, instructions, consents,
directions and other communications provided for herein shall be in writing
(including teletransmission communication) and (unless otherwise required by
applicable law) shall be teletransmitted, mailed or delivered to the intended
recipient at the "Address for
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Notices" specified below its name on the signature pages hereof; or at such
other address as shall be designated by such party in a notice to the other
parties. All notices and other communications shall be effective when
transmitted by telecopier, delivered to the telegraph or cable office or
personally delivered or, in the case of a mailed notice or notice sent by
overnight courier, upon receipt thereof as conclusively evidenced by the
signed receipt therefor, in each case given or addressed as aforesaid, except
that notices to the Agent, U.S. Bank or any Bank under the provisions of
Article II shall not be effective until received by the Agent, U.S. Bank or
such Bank.
Section 8.03 COSTS AND EXPENSES. The Company agrees to pay on
demand: (a) all out-of-pocket costs, expenses and fees incurred by the Agent
in connection with the negotiation, preparation, approval and execution and
delivery of the Loan Documents, including, without limitation, the reasonable
fees and expenses of Xxxxxx & Xxxxxxx LLP, special counsel to the Agent, in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Loan Documents, the commitments relating thereto, the
transactions contemplated hereby and thereby and the satisfaction and
attempted satisfaction of conditions precedent hereunder, (b) the reasonable
fees and expenses of counsel for the Agent in connection with any amendment,
modification or waiver or proposed amendment, modification or waiver of any
of the terms of this Agreement or any of the other Loan Documents and (c) all
reasonable costs and expenses of the Agent and the Banks (including
reasonable counsels' fees) in connection with the enforcement (whether
through negotiations, legal proceedings or otherwise) of this Agreement and
the other Loan Documents.
Section 8.04 SURVIVAL OF AGREEMENT. All representations,
warranties, covenants and agreements made by the Company or any of its
Subsidiaries herein, in the other Loan Documents or in any certificates or
other instruments prepared or delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be deemed to have been relied
upon by the Banks and shall survive the making of the Loans by the Banks and
the execution and delivery to the Banks by the Company of the Notes,
regardless of any investigation made by or on behalf of the Banks, and shall
continue in full force and effect as long as any Letter of Credit or
Obligation is outstanding and undrawn or unpaid and so long as the
Commitments have not expired or been terminated; PROVIDED, that the
obligations and agreements of the Company under Sections 2.12, 2.14, 2.23,
2.25, 2.26, 8.03, 8.06 and 8.09 shall survive payment in full of the
Obligations, the expiration of or other discharge of U.S. Bank's liability
with respect to the Letters of Credit and the expiration or termination of
the Commitments. The obligations of the Banks under Section 2.13 shall
remain in effect, notwithstanding the termination of the Commitments and the
payment in full of the Obligations (other than contingent Obligations with
respect to outstanding Letters of
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Credit), until the Letters of Credit have expired or U.S. Bank's liability
with respect thereto has otherwise been discharged; PROVIDED, that if the
amount on deposit in the Holding Account at any time equals the aggregate
undrawn face amount of all outstanding Letters of Credit, the obligations of
the Banks under Section 2.13 shall terminate; PROVIDED, FURTHER, that the
obligations of the Banks under Section 2.13 shall be reinstated if, and to
the extent, U.S. Bank is required to return or repay any payment received by
it in respect of any draw under a Letter of Credit, or U.S. Bank's Lien on or
right of setoff with respect to any amount on deposit into the Holding
Account is avoided or enjoined, by reason of (i) any judgment, decree or
order of any court or administrative body or (ii) any settlement or
compromise of any claim for such return, avoidance or injunction effected by
U.S. Bank.
Section 8.05 BINDING EFFECT; ASSIGNMENTS AND PARTICIPATIONS.
(a) Whenever in this Agreement or any other Loan Agreement any
of the parties hereto or thereto is referred to, such reference shall be
deemed to refer to the successors and any permitted assigns of such party
and this Agreement and the other Loan Documents shall be binding upon and
inure to the benefit of each party hereto and the respective successors and
assigns of each of them, except that the Company may not assign its rights
or delegate its obligations hereunder or under any other Loan Document
without the prior written consent of all of the Banks.
(b) Any Bank may (i) with the prior written consent (except in
the case of an assignment by any Bank to an Affiliate of such Bank or to
another Bank) of the Agent and, prior to the occurrence of an Event of
Default, the Company, which consent shall not be unreasonably withheld,
assign its rights and delegate its obligations under this Agreement and any
other Loan Document, including, without limitation, all or any portion of
its Commitment, its Revolving Note, its Loans and any other Obligation
owned by it, to one or more banks, financial institutions or other Person
generally engaged in the business of making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business,
PROVIDED, that the aggregate amount of the Commitment which is the subject
of the assignment shall be $10,000,000 or an integral multiple of
$1,000,000 in excess thereof, except (I) in the case of an assignment by
one Bank to another Bank, in which case the aggregate amount of the
Commitment which is the subject of the assignment shall be $1,000,000 or an
integral multiple of $1,000,000 in excess thereof, and (II) in the case of
the assignment by any Bank of its Commitment in full, and PROVIDED, that
following any such assignment, the transferring Bank shall continue to hold
a Commitment
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in an aggregate amount not less than $10,000,000, unless it has
assigned its Commitment in full, and (ii) sell participations therein
to one or more banks, financial institutions, corporate lenders or other
sophisticated investors. Any such assignee under clause (i) of the
preceding sentence, to the extent of such assignment (unless otherwise
provided therein), shall have all the rights and obligations of a Bank
hereunder and the assigning Bank shall be released from its duties and
obligations under this Agreement to the extent of such assignment. Upon
any assignment and delegation as contemplated in clause (i) of the second
preceding sentence, (A) the Agent shall revise Schedule 1.01(a) to reflect
such assignment and delegation and distribute such revised Schedule 1.01(a)
to the Company and the Banks, (B) the Company shall, at the request of
either the assignor or assignee Bank, execute and deliver new Revolving
Notes to the assignor Bank (if it retains a Commitment following such
assignment) and the assignee Bank, in the principal amount of their
respective Commitments, and (C) the assignor Bank shall pay to the Agent an
assignment fee in the amount of $3,000. Upon the delivery of such new
Revolving Notes, the assignor Bank shall return to the Company its
Revolving Note in effect prior to such assignment and delegation.
Notwithstanding the sale of any such participation under clause (ii) of the
fifth preceding sentence, (x) no such participant shall be deemed to be or
have the rights and obligations of a Bank hereunder except that any such
participant shall have a right of setoff under Section 2.28 as if it were a
Bank and the amount of its participation were owing directly to such
participant by the Company obligated thereon and (y) each Bank, in
connection with selling any such participation, shall not condition its
rights in connection with consenting to amendments or granting waivers
concerning any matter under any Loan Document upon obtaining the consent of
such participant other than on matters relating to (1) any reduction in the
amount of any principal of, or the amount of or rate of interest or fee in
connection with, its Commitment or any Obligation, or (2) any extension of
the termination of its Commitment or the maturity of any principal of or
interest on any Obligation.
Section 8.06 TAXES. The Company agrees to pay, and save the Agent
and the Banks harmless from all liability for, any stamp or other taxes which
may be payable with respect to the execution or delivery of this Agreement or
the issuance of the Notes.
Section 8.07 SEVERABILITY OF PROVISIONS. Whenever possible, each
provision of this Agreement and the other Loan Documents and any other
statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto shall be interpreted in such manner as to be
effective and valid under applicable law, but, if any provision of this
Agreement or any other Loan Document or any other statement,
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instrument or transaction contemplated hereby or thereby or relating hereto
or thereto shall be held to be prohibited or invalid in any jurisdiction
under such applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement or the other
Loan Documents and any other statement, instrument or transaction
contemplated hereby or thereby or relating hereto or thereto and shall not be
effective to affect the enforceability of such provision in any other
jurisdiction.
Section 8.08 GOVERNING LAW AND CONSTRUCTION. THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA,
WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING
EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS.
Section 8.09 CONSENT TO JURISDICTION. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY MINNESOTA STATE OR FEDERAL
COURT SITTING IN MINNEAPOLIS, MINNESOTA OR ST. XXXX, MINNESOTA OVER ANY
ACTION OR PROCEEDING COMMENCED BY THE AGENT OR ANY BANK ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND THE COMPANY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN SUCH MINNESOTA STATE OR FEDERAL COURT. THE
COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION
OR PROCEEDING. THE COMPANY AGREES THAT A JUDGMENT, FINAL BY APPEAL OR
EXPIRATION OF TIME TO APPEAL WITHOUT AN APPEAL BEING TAKEN, IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS SECTION 8.09 SHALL AFFECT THE RIGHT OF THE AGENT OR ANY BANK
TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTIONS.
Section 8.10 CAPTIONS. The captions or headings herein and any
table of contents hereto are for convenience only and in no way define, limit
or describe the scope or intent of any provision of this Agreement.
Section 8.11 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the other Loan Documents embody the entire agreement and
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understanding between the Company, the Agent and the Banks with respect to
the subject matter hereof and thereof. This Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof. Nothing
contained in this Agreement or in any other Loan Document, expressed or
implied is intended to confer upon any Person other than the parties hereto
and thereto any rights, remedies, obligations or liabilities hereunder or
thereunder.
Section 8.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract which shall
become effective when the Agent shall have received counterparts hereof
signed on behalf of the Company, the Agent and each Bank.
Section 8.13 COMPANY ACKNOWLEDGEMENTS. The Company hereby
acknowledges that (a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents, (b)
neither the Agent nor any Bank has any fiduciary relationship to the Company,
the relationship being solely that of borrower and lender, (c) no joint
venture exists among or between the Company and the Agent or any Bank, and
(d) the Agent and the Banks undertake no responsibility to the Company to
review or inform the Company of any matter in connection with any phase of
the business or operations of the Company and the Company shall rely entirely
upon its own judgment with respect to its business, and any review,
inspection or supervision of, or information supplied to the Company by the
Agent or any Bank is for the protection of the Agent and the Banks and
neither the Company nor any third party is entitled to rely thereon.
Section 8.14 HIGHEST LAWFUL RATE. Anything herein to the contrary
notwithstanding, the Obligations shall be subject to the limitation that
payments of interest thereon shall not be required, for any period for which
interest is computed hereunder, to the extent that contracting for or receipt
thereof would be contrary to provisions of any law applicable to any Bank
limiting the highest rate of interest which may be lawfully contracted for,
charged or received by such Bank.
Section 8.15 INDEMNIFICATION. The Company hereby agrees to defend,
protect, indemnify and hold harmless the Agent, the Banks, their respective
Affiliates, and their respective directors, officers, employees, attorneys and
agents (each of the foregoing being an "Indemnitee" and all of the foregoing
being collectively the "Indemnitees") from and against any and all claims,
actions, damages, liabilities, judgments, costs and expenses (including all
reasonable fees and disbursements of counsel which may be incurred in the
investigation or defense of any matter) imposed
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upon, incurred by or asserted against any Indemnitee, whether direct,
indirect or consequential and whether based on any federal, state, local or
foreign laws or regulations (including securities laws, environmental laws,
commercial laws and regulations), under common law or on equitable cause, or
on contract or otherwise:
(a) by reason of, relating to or in connection with the issuance,
extension, amendment or payment of any Letter of Credit, or any failure to do
any of the foregoing;
(b) by reason of, relating to or in connection with any action
taken or not taken by the Company, its Subsidiaries and Affiliates, and their
respective directors, officers, employees, attorneys or agents in connection
with any Loan Document, including, without limitation, any use of any credit
extended under the Loan Documents;
provided, however, that the Company shall not be liable to any Indemnitee for
any portion of such claims, damages, liabilities and expenses resulting from
such Indemnitee's gross negligence or willful misconduct, or arising from
claims made by the Agent or any Bank against the Agent or any other Bank,
unless resulting from the Company's negligence or willful misconduct. In the
event this indemnity is unenforceable as a matter of law as to a particular
matter or consequence referred to herein, it shall be enforceable to the full
extent permitted by law. This indemnification applies, without limitation,
to any act, omission, event or circumstance existing or occurring on or prior
to the later of the Termination Date or the date of payment in full of the
Obligations, including specifically Obligations arising under clause (b) of
this Section. The indemnification provisions set forth above shall be in
addition to any liability the Company may otherwise have. Without prejudice
to the survival of any other obligation of the Company hereunder the
indemnities and obligations of the Company contained in this Section shall
survive the payment in full of the other Obligations.
Section 8.16 WAIVER OF JURY TRIAL. EACH OF THE COMPANY , THE
AGENT AND THE BANKS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
BEST BUY CO., INC.
By /s/ Xxxxxx X. Xxx
----------------------------------------------
Its Senior VP - Finance
--------------------------------------------
U.S. BANK NATIONAL ASSOCIATION
By
----------------------------------------------
Its
--------------------------------------------
THE BANK OF NOVA SCOTIA
By /s/ F.C.H. Xxxxx
----------------------------------------------
Its Senior Manager Loan Operations
--------------------------------------------
BANK ONE, N.A.
By /s/ Xxxxx Xxxxxxxx
----------------------------------------------
Its Vice President
--------------------------------------------
FIRST UNION NATIONAL BANK
By /s/ Xxxx Xxxxx Xxxxxxxxxxx
----------------------------------------------
Its Vice President
--------------------------------------------
BANQUE NATIONALE DE PARIS
By /s/ Xxxxxx Xxxxxx du Xxxxxx
----------------------------------------------
Its Executive Vice President & General Manager
--------------------------------------------
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BANK OF TOKYO-MITSUBISHI, LTD.
By /s/ J. R. Xxxxxx
----------------------------------------------
Its Vice President and Manager
--------------------------------------------
FLEET NATIONAL BANK
By /s/ Xxxxxx Xxxx
----------------------------------------------
Its Assistant Vice President
--------------------------------------------
LONG TERM CREDIT BANK OF JAPAN, LTD.
By /s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------------------------
Its Senior Vice President
--------------------------------------------
XXXXX FARGO BANK N.A.
By
----------------------------------------------
Its
--------------------------------------------
FIRST NATIONAL BANK OF CHICAGO (THE)
By /s/ Xxxx Xxxxxx
----------------------------------------------
Its Managing Director
--------------------------------------------
STAR BANK N.A.
By /s/ Xxxx X. Xxxxxxx
----------------------------------------------
Its Vice President
--------------------------------------------
UMB BANK n.a.
By /s/ Xxxxxxx X. Xxxx
----------------------------------------------
Its Senior Vice President
--------------------------------------------
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