EXHIBIT 10.42
MBR&M DRAFT 6/12/02
OMNIBUS AMENDMENT
This OMNIBUS AMENDMENT, dated as of June 21, 2002 (this
"Amendment"), is among BORDERS GROUP, INC. (the "Company"), BORDERS, INC.
("Borders"), XXXXXX BOOK COMPANY, INC. ("Xxxxxx"), WALDENBOOKS PROPERTIES, INC.
("WPI"), BORDERS PROPERTIES, INC. ("BPI"), WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly stated herein, but solely as Owner
Trustee ("Owner Trustee"), XXX PROJECT FUNDING CORP. I, as Investor
("Investor"), PNC BANK, NATIONAL ASSOCIATION, as former Administrative Agent,
BANK ONE, NA (f/k/a The First National Bank of Chicago), as former Syndication
Agent, DEUTSCHE BANK TRUST COMPANY AMERICAS (as successor to Bankers
Trust Company), as former Real Estate Administrative Agent, SUNTRUST BANK, as
Co-Arranger, Administrative Agent ("Administrative Agent"), Real Estate
Administrative Agent ("Real Estate Administrative Agent") and Documentation
Agent ("Documentation Agent"), FLEET NATIONAL BANK, as Co-Arranger (together
with SunTrust Bank, each a "Co-Arranger" and collectively, "Co-Arrangers") and
Syndication Agent ("Syndication Agent"), and the Lenders party thereto (the
"Lenders").
BACKGROUND
1. The Company, Borders, Walden, WPI, BPI, Owner Trustee, Investor,
former Administrative Agent, former Syndication Agent, former Real Estate
Administrative Agent and certain of the Lenders are parties to that certain
Participation Agreement, dated as of November 22, 1995, which was Amended and
Restated October 17, 1997 (the "Participation Agreement").
2. Owner Trustee, as Borrower, former Administrative Agent, former
Syndication Agent and former Real Estate Administrative Agent are parties to
that certain Credit Agreement, dated as of November 22, 1995, which was Amended
and Restated as of October 17, 1997 (the "Credit Agreement").
3. The parties hereto desire to amend the Participation Agreement, the
Credit Agreement and certain other Operative Agreements (as defined below) in
order to extend the Maturity Date of the facility, to decrease the facility
provided thereunder, to add certain new Lenders and certain new Guarantors and
in certain other respects as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Definitions. Capitalized terms used in this Amendment and
not otherwise defined herein shall have the meanings assigned thereto in the
Participation Agreement.
Section 2. Agent Roles. (a) PNC Bank, National Association, hereby
resigns as Administrative Agent. Bank One, NA, hereby resigns as Syndication
Agent. Bankers Trust Company hereby resigns as Real Estate Administrative Agent.
SunTrust Bank is hereby
designated as Co-Arranger, Documentation Agent, Administrative Agent, Real
Estate Administrative Agent and Agent. Fleet National Bank is hereby designated
as Co-Arranger and Syndication Agent.
(b) Each party hereto acknowledges and agrees that neither SunTrust
Bank nor Fleet National Bank (collectively, the "New Agents"), individually or
in any of their respective agent capacities, makes any representations or
warranties regarding the status of perfection of any security interest in any
collateral granted under the Operative Agreements and that neither New Agent
shall bear any responsibility for obtaining or maintaining the perfection of any
such security interest.
Section 3. Certain Definitions. (a) Appendix A is hereby amended by
deleting the definitions "Affiliate", "Aggregate Commitment Amount", "Authorized
Officer", "Capitalized Lease", "Change in Control", "Consolidated Net Income",
"Consolidated Tangible Net Worth", "Corporate Credit Agreement",
"Distributions", "Financed Lease", "Fiscal Quarter", "Fiscal Year", "Fixed
Charge Coverage Ratio", "Foreign Subsidiary", "GAAP", "Governmental Authority",
"Indebtedness", "Investment", "Kmart Agreements", "Kmart Indemnity", "Kmart
Intercompany Agreement", "Kmart Registration Rights Agreement", "Kmart Tax
Agreement", "Leverage Ratio", "Lien", "Material Adverse Effect", "Maturity
Date", "Multiemployer Plan", "Permitted Joint Venture Activity", "Principal
Office", "Rent Expense", "Solvent", "Subsidiary", "Tranche A Maximum Amount",
"Tranche B Maximum Amount", and "Wholly-Owned Subsidiary".
(b) Appendix A is hereby amended by inserting the following new
definitions in alphabetical order as follows:
"Accounts Receivable" shall mean all rights of the Company or
any of its Subsidiaries to payment for goods sold, leased or otherwise
marketed in the ordinary course of business and all rights of the
Company or any of its Subsidiaries to payment for services rendered in
the ordinary course of business and all sums of money or other proceeds
due thereon pursuant to transactions with account debtors, except for
that portion of the sum of money or other proceeds due thereon that
relate to sales, use or property taxes in conjunction with such
transactions, recorded on books of account in accordance with GAAP.
"Acquisition" shall mean any transaction, or any series of
related transactions, consummated on or after the date of the Omnibus
Amendment, by which the Company or any of its Subsidiaries (a) acquires
any ongoing business or all or substantially all of the assets of any
Person or division thereof, whether through purchase of assets, merger
or otherwise, or (b) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of
transactions) a majority of the securities of a corporation, which
securities have ordinary voting power for the election of directors
(other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage and voting
power) of the outstanding partnership interests of a partnership or
membership interests of a limited liability company.
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"Adjustment Date" shall mean the first day of the month in
which a Compliance Certificate is to be delivered by the Guarantors
pursuant to Section 11.04 of the Guarantee.
"Affiliate" shall mean any Person which, directly or
indirectly, controls, is controlled by or is under common control with
any of the Lessees or such Guarantor. "Control" of a Lessee or a
Guarantor means the power, directly or indirectly, (a) to vote five
percent (5%) or more of the Capital Stock (on a fully diluted basis) of
such Lessee or such Guarantor having ordinary voting power for the
election of directors, managing members or general partners (as
applicable); or (b) to direct or cause the direction of the management
and policies of such Lessee or such Guarantor (whether by contract or
otherwise).
"Agree Litigation" shall mean Borders, Inc. et al v. Agree
Limited Partnership et al, Washtenaw Circuit Court Case Number
01-833-CZ and Court of Appeals Number 238628.
"Aggregate Commitment Amount" shall mean $100,000,000, as such
amount may be increased or decreased pursuant to the Credit Agreement.
"Applicable Pension Legislation" shall mean at any time, any
pension or retirement benefits legislation (be it national, federal,
provincial, territorial or otherwise) then applicable to any Lessee,
any Guarantor or any of their Subsidiaries.
"Authorized Officers" shall mean the President, Senior Vice
President - Finance and Chief Financial Officer, Vice President -
Financial Planning and Reporting, Vice President - Finance and Asset
Protection or Treasurer of any Lessee or any Guarantor.
"Balance Sheet Date" shall mean January 27, 2002.
"BPI" shall mean Borders Properties, Inc., a Delaware
corporation.
"Capital Assets" shall mean fixed assets, both tangible (such
as land, buildings, fixtures, machinery and equipment) and intangible
(such as patents, copyrights, trademarks, franchises and good will);
provided that Capital Assets shall not include any item customarily
charged directly to expense or depreciated over a useful life of twelve
(12) months or less in accordance with GAAP.
"Capital Expenditures" shall mean amounts paid or Indebtedness
incurred by the Company or any of its Subsidiaries in connection with
the purchase or lease by the Company or any of its Subsidiaries of
Capital Assets that would be required to be capitalized and shown on
the balance sheet of such Person in accordance with GAAP, provided that
Capital Expenditures shall not include any expenditures made (a) to
effect any Acquisition, (b) with respect to the Existing Synthetic
Lease Facility and the New
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Synthetic Lease Facility in the event either or both facilities are
recharacterized as Capitalized Leases or (c) to acquire property out of
the Existing Synthetic Lease Facility.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in a
Person (other than a corporation) and any and all warrants, rights or
options to purchase any of the foregoing.
"Capitalized Leases" shall mean leases under which the Company
or any of its Subsidiaries is the lessee or obligor, the discounted
future rental payment obligations under which are required to be
capitalized on the balance sheet of the lessee or obligor in accordance
with GAAP.
"CA-Property" shall mean any and all property, whether real,
personal, tangible, intangible or mixed, both owned and leased pursuant
to Capitalized Leases, of any Person.
"Change of Control" shall mean an event or series of events by
which any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities and Exchange Commission under said Act), directly or
indirectly, of thirty-five percent (35%) or more of the outstanding
shares of Capital Stock of the Company; or, during any period of twelve
consecutive calendar months, individuals who were directors of the
Company on the first day of such period (together with any new
directors whose election by the Board of Directors of BGI was approved
by a vote of sixty-six and two-thirds percent (66 2/3%) of the
directors then still in office who were either directors at the
beginning of such period or whose election was previously so approved)
shall cease to constitute a majority of the board of directors of the
Company.
"Compliance Certificate" is defined in Section 11.04(c) of
the Guarantee.
"Consolidated or consolidated" shall mean, with reference to
any term defined herein, shall mean that term as applied to the
accounts of the Company and its Subsidiaries, consolidated in
accordance with GAAP.
"Consolidated EBITDA" shall mean with respect to any period,
an amount equal to the sum of (a) Consolidated Net Income of the
Company and its Subsidiaries for such period, (excluding (i) all
extraordinary nonrecurring items of income, but not losses (except to
the extent such extraordinary losses are offset by such extraordinary
income) and (ii) income or loss of any Joint Venture to which the
Company or any of its Subsidiaries is a party), plus (b) in each case
to the extent deducted in the calculation of such Person's Consolidated
Net Income and without duplication, (i) depreciation and amortization
for such period, plus (ii) income tax expense for such period, plus
(iii) Consolidated Total Interest Expense paid or accrued during such
period, all as determined in accordance with GAAP; provided, however,
that there shall be excluded in calculating
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Consolidated Net Income for purposes of this definition any losses
attributable to the use of a fair value methodology for recognition and
measurement of impairment of goodwill not identified with impaired
assets in accordance with Accounting Principles Board Opinion No. 142.
"Consolidated Excess Cash Flow" shall mean, with respect to
the Company and its Subsidiaries and any particular period, an amount
equal to (a) Consolidated EBITDA for such period plus if applicable,
in-flows resulting from Net Working Capital Changes for such period
minus (b) the sum of, in each case for such period, (i) if applicable,
out-flows resulting from Net Working Capital Changes, (ii) to the
extent not already deducted in the determination of Consolidated
EBITDA, Capital Expenditures, (iii) any Restricted Payment Amount, (iv)
cash payments for all taxes paid during such period and (v) any
mandatory repayments (whether scheduled or otherwise) of principal on
any Indebtedness of the Company or any of its Subsidiaries paid or due
and payable during such period.
"Consolidated Fixed Charges" shall mean, with respect to the
Company and its Subsidiaries and for any period, the sum, without
duplication, of (a) Consolidated Total Interest Expense for such
period, plus (b) Rent Expense, plus (c) Lease Financing Rent Expense,
plus (d) any and all scheduled repayments of principal during such
period in respect of Indebtedness that becomes due and payable or that
are to become due and payable during such period pursuant to any
agreement or instrument to which any Lessee, any Guarantor or any of
their Subsidiaries is a party relating to (i) the borrowing of money or
the obtaining of credit, including the issuance of notes or bonds, (ii)
the deferred purchase price of assets (other than trade payables
incurred in the ordinary course of business), (iii) in respect of any
Capitalized Leases, and (iv) Indebtedness of the type referred to above
of another Person guaranteed by the Company or any of its Subsidiaries.
Demand obligations shall be deemed to be due and payable during any
fiscal period during which such obligations are outstanding.
"Consolidated Free Cash Flow" shall mean, with respect to any
period, an amount equal to (a) net cash provided by operations of a
Person and its Subsidiaries for such period (as set forth as a line
item on such Person's consolidated statement of cash flows in
accordance with GAAP) minus (b) Capital Expenditures made by such
Person and its Subsidiaries during such period.
"Consolidated Net Income (or Deficit)" shall mean the
consolidated net income (or deficit) of the Company and its
Subsidiaries, after deduction of all expenses, taxes, and other proper
charges, determined in accordance with GAAP.
"Consolidated Operating Cash Flow" shall mean for any period,
an amount equal to the sum of (a) Consolidated EBITDA plus (b) Rent
Expense and (c) Lease Financing Rent Expense, in each case of the
Company and its Subsidiaries for such period determined in accordance
with GAAP.
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"Consolidated Tangible Net Worth" shall mean the excess of
Consolidated Total Assets over Consolidated Total Liabilities, and less
the sum of:
(a) the total book value of all assets of the Company and its
Subsidiaries properly classified as intangible assets under GAAP,
including such items as good will, the purchase price of acquired
assets in excess of the fair market value thereof, trademarks, trade
names, service marks, brand names, copyrights, patents and licenses,
and rights with respect to the foregoing; plus
(b) all amounts representing any write-up in the book value of
any assets of the Company or its Subsidiaries resulting from a
revaluation thereof subsequent to the Balance Sheet Date, excluding
adjustments to translate foreign assets and liabilities for changes in
foreign exchange rates made in accordance with Financial Accounting
Standards Board Statement No. 52; plus
(c) to the extent otherwise includable in the computation of
Consolidated Tangible Net Worth, any subscriptions receivable.
"Consolidated Total Assets" shall mean the sum of (a) all
assets ("consolidated balance sheet assets") of the Company and its
Subsidiaries determined on a consolidated basis in accordance with
GAAP, plus (b) without duplication, all sold receivables referred to in
clause (g) of the definition of the term "Indebtedness" to the extent
that such receivables would have been consolidated balance sheet assets
had they not been sold.
"Consolidated Total Funded Debt" shall mean with respect to
the Company and its Subsidiaries, the sum, without duplication, of (a)
the aggregate amount of Indebtedness of the Company and its
Subsidiaries, on a consolidated basis, relating to or in respect of (i)
the borrowing of money or the obtaining of credit, including the
issuance of notes or bonds but excluding letters of credit outstanding,
(ii) the deferred purchase price of assets (other than trade payables
incurred in the ordinary course of business), and (iii) any Synthetic
Leases or any Capitalized Leases, plus (b) Indebtedness of the type
referred to in clause (a) of another Person guaranteed by any Lessee,
the Company or any of their Subsidiaries.
"Consolidated Total Interest Expense" shall mean for any
period, the aggregate amount of interest required to be paid or accrued
by the Company and its Subsidiaries during such period on all
Indebtedness of the Company and its Subsidiaries outstanding during all
or any part of such period, whether such interest was or is required to
be reflected as an item of expense or capitalized, including payments
consisting of interest in respect of any Capitalized Lease or any
Synthetic Lease, and including commitment fees, agency fees, facility
fees, balance deficiency fees and similar fees or expenses in
connection with the borrowing of money.
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"Consolidated Total Liabilities" shall mean all liabilities of the
Company and its Subsidiaries determined on a consolidated basis in accordance
with GAAP and classified as such on the consolidated balance sheet of the
Company and its Subsidiaries.
"Distribution" shall mean the declaration or payment of any dividend
on or in respect of any shares of any class of Capital Stock of a Person,
other than dividends payable solely in shares of common stock of such Person;
the purchase, redemption, defeasance, retirement or other acquisition of any
shares of any class of Capital Stock of a Person, directly or indirectly
through a Subsidiary of such Person or otherwise (including the setting apart
of assets for a sinking or other analogous fund to be used for such purpose);
the return of capital by a Person to its shareholders as such; or any other
distribution on or in respect of any shares of any class of Capital Stock of
such Person.
"Dollars" or "$" Means Dollars in lawful currency of the United
States of America.
"Dollar Equivalent" means, on any particular date, with respect to
any amount denominated in Dollars, such amount in Dollars, and with respect
to any amount denominated in currency other than Dollars, the amount (as
conclusively ascertained by the Administrative Agent absent manifest error)
of Dollars which could be purchased by the Administrative Agent (in
accordance with its normal banking practices) in the London foreign currency
deposit market with such amount of such currency at the Exchange Rate on such
date.
"Domestic Subsidiary" means any Subsidiary of the Company organized
under the laws of the United States of America, any state or territory
thereof or the District of Columbia.
"Employee Benefit Plan" shall mean any employee benefit plan within
the meaning of Section 3(3) of ERISA maintained or contributed to by any
Lessee, any Guarantor or any ERISA Affiliate, other than a Guaranteed Pension
Plan or a Multiemployer Plan.
"ERISA Affiliate" shall mean any Person which is treated as a single
employer with any of the Lessees or the Guarantors under Section 414 of the
Code.
"ERISA Reportable Event" shall mean a reportable event with respect
to a Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and
the regulations promulgated thereunder.
"Exchange Rate" means, with respect to any Optional Currency, at any
date of determination thereof, the spot rate of exchange in London that
appears on the display page applicable to such Optional Currency on the
Reuters System (or such other page as may replace such page on such service
for the purpose of displaying the spot rate of exchange in London) for the
conversion of such Optional Currency into Dollars; provided, however, that if
there shall at any time no longer exist such a
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page on such service, the Exchange Rate shall be determined by
reference to another similar rate publishing service selected by the
Administrative Agent.
"Financed Lease" shall mean a lease of real property,
improvements on real property or real property and improvements thereon
by the Company or any of its Subsidiaries entered into pursuant to the
Participation Agreement or the New Master Agreement, as applicable.
"Financial Affiliate" shall mean a Subsidiary of the bank
holding company controlling any Lender, which Subsidiary is engaging in
any of the activities permitted by Section 4(e) of the Bank Holding
Company Act of 1956 (12 U.S.C. Section 1843).
"Fiscal Quarter" shall mean the 13/14 week period commencing
on the day after the last day of the preceding Fiscal Quarter and
ending on the Sunday (except with respect to Xxxxxx, on the Saturday)
preceding the last Wednesday in each of April (first), July (second),
October (third) and January (fourth) of each Fiscal Year. As used
herein, "FQ1 2xxx" refers to the first Fiscal Quarter of the 2xxx
Fiscal Year, "FQ2 2xxx" refers to the second Fiscal Quarter of the 2xxx
Fiscal Year and so on.
"Fiscal Year" shall mean the 52/53 week period commencing on
the day after the last day of the preceding Fiscal Year and ending on
the Sunday (except with respect to Xxxxxx, on the Saturday) preceding
the last Wednesday in January. By way of illustration, the Company's
2001 Fiscal Year ended January 27, 2002.
"Fixed Charge Coverage Ratio" shall mean as of any date of
determination, the ratio of (a) Consolidated Operating Cash Flow for
the Reference Period most recently ended to (b) Consolidated Fixed
Charges for such Reference Period.
"Foreign Subsidiary" shall mean any Subsidiary of the Company
organized under the laws of any jurisdiction other than the United
States of America, any state or territory thereof or the District of
Columbia.
"GAAP" or "generally accepted accounting principles" shall
mean (a) when used in Sections 12.15 through 12.18 of the Guarantee,
whether directly or indirectly through reference to a capitalized term
used therein, means (i) principles that are consistent with the
principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, in effect for the fiscal year ended on the
Balance Sheet Date, and (ii) to the extent consistent with such
principles, the accounting practice of the Company reflected in its
financial statements for the year ended on the Balance Sheet Date
(unless otherwise agreed to by the parties hereto), and (b) when used
in general, other than as provided above, means principles that are (i)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time
to time, and (ii) consistently applied with past financial statements
of the Company adopting the same principles, provided that in each case
referred to in this definition of "GAAP" a certified public accountant
would, insofar as the use of such accounting principles is pertinent,
be in a position to deliver an unqualified opinion (other
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than a qualification regarding changes in GAAP) as to financial statements
in which such principles have been properly applied.
"Governing Documents" shall mean with respect to any Person, its
certificate or articles of incorporation or organization, its by-laws, or,
as the case may be, its certificate of formation, limited partnership
certificate, operating agreement, limited partnership agreement or other
constitutive documents and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its Capital Stock.
"Governmental Authority" shall mean any foreign, federal, state,
regional, local, municipal or other government, or any department,
commission, board, bureau, agency, public authority or instrumentality
thereof, or any court or arbitrator.
"Guaranteed Pension Plan" shall mean any employee pension benefit
plan within the meaning of Section 3(2) of ERISA maintained or contributed
to by any Lessee, any Guarantor or any ERISA Affiliate the benefits of
which are guaranteed on termination in full or in part by the PBGC
pursuant to Title IV of ERISA, other than a Multiemployer Plan.
"Indebtedness" shall mean as to any Person and whether recourse is
secured by or is otherwise available against all or only a portion of the
assets of such Person and whether or not contingent, but without
duplication:
(a) every obligation of such Person for money borrowed,
(b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses,
(c) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for
the account of such Person,
(d) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith),
(e) every obligation of such Person under any Capitalized Lease,
(f) every obligation of such Person under any Synthetic Lease,
(g) all sales by such Person of (i) accounts or general intangibles
for money due or to become due, (ii) chattel paper, instruments or
documents creating or evidencing a right to payment of money or (iii)
other receivables (collectively "receivables"), whether pursuant to a
purchase facility or otherwise, other than in connection with the
disposition of the business operations of such Person relating thereto or
a disposition of defaulted
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receivables for collection and not as a financing arrangement, and
together with any obligation of such Person to pay any discount, interest,
fees, indemnities, penalties, recourse, expenses or other amounts in
connection therewith,
(h) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value
any shares of Capital Stock issued by such Person or any rights measured
by the value of such Capital Stock,
(i) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon interest rates, currency
exchange rates, commodities or other indices (a "derivative contract"),
(j) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to
the extent that such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity,
except to the extent that the terms of such Indebtedness provide that such
Person is not liable therefor and such terms are enforceable under
applicable law,
(k) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of clauses
(a) through (j) (the "primary obligation") of another Person (the "primary
obligor"), in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such Person (i) to purchase or pay
(or advance or supply funds for the purchase of) any security for the
payment of such primary obligation, (ii) to purchase property, securities
or services for the purpose of assuring the payment of such primary
obligation, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time
of determination represented by (t) any Indebtedness, issued at a price
that is less than the principal amount at maturity thereof, shall be the
amount of the liability in respect thereof determined in accordance with
GAAP, (u) any Capitalized Lease shall be the principal component of the
aggregate of the rentals obligation under such Capitalized Lease payable
over the term thereof that is not subject to termination by the lessee,
(v) any sale of receivables shall be the amount of unrecovered capital or
principal investment of the purchaser (other than the Company or any of
its Wholly-owned Subsidiaries) thereof, excluding amounts representative
of yield or Interest earned on such investment, (w) any Synthetic Lease
shall be the stipulated loss value, termination value or other equivalent
amount, (x) any derivative contract shall be the maximum amount of any
termination or loss payment required to be paid by such Person if such
derivative contract were, at the time of determination, to be terminated
by reason of any event of default or early termination event thereunder,
whether or not such event of default or early termination event has in
fact occurred, (y) any equity related purchase obligation shall be the
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maximum fixed redemption or purchase price thereof inclusive of any
accrued and unpaid dividends to be comprised in such redemption or
purchase price and (z) any guaranty or other contingent liability referred
to in clause (k) shall be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such guaranty or
other contingent obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in
good faith.
"Investments" shall mean all expenditures made and all liabilities
incurred (contingently or otherwise) for the acquisition of stock or
Indebtedness of, or for loans, advances, capital contributions or
transfers of property to, or in respect of any guaranties (or other
commitments as described under Indebtedness), or obligations of, any
Person. In determining the aggregate amount of Investments outstanding at
any particular time: (a) the amount of any Investment represented by a
guaranty shall be taken at not less than the principal amount of the
obligations guaranteed and still outstanding; (b) there shall be deducted
in respect of each such Investment any amount received as a return of
capital (but only by repurchase, redemption, retirement, repayment,
liquidating dividend or liquidating distribution); (c) there shall not be
deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise; (d) there
shall not be deducted from the aggregate amount of Investments any
decrease in the value thereof; and (e) the amount of any Investment made
by a transfer of property shall be valued at the fair market value of such
transferred property at the time of such transfer.
"Joinder Agreements" shall mean joinder agreements in substantially
the form of Exhibit B to the Guarantee pursuant to which Subsidiaries of
the Company become parties to and agree to be bound by the provisions of
the Guarantee as a Guarantor.
"Joint Venture" shall mean any corporation, partnership, limited
liability company, joint venture or other entity in which the Company and
its Subsidiaries own not more than 50% of the capital stock, partnership
interests, membership interests or other ownership interests and which
does not meet the definition of "Subsidiary" herein.
"Kmart Agreements" shall mean the Kmart Indemnity and the Kmart Tax
Agreement.
"Kmart Indemnity" shall mean that certain Lease Guaranty,
Indemnification and Reimbursement Agreement, dated May 24, 1995, as
amended, among the Company, one or more of the Lessees and Kmart.
"Kmart Tax Agreement" shall mean that certain Tax Allocation and
Indemnification Agreement, dated May 24, 1995, between the Company and
Kmart.
"Lease Financing Rent Expense" shall mean all Basic Rent (as defined
herein) and Basic Rent (as defined in the New Master Agreement) payable by
the Company and its Subsidiaries, as lessee or sublessee under a Financed
Lease and any rent payable by
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the Company and its Subsidiaries under Ground Leases (as defined in each
of the Credit Agreement and the New Master Agreement).
"Leverage Ratio" shall mean as at any date of determination, the
ratio of (a) Consolidated Total Funded Debt outstanding on such date to
(b) Consolidated EBITDA for the Reference Period ending on such date.
"Library" shall mean the Library, Ltd., a Missouri corporation.
"Lien" shall mean any mortgage, deed of trust, security interest,
pledge, hypothecation, assignment, attachment, deposit arrangement,
encumbrance, lien (statutory, judgment or otherwise, but excluding any
right of set off pursuant to agreements entered into in the ordinary
course of business), or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any Capitalized Lease, any
Synthetic Lease, any financing lease involving substantially the same
economic effect as any of the foregoing and the filing of any financing
statement under the UCC or comparable law of any jurisdiction).
"MARGIN STOCK" MEANS "MARGIN STOCK" AS DEFINED IN REGULATION U OF
THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.
"Material Adverse Effect" shall mean with respect to any event or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration or governmental investigation or proceeding):
(a) a material adverse effect on the business, properties,
prospects, condition (financial or otherwise), assets, operations or
income of any of the Lessees or the Guarantors, individually or the
Lessees, the Guarantors and their Subsidiaries, taken as a whole;
(b) a material adverse effect on the ability of any of the Lessees,
any of the Guarantors or any of their Subsidiaries, individually and taken
as a whole, to perform any of their respective Obligations under any of
the Operative Agreements to which it is a party; or
(c) any impairment of the validity, binding effect or enforceability
of any of the Operative Agreements or any impairment of the rights,
remedies or benefits available to any Agent or any Lender under any
Operative Agreement.
"Maturity Date" shall mean June 20, 2004 unless, no later than
[sixty (60)] days prior to such day, the Company shall have delivered to
the Lenders and the Administrative Agent a written statement certified by
an Authorized Officer representing to the facts that either (a) a final
non-appealable judgment or settlement has been reached in the Agree
Litigation and the Agree Project Loans have been repaid in full, or (b)
the Agree Litigation is continuing but the outstanding principal balance
of the
12
Revolving Credit Loans as of such date is less than $10,000,000, in which
case the Maturity Date shall mean June 20, 2005. In the event that the
Company delivers written notice to the Lenders and the Administrative
Agent that the Agree Litigation is continuing as of the date which is
[sixty (60)] days prior to the then Maturity Date and has further
requested that nonetheless the Lenders agree to an extension of the then
Maturity Date to June 20, 2005, the Company shall promptly provide the
Lenders and the Administrative Agent with such further information
regarding the Agree Litigation as any Lender or the Administrative Agent
may request. Each Lender may, in its sole discretion, consent to the
proposed extension of the then Maturity Date by notifying the
Administrative Agent of such determination by the thirtieth day prior to
the then Maturity Date. If all the Lenders consent to the extension by so
notifying the Administrative Agent in writing by the thirtieth day prior
to the then Maturity Date, the then Maturity Date shall be extended to
June 20, 2005 and the "Maturity Date" shall mean June 20, 2005 for all
purposes hereof.
"Multiemployer Plan" shall mean any multiemployer plan within the
meaning of Section 3(37) of ERISA maintained or contributed to by any
Lessee, any Guarantor or any ERISA Affiliate.
"Net Working Capital Changes" shall mean with respect to the Company
and its Subsidiaries, for any fiscal period and without duplication, the
difference (expressed as a positive or a negative number) of (a) the sum
of (i) both billed and unbilled Accounts Receivable plus (ii) inventory of
the Company and its Subsidiaries and other current assets considered part
of working capital in accordance with GAAP, minus (iii) current accounts
payable of the Company and its Subsidiaries, minus (iv) current accruals
and accretions (exclusive of interest accruals and accretions) of the
Company and its Subsidiaries, in each case, for such fiscal period, minus
(b) the sum of (i) both billed and unbilled Accounts Receivable, plus,
(ii) inventory of the Company and its Subsidiaries and other current
assets considered part of working capital in accordance with GAAP, minus
(iii) current accounts payable of the Company and its Subsidiaries, minus
(iv) current accruals and accretions (exclusive of interest accruals and
accretions) of the Company and its Subsidiaries, in each case, for the
fiscal period of equal duration immediately prior to such fiscal period.
"New Lease Guaranty" shall mean the Guaranty Agreement dated as of
June 21, 2002 entered into by the Company and certain Subsidiaries of the
Company in favor of the lenders parties to the New Lease Loan Agreement
and SunTrust Bank as agent for such lenders and in form and substance
satisfactory to the Syndication Agent.
"New Lease Loan Agreement" shall mean the Loan Agreement dated as of
June 21, 2002 among Atlantic Financial Group, Ltd., the lenders party
thereto and SunTrust Bank as agent for such lenders and in form and
substance satisfactory to the Syndication Agent.
13
"New Master Agreement" shall mean the Master Agreement dated as of
June 21, 2002 by and among Borders and certain of the Company's other
Subsidiaries, as lessees, the Company and certain of its Subsidiaries, as
guarantors, Atlantic Financial Group, Ltd., as lessor, the lenders parties
to the New Lease Loan Agreement, Fleet National Bank, as co-arranger and
syndication agent, and SunTrust, as co-arranger, documentation agent and
agent for such lenders and in form and substance satisfactory to the
Syndication Agent.
"New Synthetic Lease" shall mean the Lease Agreement, dated as of
June 21, 2002, among Atlantic Financial Group, Ltd., as lessor, and
Borders, Inc., and certain other subsidiaries of the Company, as lessees.
"New Synthetic Lease Documents" shall mean the New Lease Loan
Agreement, the New Lease Guaranty, the New Master Agreement and the other
Operative Agreements as defined therein, each in form and substance
satisfactory to the Syndication Agent.
"New Synthetic Lease Facility" shall mean the Synthetic Lease
facility agented by SunTrust Bank to be entered into by the Company and
certain of its Subsidiaries on June 21, 2002 pursuant to the New Synthetic
Lease Documents with a total facility amount not to exceed $75,000,000.
"Obligor Group" shall mean collectively, the Company, the Lessees
and the Guarantors (including any Subsidiary of the Company which as of
any date of determination has become a Guarantor pursuant to the
provisions of the Guarantee).
"Obligor Group Requirement" shall mean the requirement that
Consolidated Free Cash Flow of the Obligor Group for each Reference Period
shall not be less than 85% of Consolidated Free Cash Flow of the Company
and its Subsidiaries for such Reference Period.
"Omnibus Amendment Effective Date" shall mean June 21, 2002.
"Online" shall mean Borders Online, LLC, a Delaware limited
liability company.
"Optional Currency" means each of the following types of currency:
Euros, Australian Dollars ("AUD"), British Pounds Sterling ("GBP"),
Canadian Dollars ("CAD"), Japanese Yen ("JPY"), New Zealand Dollars
("NZD"), or Singaporean Dollars ("SGD").
"Outlet" shall mean Borders Outlet, Inc., a Colorado corporation.
"Permitted Joint Venture Activity" shall mean any Investment by the
Company or any Subsidiary of the Company in any Joint Venture provided
that (a) the aggregate amount of all such Investments does not at any time
exceed 15% of Consolidated Tangible Net Worth, determined as of the last
day of the Fiscal Quarter most recently
14
ended and (b) both before and after giving effect to such Investment, the
Lessees and the Company are in compliance with the Obligor Group
Requirement.
"Permitted Liens" shall mean Liens permitted by Section 12.02 of the
Guarantee.
"Principal Office" shall mean .
"Real Estate" shall mean all real property at any time owned or
leased (as lessee or sublessee) by the Company or any of its Subsidiaries.
"Reference Period" shall mean as of any date of determination, the
period of four (4) consecutive fiscal quarters of the Company and its
Subsidiaries ending on such date, or if such date is not a fiscal quarter
end date, the period of four (4) consecutive fiscal quarters most recently
ended (in each case treated as a single accounting period).
"Rent Expense" shall mean all fixed rents payable by the Company and
its Subsidiaries, as lessee or sublessee under a lease of CA-Property
(other than rents payable under Financed Leases), exclusive of any amounts
required to be paid by the Company and its Subsidiaries (whether or not
designated as rents or additional rents) on account of maintenance,
repairs, insurance, taxes, assessments, utilities, operating and labor
costs, and similar charges. Fixed rents under any so-called "percentage
leases" shall be computed based on the actual amount of rent paid, and not
on the basis of the minimum rents, if any, required to be paid by the
lessee regardless of sales volume or gross revenues. The term Rent Expense
shall exclude any payments made in respect of any Capitalized Lease.
"Restricted Payment" shall mean in relation to the Company and its
Subsidiaries, any (a) Distribution, or (b) derivatives or other
transactions with any financial institution, commodities or stock exchange
or clearinghouse (a "Derivatives Counterparty") obligating the Company or
any of its Subsidiaries to make payments to such Derivatives Counterparty
as a result of any change in market value of any Capital Stock of the
Company or such Subsidiary.
"Restricted Payment Amount" means (a) an amount not to exceed
$100,000,000 in aggregate amount over the term of the Lease and the sum of
$50,000,000 in any Fiscal Year plus (b) the aggregate amount paid to the
Company (whether in cash or in shares of the Company's stock), from time
to time and at any time since the Omnibus Amendment Effective Date, by
officers, employees or directors of the Company or any of its Subsidiaries
in connection with the exercise of options to purchase shares of the
Company's stock, plus (c) the realized tax benefit (as calculated by the
Company in a manner satisfactory to the Administrative Agent, for tax
years ending after the Omnibus Amendment Effective Date resulting from the
exercise of such options or resulting from the lapse of restrictions on
(and vesting of rights in) certain shares of the Company's stock subject
to the Management Stock Purchase Plan or any similar successor plan from
time to time and at any time since January 28, 2002. For purposes of
calculating the
15
Restricted Payment Amount, to the extent shares of the Company's stock are
delivered to the Company in payment of the exercise price of options, or
in payment of taxes associated with the exercise of options or the vesting
of restricted shares, such delivered shares are deemed to be repurchased
by the Company at fair market value (as defined in the Company's stock
option plan) on the date of delivery to the Company. Such delivered share
repurchases will serve to reduce the available Restricted Payment Amount.
"Revolving Credit Agreement" means the Multicurrency Revolving
Credit Agreement, dated as of June 21, 2002, among BGI, Borders, Xxxxxx
Book Company, Inc., BGP (UK) Limited, Borders (UK), Limited, Borders
Australia Pty., Ltd., the lenders listed on Schedule 1 thereto, PNC Bank,
National Association, as administrative agent, Fleet National Bank, as
syndication agent, Wachovia Bank, National Association, as co-syndication
agent, Bank One, NA (Main Office Chicago), as documentation agent, with
Fleet Securities, Inc., having acted as arranger.
"Solvent" shall mean with respect to any Person on a particular
date, that on such date (a) the fair value of the CA-Property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair
saleable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal
course of business, (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (e) such Person
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would
constitute unreasonably small capital after giving due consideration to
the prevailing practice in the industry in which such Person is engaged.
In computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount which, in
light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.
"Subsidiary" shall mean with respect to any Person (the "parent") at
any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated
with those of the parent in the parent's consolidated financial statements
if such financial statements were prepared in accordance with GAAP as of
such date, as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which securities or other
ownership interests representing more than 50% of the equity or more than
50% of the ordinary voting power or, in the case of a partnership, more
than 50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of
16
such date, otherwise controlled, by the parent or one or more subsidiaries
of the parent or by the parent and one or more subsidiaries of the parent.
"SunTrust" shall mean SunTrust Bank, a Georgia banking corporation.
"SunTrust Commitment Termination Date" shall mean the date that is
three months after the Omnibus Amendment Effective Date.
"Synthetic Lease" shall mean any lease of goods or other property,
whether real or personal, which is treated as an operating lease under
GAAP and as a loan or financing for U.S. income tax purposes.
"Wholly-owned Subsidiary" shall mean any Subsidiary of the Company
of which all of the outstanding shares of capital stock or other equity
interests are owned by the Company (whether directly or through one or
more Wholly-owned Subsidiaries of the Company) except for directors'
qualifying shares in jurisdictions where such qualifying shares are
required.
"WPI" shall mean Waldenbooks Properties, Inc., a Delaware
corporation.
(c) The definition of "Agents" is hereby amended by inserting the phrase
"the Documentation Agent" after the phrase "the Syndication Agent" where it
appears in the first line thereof.
Section 4. Aggregate Limit on Loans. (a) Section 2.01 of the Participation
Agreement is hereby amended by deleting the number "$250,000,000" where it
appears in clause (a) of the first sentence thereof and substituting therefor
the number "$100,000,000".
(b) Section 2.02 of the Participation Agreement is hereby amended by
deleting the number "$250,000,000" where it appears in the third line thereof
and substituting therefor the number "$100,000,000. Section 2.02 of the
Participation Agreement is hereby further amended by inserting the following
provisos at the end of the first sentence thereof:
"; provided that it is expressly understood and agreed that the amount set
forth in this sentence shall not be reinstated to the extent of any
principal repayment of the Loans to the Lenders; provided, further, that
on and after the Omnibus Amendment Effective Date, only SunTrust shall be
obligated to make loans to the Owner Trustee up to its Commitment in
accordance with the Credit Agreement, which commitment shall terminate on
the SunTrust Commitment Termination Date"
Section 5. Swing Loans. Article III of the Participation Agreement is
hereby deleted.
Section 6. Project Loan Percentage of Total Costs. Section 2.03(a) of the
Participation Agreement is hereby amended by deleting the percentage "89%" where
it appears in the seventh line thereof and substituting therefor the percentage
"95%".
17
Section 7. Representations and Warranties. Section 7.03 of the
Participation Agreement is hereby deleted in its entirety and the following
Section 7.03 is hereby substituted therefor:
7.03 Representations and Warranties of the Guarantors and the
Lessees. Each of the Guarantors and the Lessees jointly and severally
represents and warrants to each of the other parties as follows:
(a) Corporate Authority.
(i) Incorporation; Good Standing. Each of the Guarantors, the
Lessees and their Subsidiaries (a) is a corporation (or similar
business entity) duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
formation, (b) has all requisite corporate (or the equivalent
company) power to own its property and conduct its business as now
conducted and as presently contemplated, and (c) is in good standing
as a foreign corporation (or similar business entity) and is duly
authorized to do business in each jurisdiction where such
qualification is necessary except where a failure to be so qualified
would not have a Material Adverse Effect.
(ii) Authorization. The execution, delivery and performance of
this Participation Agreement and the other Operative Agreements to
which any of the Lessees, the Guarantors or any of their
Subsidiaries is or is to become a party and the transactions
contemplated hereby and thereby (a) are within the corporate (or the
equivalent company) authority of such Person, (b) have been duly
authorized by all necessary corporate (or the equivalent company)
proceedings, (c) do not and will not conflict with or result in any
breach or contravention of any provision of law, statute, rule or
regulation to which any of the Lessees, the Guarantors or any of
their Subsidiaries is subject or any judgment, order, writ,
injunction, license or permit applicable to any of the Lessees, the
Guarantors or any of their Subsidiaries and (d) do not conflict with
any provision of the Governing Documents of, or any agreement or
other instrument binding upon, any of the Lessees, the Guarantors or
any of their Subsidiaries.
(iii) Enforceability. The execution and delivery of this
Participation Agreement and the other Operative Agreements to which
any of the Lessees, the Guarantors or any of their Subsidiaries is
or is to become a party will result in valid and legally binding
obligations of such Person enforceable against it in accordance with
the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or
18
injunctive relief is subject to the discretion of the court before
which any proceeding therefor may be brought.
(b) Governmental Approvals. The execution, delivery and performance
by any of the Lessees, the Guarantors and any of their Subsidiaries of
this Participation Agreement and the other Operative Agreements to which
any of the Lessees, the Guarantors or any of their Subsidiaries is or is
to become a party and the transactions contemplated hereby and thereby do
not require the approval or consent of, or filing with, any governmental
agency or authority other than those already obtained.
(c) Title to Properties; Leases. Except as indicated on Schedule
7.03(c) hereto, the Lessees, the Guarantors and their Subsidiaries own all
of the assets reflected in the consolidated balance sheet of the Lessees,
the Guarantors and their Subsidiaries as at the Balance Sheet Date or
acquired since that date (except property and assets sold or otherwise
disposed of in the ordinary course of business since that date), subject
to no Liens or other rights of others, except Permitted Liens.
(d) Fiscal Year; Financial Statements and Projections.
(i) Fiscal Year. Each of the Lessees, the Guarantors and each
of their Subsidiaries has a Fiscal Year which is the 52/53 week
period ending on the Sunday (except with respect to Xxxxxx, on the
Saturday) preceding the last Wednesday in January. The Fiscal
Quarters and Fiscal Year of the Lessees, the Guarantors and their
Subsidiaries are accurately described in the definitions thereof.
(ii) Financial Statements. There has been furnished to each of
the Lenders (a) a consolidated balance sheet of Lessees, the
Guarantors and its Subsidiaries as at the Balance Sheet Date, and
consolidated statements of income and cash flow of the Lessees, the
Guarantors and their Subsidiaries for the Fiscal Year then ended,
certified by Ernst & Young LLP. Such balance sheet and statements of
income and cash flow have been prepared in accordance with GAAP and
fairly present the financial condition of Lessees, the Guarantors
and its Subsidiaries as at the close of business on the date thereof
and the results of operations for the fiscal year then ended. There
are no contingent liabilities of any Lessee, the any Guarantor or
any of their Subsidiaries as of such date involving material
amounts, known to the officers of the Lessees or the Guarantors,
which were not disclosed in such balance sheet and the notes related
thereto.
(iii) Projections. The projections of the annual operating
budgets of the Company and its Subsidiaries on a consolidated basis,
balance sheets and cash flow statements for the period from January
28,
19
2002 through January 23, 2005, copies of which have been delivered
to each Lender, disclose all assumptions made with respect to
general economic, financial and market conditions used in
formulating such projections. To the knowledge of any of the
Lessees, the Guarantors or any of their Subsidiaries, no facts exist
that (individually or in the aggregate) would result in any material
change in any of such projections. The projections are based upon
reasonable estimates and assumptions, have been prepared on the
basis of the assumptions stated therein and reflect the reasonable
estimates of the Company and its Subsidiaries of the results of
operations and other information projected therein.
(e) No Material Adverse Changes, etc. Since the Balance Sheet Date
there has been no event or occurrence which has had a Material Adverse
Effect. Since the Balance Sheet Date, none of the Lessees or the
Guarantors have made any Restricted Payment except as set forth in
Schedule 7.03(e) hereto.
(f) Franchises, Patents, Copyrights, etc. The Company and each of
its Subsidiaries possesses all franchises, patents, copyrights,
trademarks, trade names, licenses and permits, and rights in respect of
the foregoing, adequate for the conduct of its business substantially as
now conducted without known conflict with any rights of others.
(g) Litigation. Except as set forth in Schedule 7.03(g) hereto,
there are no actions, suits, proceedings or investigations of any kind
pending or threatened against the Company or any of its Subsidiaries
before any Governmental Authority, that, (a) might reasonably be expected
to, either in any case or in the aggregate, (i) have a Material Adverse
Effect or (ii) materially impair the right of Lessees, the Guarantors and
its Subsidiaries, considered as a whole, to carry on business
substantially as now conducted by them, or result in any substantial
liability not adequately covered by insurance, or for which adequate
reserves are not maintained on the consolidated balance sheet of the
Company and its Subsidiaries, or (b) question the validity of this
Participation Agreement or any of the other Operative Agreements, or any
action taken or to be taken pursuant hereto or thereto.
(h) No Materially Adverse Contracts, etc. None of the Lessees, the
Guarantors or any of their Subsidiaries is subject to any Governing
Document or other legal restriction, or any judgment, decree, order, law,
statute, rule or regulation that has or is expected in the future to have
a Material Adverse Effect. None of the Lessees, the Guarantors or any of
their Subsidiaries is a party to any contract or agreement that has or is
expected, in the judgment of the Lessees' and the Guarantors' officers, to
have any Material Adverse Effect.
(i) Compliance with Other Instruments, Laws, etc. None of the
Lessees, the Guarantors or any of their Subsidiaries is in violation of
any provision of its Governing Documents, or any agreement or instrument
to which it
20
may be subject or by which it or any of its properties may be bound or any
decree, order, judgment, statute, license, rule or regulation, in any of
the foregoing cases in a manner that could result in the imposition of
substantial penalties or have a Material Adverse Effect.
(j) Tax Status. Each of the Lessees, the Guarantors and their
Subsidiaries (i) has made or filed all federal, state and foreign income
and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject where, in the cases of state or
foreign tax returns, failure to make such filing could have a Material
Adverse Effect, (ii) has paid all taxes and other governmental assessments
and charges shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and by
appropriate proceedings and (iii) has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to
the periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and none of the officers of any Lessee or
any Guarantor know of any basis for any such claim.
(k) No Event of Default. No Default or Event of Default has occurred
and is continuing.
(l) Holding Company and Investment Company Acts. None of the
Lessees, the Guarantors or any of their Subsidiaries is a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935; nor is it an "investment
company", or an "affiliated company" or a "principal underwriter" of an
"investment company", as such terms are defined in the Investment Company
Act of 1940.
(m) Absence of Financing Statements, etc. Except with respect to
Permitted Liens, there is no financing statement, security agreement,
chattel mortgage, real estate mortgage or other document filed or recorded
with any filing records, registry or other public office, that purports to
cover, affect or give notice of any present or possible future Lien on any
assets or property of any Lessee, any Guarantor or any of their
Subsidiaries or any rights relating thereto.
(n) Certain Transactions. Except as set forth on Schedule 7.03(n),
none of the officers, directors, or employees of any Lessee, any Guarantor
or any of their Subsidiaries is presently a party to any transaction with
any Lessee, any Guarantor or any of their Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or by, providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Lessees or the Guarantors, any
corporation, partnership, trust or other entity in which any officer,
21
director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
(o) Employee Benefit Plans.
(i) In General. Each Employee Benefit Plan and each Guaranteed
Pension Plan has been maintained and operated in compliance in all
material respects with the provisions of ERISA and all Applicable
Pension Legislation and, to the extent applicable, the Code,
including but not limited to the provisions thereunder respecting
prohibited transactions and the bonding of fiduciaries and other
persons handling plan funds as required by ss. 412 of ERISA. The
Lessees and the Guarantors have heretofore delivered to the
Administrative Agent the most recently completed annual report, Form
5500, with all required attachments, and actuarial statement
required to be submitted under ss. 103(d) of ERISA, with respect to
each Guaranteed Pension Plan.
(ii) Terminability of Welfare Plans. No Employee Benefit Plan,
which is an employee welfare benefit plan within the meaning of ss.
3(1) or ss. 3(2)(B) of ERISA, provides benefit coverage subsequent
to termination of employment, except as required by Title I, Part 6
of ERISA or the applicable state insurance laws, provided, however,
that any Lessee(s) or any Guarantor(s) may include retirees in its
employee welfare plans and pay a portion of the cost of such
coverage so long as (a) the premium based cost of the coverage does
not exceed, in the aggregate $2,000,000 and (b) such coverage is
terminable at any time by the applicable Lessee(s) or the
Guarantor(s). The Lessees or the Guarantors may terminate each such
Plan at any time (or at any time subsequent to the expiration of any
applicable bargaining agreement) in the discretion of the Lessees or
the Guarantors without liability to any Person other than for claims
arising prior to termination.
(iii) Guaranteed Pension Plans. Each contribution required to
be made to a Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding deficiency, the
notice or lien provisions of ss. 302(f) of ERISA, or otherwise, has
been timely made. No waiver of an accumulated funding deficiency or
extension of amortization periods has been received with respect to
any Guaranteed Pension Plan, and none of the Lessees, the Guarantors
or any ERISA Affiliate is obligated to or has posted security in
connection with an amendment to a Guaranteed Pension Plan pursuant
to ss. 307 of ERISA or ss. 401(a)(29) of the Code. No liability to
the PBGC (other than required insurance premiums, all of which have
been paid) has been incurred by any Lessee, the Guarantor or any
ERISA Affiliate with respect to any Guaranteed Pension Plan and
there has not been any ERISA Reportable
22
Event (other than an ERISA Reportable Event as to which the
requirement of 30 days notice has been waived), or any other event
or condition which presents a material risk of termination of any
Guaranteed Pension Plan by the PBGC. Based on the latest valuation
of each Guaranteed Pension Plan (which in each case occurred within
twelve months of the date of this representation), and on the
actuarial methods and assumptions employed for that valuation, the
aggregate benefit liabilities of all such Guaranteed Pension Plans
within the meaning of ss. 4001 of ERISA did not exceed the aggregate
value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of
any Guaranteed Pension Plan with assets in excess of benefit
liabilities.
(iv) Multiemployer Plans. None of the Lessees, the Guarantors
or any ERISA Affiliate has incurred any material liability
(including secondary liability) to any Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer
Plan under ss. 4201 of ERISA or as a result of a sale of assets
described in ss. 4204 of ERISA. None of the Lessees, the Guarantors
or any ERISA Affiliate has been notified that any Multiemployer
Plan is in reorganization or insolvent under and within the meaning
of ss. 4241 or ss. 4245 of ERISA or is at risk of entering
reorganization or becoming insolvent, or that any Multiemployer
Plan intends to terminate or has been terminated under ss. 4041A
of ERISA.
(p) Use of Proceeds.
(i) General. The proceeds of the Loans shall be used for the
acquisition and construction of the Properties in accordance with
this Participation Agreement.
(ii) Regulations U and X. No portion of any Loan is to be
used, and no portion of any Letter of Credit is to be obtained, for
the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R. Parts
221 and 224.
(q) Environmental Compliance. The Lessees and the Guarantors have
taken all appropriate inquiry into the previous ownership of the Real
Estate consistent with good commercial or customary practice and, based
upon such diligent investigation, has determined that, to the best of the
Lessees' and the Guarantors' knowledge:
(i) none of the Lessees, the Guarantors, their Subsidiaries or
any operator of the Real Estate or any operations thereon is in
violation, or alleged violation, of any judgment, decree, order,
law, license, rule or regulation pertaining to environmental
matters, including, without limitation, those arising under the
Resource Conservation and Recovery
23
Act ("RCRA"), the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("XXXX"), the Federal
Clean Water Act, the Federal Clean Air Act, the Toxic Substances
Control Act, or any state, local or foreign law, statute,
regulation, ordinance, order or decree relating to health, safety or
the environment (hereinafter "Environmental Laws"), which violation
would have a material adverse effect on the environment or a
Material Adverse Effect;
(ii) none of the Lessees, the Guarantors or any of their
Subsidiaries has received notice from any third party including,
without limitation, any Governmental Authority, (A) that any one of
them has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under
CERCLA with respect to a site listed on the National Priorities
List, 40 C.F.R. Part 000 Xxxxxxxx X; (B) that any hazardous waste,
as defined by 42 U.S.C. ss. 6903(5), any hazardous substances as
defined by 42 U.S.C. ss. 9601(14), any pollutant or contaminant as
defined by 42 U.S.C. ss. 9601(33) and any toxic substances, oil or
hazardous materials or other chemicals or substances regulated by
any Environmental Laws ("Hazardous Substances") which any one of
them has generated, transported or disposed of has been found at any
site at which a Governmental Authority has conducted or has ordered
that any Lessee, any Guarantor or any of their Subsidiaries conduct
a remedial investigation, removal or other response action pursuant
to any Environmental Law; or (C) that it is or shall be a named
party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses,
losses or damages of any kind whatsoever in connection with the
release of Hazardous Substances;
(iii) except as set forth on Schedule 7.03(q) attached hereto:
(A) no portion of the Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws; and no underground
tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the Real Estate; (B) in the
course of any activities conducted by the Lessees, the Guarantors,
their Subsidiaries or operators of its properties, no Hazardous
Substances have been generated or are being used on the Real Estate
except in accordance with applicable Environmental Laws; (C) there
have been no releases (i.e., any past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or
threatened releases of Hazardous Substances on, upon, into or from
the properties of the Lessees, the Guarantors or their Subsidiaries,
which releases would have a material adverse effect on the value of
any of the Real Estate or
24
adjacent properties or the environment; (D) to the best of the
Lessees' and the Guarantors' knowledge, there have been no releases
on, upon, from or into any real property in the vicinity of any of
the Real Estate which, through soil or groundwater contamination,
may have come to be located on, and which would have a material
adverse effect on the value of, the Real Estate; and (E) in
addition, any Hazardous Substances that have been generated on any
of the Real Estate have been transported offsite only by carriers
having an identification number issued by the EPA (or the equivalent
thereof in any foreign jurisdiction), treated or disposed of only by
treatment or disposal facilities maintaining valid permits as
required under applicable Environmental Laws, which transporters and
facilities have been and are, to the best of the Lessees' and the
Guarantors' knowledge, operating in compliance with such permits and
applicable Environmental Laws; and
(iv) none of the Lessees, the Guarantors or any of their
Subsidiaries, or any of the Real Estate is subject to any applicable
Environmental Law requiring the performance of Hazardous Substances
site assessments, or the removal or remediation of Hazardous
Substances, or the giving of notice to any Governmental Authority or
the recording or delivery to other Persons of an environmental
disclosure document or statement by virtue of the transactions set
forth herein and contemplated hereby, or to the effectiveness of any
other transactions contemplated hereby.
(r) Subsidiaries. Schedule 7.03(r), as the same may be updated
pursuant to Section 7.03(v) hereof, states the name of each of the
Company's Subsidiaries and Joint Ventures and, in each case, such entity's
jurisdiction of incorporation, outstanding shares (referred to herein as
the "Subsidiary Shares") and the owners thereof if it is a corporation,
such entity's outstanding partnership interests (the "Partnership
Interests") if it is a partnership and such entity's outstanding
membership interests (the "Membership Interests") if it is a limited
liability company. The Company and each of its Subsidiaries has good and
marketable title to all of the Subsidiary Shares, Partnership Interests,
and Membership Interests it purports to own, free and clear in each case
of any Lien. All Subsidiary Shares, Partnership Interests and Membership
Interests have been validly issued and all Subsidiary Shares are fully
paid and nonassessable. All capital contributions and other consideration
required to be made or paid in connection with the issuance of the
Partnership Interests or Membership Interests have been made or paid, as
the case may be. There are no options, warrants or other rights
outstanding to purchase any such Subsidiary Shares, Partnership Interests
or Membership Interests except as indicated on Schedule 7.03(r).
(s) Disclosure. None of this Participation Agreement or any of the
other Operative Agreements contains any untrue statement of a material
fact or
25
omits to state a material fact (known to any of the Lessees, any of the
Guarantors or any of their Subsidiaries in the case of any document or
information not furnished by it or any of their Subsidiaries) necessary in
order to make the statements herein or therein not misleading. There is no
fact known to any of the Lessees, any of the Guarantors or any of their
Subsidiaries which has a Material Adverse Effect, or which is reasonably
likely in the future to have a Material Adverse Effect, exclusive of
effects resulting from changes in general economic conditions, legal
standards or regulatory conditions.
(t) Senior Debt Status. The Obligations of each Lessee and each
Guarantor under this Participation Agreement and each of the other
Operative Agreements to which it is a party do rank and will rank at least
pari passu in priority of payment with all other Indebtedness of such
Lessee or such Guarantor except Indebtedness of such Lessee or such
Guarantor to the extent secured by Permitted Liens. There is no Lien upon
or with respect to any of the properties or income of any Lessee, any
Guarantor or any of their Subsidiaries which secures Indebtedness or other
obligations of any Person except for Permitted Liens.
(u) Solvency. After giving effect to each incurrence of Indebtedness
hereunder, and the payment of all Fees, costs and expenses payable by each
of the Lessees and the Guarantors hereunder, each of the Lessees and the
Guarantors is Solvent.
(v) Updates to Schedules. Should any of the information or
disclosures provided on any of the Schedules attached hereto become
outdated or incorrect in any material respect, the Company shall promptly
provide the Administrative Agent in writing with such revisions or updates
to such Schedule as may be necessary or appropriate to update or correct
same; provided that, except for the amendment of Schedule 7.03(r) in
connection with any new Subsidiary of the Company as permitted herein, no
Schedule shall be deemed to have been amended, modified or superseded by
any such correction or update, nor shall any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any such
Schedule be deemed to have been cured thereby, unless and until the
Syndication Agent (which may request the consent of the Required Lenders)
shall have accepted in writing such revisions or updates to such Schedule.
Section 8. Representations of the Company on Project Closing Dates.
Section 8.01(e) of the Participation Agreement is hereby amended by deleting the
phrases "the Lease," and "the Reassignment of Leases" where they appear therein.
Section 9. Non-Revolving Loans.
(a) Section 2.1(a) of the Credit Agreement is hereby amended by inserting
the following proviso at the end of the first sentence thereof:
26
; provided that on and after the Omnibus Amendment Effective Date, only
SunTrust shall make Revolving Credit Loans to the Borrower up to its
Commitment, which commitment shall terminate on the SunTrust Commitment
Termination Date.
(b) Section 2.1(a) of the Credit Agreement is hereby further amended by
deleting the last sentence thereof and substituting therefor the following
sentence:
Within such limits of time and amount and subject to the other provisions
of this Agreement, the Borrower may borrow and repay pursuant to this
Section 2.1; provided that the Borrower may not reborrow to the extent of
any principal repayment of the Revolving Credit Loans to any of the
Lenders.
Section 10. Outstanding Revolving Credit Loans. Paragraph (b) of Section
2.1 of the Credit Agreement is hereby deleted in its entirety and the following
paragraph (b) is substituted therefor:
(b) Prior Revolving Credit Loans. Schedule 2.01(b) lists the
Revolving Credit Loans outstanding for each Lender under the Agreement
after giving effect to the Omnibus Amendment and the Revolving Credit
Loans to be outstanding for each Lender hereunder as of such date.
Section 11. Notes. Section 2.04 of the Credit Agreement is hereby deleted
in its entirety and the following Section 2.04 is substituted therefor:
2.04 Notes.
The Revolving Credit Loans made by the Lenders shall be evidenced by
a promissory note of the Borrower, substantially in the form of Exhibit
A-1, in the case of Tranche A Loans (each, a "Tranche A Note"), or Exhibit
A-2, in the case of Tranche B Loans (each, a "Tranche B Note"), with
appropriate insertions as to payee, date and principal amount, payable to
the order of the Administrative Agent for the ratable benefit of the
Lenders and in a principal amount equal to the lesser of (a) the initial
aggregate Commitments of the Lenders and (b) the aggregate unpaid
principal amount of all Tranche A Loans or Tranche B Loans, as the case
may be, made by the Lenders. The Administrative Agent is hereby authorized
to record the date, the Borrowing Tranche and amount of the Revolving
Credit Loans made by the Lenders, each continuation thereof, each
conversion of all or a portion thereof to another Borrowing Tranche, the
date and amount of each payment or prepayment of principal thereof and, in
the case of Revolving Credit Loans with Euro-Rate Option, the length of
each Interest Period with respect thereto, on the schedule annexed to and
constituting a part of its Note, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded,
provided, that the failure to make any such recordation or any error in
such recordation shall not affect the Borrower's obligations hereunder or
under such Note. Each Note shall (i) be dated the Omnibus Amendment
Effective Date, (ii) be stated to
27
mature on the Maturity Date and (iii) provide for the payment of interest
in accordance with Section 4.1.
Section 12. Facility Fee. Section 2.7(a) of the Credit Agreement is hereby
deleted in its entirety and the following Section 2.7(a) is substituted
therefor:
(a) The Borrower agrees to pay to the Administrative Agent for the
accounts of the Lenders on a pro rata basis a facility fee (the "Facility
Fee") determined on a daily basis with respect to the period from the
Omnibus Amendment Effective Date to the Maturity Date (or to the date of
termination in full of the Commitments if earlier) at the annual rate
equal to the Facility Fee Rate as in effect from time to time, calculated
on the Aggregate Commitment Amount. The Facility Fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on the first such date
following the Omnibus Amendment Effective Date, with a final payment on
the Maturity Date or any earlier date on which the Commitments shall
terminate; provided, that it is understood and agreed the Facility Fee
payable under the Credit Agreement for the portion of the calendar quarter
occurring prior to the Omnibus Amendment Effective Date shall be paid in
accordance with the Credit Agreement without giving effect to the Omnibus
Amendment.
Section 13. Application of Prepayments. Section 5.02 of the Credit
Agreement is hereby amended by inserting the following proviso at the end of the
first sentence thereof:
; provided that, (i) the foregoing notwithstanding, each payment or
prepayment by the Borrower with respect to principal with respect to the
Revolving Credit Loans shall be applied to reduce the principal amount of
the outstanding Revolving Credit Loans made by SunTrust Bank until such
time as the aggregate outstanding Revolving Credit Loans made by the
Lenders shall have been reduced to $75,000,000, and (ii) after such time
as the aggregate outstanding Revolving Credit Loans shall have been so
reduced, each payment or prepayment by the Borrower with respect to
principal shall be applied as set forth in this Section 5.02; provided,
further, that the aggregate outstanding Revolving Credit Loans shall be
reduced to $75,000,000 no later than November 1, 2002.
Section 14. Events of Default. (a) Paragraph (a) of Article IX of the
Credit Agreement is hereby amended by deleting the number "five" where it
appears in clause (ii) of paragraph (a) thereof and substituting the number
"three" therefor and inserting the phrase "to any Lender or any Agent" after the
word "hereunder" in clause (ii), and a new clause (iii) is inserted as follows:
"(iii) default, and such default shall continue for five or more
days, in the payment when due of any amount owing hereunder or under any
other Credit Document to which it is a party to any Person other than a
Lender or an Agent."
(b) Paragraph (d) of Article IX of the Credit Agreement is hereby deleted
in its entirety and the following paragraph (d) is substituted therefor:
28
(d) any of the Guarantors or the Lessees shall fail to comply with
any of its covenants contained in Section 11.01, Section 11.04,
Section 11.05(a), the first sentence of Section 11.06, Section 11.12,
Section 11.14 through Section 11.16, Section 12.01 through Section 12.18
(other than Sections 12.07 and 12.09) of the Guarantee; and (ii) any of
the Guarantors or the Lessees or any of their Subsidiaries shall fail to
perform any term, covenant or agreement contained herein or in any of the
other Operative Agreements (other than those specified elsewhere in this
Article IX) for thirty (30) days after written notice of such failure has
been given to the Guarantors and the Lessees by the Administrative Agent
(such grace period to be applicable only in the event such Default can be
remedied by corrective action of the Guarantors and the Lessees as
determined by the Administrative Agent in its sole discretion);
(c) Paragraphs (h) through (s) of Article IX of the Credit Agreement are
hereby deleted in their entirety and the following paragraphs (h) through (t)
are substituted therefor:
(h) any Guarantor, any Lessee or any of their Subsidiaries shall
fail to pay at maturity, or within any applicable period of grace, any
obligation for Indebtedness with an aggregate outstanding principal amount
in excess of $25,000,000, or fail to observe or perform any material term,
covenant or agreement contained in any agreement by which it is bound,
evidencing or securing Indebtedness with an aggregate outstanding
principal amount in excess of $25,000,000 for such period of time as would
permit (assuming the giving of appropriate notice if required) the holder
or holders thereof or of any obligations issued thereunder to accelerate
the maturity thereof, or any such holder or holders shall rescind or shall
have a right to rescind the purchase of any such obligations;
(i) the Borrower or the Investor shall make an assignment for the
benefit of creditors, or admit in writing its inability to pay or
generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of the Borrower or the Investor or of any
substantial part of the assets of the Borrower or the Investor or shall
commence any case or other proceeding relating to the Borrower or the
Investor under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other
proceeding shall be commenced against the Borrower or the Investor and the
Borrower or the Investor shall indicate its approval thereof, consent
thereto or acquiescence therein or such petition or application shall not
have been dismissed within forty-five (45) days following the filing
thereof;
(j) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any Guarantor, any
Lessee or any of their Subsidiaries, the Borrower or the Investor bankrupt
or insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of any
Guarantor, any Lessee or any of their Subsidiaries, the Borrower or the
Investor in an involuntary case under federal bankruptcy laws as now or
hereafter constituted;
29
(k) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than sixty days, whether or not consecutive, any
final judgment against any Guarantor, any Lessee or any of their
Subsidiaries that, with other outstanding final judgments,
undischarged, against any Guarantor, any Lessee or any of their
Subsidiaries exceeds in the aggregate $25,000,000;
(l) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
final judgment against the Borrower or the Investor that, with other
outstanding final judgments, undischarged, against the Borrower or the
Investor exceeds in the aggregate $100,000;
(m) if any of the Operative Agreements shall be cancelled,
terminated, revoked or rescinded, in each case otherwise than in
accordance with the terms thereof or with the express prior written
agreement, consent or approval of the Lenders, or any action at law,
suit or in equity or other legal proceeding to cancel, revoke or
rescind any of the Operative Agreements shall be commenced by or on
behalf of any Guarantor, any Lessee, any of their Subsidiaries, the
Borrower or the Investor party thereto or any of their respective
stockholders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Operative Agreements is illegal,
invalid or unenforceable in accordance with the terms thereof;
(n) any Guarantor, any Lessee or any ERISA Affiliate incurs
any liability to the PBGC or a Guaranteed Pension Plan pursuant to
Title IV of ERISA in an aggregate amount exceeding $25,000,000, or any
Guarantor, any Lessee or any ERISA Affiliate is assessed withdrawal
liability pursuant to Title IV of ERISA by a Multiemployer Plan
requiring aggregate annual payments exceeding $25,000,000, or any of
the following occurs with respect to a Guaranteed Pension Plan: (i) an
ERISA Reportable Event, or a failure to make a required installment or
other payment (within the meaning of ss. 302(f)(1) of ERISA),
provided that the Administrative Agent determines in their reasonable
discretion that such event (A) could be expected to result in liability
of any Guarantor, any Lessee or any of their Subsidiaries to the PBGC
or such Guaranteed Pension Plan in an aggregate amount exceeding
$25,000,000 and (B) could constitute grounds for the termination of
such Guaranteed Pension Plan by the PBGC, for the appointment by the
appropriate United States District Court of a trustee to administer
such Guaranteed Pension Plan or for the imposition of a lien in favor
of such Guaranteed Pension Plan; or (ii) the appointment by a United
States District Court of a trustee to administer such Guaranteed
Pension Plan; or (iii) the institution by the PBGC of proceedings to
terminate such Guaranteed Pension Plan;
(o) any Guarantor, any Lessee or any of their Subsidiaries
shall be enjoined, restrained or in any way prevented by the order of
any Governmental Authority from conducting any material part of its
business and such order shall continue in effect for more than thirty
(30) days and such restraint or enjoinment or similar restriction by
any Governmental Authority would have a Material Adverse Effect;
30
(p) there shall occur the loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter
acquired by any Guarantor, any Lessee or any of their Subsidiaries if
such loss, suspension, revocation or failure to renew would have a
Material Adverse Effect;
(q) an Event of Default shall have occurred under the Kmart
Indemnity such that Kmart shall have the right thereunder to exercise
the rights granted to it pursuant to Sections 3(c)(ii) or Sections
3(c)(iii) thereof in respect of more than two (2) Premises (as such
term is defined therein);
(r) any matured default shall have occurred under the
Revolving Credit Agreement, the New Lease Loan Agreement or any
Financed Lease, whether or not any obligations thereunder have been
accelerated;
(s) a Change of Control shall occur; or
(t) the Company and its Subsidiaries at any time shall not be
in compliance with the Obligor Group Requirement and such failure
continues for thirty (30) days;
(d) The paragraph at the end of Article IX of the Credit Agreement is
hereby deleted in its entirety and the following paragraph is substituted
therefor:
then, and in any such event, (A) if such event is an Event of Default
specified in paragraphs (in), (i) or (j) above, automatically the
Commitments shall immediately terminate and the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this
Agreement and the Notes shall immediately become due and payable, and
(B) if such event is any other Event of Default, either or both of the
following actions may be taken: (i) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the
Borrower declare the Commitments to be terminated forthwith, whereupon
the Commitments shall immediately terminate; and (ii) with the consent
of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and
the Notes to be due and payable forthwith, whereupon the same shall
immediately become due and payable (any of the foregoing occurrences or
actions referred to in clause (A) or (B) above, an "Acceleration").
Except as expressly provided above in this Article IX, presentment,
demand, protest and all other notices of any kind are hereby expressly
waived.
Section 15. Agents (a) Section 10.01 of the Credit Agreement is amended
by inserting the words ", the Documentation Agent" after the words "the
Syndication Agent" where they appear in the second line thereof.
31
(b) Section 10.3 of the Credit Agreement is hereby amended by inserting
a new clause (c) at the end of the first sentence thereof as follows:
(c) responsible in any manner to any of the Lenders for the
recording or filing of any real estate document or financing statement
or for obtaining or maintaining, or failing to obtain or maintain, a
perfected security interest in any collateral in which a security
interest has been granted under any Operative Agreement.
Section 16. Amendment of Commitments.(a) Section 12.01 of the Credit
Agreement is hereby amended by deleting the amount "$250,000,000" where it
appears in clause (ii) of the second sentence thereof and substituting therefor
the number $100,000,000.
(b) Section 12.01 of the Credit Agreement is hereby further amended by
inserting the phrase "or waive an Event of Default under paragraph (d) of
Article IX arising from a failure to comply with Section 11.16 of the Guarantee"
at the end thereof.
Section 17. Applicable Margin/Facility Fee Rate. Schedule 1.01(A) to
the Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor Schedule 1.01(A) attached hereto.
Section 18. Commitments; New Lenders; Departing Lenders. Schedule II to
the Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor Schedule II attached hereto. Each of the financial
institutions that is a party to this Amendment that was not a party to the
Credit Agreement previously (the "New Lenders") is hereby made a party to the
Participation Agreement and the Credit Agreement, and shall have all the rights
and obligations of a "Lender" under the Participation Agreement, the Credit
Agreement and the other Operative Agreements as if it were an original signatory
thereto to the extent of its Commitment. Each of the New Lenders agrees to be
bound by the terms and conditions applicable to a "Lender" set forth in the
Participation Agreement, the Credit Agreement and the other Operative Agreements
as if it were an original signatory thereto. Each of the New Lenders hereby
acknowledges and confirms that it has received a copy of each of the Operative
Agreements and that in becoming a Lender and in making its Commitment and
Revolving Credit Loans under the Credit Agreement, such actions have and will be
made without recourse to, or representation or warranty by, the Administrative
Agent, the Co-Arrangers, the Documentation Agent, the Real Estate Administrative
Agent, the Syndication Agent or any other Lender. The Guarantor, each Lessee and
the Administrative Agent hereby consent to the addition of the New Lenders. On
the date hereof, the New Lenders shall make payments to the Administrative
Agent, who shall distribute such payments to the other Lenders (including the
Departing Lenders) as prepayments of the principal of such other Lenders'
Revolving Credit Loans and Swing Loans, such that, after giving effect to such
payment and distributions, (i) each Lender's outstanding Revolving Credit Loans
(other than SunTrust Bank) shall be equal to the product of (A) $75,000,000
times (B) such Lender's Ratable Share, and (ii) SunTrust Bank's outstanding
Revolving Credit Loans shall be equal to (A) the aggregate outstanding principal
amount of all Revolving Credit Loans on such date minus (B) the aggregate amount
of all other Lenders' Revolving Credit Loans, as calculated pursuant to clause
(i). Such payment shall be made in immediately available funds to
32
such account as the Administrative Agent shall specify to the Lenders. Each of
the financial institutions that was party to the Participation Agreement and the
Credit Agreement but is designated on the signature pages hereto as a "Departing
Lender" hereby acknowledges receipt as of the date hereof of the amounts
distributable to it pursuant to this Section, and in connection therewith each
such Departing Lender's Notes shall hereby be deemed cancelled and such
Departing Lender shall have no further rights or obligations under the Operative
Agreements, except that all claims of the Departing Lenders pertaining to the
representations, warranties, covenants and indemnities of the Borrower, the
Guarantors and the Lessees under the Operative Agreements (without giving effect
to this Amendment) shall survive in accordance with the terms of the Operative
Agreements (without giving effect to this Amendment) to the extent such claims
arose out of events occurring prior to the date hereof.
Section 19. New Guarantors. Each of the entities designated as
"Guarantors" on the signature pages hereto that were not party to the Guarantee
prior to the date hereof hereby agree to become party to the Guarantee and the
Participation Agreement as a Guarantor (each an "Additional Guarantor"). Each
Additional Guarantor agrees that it shall be bound by all terms and provisions
of, and shall be deemed a party to (as if it were an original signatory thereto)
each of the Participation Agreement and the Guarantee. Each Additional Guarantor
hereby acknowledges that it has received copies of the Operative Agreements.
Section 20. Guarantors' Affirmative Covenants. Sections 11.01 through
11.12 of the Guarantee are hereby deleted in their entirety and the following
Sections 11.01 through 11.16 are substituted therefor:
11.01 Punctual Payment. Each Guarantor will, and will cause
each of the Lessees to, duly and punctually pay or cause to be paid
Rent, the Facility Fees and all other amounts provided for in the
Operative Agreements, all in accordance with the terms of the Operative
Agreements. The Guarantors will duly and punctually pay or cause to be
paid the Obligations and all other amounts provided for in this
Guarantee and the other Operative Agreements
11.02 Maintenance of Office. Each of the Guarantors and the
Lessees will maintain its chief executive office at 000 Xxxxxxx Xxxxx,
Xxx Xxxxx, Xxxxxxxx or at such other place in the United States of
America as such Guarantor or Lessee shall designate upon written notice
to the Administrative Agent, where notices, presentations and demands
to or upon such Guarantor or Lessee in respect of the Operative
Agreements to which such Guarantor or Lessee is a party may be given or
made.
11.03 Records and Accounts. Each of the Guarantors and the
Lessees will (a) keep, and cause each of its Subsidiaries to keep, true
and accurate records and books of account in which full, true and
correct entries will be made in accordance with GAAP, (b) maintain
adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its
properties and the properties of its Subsidiaries, contingencies, and
other reserves, and (c) at all times engage Ernst & Young LLP or other
independent
33
certified public accountants satisfactory to the Administrative Agent
as the independent certified public accountants of the Guarantors, the
Lessees and their Subsidiaries and will not permit more than thirty
(30) days to elapse between the cessation of such firm's (or any
successor firm's) engagement as the independent certified public
accountants of the Guarantors, the Lessees and their Subsidiaries and
the appointment in such capacity of a successor firm as shall be
satisfactory to the Administrative Agent.
11.04 Financial Statements, Certificates and Information. The
Guarantors will deliver to each of the Lenders:
(a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Guarantors
and the Lessees, the consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year, and the related consolidated
statement of income and consolidated statement of cash flow for such
year, each setting forth in comparative form the figures for the
previous fiscal year and all such consolidated statements to be in
reasonable detail, prepared in accordance with GAAP, and certified,
without qualification and without an expression of uncertainty as to
the ability of the Company or any of its Subsidiaries to continue as
going concerns, by Ernst & Young LLP or by other independent certified
public accountants satisfactory to the Administrative Agent, together
with a written statement from such accountants to the effect that they
have read a copy of the Operative Agreements, and that, in making the
examination necessary to said certification, they have obtained no
knowledge of any Default or Event of Default, or, if such accountants
shall have obtained knowledge of any then existing Default or Event of
Default they shall disclose in such statement any such Default or Event
of Default; provided that such accountants shall not be liable to the
Lenders for failure to obtain knowledge of any Default or Event of
Default;
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the first three fiscal
quarters of the Guarantors and the Lessees, copies of the unaudited
consolidated balance sheet of the Company and its Subsidiaries as at
the end of such quarter, and the related consolidated statement of
income and consolidated statement of cash flow for the portion of the
Guarantors' and the Lessees' fiscal year then elapsed, all in
reasonable detail and prepared in accordance with GAAP, together with a
certification by the principal financial or accounting officer of the
Company that the information contained in such financial statements
fairly presents the financial position of the Company and its
Subsidiaries on the date thereof (subject to year-end adjustments);
(c) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement
certified by the principal financial or accounting officer of the
Guarantors and the Lessees in substantially
34
the form of Exhibit A hereto (a "Compliance Certificate") and setting
forth in reasonable detail computations evidencing compliance with the
covenants contained in Sections 12.15 through 12.18, the calculation of
the Obligor Group Requirement and (if applicable) reconciliations to
reflect changes in GAAP since the Balance Sheet Date;
(d) contemporaneously with the filing or mailing thereof,
copies of all material of a financial nature filed with the Securities
and Exchange Commission or sent to the stockholders of any of the
Guarantors or Lessees;
(e) from time to time upon request of the Administrative
Agent, projections of the Company and its Subsidiaries updating those
projections delivered to the Lenders and referred to in Section
7.03(d)(iii) of the Participation Agreement or, if applicable, updating
any later such projections delivered in response to a request pursuant
to this Section 11.04(e); and
(f) from time to time such other financial data and
information (including accountants management letters) as the
Administrative Agent or any Lender may reasonably request.
11.05 Notices.
(a) Defaults. Each of the Guarantors and the Lessees will
promptly notify the Administrative Agent and each of the Lenders in
writing of the occurrence of any Default or Event of Default, together
with a reasonably detailed description thereof, and the actions the
Guarantors and the Lessees propose to take with respect thereto. If any
Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting an Event of Default) under
any Operative Agreement or any other note, evidence of indebtedness,
indenture or other obligation to which or with respect to which the
Company or any of its Subsidiaries is a party or obligor, whether as
principal, guarantor, surety or otherwise, the Guarantors and the
Lessees shall forthwith give written notice thereof to the
Administrative Agent and each of the Lenders, describing the notice or
action and the nature of the claimed default.
(b) Environmental Events. The Guarantors and the Lessees will
promptly give notice to the Administrative Agent and each of the
Lenders (i) of any violation of any Environmental Law that any of the
Guarantors, the Lessees or any of their Subsidiaries reports in writing
or is reportable by such Person in writing (or for which any written
report supplemental to any oral report is made) to any Governmental
Authority and (ii) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a notice from any
agency of potential environmental liability, of any Governmental
Authority that could have a Material Adverse Effect.
35
(c) Notice of Litigation and Judgments. Each of the Guarantors
and the Lessees will, and will cause each of its Subsidiaries to, give
notice to the Administrative Agent and each of the Lenders in writing
within fifteen (15) days of becoming aware of any litigation or
proceedings threatened in writing or any pending litigation and
proceedings affecting any of the Guarantors, the Lessees or any of
their Subsidiaries or to which any of the Guarantors, the Lessees or
any of their Subsidiaries is or becomes a party involving an uninsured
claim against any of the Guarantors, the Lessees or any of their
Subsidiaries that could reasonably be expected to have a Material
Adverse Effect on any of the Guarantors, the Lessees or any of their
Subsidiaries and stating the nature and status of such litigation or
proceedings. The Guarantors, the Lessees will, and will cause each of
its Subsidiaries to, give notice to the Administrative Agent and each
of the Lenders, in writing, in form and detail satisfactory to the
Administrative Agent, within ten (10) days of any judgment not covered
by insurance, final or otherwise, against the Guarantors, the Lessees
or any of their Subsidiaries in an amount in excess of $15,000,000.
(d) Notice Regarding Certain Events. The Guarantors and the
Lessees will furnish or cause to be furnished to the Administrative
Agent and the Lenders written notice of (a) promptly after the adoption
thereof, any amendment to the organizational documents of any Guarantor
or Lessee; and (b) promptly, the enactment or adoption of any law which
could reasonably be expected to have a Material Adverse Effect.
11.06 Legal Existence; Maintenance of Properties. Each of the
Guarantors and the Lessees will do or cause to be done all things
necessary to preserve and keep in full force and effect its legal
existence, rights and franchises and those of its Subsidiaries and will
not, and will not cause or permit any of its Subsidiaries to, convert
to a limited liability company or a limited liability partnership. It
(a) will cause all of its properties and those of its Subsidiaries used
or useful in the conduct of its business or the business of its
Subsidiaries to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment, (b) will cause
to be made all necessary repairs, renewals, replacements, betterments
and improvements thereof, all as in the judgment of such Guarantor or
Lessee may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times,
(c) will maintain in full force and effect all patents, trademarks,
trade names, copyrights, licenses, permits and other authorizations
necessary for the ownership and operation of its properties and
business, and (d) will, and will cause each of its Subsidiaries to,
continue to engage primarily in the businesses now conducted by them
and in related businesses; provided that nothing in this Section
11.06 shall prevent any of the Guarantors or the Lessees from
discontinuing the operation and maintenance of any of its properties or
any of those of its Subsidiaries, including the existence of any
Subsidiary of the Company or the conversions of any Subsidiary of the
Company to a limited
36
liability company or limited liability partnership, if such
discontinuance or conversion is, in the judgment of such Guarantor or
Lessee, desirable in the conduct of its or their business and that do
not in the aggregate have a Material Adverse Effect and, with respect
to the conversions of a Lessee or a Guarantor to a limited liability
company or limited liability partnership, simultaneously with such
conversion, such Lessee or Guarantor shall have executed and delivered
to the Administrative Agent all documentation which the Administrative
Agent reasonably determine is necessary to continue such Lessee's or
such Guarantor's obligations in respect of Operative Agreements.
11.07 Insurance. Each of the Guarantors and the Lessees will,
and will cause each of its Subsidiaries to, maintain with financially
sound and reputable insurers insurance with respect to its properties
and business against such casualties and contingencies as shall be in
accordance with the general practices of businesses engaged in similar
activities in similar geographic areas and in amounts, containing such
terms, in such forms and for such periods as may be reasonable and
prudent, including self-insurance to the extent customary, all as
reasonably determined by the Administrative Agent. At the request of
the Administrative Agent, the Company shall deliver from time to time a
summary schedule indicating all insurance then in force with respect to
each of the Guarantors and the Lessees.
11.08 Taxes. Each of the Guarantors and the Lessees will, and
will cause each of its Subsidiaries to, duly pay and discharge, or
cause to be paid and discharged, before the same shall become overdue,
all taxes, assessments and other governmental charges imposed upon it
and its Real Estate, sales and activities, or any part thereof, or upon
the income or profits therefrom, as well as all claims for labor,
materials, or supplies that if unpaid might by law become a Lien or
charge upon any of its property; provided that any such tax,
assessment, charge, levy or claim need not be paid if the validity or
amount thereof shall currently be contested in good faith by
appropriate proceedings and if such Guarantor or Lessee or such
Subsidiary shall have set aside on its books adequate reserves with
respect thereto; and provided further that each of the Guarantors and
the Lessees and each of their Subsidiaries will pay all such taxes,
assessments, charges, levies or claims forthwith upon the commencement
of proceedings to foreclose any Lien that may have attached as security
therefor.
11.09 Inspection of Properties. Each of the Guarantors and the
Lessees shall permit the Lenders, through the Administrative Agent or
any of the Lenders' other designated representatives, to visit and
inspect any of the properties of such Guarantor, Lessee or any of its
Subsidiaries, to examine the books of account of such Guarantor, Lessee
and its Subsidiaries (and to make copies thereof and extracts
therefrom), and to discuss the affairs, finances and accounts of such
Guarantor, Lessee and its Subsidiaries with, and to be advised as to
the same by, its and their officers, all at such reasonable times and
intervals as the
37
Administrative Agent or any Lender may reasonably request. At the
request of the Administrative Agent, but not more frequently than once
a year, the Guarantors and the Lessees and their respective Authorized
Officers shall hold a meeting of the Lenders, at which the Guarantors
and the Lessees will present an analysis of the financial performance
of the Company and its Subsidiaries during the previous Fiscal Year and
a discussion of the expected results of operations for the then current
Fiscal Year.
11.10 Compliance with Laws, Contracts, Licenses, and Permits.
Each of the Guarantors and the Lessees will, and will cause each of its
Subsidiaries to, comply with (a) the applicable laws and regulations
wherever its business is conducted, including all Environmental Laws,
(b) the provisions of its Governing Documents, (c) all agreements and
instruments by which it or any of its properties may be bound and (d)
all applicable decrees, orders, and judgments, where, with respect to
clauses (a), (c) and (d) only, failure to so comply could have a
Material Adverse Effect. If any authorization, consent, approval,
permit or license from any officer, agency or instrumentality of any
government shall become necessary or required in order that any of the
Guarantors, any of the Lessees or any of their Subsidiaries may fulfill
any of its obligations hereunder or any of the other Operative
Agreements to which such Guarantor, such Lessee or such Subsidiary is a
party, such Guarantor, such Lessee will, or (as the case may be) will
cause such Subsidiary to, immediately take or cause to be taken all
reasonable steps within the power of such Guarantor or such Lessee or
such Subsidiary to obtain such authorization, consent, approval, permit
or license and furnish the Administrative Agent and the Lenders with
evidence thereof.
11.11 Employee Benefit Plans. The Guarantors and the Lessees
will (a) promptly upon filing the same with the Department of Labor or
Internal Revenue Service upon request of the Administrative Agent,
furnish to the Administrative Agent a copy of the most recent actuarial
statement required to be submitted under ss. 103(d) of ERISA and
Annual Report, Form 5500, with all required attachments, in respect of
each Guaranteed Pension Plan, (b) promptly upon receipt or dispatch,
furnish to the Administrative Agent any notice, report or demand sent
or received in respect of a Guaranteed Pension Plan under ss. ss. 302,
4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of
a Multiemployer Plan, under ss. ss. 4041A, 4202, 4219, 4242, or 4245 of
ERISA and (c) promptly furnish to the Administrative Agent a copy of
all actuarial statements required to be submitted under all Applicable
Pension Legislation.
11.12 Use of Proceeds. The Borrower and the Lessor will use
the proceeds of the Loans solely for the purposes set forth in Section
7.03(p) of the Participation Agreement.
11.13 Subsequent Credit Terms. The Guarantors shall notify the
Administrative Agent in writing not less than ten (10) Business Days
prior to any
38
Guarantor or Lessee entering into any credit agreement or any amendment
or modification to any existing credit agreement in either case as
otherwise permitted hereunder, pursuant to which any Guarantor or
Lessee agrees to representations, warranties or covenants which are
more restrictive, as determined in the sole discretion of the
Administrative Agent, than the representations, warranties or covenants
hereof (the "More Restrictive Provisions"). Upon the execution of such
new credit agreement, amendment or modification, the corresponding
covenants, terms and conditions of this Guarantee and the Participation
Agreement shall be and shall be deemed to be automatically and
immediately amended to conform with and to include the applicable More
Restrictive Provisions of such new credit agreement, amendment or
modification; provided that the foregoing shall not be applicable to or
be deemed to affect any provision of this Guarantee and the
Participation Agreement if any new credit agreement, amendment or
modification is less restrictive. Each of the Guarantors hereby agrees
promptly to execute and deliver, and to cause each of the Lessees
promptly to execute and deliver, any and all such documents and
instruments and to take all such further actions as the Administrative
Agent may, in its sole discretion, deem necessary or appropriate to
effectuate the provisions of this Section 11.13.
11.14 Subsidiary Guaranties. If, with respect to any of the
Company's Domestic Subsidiaries which are not members of the Obligor
Group, (a) any such Domestic Subsidiary's total assets determined in
accordance with GAAP at the end of any Fiscal Quarter constitute more
than 10% of Consolidated Tangible Net Worth determined at the end of
such Fiscal Quarter or (b) any such Domestic Subsidiary's net income
determined in accordance with GAAP for any rolling four Fiscal Quarter
period exceeds 10% of Consolidated Net Income for such four Fiscal
Quarters, the Company shall cause such Domestic Subsidiary to become a
Guarantor and agree to be bound by the provisions hereof, to execute a
Joinder Agreement and to deliver such legal opinions and other
documents and instruments as the Administrative Agent may request.
11.15 Further Assurances. Each of the Guarantors and the
Lessees will, and will cause each of its Subsidiaries to, cooperate
with the Lenders and the Administrative Agent and execute such further
instruments and documents as the Lenders or the Administrative Agent
shall reasonably request to carry out to their satisfaction the
transactions contemplated by the Operative Agreements.
11.16 Mortgage Recording. Each of the Guarantors that is also
a Lessee will execute and deliver to the Real Estate Administrative
Agent a mortgage or deed of trust, as applicable, in the form of
Exhibit C, and appropriate UCC financing statements (including fixture
filings) for each Property that is leased by such Guarantor, and will
cause each such mortgage or deed of trust to be recorded in the
appropriate recording office(s) in the applicable jurisdictions within
60 days of the Omnibus Amendment Effective Date. Each such Guarantor
will also deliver, or cause to be delivered, to the Real Estate
Administrative Agent within
39
60 days of the Omnibus Amendment Effective Date a title search report
with respect to each Property leased by it indicating that no prior
liens exist with respect to such Property (other than customary
easements and similar liens and encumbrances on title, or liens in
favor of the Lenders, the Real Estate Administrative Agent or the
Borrower).
Section 21. Guarantors' Negative Covenants. Sections 12.01 through
12.21 of the Guarantee are hereby deleted in their entirety and the following
Sections 12.01 through 12.18 are substituted therefor:
12.01 Restrictions on Indebtedness. None of the Guarantors and
the Lessees will, nor will permit any of its Subsidiaries to, create,
incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Lenders and the Agents arising under
any of the Operative Agreements and Indebtedness arising under the
Revolving Credit Agreement and the loan documents referred to therein;
(b) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(c) Indebtedness incurred in connection with the acquisition
after the Omnibus Amendment Effective Date of any CA-Property (and in
any event not more than ninety (90) days from the date of such
acquisition) by such Guarantor, such Lessee or such Subsidiary as
contemplated by Section 12.02(ix);
(d) obligations under or guaranties of Capitalized Leases;
(e) Indebtedness in respect of Hedging Agreements entered into
for hedging purposes only and not for speculation;
(f) Indebtedness existing on the Omnibus Amendment Effective
Date and listed and described on Schedule 12.01(f) hereto including any
extensions or refinancings thereof on substantially similar terms as
the Indebtedness being refinanced and provided there is no increase in
the amount thereof;
(g) unsecured Indebtedness of any of the Company's
Subsidiaries to, or in respect of Obligations of, the Company or
another Subsidiary of the Company consisting of intercompany loans and,
if no Default or Event of Default shall have occurred and be continuing
at the time such Indebtedness is incurred, any other Investments;
(h) unsecured Indebtedness of the Company to, or in respect of
obligations of, a Subsidiary of the Company consisting of intercompany
loans
40
and, if no Default or Event of Default shall have occurred and be
continuing at the time such Indebtedness is incurred, any other
Investments;
(i) Indebtedness of Foreign Subsidiaries (other than
Indebtedness permitted under clause (g) hereof) with an aggregate
principal Dollar Equivalent amount outstanding not to exceed
$30,000,000;
(j) Indebtedness of the Guarantors and the Lessee in respect
of the Operative Agreements and the New Synthetic Lease Facility,
provided, however, that the aggregate amount of Indebtedness permitted
thereunder (i) on and after the Closing Date through October 31, 2002
shall not exceed $100,000,000 and (ii) on and after November 1, 2002
shall not exceed $75,000,000;
(k) Indebtedness in respect of Permitted Joint Venture
Activity, provided that no Default or Event of Default has occurred and
is continuing or would result therefrom;
(l) unsecured Indebtedness of the Company in respect of the
private placement offering of debt securities to be made after the
Omnibus Amendment Effective Date in an aggregate principal amount
outstanding not to exceed $50,000,000 at any time; and
(m) Indebtedness of the Company and its Domestic Subsidiaries
in addition to Indebtedness otherwise permitted by clause (a) to (l)
above with an aggregate principal Dollar Equivalent amount outstanding
not to exceed 20% of Consolidated Tangible Net Worth (determined as of
the last day of the Fiscal Quarter most recently ended), provided that
at the time of incurrence of such Indebtedness no Default or Event of
Default has occurred and is continuing or would result therefrom.
12.02 Restrictions on Liens. None of the Guarantors or Lessees
will, nor will permit any of its Subsidiaries to, (a) create or incur
or suffer to be created or incurred or to exist any Lien upon any of
its property or assets of any character whether now owned or hereafter
acquired, or upon the income or profits therefrom; (b) transfer any of
such property or assets or the income or profits therefrom for the
purpose of subjecting the same to the payment of Indebtedness or
performance of any other obligation in priority to payment of its
general creditors; (c) acquire, or agree to acquire, any property or
assets upon conditional sale or other title retention or purchase money
security agreement, device or arrangement; (d) suffer to exist for a
period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid
might by law or upon bankruptcy or insolvency, or otherwise, be given
any priority whatsoever over its general creditors; or (e) sell,
assign, pledge or otherwise transfer any "receivables" as defined in
clause (g) of the definition of the term "Indebtedness," with or
without recourse; provided that any Lessee, the
41
Company or any of their Subsidiaries may create or incur or suffer to
be created or incurred or to exist:
(i) Liens in favor of such Guarantor or Lessee on all
or part of the assets of Subsidiaries of such Guarantor or
Lessee securing Indebtedness owing by Subsidiaries of such
Guarantor or Lessee to such Guarantor or Lessee;
(ii) Liens to secure taxes, assessments and other
government charges in respect of obligations and Liens to
secure claims for labor, material or supplies, in each case in
respect of obligations not overdue or which are being
contested in good faith and by appropriate proceedings and for
which such Guarantor, such Lessee or such Subsidiary has set
aside on its books adequate reserves with respect thereto;
(iii) deposits or pledges made in connection with, or
to secure payment of, workmen's compensation, unemployment
insurance, old age pensions or other social security
obligations;
(iv) Liens on properties in respect of judgments or
awards that have been in force for less than the applicable
period for taking an appeal so long as execution is not levied
thereunder or in respect of which such Guarantor, such Lessee
or such Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect
of which a stay of execution shall have been obtained pending
such appeal or review;
(v) Liens of carriers, warehousemen, mechanics and
materialmen, and other like Liens, securing obligations
incurred in the ordinary course of business, in respect of
obligations not overdue or which in the aggregate do not have
a Material Adverse Effect;
(vi) encumbrances on Real Estate consisting of
easements, rights of way, zoning restrictions, restrictions on
the use of real property and defects and irregularities in the
title thereto, landlord's or lessor's liens and other minor
Liens, provided that none of such Liens (A) interferes
materially with the use of the property affected in the
ordinary conduct of the business of the Guarantors, the
Lessees and their Subsidiaries, and (B) individually or in the
aggregate have a Material Adverse Effect;
(vii) pledges or deposits made in the ordinary course
of business to secure performance of bids, tenders, contracts
(other than for the repayment of Indebtedness) or leases, not
in excess of the aggregate amount due thereunder, or to secure
statutory obligations, or surety,
42
appeal, indemnity, performance or other similar bonds required
in the ordinary course of business;
(viii) Liens existing on the Omnibus Amendment
Effective Date and listed on Schedule 12.02 hereto, provided
that the principal amount secured thereby is not thereafter
increased and no additional assets become subject to such
Lien;
(ix) purchase money security interests in or purchase
money mortgages on CA-Property acquired after the Omnibus
Amendment Effective Date to secure purchase money Indebtedness
of the type and amount permitted by Section 12.01(c), incurred
in connection with the acquisition of such CA-Property and in
any event not more than ninety (90) days from the date of such
acquisition, which security interests or mortgages cover only
the CA-Property so acquired;
(x) Liens in respect of the interests of lessors
under Capitalized Leases and Synthetic Leases permitted under
this Guarantee securing obligations of the Company or its
Subsidiaries to the lessor under such Capitalized Leases or
such Synthetic Leases;
(xi) Liens on assets of Foreign Subsidiaries securing
Indebtedness permitted under Section 12.01(i);
(xii) Liens granted to the Agents, the Lenders and
the Issuing Bank (each as defined in the Revolving Credit
Agreement) pursuant to Section 16.1 of the Revolving Credit
Agreement; and
(xiii) Liens on assets of the Company and its
Subsidiaries not otherwise permitted by clauses (i) through
(xii) above, so long as any Indebtedness secured thereby is
permitted under the terms of Section 12.01, and the aggregate
fair market value of all property secured by such Liens does
not at any time exceed 5% of Consolidated Tangible Net Worth
(determined as of the last day of the Fiscal Quarter most
recently ended).
12.03 Restrictions on Investments. None of the Guarantors or
the Lessees will, nor will such party permit any of its Subsidiaries
to, make or permit to exist or to remain outstanding any Investment
except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America (or any agency thereof to the extent such obligations
are backed by the full faith and credit of the United States of
America) that mature within one (1) year from the date of purchase by
such Guarantor or such Lessee;
43
(b) demand deposits, certificates of deposit, bank acceptances
and time deposits maturing within 180 days from the date of purchase
thereof of (i) United States banks having total assets in excess of
$1,000,000,000 or (ii) a commercial bank organized under the laws of
any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of
such country, and having total assets in excess of $1,000,000,000,
provided that such bank is acting through a branch or agency located in
the country in which it is organized or another country which is a
member of the OECD;
(c) securities commonly known as "commercial paper"
denominated in Dollars maturing within 180 days from the date of
purchase thereof that at the time of purchase have been rated and the
ratings for which are not less than "P 1" if rated by Moody's, and not
less than "A 1" if rated by S&P;
(d) money market mutual funds denominated in an Optional
Currency in countries in which the Company or any of its Subsidiaries
operates a business provided that (i) each such fund in which the
Company or any of its Subsidiaries makes an Investment has assets of
not less than $50,000,000 and (ii) the proportional Investment in each
such fund by the Company or such Subsidiary does not exceed five
percent (5%) of the aggregate amount of all Investments in such fund;
(e) Investments existing on the Omnibus Amendment Effective
Date and listed on Schedule 12.03 hereto;
(f) Investments consisting of loans and advances to employees
(i) for moving, entertainment, travel and other similar expenses in the
ordinary course of business and (ii) for any other purpose, with such
Investments under this clause (ii) not to exceed $10,000,000 in the
aggregate principal amount at any time outstanding;
(g) trade credit extended on usual and customary terms in the
ordinary course of business;
(h) Investments by the Company in any Subsidiary of the
Company or by any Subsidiary of the Company in the Company or another
Subsidiary of the Company, provided (i) any loans or advances are
unsecured and are evidenced by intercompany notes and (ii) before and
after giving effect to such Investment, the Guarantors or the Lessees
are in compliance with the Obligor Group Requirement;
(i) Acquisitions provided (i) no Default or Event of Default
has occurred and is continuing or would result therefrom, (ii) the
assets or business subject to such Acquisition are in substantially the
same or a similar type of business as the Company and its Subsidiaries,
(iii) the Board of Directors and (if
44
required by applicable law) the shareholders of any Person to be
acquired have approved the terms of the Acquisition, and (iv) the
Company delivers to the Lenders on or before the date on which it or
any of its Subsidiaries agrees to or consummates any Acquisition a
Compliance Certificate and pro forma financial statements, in form and
substance satisfactory to the Administrative Agent, showing that on a
pro forma basis no Default or Event of Default will occur under any of
Section 12.15 through 12.18 or with respect to the Obligor Group
Requirement over the 12 month period following the effective date of
the Acquisition, based on reasonable projections of the financial
performance of the Guarantors or the Lessees;
(j) Investments constituting Permitted Joint Venture Activity,
provided no Default or Event of Default has occurred and is continuing
or would result therefrom;
(k) repurchases of the Company's common stock in accordance
with Section 12.04;
(l) guarantees of any obligations of landlords of a Guarantor
or a Lessee to the extent that the obligations relate to funds arranged
by a Guarantor or a Lessee and used to finance or refinance any stores
of a Guarantor or a Lessee and such funds are intended to be a repaid
through lease payments of a Guarantor or a Lessee; and
(m) Investments in respect of Hedging Agreements entered into
for hedging purposes only and not for speculation.
12.04 Restricted Payments. None of the Guarantors or the
Lessees will, nor will permit any of its Subsidiaries to, make any
Restricted Payments except that, so long as no Default or Event of
Default then exists or would result from such payment and the Company
delivers to the Lenders prior to the date of any Restricted Payment
contemplated under paragraphs (a), (d), (e) or (f) hereof a certificate
in form and substance satisfactory to the Administrative Agent
calculating the Leverage Ratio on a pro forma basis, including the
impact of the contemplated Distribution in the calculation of
Consolidated Total Funded Debt:
(a) The Company may make (i) repurchases of shares of its
common stock at prices not exceeding the then existing market price,
and it may receive shares of its common stock as payment of the
exercise price of options, or as payment of taxes associated with the
exercise of options or the vesting of restricted shares, which such
delivered shares are deemed to be repurchased by the Company at fair
market value (as defined in the Company's stock option plan) on the
date of delivery to the Company and (ii) other Restricted Payments so
long as the aggregate amount paid by the Company with respect to all
such repurchases
45
(including all such deemed repurchases) and other Restricted Payments
does not at any time exceed the Restricted Payment Amount in effect
from time to time;
(b) The Company may engage in stock splits (including reverse
stock splits);
(c) Wholly-owned Subsidiaries may make Distributions to the
Company or another Wholly-owned Subsidiary;
(d) Subsidiaries other than Wholly-owned Subsidiaries may make
Distributions so long as (i) the aggregate amount of Distributions made
by any such Subsidiary to any Person other than the Company or a
Subsidiary of the Company in any Fiscal Year does not exceed 50% of
such Person's pro rata share (based on the percentage of stock or other
equity interests owned by such Person) of such Subsidiary's net income
for such Fiscal Year as determined in accordance with GAAP and (ii) no
later than ten (10) days prior to any such Distribution, the Company
shall have given written notice to the Lenders and the Administrative
Agent thereof, together with calculations demonstrating that such
Distribution complies with this paragraph (d); and
(e) The Company may pay dividends on its preferred stock so
long as the dividend rate on such preferred stock (after taking into
account all other fees and amounts payable on such preferred stock) is
less than the interest rate payable on the Loans.
12.05 Merger, Consolidation, Disposition of Assets and Sale
Leaseback Transactions.
(a) Mergers and Consolidations. None of the Guarantors or the
Lessees will, nor will permit any of its Subsidiaries to, become a
party to any merger, amalgamation or consolidation, except, so long as
no Default or Event of Default shall have occurred and be continuing or
would result therefrom, (i) any Guarantor or Lessee (other than the
Company) may merge or consolidate into another Guarantor or Lessee,
(ii) any Subsidiary of the Company may consolidate or merge into any
Lessee, a Guarantor or any Wholly-owned Subsidiary of a Guarantor or a
Lessee provided a Lessee, a Guarantor or the Wholly-owned Subsidiary is
the surviving corporation of such consolidation or merger, (c) any
Subsidiary of the Company (other than a Lessee or Guarantor) may
consolidate or merge into any other Subsidiary of the Company (other
than a Lessee or Guarantor) and (d) any Guarantor or Lessee (other than
the Company) or Subsidiary of the Company may merge or consolidate into
another Person so long as both before and after giving effect to such
merger or consolidation the Guarantors and the Lessees are in
compliance with the Obligor Group Requirement and (i) the disposition
of the assets of such Borrower or such Subsidiary would have been
permitted under Section 12.02(b) or (ii) (A) the surviving entity,
immediately after giving effect to such merger or consolidation,
46
is or becomes a Lessee or a Guarantor by executing and delivering to
the Administrative Agent a Joinder Agreement and the documents referred
to therein and (B) such transaction, if it had been structured as an
Acquisition by any Guarantor, any Lessee or Subsidiary of the Company,
would not have been prohibited under Section 12.06.
(b) Disposition of Assets. None of the Guarantors or the
Lessees will, nor will such party permit any of its Subsidiaries to,
become a party to or agree to or effect any disposition of assets,
other than:
(i) the sale of inventory, the licensing of
intellectual property and the disposition of obsolete assets,
in each case in the ordinary course of business consistent
with past practices;
(ii) any sale, transfer, assignment or lease of
CA-Property, including without limitation any store closures,
in the ordinary course of business which are no longer
necessary or required in the conduct of such Borrower's or
Subsidiary's business;
(iii) any sale or transfer of any CA-Property owned
by any Guarantor, any Lessee or any of their Subsidiaries in
order then or thereafter to lease such CA-Property or lease
other CA-Property that any Guarantor, any Lessee or any of
their Subsidiaries intends to use for substantially the same
purpose as the property being sold or transferred (a
"sale-leaseback transaction") in the ordinary course of
business and provided that no Default or Event of Default
shall have occurred and be continuing or would result
therefrom;
(iv) any sale, transfer or lease of CA-Property by
the Company to any Subsidiary of the Company or by any
Subsidiary of the Company to the Company or another Subsidiary
of the Company provided before and after giving effect to such
sale, transfer or lease, the Guarantors and the Lessees are in
compliance with the Obligor Group Requirement;
(v) any sale, transfer or lease of CA-Property in the
ordinary course of business which is replaced by substitute
CA-Property;
(vi) any transfers to Kmart of "Premises" pursuant to
the Kmart Indemnity (as such term is defined therein) if and
to the extent that any such transfer does not cause an Event
of Default under paragraph (q) of Article IX of the Credit
Agreement;
(vii) any sale, transfer or lease of property by the
Company or any of its Subsidiaries constituting all or a
portion of a Permitted Joint Venture Activity; and
47
(viii) other dispositions of assets that do not have
a Material Adverse Effect, provided that (i) the aggregate net
book value of the assets to be sold plus the net book value of
all other assets of the Guarantors, the Lessees and their
Subsidiaries sold or otherwise disposed of under this clause
(viii) during the period of time from the Closing Date through
the date of such sale does not, at the time of such sale or
other disposition, exceed 15% of the Consolidated Total Assets
of the Guarantors, the Lessees and their Subsidiaries, (ii)
such assets are sold or otherwise disposed of in an arm's
length transaction for fair market value (after giving effect
to all tax benefits, if any, associated with such sale or
other disposition), (iii) no Default or an Event of Default
exists or would result from such sale and (iv) before and
after giving effect to such disposition, the Guarantors and
the Lessees are in compliance with the Obligor Group
Requirement.
12.06 Acquisitions. None of the Guarantors or the Lessees
will, nor will permit any of its Subsidiaries to, enter into any stock
or asset acquisitions (other than the acquisition of assets in the
ordinary course of such Person's business, and Acquisitions permitted
under Section 12.03(i) or become or agree to become a general or
limited partner, joint venturer or member in any partnership, joint
venture or limited liability company, as the case may be, provided
that, so long as no Default or Event of Default shall have occurred and
be continuing or would result therefrom, the Company or any of its
Subsidiaries may own or create (a) any Subsidiary so long as both
before and after giving effect thereto the Guarantors and the Lessees
are in compliance with the Obligor Group Requirement or (b) any Joint
Venture so long as any Investment with respect thereto would constitute
a Permitted Joint Venture Activity.
12.07 Compliance with Environmental Laws. None of the
Guarantors or the Lessees will, nor will permit any of its Subsidiaries
to, (a) use any of the Real Estate or any portion thereof for the
handling, processing, storage or disposal of Hazardous Substances, (b)
cause or permit to be located on any of the Real Estate any underground
tank or other underground storage receptacle for Hazardous Substances,
(c) generate any Hazardous Substances on any of the Real Estate, (d)
conduct any activity at any Real Estate or use any Real Estate in any
manner so as to cause a release (i.e., releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping) or threatened release of Hazardous
Substances on, upon or into the Real Estate or (e) otherwise conduct
any activity at any Real Estate or use any Real Estate in any manner
that would violate any Environmental Law or bring such Real Estate in
violation of any Environmental Law.
12.08 Modifications of Other Documents. None of the Guarantors
or the Lessees will, nor will permit any of its Subsidiaries to, permit
or otherwise consent to any amendment to or modification of any of the
Kmart Agreements,
48
the Credit Agreement, the Guarantee, the Participation Agreement, any
Financed Lease or any other Operative Agreement (as defined in the
Credit Agreement), the New Lease Loan Agreement, the New Lease
Guaranty, the New Master Agreement, or any other Operative Agreement
(as defined in the New Master Agreement) which could reasonably be
expected to have a Material Adverse Effect, which would have the effect
of materially increasing the obligations of or burdens on the Borrowers
or any of their Subsidiaries thereunder or which would have the effect
of shortening or deleting any notice or cure period provided for
therein.
12.09 Employee Benefit Plans. None of the Guarantors, the
Lessees nor any ERISA Affiliate will:
(a) engage in any "prohibited transaction" within the meaning
of ss. 406 of ERISA or ss. 4975 of the Code which could result in a
material liability for any of the Guarantors, the Lessees or any of
their Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in ss. 302 of
ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of any of the Guarantors, the Lessees or any of their
Subsidiaries pursuant to ss. 302(f) or ss. 4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances
requiring the posting of security pursuant to ss. 307 of ERISA or ss.
401(a)(29) of the Code; or
(e) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of ss. 4001 of
ERISA) of all Guaranteed Pension Plans exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose the
benefit liabilities and assets of any such Plan with assets in excess
of benefit liabilities; or
(f) permit or take any action which would contravene any
Applicable Pension Legislation.
12.10. Business Activities. None of the Guarantors or the
Lessees will, nor will permit any of its Subsidiaries to, engage
directly or indirectly (whether through Subsidiaries or otherwise) in
any type of business other than (a) with respect to the Guarantors and
the Lessees, the businesses conducted by them on the effective date of
the Omnibus Amendment, substantially as conducted and operated by such
Person as of such date and (b) with respect to any Subsidiary of a
Guarantor or a Lessee, substantially as conducted and operated by a
Guarantor
49
or a Lessee on the effective date of the Omnibus Amendment or in
businesses reasonably incidental and complementary thereto.
12.11 Fiscal Year. None of the Guarantors or the Lessees will,
nor will such party permit any of its Subsidiaries to, change its
Fiscal Quarter or change its Fiscal Year.
12.12. Transactions with Affiliates. None of the Guarantors or
the Lessees will, nor will such party permit any of its Subsidiaries
to, engage in any transaction with any Affiliate (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services
to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such Affiliate or, to
the knowledge of any of the Guarantors and the Lessees, any
corporation, partnership, trust or other entity in which any such
Affiliate has a substantial interest or is an officer, director,
trustee or partner, on terms more favorable to such Person than would
have been obtainable on an arm's-length basis in the ordinary course of
business and provided such transaction is not otherwise prohibited by
the Operative Agreements.
12.13 Changes in Governing Documents. None of the Guarantors
or the Lessees will, nor will permit any of its Subsidiaries to, amend
in any respect its Governing Documents in the event such change would
be adverse to the Lenders.
12.14. Inconsistent Agreements. Each of the Guarantors and the
Lessees shall not, and shall not permit any of its Subsidiaries to,
enter into or become or remain subject to any restriction on the
ability of such Guarantor, such Lessee or such Subsidiary to make
dividends or distributions in cash or kind to such Guarantor, such
Lessee or such Subsidiary, to make loans, advances or other payments of
whatsoever nature to such Guarantor, such Lessee or such Subsidiary, or
to make transfers or distributions of all or any part of its assets to
such Guarantor, such Lessee or such Subsidiary either in its Governing
Documents or in any agreement or contract to which it is a party (other
than restrictions in this Guarantee, the other Operating Agreements,
the New Master Agreement and the Revolving Credit Agreement), nor shall
any of them enter into any indenture, agreement, instrument or other
arrangement which, (a) directly or indirectly prohibits or restrains,
or has the effect of prohibiting or restraining, or could reasonably be
expected to impose materially adverse conditions upon, the incurrence
of the Obligations under the Operating Agreements, any provisions of
the Operative Agreements or the amending of any of the Operative
Agreements, (b) contains any provision which would be violated or
breached by the making of Loans to the Borrower or any Lessee, the
incurrence of Indebtedness by any Guarantor or Lessee hereunder, or by
the performance by any Guarantor or Lessee or any of its Subsidiaries
of any of its obligations under any Operative Agreement or (c) directly
or indirectly prohibits any of the Guarantors or the Lessees or any
50
of its Subsidiaries from creating, assuming or incurring any Lien upon
its properties, revenues or assets or those of any of its Subsidiaries
whether now owned or hereafter acquired, other than (i) restrictions on
specific assets which assets are the subject of purchase money security
interests to the extent permitted under Section 12.02, (ii) customary
anti-assignment provisions contained in leases and licensing agreements
entered into by such Guarantor, such Lessee or such Subsidiary in the
ordinary course of its business, and (iii) restrictions in the
Revolving Credit Agreement, the other Loan Documents (as defined in the
Revolving Credit Agreement), this Guarantee and the New Master
Agreement.
12.15. Fixed Charge Coverage Ratio. The Guarantors and the
Lessees will not permit the Fixed Charge Coverage Ratio for any Fiscal
Quarter ending during any period described in the table set forth below
to be less than the ratio set forth opposite such period in such table:
Period Ratio
------ -----
FQ4 2001 - FQ4 2002 1.6:1.0
FQ1 2003 - thereafter 1.7:1.0
12.16. Leverage Ratio. The Guarantors and the Lessees will not
permit the Leverage Ratio at the end of any Fiscal Quarter to exceed
1.5:1.0.
12.17. Consolidated Tangible Net Worth. The Guarantors and the
Lessees will not permit Consolidated Tangible Net Worth to be less than
the sum of (a) $800,000,000 plus, (b) on a cumulative basis, fifty
percent (50%) of positive Consolidated Net Income for each Fiscal Year
subsequent to the Omnibus Amendment Effective Date plus (c) one hundred
percent (100%) of the proceeds of any sale by the Guarantors and the
Lessees of (i) equity securities issued by any Guarantor or any Lessee
or (ii) warrants or subscription rights for equity securities issued by
any Guarantor or Lessee.
12.18. Capital Expenditures. The Guarantors and the Lessees
will not make or permit any Subsidiary of a Guarantor or a Lessee to
make, Capital Expenditures in any Fiscal Year described in the table
below that exceed, in the aggregate the amount set forth opposite such
Fiscal Year in the table below:
Fiscal Year Amount
----------- ------
Fiscal Year 2002 $150,000,000
Fiscal Year 2003 $158,000,000
Fiscal Year 2004 $148,000,000
Fiscal Year 2005 $139,000,000
provided, however, that (a) in addition to the amounts described above,
the Guarantors and the Lessees may increase Capital Expenditures during
any Fiscal Year described in the table above by an amount equal to
twenty-five percent (25%) of Consolidated Excess Cash Flow for the
immediately preceding Fiscal Year and (b) if during any Fiscal Year the
amount of Capital Expenditures
51
permitted under the table above and clause (a) hereof (the
"Permitted Amount") for that Fiscal Year is not so utilized, the
lesser of (i) one hundred percent (100%) of such unutilized amount
and (ii) fifty percent (50%) of the Permitted Amount for that
Fiscal Year may be utilized in the next succeeding Fiscal Year
(prior to the Permitted Amount for such succeeding Fiscal Year
being used) but not in any subsequent Fiscal Year.
Section 22. Grant of Security Interest. A new Article XXVI of the
Guarantee is hereby inserted immediately after Article XXV of the Guarantee as
follows:
ARTICLE XXVI. Granting Clause. In order to secure the
obligations of the Guarantors under this Guarantee and each other
Operative Agreement, each of the Guarantors that is also a Lessee, as
grantor, hereby (i) grants, mortgages and warrants to the Real Estate
Administrative Agent for the benefit of the Lenders, as mortgagee or
beneficiary and secured party, or any successor thereto, a first and
paramount Lien on such Guarantor's interest in each Property in which
such Guarantor has an interest, (ii) represents that the Real Estate
Administrative Agent shall have, as a result of such determination, all
of the rights, powers and remedies of a mortgagee, deed of trust
beneficiary or secured party available under applicable law to take
possession of and sell (whether by foreclosure or otherwise) such
Guarantor's interest in any such Property. The effective date of such
mortgage, security deed or deed of trust shall be the effective date of
this Guarantee.
Section 23. Notes. The Notes issued by the Borrower on the Effective
Date to each of the Lenders (including any Departing Lender) (the "Original
Notes") shall be replaced with Tranche A Note and Tranche B Note issued by the
Borrower to the Administrative Agent for the benefit of the Lenders (including
the New Lenders); upon such replacement, such Original Notes shall be deemed to
be cancelled. Any reference to the Notes in the Operative Agreements shall be
deemed to refer to such replacement Notes.
Section 24. Guarantee; Representations. The Guarantors hereby affirm
their obligations under the Guarantee after giving effect to this Amendment.
Each Guarantor and each Lessee hereby represents and warrants that, after giving
effect to this Amendment, (i) no Lease Event of Default, Event of Default, Lease
Default or Default has occurred and is continuing or will result from this
Amendment, (ii) there shall not have occurred any event that could reasonably be
expected to have a Material Adverse Effect since the Balance Sheet Date, and
(iii) each representation and warranty of each Guarantor and each Lessee
contained in the Participation Agreement and the other Operative Agreements is
true and correct in all material respects on the date hereof as though made on
and as of the date hereof, except to the extent such representations or
warranties relate solely to an earlier date, in which case such representations
and warranties shall have been true and correct in all material respects on and
as of such earlier date.
Section 25. Conditions. The effectiveness of this Amendment shall be
conditioned upon the receipt by the Administrative Agent of the following
documents, each of which shall be satisfactory in form and substance to the
Administrative Agent: (i) the replacement Notes
52
referred to in Section 23 of this Amendment executed by the Borrower; (ii) a
certificate of the Secretary or an Assistant Secretary of each Guarantor and
each Lessee attaching to it and certifying as to (A) the Board of Directors' (or
appropriate committee's) resolution duly authorizing the execution, delivery and
performance by it of this Amendment, (B) the incumbency and signatures of
persons authorized to execute and deliver this Amendment on its behalf and (C)
its articles of incorporation and bylaws; (iii) the opinions of in-house counsel
to the Lessees and the Guarantors and Xxxxxxxxx Xxxxxx PLLC, substantially in
the form set forth in Exhibit A hereto, and (iv) receipt by the Departing
Lenders of the prepayment amounts of Revolving Credit Loans and Swing Loans
described in Section 18 hereof, together with the payment of all costs, expenses
and fees of the Departing Lenders in accordance with the Operative Agreements
(including their pro rata share of the Facility Fee due June 2002).
Section 26. Miscellaneous. This Amendment shall be governed by, and
construed in accordance with, the laws of the state of New York. This Amendment
may be executed by the parties hereto and separate counterparts, (including by
facsimile), each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one in the same agreement.
The Operative Agreements, as amended hereby, remain in full force and effect and
are hereby ratified by each of the parties hereto. Any reference to any
Operative Agreement from and after the date hereof shall be deemed to refer to
such Operative Agreements as amended hereby, unless otherwise expressly stated.
The Company hereby agrees to promptly pay, or reimburse the Administrative Agent
and the Lenders for all costs and expenses, including reasonable legal fees and
disbursements, incurred by such Person in connection with this Amendment.
Section 27. Instruction to Owner Trustee. The undersigned Investor,
being the sole Investor under the Trust Agreement, by executing its counterpart
of this Amendment hereby authorizes and instructs the Owner Trustee to execute
and deliver this Amendment pursuant to Section 4.2 of the Trust Agreement. The
undersigned Investor hereby certifies that it has reviewed and approved of this
Amendment, and this instruction and such action by the Owner Trustee pursuant to
this instruction are not contrary to any obligation of the Owner Trustee, and
are consistent with, permitted by and in compliance with each of the Operative
Agreements and any applicable law. In order to induce the Owner Trustee to take
the foregoing actions, the Investor hereby agrees to indemnify Wilmington Trust
Company, its directors, officers, employees, and agents (each, an "Indemnitee")
for, and agrees to hold each Indemnitee harmless against, any liability, loss or
expense (including, without limitation, legal and other professional fees and
expenses) incurred by an Indemnitee in connection with or arising out of the
taking by Wilmington Trust Company, as Owner Trustee, of the foregoing actions.
In addition, the undersigned Lessees hereby consent to the taking by the Owner
Trustee of the foregoing actions.
53
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the year first above
written.
BORDERS GROUP, INC., as a Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Chief
Financial Officer
BORDERS, INC., as a Lessee and a Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
XXXXXX BOOK COMPANY, INC., as a Lessee
and a Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
WALDENBOOKS PROPERTIES, INC., as a
Lessee and a Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
S-1
BORDERS PROPERTIES, INC., as a Lessee and a
Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
PLANET MUSIC, INC., as a Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
BORDERS ONLINE, LLC., as a Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
BORDERS OUTLET, INC., as a Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
BORDERS FULFILLMENT, INC., as a Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
S-2
THE LIBRARY, LTD., as a Guarantor
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
S-3
BORDERS ONLINE, INC., as a Guarantor
By: /S/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name Printed: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
S-4
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner
Trustee
By: ________________________________________
Name Printed: ______________________________
Title: _____________________________________
S-5
XXX PROJECT FUNDING CORP. I
By: ________________________________________
Name Printed: ______________________________
Title: _____________________________________
S-6
SUNTRUST BANK, as Co-Arranger,
Documentation Agent, Administrative Agent
and a Lender
By: ________________________________________
Name Printed: ______________________________
Title: _____________________________________
S-7
FLEET NATIONAL BANK, as Co-Arranger,
Syndication Agent, and a Lender
By: ________________________________________
Name Printed: ______________________________
Title: _____________________________________
S-8
PNC BANK NATIONAL ASSOCIATION, as
former Administrative Agent and as a Lender
By: ________________________________________
Name Printed: ______________________________
Title: _____________________________________
S-9
BANK ONE, NA, as former Syndication Agent
and as a Departing Lender
By: ________________________________________
Name Printed: ______________________________
Title: _____________________________________
S-10
DEUTSCHE BANK TRUST COMPANY AMERICAS, as
former Real Estate Administrative Agent and
as a Departing Lender
By: ________________________________________
Name Printed: ______________________________
Title: _____________________________________
S-11
MIZUHO CORPORATE BANK, LIMITED, as a
Departing Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-12
KEYBANK, NATIONAL ASSOCIATION, as a
Departing Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-13
COMERICA BANK, as a Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-14
XX XXXXXX CHASE BANK, as a Departing
Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-15
UNION BANK OF CALIFORNIA, N.A., as a
Departing Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-16
BNP PARIBAS, as a Departing Lender
By:_______________________________
Name Printed:_____________________
Title:____________________________
S-17
HIBERNIA NATIONAL BANK, as a Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-18
THE NORTHERN TRUST COMPANY, as a
Departing Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
X-00
XXX XXXX XX XXX XXXX, as a Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-20
U.S. BANK NATIONAL ASSOCIATION, as
a Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-21
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Departing Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-22
FIRST HAWAIIAN BANK, as a Departing
Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
X-00
XXXX XX XXXXXXXX, as a Departing Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-24
WACHOVIA BANK, NATIONAL
ASSOCIATION, as a Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
X-00
XXXXXXXX XXXX XXXX, as a New Lender
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-26
LORD SECURITIES, INC., AS INVESTOR
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
S-27
SCHEDULE 1.01(A)
Euro-Rate Margin, Base Rate Margin, Facility Fee Rate
For each period commencing on an Adjustment Date through the date
immediately preceding the next Adjustment Date (each a "Rate Adjustment
Period"), the Base Rate Margin, Euro-Rate Margin and Facility Fee Rate shall be
the applicable margin set forth below with respect to the Fixed Charge Coverage
Ratio, as determined for the Reference Period of the Guarantors, the Lessees and
their Subsidiaries ending with the Fiscal Quarter ended immediately prior to the
applicable Rate Adjustment Period.
Fixed Charge Base Rate Euro-Rate Facility
Level Coverage Ratio Margin Margin Fee Rate
----- -------------- ------ ------ --------
I Greater than or equal 0% 0.950% 0.175%
to 2.25:1.00
II Less than 2.25:1.00 0% 1.175% 0.200%
but greater than or
equal to 2.00:1.00
III Less than 2.00:1.00 0% 1.375% 0.250%
but greater than or
equal to 1.75:1.00
IV less than 1.75:1.00 0% 1.500% 0.375%
Notwithstanding the foregoing, (a) for the Revolving Credit Loans
outstanding and the Facility Fee payable during the period commencing on the
Omnibus Amendment Effective Date through the date immediately preceding the
first Adjustment Date to occur after the date that is six months after the
Omnibus Amendment Effective Date, the Base Rate Margin, Euro-Rate Margin and
Facility Fee Rate shall be the applicable margin set forth in Level III above,
and (b) if the Guarantors fail to deliver any Compliance Certificate pursuant to
Section 11.04(c) of the Guarantee then, for the period commencing on the next
Adjustment Date to occur subsequent to such failure through the date immediately
following the date on which such Compliance Certificate is delivered, the Base
Rate Margin, Euro-Rate Margin and Facility Fee Rate shall be the highest
applicable margin set forth above.
SCHEDULE II
Commitments of Lenders
Amount of
Name of Lender Address for Notices Commitment Ratable Share(1)
-------------- ------------------- ---------- ----------------
SunTrust Bank 000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000 $39,000,000(2)
Attention: Xxxxxxxx Xxxxx $14,000,000(3) 18.6667%
Fleet National Bank $5,000,000 6.6667%
PNC Bank $13,000,000 17.3333%
Comerica Bank $5,000,000 6.6667%
Hibernia National Bank $5,000,000 6.6667%
The Bank of New York $5,000,000 6.6667%
US Bank $10,000,000 13.3333%
Wachovia Bank $13,000,000 17.3333%
National City Bank $5,000,000 6.6667%
(1) Ratable Share is calculated as of the date that the aggregate outstanding
principal amount of all Revolving Credit Loans shall be reduced to
$75,000,000.
(2) SunTrust Commitment prior to the aggregate outstanding principal amount of
all Revolving Credit Loans being reduced to $75,000,000.
(3) SunTrust Commitment on and after the date that the aggregate outstanding
principal amount of all Revolving Credit Loans is reduced to $75,000,000.
