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EXHIBIT 10.18
FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
PETsMART, INC.,
CERTAIN LENDERS
AND
NATIONSBANK, N.A.
as Administrative Lender
DATED AS OF APRIL 16, 1999
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TABLE OF CONTENTS
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Page
ARTICLE I
DEFINITIONS
Section 1.1 Definitions ........................................... 1
Section 1.2 Accounting and Other Terms ............................ 15
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
Section 2.1 Advances .............................................. 16
Section 2.2 Making Advances ....................................... 17
Section 2.3 Fees .................................................. 19
Section 2.4 Reduction of Commitment ............................... 20
Section 2.5 Prepayment and Repayment of Advances .................. 20
Section 2.6 Interest on Advances .................................. 21
Section 2.7 Computations and Manner of Payments ................... 22
Section 2.8 Yield Protection ...................................... 23
Section 2.9 Reimbursement ......................................... 23
Section 2.10 LIBOR Lending Offices ................................. 23
Section 2.11 Calculation of LIBOR Rate ............................. 24
ARTICLE III
LETTERS OF CREDIT
Section 3.1 Letter of Credit Commitment; Reimbursement ............ 24
Section 3.2 Standard of Care ...................................... 25
Section 3.3 Expenses of the Issuing Bank .......................... 25
Section 3.4 Obligations of the Company Absolute ................... 26
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness ................. 26
Section 4.2 Conditions Precedent to All Advances .................. 28
Section 4.3 Conditions Precedent to Issuance of Letters of Credit . 00
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XXXXXXXXXXXXXXX AND WARRANTIES
Section 5.1 Organization and Qualification ....................... 29
Section 5.2 Due Authorization; Validity .......................... 30
Section 5.3 Conflicting Agreements and Other Matters ............. 30
Section 5.4 Financial Statements ................................. 30
Section 5.5 Litigation ........................................... 30
Section 5.6 Compliance With Applicable Laws Regulating the
Incurrence of Indebtedness ......................... 31
Section 5.7 Licenses, Title to Properties, and Related Matters ... 31
Section 5.8 Outstanding Indebtedness ............................. 31
Section 5.9 Taxes ................................................ 31
Section 5.10 ERISA ................................................ 31
Section 5.11 Environmental Laws ................................... 32
Section 5.12 Disclosure ........................................... 32
Section 5.13 Year 2000 ............................................ 32
ARTICLE VI
COVENANTS
Section 6.1 Financial Covenants .................................. 33
Section 6.2 Indebtedness ......................................... 34
Section 6.3 Liens ................................................ 34
Section 6.4 Licenses and Material Agreements ..................... 34
Section 6.5 Liquidation, Dispositions of Assets, Merger,
Consolidation ...................................... 34
Section 6.6 Dividends ............................................ 35
Section 6.7 Investments .......................................... 35
Section 6.8 Acquisitions ......................................... 36
Section 6.9 Business ............................................. 36
Section 6.10 Compliance with Applicable Laws ...................... 37
Section 6.11 Insurance ............................................ 37
Section 6.12 Inspection Rights .................................... 37
Section 6.13 Records and Books of Account; Changes in GAAP ........ 37
Section 6.14 Reporting Requirements ............................... 37
Section 6.15 Use of Proceeds ...................................... 39
Section 6.16 Transactions with Affiliates ......................... 39
Section 6.17 Environmental Law Compliance ......................... 39
Section 6.18 Indirect Foreign Subsidiaries ........................ 40
Section 6.19 Year 2000 ............................................ 40
ARTICLE VII
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EVENTS OF DEFAULT
Section 7.1 Events of Default ......................................... 40
Section 7.2 Remedies Upon Default ..................................... 43
Section 7.3 Cumulative Rights ......................................... 43
Section 7.4 Waivers ................................................... 43
Section 7.5 Expenditures .............................................. 44
Section 7.6 Control ................................................... 44
ARTICLE VIII
THE ADMINISTRATIVE LENDER
Section 8.1 Authorization and Action .................................. 44
Section 8.2 Administrative Lender's Reliance, Etc ..................... 45
Section 8.3 NationsBank, N.A. dba Bank of America, National
Association and Affiliates .............................. 45
Section 8.4 Lender Credit Decision .................................... 45
Section 8.5 Indemnification by Lenders ................................ 45
Section 8.6 Successor Administrative Lender ........................... 46
ARTICLE IX
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate ...................... 46
Section 9.2 Illegality ................................................ 47
Section 9.3 Increased Costs ........................................... 47
Section 9.4 Base Rate Advances Rather than LIBOR Advances ............. 48
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendments and Waivers .................................... 49
Section 10.2 Notices ................................................... 49
Section 10.3 Parties in Interest ....................................... 50
Section 10.4 Assignments and Participations ............................ 50
Section 10.5 Sharing of Payments ....................................... 52
Section 10.6 Right of Set off .......................................... 52
Section 10.7 Costs, Expenses, and Taxes ................................ 52
SECTION 10.8 INDEMNIFICATION BY COMPANY ................................ 54
Section 10.9 Rate Provision ............................................ 55
Section 10.10 Severability .............................................. 55
Section 10.11 Exceptions to Covenants ................................... 55
Section 10.12 Counterparts .............................................. 55
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Section 10.13. No Novation ............................................... 56
Section 10.14. Purchase by Lenders ....................................... 56
Section 10.15. GOVERNING LAW; WAIVER OF JURY TRIAL ....................... 56
SECTION 10.16. ENTIRE AGREEMENT .......................................... 57
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FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT
THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT is dated as of April
16, 1999, among PETsMART, Inc., a Delaware corporation (the "Company"), the
Lenders from time to time party hereto, and NationsBank, N.A., a national
banking association, individually and as Administrative Lender (in such latter
capacity, the "Administrative Lender").
WITNESSETH:
The Company, certain of the Lenders (the "Prior Lenders") and the
Administrative Lender are parties to that certain Third Amended and Restated
Credit Agreement, dated as of April 18, 1997, as amended by that certain First
Amendment to Third Amended and Restated Credit Agreement, dated effective as of
August 6, 1997, that certain Second Amendment to Third Amended and Restated
Credit Agreement, dated as of October 29, 1997, that certain Third Amendment to
Third Amended and Restated Credit Agreement, dated as of July 31, 1998 and that
certain Fourth Amendment to Third and Restated Credit Agreement and Consent and
Waiver dated as of March 31, 1999 (said Third Amended and Restated Credit
Agreement, as amended, the "Prior Credit Agreement").
The Company and the Lenders desire to amend and restate the Prior
Credit Agreement in its entirety to, among other things, amend certain covenants
therein and extend the maturity of the Commitment.
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
parties hereto agree that the Prior Credit Agreement shall be amended and
restated in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, the following
terms have the respective meanings indicated below (such meanings to be
applicable equally to both the singular and plural forms of such terms):
"Acquisition" shall mean any transaction pursuant to which the Company
or any Subsidiary, (i) whether by means of purchase or other acquisition of
stock or other securities or other equity participation or interest, (A)
acquires more than 50% of the equity interest in any Person pursuant to a
solicitation by the Company or such Subsidiary of tenders of equity securities
of such Person, or through one or more negotiated block, market, private or
other transactions not involving a tender offer, or a combination of any of the
foregoing, (B) makes any corporation a Subsidiary, or causes any corporation,
other than a Subsidiary, to be merged into the Company or any Subsidiary, or
agrees to purchase all or substantially all of the assets of any corporation,
pursuant to a merger, purchase of assets or other reorganization providing for
the delivery or issuance to the holders of such corporation's then outstanding
securities, in exchange for such securities, of cash or securities of the
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Company or any Subsidiary, or any combination thereof, or (ii) purchases all or
substantially all of the business or assets of any Person or of any operating
division of any Person.
"Acquisition Consideration" shall mean the consideration given by the
Company or any Subsidiary for an Acquisition, including but not limited to the
fair market value of any cash, property, stock or services given, and the amount
of any Indebtedness assumed.
"Acquisition Subsidiary" shall mean any Subsidiary (i) formed solely
for the purpose of consummating an Acquisition, (ii) capitalized with the
minimum requirements of Law, and (iii) which is merged out of existence
immediately upon the consummation of the applicable Acquisition.
"Advance" means an advance made by a Lender to the Company pursuant to
Section 2.1 hereof, including, without limitation any Refinancing Advance.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with another Person.
"Administrative Lender" means NationsBank, N.A., a national banking
association, in its capacity as Administrative Lender hereunder, or any
successor Administrative Lender appointed pursuant to Section 8.6 hereof.
"Administrative Lender Fee Letter" shall have the meaning given to such
term in Section 2.3(b) hereof.
"Agreement" means this Fourth Amended and Restated Credit Agreement, as
hereafter amended, modified, or supplemented in accordance with its terms.
"Applicable Law" means (i) in respect of any Person, all provisions of
constitutions, statutes, laws, ordinances, rules, regulations and orders of
governmental bodies, or regulatory agencies applicable to such Person, and all
orders and decrees of all courts and arbitrators in proceedings or actions to
which the Person in question is a party and (ii) in respect of contracts made or
performed in the State of Texas, "Applicable Law" shall also mean the laws of
the United States of America, including, without limiting the foregoing, 12 USC
Sections 85 and 86, as amended to the date hereof and as the same may be amended
at any time and from time to time hereafter, and any other statute of the United
States of America now or at any time hereafter prescribing the maximum rates of
interest on loans and extensions of credit, and the laws of the State of Texas,
including, without limitations, Articles 5069-1H, Title 79, Revised Civil
Statutes of Texas, 1925, as amended, and if said Article 5069-1H is not
applicable, Article 5069-1D, Title 79, Revised Civil Statutes of Texas, 1925, as
amended, and any other statute of the State of Texas now or at any time
hereafter prescribing maximum rates of interest on loans and extensions of
credit, provided however, that the parties hereto agree that the provisions of
Chapter 346 of Texas Finance Code, as amended, shall not apply to this Agreement
or the Advances hereunder.
"Applicable Margin" shall mean the following per annum percentages,
applicable in the following situations:
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Applicability LIBOR Margin Base Rate Margin
(i) If the Fixed Charges Coverage Ratio is equal to or greater 1.000% 0.000%
than 2.00 to 1
(ii) If the Fixed Charges Coverage Ratio is less than 2.00 to 1 but 1.250% 0.000%
is equal to or greater than 1.75 to 1
(iii) If the Fixed Charges Coverage Ratio is less than 1.75 to 1, 1.500% 0.000%
but is equal to or greater than 1.50 to 1
(iv) If the Fixed Charges Coverage Ratio is less than 1.50 to 1, 1.750% 0.250%
but is equal to or greater than 1.25 to 1
(iii) If the Fixed Charges Coverage Ratio is less than 1.25 to 1 2.000% 0.500%
The Applicable Margin payable by the Company on the Advances outstanding
hereunder shall be subject to reduction or increase, as applicable and as set
forth in the table above, on a quarterly basis according to the Fixed Charges
Coverage Ratio; provided, that each adjustment in the Applicable Margin shall be
effective as of the fifth day following the date of receipt by the
Administrative Lender of the financial statements required pursuant to Section
6.14(a) or 6.14(b) hereof, as appropriate. If financial statements of the
Company (and corresponding Quarterly Compliance Certificate setting forth the
Fixed Charges Coverage Ratio) are not received by the Administrative Lender by
the fifth day following the date required pursuant to Section 6.14(a) or 6.14(b)
hereof, as appropriate, the Applicable Margin shall be determined as if the
Fixed Charges Coverage Ratio is less than 1.25 to 1 until such time as such
financial statements and Quarterly Compliance Certificate are received. The
Applicable Margin from and including the date hereof to the date of the initial
adjustment to be made therein as provided above shall be 1.750%. At all other
times the Applicable Margin shall be equal to the applicable LIBOR Margin set
forth above in the column designated LIBOR Margin.
"Art. 1.04" shall have the meaning given to such term in the definition
herein of "Applicable Law".
"Auditor" means Price Waterhouse, or other independent certified public
accountants selected by the Company and reasonably acceptable to the
Administrative Lender.
"Base Rate" means, for any day, a per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate on such day, or (b) the Applicable Margin
plus the higher of (i) the sum of (x) 0.50% plus (y) the Federal Funds Rate on
such day or (ii) the Prime Rate on such day. The Base Rate shall be adjusted
automatically without notice to the Company as of the opening of business on the
effective date of each change in the Prime Rate or Federal Funds Rate, as the
case may be, to account for such change.
"Base Rate Advance" means any Advance bearing interest based upon the
Base Rate.
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"Business Day" means a day of the year, other than a Saturday or
Sunday, on which banks are (a) open for the transaction of business in Dallas,
Texas, New York, New York, and Los Angeles, California, and, (b) with respect to
any LIBOR Advance, for the transaction of international business (including
dealings in U.S. Dollar deposits) in London, England.
"Capital Expenditures" means the aggregate amount of all purchases or
acquisitions of items considered to be capital items under GAAP, and in any
event shall include the aggregate amount of items leased or acquired under
Capital Leases at the cost of the item, and the acquisition of realty, tools,
equipment, and fixed assets, and any deferred costs associated with any of the
foregoing.
"Capital Leases" means capital leases and subleases, as defined in
accordance with GAAP.
"Capitalization" means Total Debt plus Stockholder's Equity.
"Cash Collateral" means cash or time deposits with, and certificates of
deposit and banker's acceptances issued by, the Administrative Lender which is
subject to a fully perfected, first priority Lien in favor of the Administrative
Lender.
"Cash Equivalents" means investments (directly or through a money
market fund) in (a) certificates of deposit, repurchase agreements, and other
interest bearing deposits or accounts with United States commercial banks having
a combined capital and surplus of at least $100,000,000, or with insurance
companies whose debt obligations have one of the three highest ratings
obtainable from S&P or Xxxxx'x, which certificates, repurchase agreements,
deposits, and accounts mature within one year from the date of investment, (b)
obligations issued or unconditionally guaranteed by the United States
government, or issued by an agency thereof and backed by the full faith and
credit of the United States government, which obligations mature within one year
from the date of investment, (c) direct obligations issued by any state or
political subdivision of the United States, which mature within one year from
the date of investment and have the highest rating obtainable from S&P or
Xxxxx'x on the date of investment, and (d) commercial paper which has one of the
three highest ratings obtainable from S&P or Xxxxx'x.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease or transfer of all or substantially all of the Company's assets
to any Person or group (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended), (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the acquisition
by any Person or group (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) of a direct or indirect majority in
interest (more than 50%) of the voting power of the voting stock of the Company
by way of merger or consolidation or otherwise, or (iv) the first day on which a
majority of the members of the board of directors of the Company are not
Continuing Directors.
"Commitment" means, as to the Lenders, $60,000,000, and, as to each
initial Lender, the amount set forth opposite the name of such Lender on the
signature pages hereof, as reduced from time to time pursuant to Section 2.4
hereof or pursuant to an assignment pursuant to Section 10.4 hereof.
"Company" means PETsMART, Inc., a Delaware corporation.
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"Contingent Liability" means, as to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or obligation of any other Person in any
manner, whether directly or indirectly, including without limitation any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase Property or services for the
purpose of assuring the owner of such Indebtedness of its payment, or (c) to
maintain the solvency, working capital, equity, cash flow, fixed charge or other
coverage ratio, or any other financial condition of the primary obligor so as to
enable the primary obligor to pay any Indebtedness or to comply with any
agreement relating to any Indebtedness or obligation.
"Continuing Directors" means, as of any date of determination, any
member of the board of directors of the Company who (i) was a member of such
board of directors on the date hereof or (ii) was nominated for election or
elected to such board of directors with the affirmative vote of a majority of
the Continuing Directors who were members of such board of directors at the time
of such nomination or election.
"Convertible Subordinated Notes" means convertible subordinated notes
issued by the Company and dated November 7, 1997 and November 14, 1997.
"Debt Ratio" means, as of any date of determination, for the Company
and its Subsidiaries, on a consolidated basis, the ratio of (a) Total Debt as of
the date of determination plus (i) the sum of lease expense pursuant to
Operating Leases (such lease expense to be in an amount equal to the product of
lease expense pursuant to Operating Leases for the four fiscal quarters
immediately preceding the date of determination multiplied by eight) minus (ii)
cash and Cash Equivalents in aggregate amount in excess of $50,000,000 to (b)
EBITDA for the four fiscal quarters immediately preceding the date of
determination plus lease expense pursuant to Operating Leases for the four
fiscal quarters immediately preceding the date of determination.
"Default" means any event specified in Section 7.1 hereof, whether or
not any requirement in connection with such event for the giving of notice,
lapse of time, or happening of any further condition has been satisfied.
"Dividend" means, as to any Person, (a) any declaration or payment of
any dividend (other than a stock dividend) on, or the making of any pro rata
distribution, loan, advance, or investment to or in any holder (in its capacity
as a shareholder) of, any shares of capital stock of such Person, or (b) any
purchase, redemption, or other acquisition or retirement for value of any shares
of capital stock of such Person; provided, however, "Dividend" shall not mean
(y) purchases of common stock of the Company by the Company from employees,
consultants or directors of the Company in connection with the termination of
their employment or other relationship with the Company or (z) purchases of
preferred stock of the Company by the Company as a result of the exercise by the
Company of its right of first refusal not to exceed $100,000 in the aggregate
during any fiscal year.
"Domestic Subsidiary" means any Subsidiary of the Company other than a
Foreign Subsidiary.
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"EBITDA" means, for the Company and its Subsidiaries, calculated on a
consolidated basis in accordance with GAAP, the sum of (a) net profit before
Taxes (but excluding from the calculation thereof (i) the effect of one-time
charges to operating income with respect to the costs related to Pooling
Acquisitions by the Company; provided that such costs shall not, together with
the aggregate Acquisition Consideration (other than capital stock of the
Company) and Capital Expenditures paid or incurred in connection with
Acquisitions during each fiscal year, exceed 15% of Tangible Net Worth during
each fiscal year, and (ii) the effect of one-time charges to operating income
with respect to costs and expenses relating to certain litigation in the amount
of $4,000,000 and that certain severance package for Xxxxx Xxxxx in the amount
of $1,526,000), plus (b) depreciation and amortization expense, and other
non-cash items deducted in the calculation of net operating income, plus (c)
interest expense (including interest expense pursuant to Capital Leases), net of
interest and other investment income, plus (d) any net extraordinary losses
included in the calculation of net operating income, minus (e) any net
extraordinary gains included in the calculation of net operating income.
"Eligible Assignee" means (a) a Lender, (b) an Affiliate of a Lender,
and (c) any other Person approved by both the Administrative Lender and, unless
an Event of Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 10.4(a) hereof, the Company, such approval
not to be unreasonably withheld or delayed by the Company or the Administrative
Lender and such approval to be deemed given by the Company if no objection is
received by the assigning Lender and the Administrative Lender from the Company
within two Business Days after notice of such proposed assignment has been
provided by the assigning Lender to the Company; provided, however, that neither
the Company nor any of its Affiliates shall qualify as an Eligible Assignee.
"Environmental Law" means any Law, permit, consent, approval, license,
award, or other authorization or requirement of any Tribunal relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, publicly owned treatment works, septic system, or
land, or otherwise relating to pollution or to the protection of health or the
environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of the Company or any of its
Subsidiaries, or is under common control with the Company or any of its
Subsidiaries, within the meaning of Section 414(b) or (c) of the Internal
Revenue Code of 1986, as amended, and the regulations and rulings issued
thereunder.
"ERISA Event" means (a) a reportable event, within the meaning of
Section 4043 of ERISA, unless the 30-day notice requirement with respect thereto
has been waived by the PBGC, (b) the provision by the administrator of any Plan
of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of
ERISA (including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA), (c) the cessation of operations at a facility in the
circumstances described in Section 4068(f) of ERISA, (d) the withdrawal by the
Company, any Subsidiary, or an ERISA Affiliate from a Multiple Employer Plan
during a Plan year for which it was a substantial
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employer, as defined in Section 4001(a)(2) of ERISA, (e) the failure by the
Company, any Subsidiary, or any ERISA Affiliate to make a payment to a Plan
required under Section 302 of ERISA, (f) the adoption of an amendment to a Plan
requiring the provision of security to such Plan, pursuant to Section 307 of
ERISA, or (g) the institution by the PBGC of proceedings to terminate a Plan,
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
that constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, a Plan.
"Event of Default" means any of the events specified in Section 7.1 of
this Agreement, provided there has been satisfied any requirement in connection
therewith for the giving of notice, lapse of time, or happening of any further
condition.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such date on such
transactions received by the Administrative Lender from three federal funds
brokers of recognized standing selected by it.
"Fixed Charges Coverage Ratio" means, for the Company and its
Subsidiaries determined on a consolidated basis and calculated for the four
fiscal quarters ending on the date of calculation, the ratio of (a) EBITDA plus
lease payments payable pursuant to Operating Leases, to (b) lease payments
payable pursuant to Operating Leases, plus all principal, interest, and other
amounts payable with respect to Total Debt, plus all amounts paid for repurchase
of common stock of the Company as permitted hereunder.
"Foreign Subsidiary" means any Subsidiary of the Company which is not
organized under the laws of any state of the United States of America or the
District of Columbia.
"GAAP" means generally accepted accounting principles applied on a
consistent basis. Application on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period, except for new
developments or statements promulgated by the Financial Accounting Standards
Board.
"Hazardous Materials" means all materials subject to any Environmental
Law, including without limitation materials listed in 49 C.F.R. Section 172.101,
Hazardous Substances, explosive or radioactive materials, hazardous or toxic
wastes or substances, petroleum or petroleum distillates, asbestos, or material
containing asbestos.
"Hazardous Substances" means hazardous waste as defined in the Clean
Water Act, 33 U.S.C. Section 1251 et seq., the Comprehensive Environmental
Response Compensation and Liability Act as amended by the Superfund Amendments
and Reauthorization Act, 42 U.S.C. Section 9601 et seq. ("CERCLA"), the Resource
Conservation Recovery Act, 42 U.S.C. Section 6901 et seq., and the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq. ("RCRA")
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"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, any Lender is then
permitted to charge on the Obligation. If the maximum rate of interest which,
under Applicable Law, any Lender is permitted to charge on the Obligation shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to the
Company. For purposes of determining the Highest Lawful Rate under Applicable
Law, the applicable rate ceiling shall be (i) the indicated rate ceiling
described in and computed in accordance with the provisions of Section (a)(1) of
Art. 1.04; or (ii) provided notice is given as required in Section (h)(1) of
said Art. 1.04, either the annualized ceiling or quarterly ceiling computed
pursuant to Section (d) of said Art. 1.04; provided, however, that at any time
the indicated rate ceiling, the annualized ceiling or the quarterly ceiling, as
applicable, shall be less than 18% per annum or more than 24% per annum, the
provisions of Sections (b)(1) and (2) of said Art. 1.04 shall control for
purposes of such determination, as applicable.
"Indebtedness" means (a) all obligations, contingent or otherwise,
which in accordance with GAAP are required to be classified on the balance sheet
as liabilities, and in any event including Capital Leases, Contingent
Liabilities that are required to be disclosed and quantified in notes to
consolidated financial statements in accordance with GAAP, and liabilities
secured by any Lien on any Property, regardless of whether such secured
liability is with or without recourse, (b) to the extent not otherwise included
in the foregoing subsection (a), all obligations under Interest Hedge
Agreements, all indebtedness for borrowed money, and all reimbursement
obligations with respect to outstanding letters of credit, and (c) to the extent
not otherwise included in the foregoing subsections (a) or (b), all obligations
as lessee under any "tax retention operating lease" or similar lease pursuant to
which the lessee has an obligation upon termination or expiration of the lease
to purchase the property covered thereby in an amount equal to the lessor's
Indebtedness related to such property.
"Insufficiency" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities within the meaning of Section 4001(a)(18) of
ERISA.
"Interest Hedge Agreements" shall mean any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options, puts and
warrants, as the same may be amended or modified and in effect from time to
time, and any and all cancellations, buy backs, reversals, terminations or
assignments of any of the foregoing.
"Interest Period" means, for any LIBOR Advance, the period beginning on
the date the Advance is made and ending one, two, three or six months thereafter
(as the Company shall select).
"Investment" means any acquisition of all or substantially all assets
of any Person, or any direct or indirect purchase or other acquisition of, or a
beneficial interest in, capital stock or other securities of any other Person,
or any direct or indirect loan, advance (other than advances to employees for
moving and travel expenses, drawing accounts, and similar expenditures in the
ordinary
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course of business), or capital contribution to or investment in any other
Person, including without limitation the incurrence or sufferance of
Indebtedness or accounts receivable of any other Person that are not current
assets or do not arise from sales to that other Person in the ordinary course of
business, which is not an Acquisition.
"Investment Policy" means the investment policy of the Company adopted
by the board of directors of the Company and in effect on the date of this
Agreement as set forth on Exhibit C, and any amendments and modifications
thereto that are approved in writing by the Majority Lenders.
"Issuing Bank" means NationsBank, or any other Lender or national
banking association designated by the Administrative Lender and acceptable to
the Company, as issuer of any Letter of Credit.
"Lenders" means the Lenders listed on the signature pages hereof, and
each Eligible Assignee that hereafter becomes a party hereto pursuant to Section
9.4 hereof.
"Letter of Credit" means any Trade Letter of Credit or Standby Letter
of Credit issued pursuant to Article III hereof.
"Letter of Credit Commitment" means $35,000,000, as reduced from time
to time pursuant to Section 2.4 hereof.
"LIBOR Advance" means an Advance which the Company requests to be made
as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with
the provisions of Section 2.2 hereof.
"LIBOR Basis" means a simple per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the
Applicable Margin. The LIBOR Basis shall, with respect to LIBOR Advances subject
to reserve or deposit requirements, be subject to premiums therefor assessed by
each Lender, which are payable directly to each Lender. Once determined, the
LIBOR Basis shall remain unchanged during the applicable Interest Period.
"LIBOR Lending Office" means, with respect to a Lender, the office
designated as its LIBOR Lending Office on Schedule I attached hereto, and such
other office of the Lender or any of its affiliates hereafter designated by
notice to the Company and the Administrative Lender.
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR Rate" shall mean, for any LIBOR Advance
for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such
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Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
"License" means, as to any Person, any license, permit, certificate of
need, authorization, certification, accreditation, franchise, approval, or grant
of rights by any Tribunal or third person necessary or appropriate for such
Person to own, maintain, or operate its business or Property, unless the failure
to obtain, retain, or comply with same would not constitute a Material Adverse
Change.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien, or charge of any kind, including without limitation any agreement to give
or not to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement or other similar form of public notice
under the Applicable Laws of any jurisdiction (except for the filing of a
financing statement or notice in connection with an operating lease).
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation conducted or threatened by or before any Tribunal, including
without limitation proceedings, claims, lawsuits, and/or investigations under or
pursuant to any environmental, occupational, safety and health, antitrust,
unfair competition, securities, Tax, or other Applicable Law, or under or
pursuant to any contract, agreement, or other instrument.
"Loan Papers" means this Agreement, the Notes, Letters of Credit, any
Subsidiary Guaranty, the Pledge Agreement, applications and agreements for
Letters of Credit, any Interest Hedge Agreement with any Lender or any Affiliate
of any Lender, any fee letters, and all other documents, instruments,
agreements, or certificates executed or delivered by any Person in connection
with this Agreement or as security for the Obligation hereunder.
"Majority Lenders" means any combination of Lenders having at least
66-2/3% of the aggregate amount of outstanding Advances plus liabilities with
respect to outstanding Letters of Credit; provided, however, that if no Advances
and Letters of Credit are outstanding, such term means any combination of
Lenders having Specified Percentages equal to at least 66-2/3%.
"Material Adverse Change" means any circumstance or event that is or
would reasonably be expected to (a) be material and adverse to the financial
condition, business operations, prospects, or Properties of the Company and its
Subsidiaries as a whole or (b) materially and adversely affect the validity or
enforceability of any of the Loan Papers.
"Maturity Date" means April 17, 2000, or such earlier date that the
Commitment is terminated.
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, any Lender is permitted to charge on the Obligation.
"Monthly Date" means the first day of each month during the term of
this Agreement.
"Moody's" means Xxxxx'x Investors Service, Inc.
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"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Company, any Subsidiary, or any ERISA
Affiliate is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions, such plan being maintained pursuant to one or more
collective bargaining agreements.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Company, any Subsidiary, or any ERISA Affiliate and at least one Person other
than the Company, any Subsidiary, and any ERISA Affiliate, or (b) was so
maintained and in respect of which the Company, any Subsidiary, or any ERISA
Affiliate could have liability under Section 4064 or 4069 of ERISA in the event
such plan has been or were to be terminated.
"NationsBank" means NationsBank, N.A., a national banking association.
"Negative Pledge" means any agreement, contract or arrangement whereby
any Person is prohibited from, or would otherwise be in default as a result of,
creating, assuming, incurring or suffering to exist, directly or indirectly, any
Lien on any of its assets other than Capital Leases permitted hereunder.
"Net Income" means net profit (or loss) after taxes of the Company and
its Subsidiaries, on a consolidated basis, determined in accordance with GAAP.
"Net Issuance Proceeds" means the gross proceeds received by the
Company in connection with or as a result of any issuance or sale of any capital
stock, minus the sum of reasonable out-of-pocket costs and expenses (including
underwriting fees) incurred by the Company in connection with such issuance and
sale.
"Net Worth" means, for the Company and its Subsidiaries on a
consolidated basis, determined in accordance with GAAP, the sum of (a) capital
stock taken at stated or par value, plus (b) capital surplus, plus (c) retained
earnings less treasury stock, plus or minus, as the case may be, the effect of
foreign currency exchanges.
"Note" means each promissory note of the Company evidencing Advances
and obligations owing hereunder to a Lender, in substantially the form of
Exhibit A attached hereto, payable to the order of such Lender and in a maximum
principal amount equal to such Lender's Specified Percentage of the Commitment.
"Obligation" means all present and future obligations, indebtedness
(including the Reimbursement Obligations) and liabilities, and all renewals and
extensions of all or any part thereof, of the Company and its Subsidiaries to
Lenders arising from, by virtue of, or pursuant to this Agreement, any of the
other Loan Papers and any and all renewals and extensions thereof or any part
thereof, or future amendments thereto, all interest accruing on all or any part
thereof and attorneys' fees incurred by each Lender for the administration,
execution of waivers, amendments and consents, and in connection with any
restructuring, workouts or in the enforcement or the collection of all or
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any part thereof, whether such obligations, indebtedness and liabilities are
direct, indirect, fixed, contingent, joint, several or joint and several.
"Operating Leases" mean operating leases, as defined in accordance with
GAAP.
"Payment Date" means the last day of the Interest Period for any
Advance and the Maturity Date.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
agency or entity performing substantially the same functions.
"Person" means an individual, partnership, joint venture, corporation,
trust, Tribunal, unincorporated organization, and government, or any department,
agency, or political subdivision thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledge Agreement" means one or more pledge agreements, executed by the
Company or any Domestic Subsidiary of the Company, granting a first priority
lien on 65% of the issued and outstanding equity interests of any direct Foreign
Subsidiary of the Company or such Domestic Subsidiary, substantially in the form
of Exhibit E hereto, as any such agreement may be amended, modified, restated or
extended from time to time.
"Pooling Acquisition" means any business combination constituting an
Acquisition which is accounted for on a pooling of interests basis under GAAP.
"Prime Rate" means a fluctuating rate per annum as shall be in effect
from time to time equal to the rate of interest announced or published by
NationsBank as its prime rate, and which may not necessarily be the lowest
interest rate charged by NationsBank.
"Prohibited Transaction" has the meaning specified therefor in Section
4975 of the Internal Revenue Code of 1986, as amended, or Section 406 of Title I
of ERISA.
"Property" means all types of real, personal, tangible, intangible, or
mixed property, whether owned in fee simple or leased.
"Quarterly Compliance Certificate" means a certificate of an officer of
the Company acceptable to the Administrative Lender, in the form of Exhibit B
hereto, (a) certifying that such individual has no knowledge that a Default or
Event of Default has occurred and is continuing, or if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action being taken or proposed to be taken with respect thereto, and (b)
setting forth detailed calculations with respect to the covenants described in
Section 6.1 hereof.
"Quarterly Date" means the first day of each February, May, August and
November during the term of this Agreement, commencing May 1, 1999.
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"Refinancing Advance" means any Advance which is used to pay the
principal amount (or any portion thereof) of an Advance at the end of its
Interest Period and which, after giving effect to such application, does not
result in an increase in the aggregate amount of outstanding Advances.
"Reimbursement Obligations" means, at any date of determination, the
sum of (a) the maximum aggregate amount which is then available to be drawn
under all Letters of Credit plus (b) the aggregate amount of all drawings under
Letters of Credit which have not been reimbursed by the Company or refinanced by
Advances.
"Related Business" means the business of providing pet food, pet
supplies and accessories and related pet services, and activities incidental
thereto.
"Release Date" means the date on which the Notes have been paid, all
other Obligations due and owing have been paid and performed in full, and the
Commitment has been terminated.
"Rights" means rights, remedies, powers, and privileges.
"S&P" means Standard & Poor's Ratings Group, a Division of XxXxxx-Xxxx,
Inc., a New York corporation.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, other than a Multiple Employer Plan.
"Solvent" means, with respect to any Person, that on such date (a) the
fair value of the Property of such Person is greater than the total amount of
liabilities, including without limitation Contingent Liabilities of such Person,
(b) the present fair salable 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 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 (d) 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
an unreasonably small capital.
"Specified Percentage" means, as to any Lender, the percentage
indicated beside its name on the signature pages hereof, or specified in a
notice by the Administrative Lender to the Company in connection with an
assignment pursuant to Section 10.4 hereof.
"Standby Letter of Credit" means any Letter of Credit issued under the
Letter of Credit Commitment other than a Trade Letter of Credit.
"Stockholder's Equity" means stockholder's equity of the Company and
its Subsidiaries as from time to time stated and described in the consolidated
financial statements and consolidated balance sheets provided to the Lenders by
the Company and prepared under GAAP.
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"Subordinated Debt" means any Indebtedness of the Company or its
Subsidiaries which shall have been and continues to be validly and effectively
subordinated to the prior payment in full of the Obligation on terms and
documentation approved in writing by the Majority Lenders.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of:
(a) the outstanding capital stock having voting power to elect
a majority of the Board of Directors of such corporation (irrespective
of whether at the time capital stock of any other class or classes of
such corporation shall or might have voting power upon the occurrence
of any contingency),
(b) the interest in the capital or profits of such partnership
or joint venture, or
(c) the beneficial interest of such trust or estate,
is at the time directly or indirectly owned by such Person, by such
Person and one or more of its Subsidiaries or by one or more of such
Person's Subsidiaries.
"Subsidiary Guaranty" means any guaranty executed by one or more
Subsidiaries, guaranteeing payment and performance of the Obligation,
substantially in the form of Exhibit D hereto, as such agreement may be amended,
modified, renewed or extended from time to time.
"Tangible Net Worth" means with respect to the Company and its
Subsidiaries on a consolidated basis, as of any date of determination, the
excess of (a) Net Worth over (b) the sum, without duplication, of unamortized
debt discount and expense, goodwill, trademarks, trade names, patents, deferred
charges and other intangible assets and any write-up of the value of assets
after July 6, 1995; all determined in accordance with GAAP, including the making
of appropriate deductions for minority interest (if any) in Subsidiaries.
"Taxes" means all taxes, assessments, imposts, fees, or other charges
at any time imposed by any Applicable Laws or Tribunal.
"Total Debt" means, as of the date of determination, determined for the
Company and its Subsidiaries on a consolidated basis, the sum (without
duplication) of (a) all principal and interest owing under the Loan Papers, (b)
all Indebtedness evidenced by a promissory note, bond, debenture or otherwise
representing borrowed money, (c) all Capital Leases, and (d) all Contingent
Liabilities; provided, however, "Total Debt" shall not include any of the
Company's obligations as lessee under (i) that certain Amended and Restated
Lease Agreement dated as of April 18, 1997, between the Company and Arizona
Funding Corporation, or any documents related thereto, (ii) that certain Lease
Agreement dated as of July 6, 1995, between the Company and First Security Bank
of Utah, N.A., not individually, but solely as Owner Trustee under the Pet
Stores Trust 1995-1, or any documents related thereto, (iii) that certain Lease
Agreement dated as of September 5, 1996, between the Company and First Security
Bank, N.A., not individually, but solely as Owner Trustee under the Pet Stores
Trust 1996-1, or any documents related thereto, and (iv) that certain Lease
Agreement dated
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as of April 18, 1997, between the Company and First Security Bank, N.A., not
individually, but solely as Owner Trustee under the Pet Stores Trust 1997-1, or
any documents related thereto.
"Total Liabilities" means the amount of total liabilities of the
Company and its Subsidiaries which would be shown in accordance with GAAP
consistently applied on a consolidated balance sheet and which in any event
shall include (without duplication):
(i) all guaranties and all debt, obligations and liabilities
secured by any Lien upon any property owned by Company or any
Subsidiary even though it has not assumed or became liable for the
payment of same; and
(ii) Capital Leases.
"Trade Letter of Credit" means any Letter of Credit issued under the
Letter of Credit Commitment in support of obligations incurred in the ordinary
course of business for the purchase of goods and services.
"Tribunal" means any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision, agency, department,
commission, board, bureau, or instrumentality of a governmental body.
"UCC" means the Uniform Commercial Code of Texas, as amended.
"Withdrawal Liability" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
"Working Capital" means (a) the sum of the Company's cash and Cash
Equivalents of the Company and its Subsidiaries in excess of $50,000,000, plus
(b) the sum of trade receivables and inventory minus trade payables of the
Company and its Subsidiaries.
Section 1.2. Accounting and Other Terms. All accounting terms used in
this Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP consistently applied on a consolidated basis for the
Company and its Subsidiaries, unless otherwise expressly stated herein.
References herein to one gender shall be deemed to include all other genders.
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
Section 2.1 Advances.
(a) Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make Advances to the Company until the Maturity Date
in an aggregate outstanding amount not to exceed such Lender's Specified
Percentage of the Commitment less its Specified Percentage of the aggregate
amount of all Reimbursement Obligations then outstanding (assuming compliance
with all
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conditions to drawing). Subject to Section 2.9 hereof, the Company may borrow,
repay, and reborrow in accordance with this Agreement. Notwithstanding any
provision of any Loan Papers to the contrary, in no event shall the aggregate
Advances outstanding plus all outstanding Reimbursement Obligations exceed the
Commitment. Any Advance shall, at the option of the Company as provided in
Section 2.2 hereof (and, in the case of LIBOR Advances, subject to availability
and to the provisions of Article IX hereof), be a Base Rate Advance or a LIBOR
Advance; provided that there shall not be outstanding to any Lender, at any one
time, more than five LIBOR Advances. On the Maturity Date unless sooner paid as
provided herein, the outstanding Advances shall be repaid in full.
Section 2.2. Making Advances.
(a) In the case of Base Rate Advances, the Company shall give the
Administrative Lender at least one Business Day's irrevocable written notice, or
irrevocable telephonic notice followed immediately by written notice (provided,
however, that the Company's failure to confirm any telephonic notice in writing
shall not invalidate any notice so given), of its intention to borrow or
reborrow a Base Rate Advance hereunder. Notice shall be given to the
Administrative Lender prior to 1:00 p.m. Dallas, Texas time, in order for such
Business Day to count toward the minimum number of Business Days required. Such
notice of borrowing shall specify the requested funding date, which shall be a
Business Day, and the amount of the proposed aggregate Base Rate Advances to be
made by Lenders.
(b) In the case of LIBOR Advances, the Company shall give the
Administrative Lender at least three Business Days' irrevocable written notice,
or irrevocable telephonic notice followed immediately by written notice
(provided, however, that the Company's failure to confirm any telephonic notice
in writing shall not invalidate any notice so given), of its intention to borrow
or reborrow a LIBOR Advance hereunder. Notice shall be given to the
Administrative Lender prior to 1:00 p.m., Dallas, Texas time, in order for such
Business Day to count toward the minimum number of Business Days required. LIBOR
Advances shall in all cases be subject to availability and to Article IX hereof.
For LIBOR Advances, the notice of borrowing shall specify the requested funding
date, which shall be a Business Day, the amount of the proposed aggregate LIBOR
Advances to be made by Lenders and the Interest Period selected by the Company,
provided that no such Interest Period shall extend past the Maturity Date, or
prohibit or impair the Company's ability to comply with Section 2.5 hereof.
(c) Subject to Sections 2.1 and 2.9 hereof, at least three Business
Days prior to each Payment Date for a LIBOR Advance, the Company shall give the
Administrative Lender irrevocable written notice, or irrevocable telephonic
notice followed immediately by written notice (provided, however, that the
Company's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given), specifying whether all or a portion of such
LIBOR Advance outstanding on the Payment Date (i) is to be repaid and then
reborrowed in whole or in part as a LIBOR Advance, (ii) is to be repaid and then
reborrowed in whole or in part as a Base Rate Advance, or (iii) is to be repaid
and not reborrowed; provided, however, notwithstanding anything in this
Agreement to the contrary, if on any Payment Date a Default shall exist, such
LIBOR Advance may only be reborrowed as a Base Rate Advance. Upon such Payment
Date, such LIBOR Advance shall, subject to the provisions hereof, be so repaid
and, as applicable, reborrowed.
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(d) The aggregate amount of Base Rate Advances to be made by the
Lenders on any day shall be in a principal amount which is at least $500,000 and
which is an integral multiple of $100,000; provided, however, that such amount
may equal the unused amount of the Commitment. The aggregate amount of LIBOR
Advances having the same Interest Period and to be made by the Lenders on any
day shall be in a principal amount which is at least $1,000,000 and which is an
integral multiple of $100,000.
(e) The Administrative Lender shall promptly notify the Lenders of each
notice received from the Company pursuant to this Section. Failure of the
Company to give any notice in accordance with Sections 2.2(c) hereof shall
result in a repayment of any such existing Advance on the applicable Payment
Date by a Refinancing Advance which is a Base Rate Advance. Each Lender shall,
not later than 1:00 p.m., Dallas, Texas time, on the date of any Advance that is
not a Refinancing Advance, deliver to the Administrative Lender, at its address
set forth herein, such Lender's Specified Percentage of such Advance in
immediately available funds in accordance with the Administrative Lender's
instructions. On the date of any Advance hereunder, the Administrative Lender
shall, subject to satisfaction of the conditions set forth in Article IV,
promptly disburse the amounts made available to the Administrative Lender by the
Lenders by (i) transferring such amounts by wire transfer pursuant to the
Company's instructions, or (ii) in the absence of such instructions, crediting
such amounts to the account of the Company maintained with the Administrative
Lender. All Advances shall be made by each Lender according to its Specified
Percentage.
(f) Unless a Lender shall have notified the Administrative Lender prior
to the date of any Advance that it will not make available its Specified
Percentage of the Advance, the Administrative Lender may assume that such Lender
has made the appropriate amount available in accordance with subsection (a)
above, and the Administrative Lender may, in reliance upon such assumption, make
available to the Company a corresponding amount. If and to the extent any Lender
shall not have made such amount available to the Administrative Lender, the
Lender and Company severally agree to repay to the Administrative Lender
forthwith on demand such corresponding amount together with interest thereon,
from the date such amount is made available to the Company until the date such
amount is repaid to the Administrative Lender, at (i) in the case of the
Company, the Base Rate, and (ii) in the case of such Lender, the Federal Funds
Rate.
(g) The failure by any Lender to make available its Specified
Percentage of an Advance hereunder shall not relieve any other Lender of its
obligation, if any, to make available its Specified Percentage of any Advance.
In no event, however, shall any Lender be responsible for the failure of any
other Lender to make available any portion of an Advance.
Section 2.3. Fees.
(a) Commitment Fee. Subject to Section 10.9 hereof, the Company agrees
to pay to the Administrative Lender, for the ratable account of the Lenders, a
commitment fee (which shall be payable quarterly in arrears on each Quarterly
Date and on the Maturity Date) based on the daily average unused portion of the
Commitment (subject to Section 10.9 hereof, computed on the basis of a 360-day
year for the actual number of days elapsed) at the following per annum
percentages, applicable in the following situations:
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Applicability Percentage
------------- ----------
(A) If the Fixed Charges Coverage Ratio is greater than or equal to 2.00 0.250%
to 1
(B) If the Fixed Charges Coverage Ratio is less than 2.00 to 1 but is 0.300%
equal to or greater than 1.75 to 1
(C) If the Fixed Charges Coverage Ratio is less than 1.75 to 1 but is 0.375%
equal to or greater than 1.50 to 1
(D) If the Fixed Charges Coverage Ratio is less than 1.50 to 1 but is 0.500%
equal to or greater than 1.25 to 1
(E) If the Fixed Charges Coverage Ratio is less than 1.25 to 1 0.500%
For purposes of calculation of the commitment fee, Letters of Credit outstanding
from time to time will reduce the unused portion of the Commitment. The
commitment fee shall be subject to reduction or increase, as applicable and as
set forth above, on a quarterly basis according to the performance of the
Company as tested by the Fixed Charges Coverage Ratio. Any such increase or
decrease in such fee shall be effective on the fifth day following the date of
receipt by the Administrative Lender of the financial statements required
pursuant to Section 6.14(a) or 6.14(b) hereof, as appropriate. If such financial
statements are not received by the fifth day following the date required, the
commitment fee shall be determined as if the Fixed Charges Coverage Ratio is
less than 1.25 to 1 until such time as such financial statements are received.
From and including the date hereof to the date of the initial adjustment of the
commitment fee to be made as provided above, the percentage shall be 0.500%.
(b) The Company agrees to pay to the Administrative Lender for its
account and for the ratable account of the Lenders, the fees provided for in the
letter agreement dated as of the Agreement Date, between the Company and the
Administrative Lender on the date and in the amounts specified therein.
(c) The Company agrees to pay to the Administrative Lender, for the
ratable account of the Lenders, a letter of credit fee on the average daily
amount for drawing under all outstanding Trade Letters of Credit, from the date
of issuance of the initial Trade Letter of Credit through the date of
termination of the final Trade Letter of Credit, at the rate of 0.625% per
annum, payable in arrears on each Quarterly Date and on the later of the
Maturity Date or the date of termination of the final Trade Letter of Credit.
(d) The Company agrees to pay to the Administrative Lender, for the
ratable account of the Lenders, a per annum letter of credit fee on the average
daily amount for drawing under all outstanding Standby Letters of Credit, from
the date of issuance of the initial Standby Letter of Credit through the date of
termination of the final Standby Letter of Credit, at a rate equal to the then
applicable LIBOR Margin in effect from time to time, payable in arrears on each
Quarterly Date and on the later of the Maturity Date or the date of termination
of the final Standby Letter of Credit.
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(e) The Company agrees to pay to the Administrative Lender, for the
sole account of the Issuing Bank, an issuance fee (which shall be payable
quarterly in arrears on each Quarterly Date and on the Maturity Date) equal to
0.125% per annum of the average daily amount available for drawing under all
outstanding Letters of Credit.
Section 2.4. Reduction of Commitment.
(a) The Company shall have the right from time to time, upon notice to
the Administrative Lender not later than 1:00 p.m. (Dallas time), three Business
Days in advance, to reduce the Commitment (and the Letter of Credit Commitment,
if applicable), in whole or in part; provided, however, that (i) the Company
shall pay the accrued commitment fee on the amount of such reduction, (ii) any
partial reduction (A) that results in a repayment of Base Rate Advances shall be
in an aggregate amount which is at least $500,000 and which is an integral
multiple of $100,000 and (B) that results in a repayment of LIBOR Advances shall
be in an aggregate amount which is at least $1,000,000 and which is in an
integral multiple of $100,000 and (iii) no voluntary reduction in the Commitment
shall cause any LIBOR Advance to be repaid prior to the last day of its Interest
Period.
(b) Upon any reduction of the Commitment pursuant to this Section, the
Company shall immediately make a repayment of Advances in accordance with
Section 2.5 hereof. The Company shall reimburse each Lender for any loss or
out-of-pocket expense incurred by each Lender in connection with any such
payment, as set forth in Section 2.9 hereof, to the extent applicable. The
Company shall not have any right to rescind any termination or reduction. Once
reduced or terminated, the Commitment may not be increased or reinstated.
(c) On the Maturity Date, the Commitment shall automatically reduce to
zero.
Section 2.5. Prepayment and Repayment of Advances.
(a) The principal amount of any Base Rate Advance may be prepaid in
full or in part at any time, without penalty, upon telephonic notice (to be
promptly followed by written notice) to the Administrative Lender not later than
11:00 a.m., Dallas, Texas time on the date of prepayment. LIBOR Advances may be
voluntarily prepaid upon three Business Days' prior telephonic notice (to be
promptly followed by written notice) to the Administrative Lender, but only so
long as the Company concurrently reimburses the Lenders in accordance with
Section 2.9 hereof. Any notice of prepayment shall be irrevocable.
(b) On or before the date of any reduction of the Commitment, the
Company shall prepay outstanding Advances in an amount necessary to reduce the
sum of outstanding Advances and Reimbursement Obligations to an amount not
greater than the Commitment as so reduced pursuant to Section 2.4 hereof. The
Company shall first prepay all Base Rate Advances and shall thereafter prepay
LIBOR Advances. To the extent that any prepayment requires that a LIBOR Advance
be repaid on a date other than the last day of its Interest Period, the Company
shall reimburse each Lender in accordance with Section 2.9 hereof.
(c) Any prepayment of a LIBOR Advance shall be (i) in an aggregate
amount of at least $1,000,000 and which is an integral multiple of $100,000 and
(ii) accompanied by (A) interest
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accrued on the principal amount being prepaid and (B) amounts due in accordance
with Section 2.9 hereof. Any voluntary partial prepayment of a Base Rate Advance
shall be in a principal amount of $100,000 or an integral multiple thereof.
(d) The unpaid principal amount of the Base Rate Advances shall be due
and payable on the Maturity Date.
(e) The principal amount of each LIBOR Advance hereunder shall be due
and payable on its Payment Date, which principal payment may be made by means of
a Refinancing Advance.
(f) On the date of any reduction of the Commitment pursuant to Section
2.4 hereof, including the Maturity Date, the (i) aggregate amount of the
Advances outstanding on such date of reduction in excess of the Commitment (as
then reduced) minus (ii) all outstanding Reimbursement Obligations shall be due
and payable, which principal payment may not be made by means of Refinancing
Advances.
(g) All telephonic notices under Article III hereof shall be made to
NationsBank, N.A., Attn: Xxxxx Xxxxxx, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxx,
Xxxxx 00000, (000) 000-0000, or such other person as the Administrative Lender
may from time to time specify.
Section 2.6. Interest on Advances.
(a) Subject to Section 10.9 hereof, Base Rate Advances shall bear
interest at the lesser of (a) the Highest Lawful Rate and (b) the Base Rate as
in effect from time to time. Accrued interest on each Base Rate Advance shall be
computed on the basis of a year of 365 or 366 days, as applicable, for the
number of days actually elapsed, and shall be due and payable in arrears on each
Monthly Date. If the amount of interest payable for the account of any Lender on
any interest payment date in respect of any Base Rate Advance would exceed the
Maximum Amount, the amount of interest payable on such interest payment date
shall be automatically reduced to the Maximum Amount. If the amount of interest
payable for the account of any Lender in respect of any interest computation
period is reduced pursuant to the immediately preceding sentence and the amount
of interest payable for its account in respect of any subsequent interest
computation period would be less than the Maximum Amount, then the amount of
interest payable for its account in respect of such subsequent interest
computation period shall be automatically increased to such Maximum Amount;
provided that at no time shall the aggregate amount by which interest paid for
the account of any Lender has been increased pursuant to this sentence exceed
the aggregate amount by which interest paid for its account has theretofore been
reduced pursuant to the immediately preceding sentence.
(b) Subject to Section 10.9 hereof, each LIBOR Advance shall bear
interest at a rate per annum equal to the LIBOR Basis for such Advance. The
Administrative Lender, whose determination shall be conclusive, shall determine
the LIBOR Basis on the second Business Day prior to the applicable funding date
and shall notify the Company and the Lenders of such LIBOR Basis. Interest on
each LIBOR Advance shall be computed on the basis of a 360-day year for the
actual number of days elapsed, and shall be payable in arrears on the applicable
Payment Date and on the Maturity Date; provided, however, that if the Interest
Period for such Advance exceeds three months, interest shall also be due and
payable in arrears on each Quarterly Date during such Interest Period.
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(c) If the Company fails to give the Administrative Lender timely
notice of its selection of a LIBOR Basis or an Interest Period for a LIBOR
Advance, or if for any reason a determination of a LIBOR Basis for any Advance
is not timely concluded due to the fault of the Company, the Base Rate shall
apply to the applicable Advance.
(d) All past due principal and interest shall, upon notice by the
Administrative Lender to the Company, bear interest at the lesser of (i) the
Base Rate as in effect from time to time, plus 3% or (ii) the Highest Lawful
Rate, and shall be due and payable on demand.
Section 2.7. Computations and Manner of Payments.
(a) The Company shall make each payment hereunder and under the other
Loan Papers not later than 1:00 p.m. (Dallas time) on the day when due in same
day funds to the Administrative Lender, for the ratable account of the Lenders
unless otherwise specifically provided herein, at the Administrative Lender's
office at 000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, for credit to commercial loan
FTA #0180019828, reference: PETsMART, Inc. No later than the end of each day
when each payment hereunder is made, the Company shall notify Xxxxx Xxxxxx, or
such other person as the Administrative Lender may from time to time specify.
(b) Unless the Administrative Lender shall have received notice from
the Company prior to the date on which any payment is due hereunder that the
Company will not make payment in full, the Administrative Lender may assume that
such payment is so made on such date and may, in reliance upon such assumption,
make distributions to the Lenders. If and to the extent the Company shall not
have made such payment in full, each Lender shall repay to the Administrative
Lender forthwith on demand the applicable amount distributed, together with
interest thereon at the Federal Funds Rate, from the date of distribution until
the date of repayment. The Company hereby authorizes each Lender, if and to the
extent payment is not made when due hereunder, to charge the amount so due
against any account of the Company with such Lender.
(c) Subject to Section 10.9 hereof, all computations of fees hereunder
shall be made on the basis of a year of 360 days, for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such fee is payable. All payments under the Loan Papers shall be made in
United States dollars, and without setoff, counterclaim, or other defense.
(d) Whenever any payment to be made hereunder or under any other Loan
Papers shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, unless such Business
Day falls in another calendar month, in which case payment shall be made on the
preceding Business Day. Any extension of time shall be included in the
computation of interest or fees, if applicable.
Section 2.8. Yield Protection.
(a) If any Lender determines that compliance with any Applicable Law
(including without limitation existing and future Applicable Laws), or any
guideline or request from any central bank or other Tribunal (whether or not
having the force of Applicable Law) affects or would affect the amount of
capital required or expected to be maintained by such Lender or any of its
Affiliates, and
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that the amount of such capital is increased by or based upon the existence of
any Commitment, Advance, or Letter of Credit (or similar commitments, loans or
letters of credit), then, upon demand by such Lender, the Company shall
immediately pay to such Lender, from time to time as specified, additional
amounts sufficient to compensate it or any of its Affiliates for the reduction
in rate of return on such Lender's or Affiliate's capital below that which such
Lender or Affiliate could have achieved but for such compliance, guideline or
request, to the extent that such Lender or Affiliate reasonably determines such
increase in capital to be allocable to the existence or maintenance of or any
participation in any Commitment, Advance, or Letter of Credit.
(b) Provided that notice shall have been given to the Company of the
reasons therefor and in reasonable detail, determinations by any Lender for
purposes of this Section shall be conclusive, absent manifest error.
Section 2.9. Reimbursement. Whenever any Lender shall sustain or incur
any losses or reasonable out-of-pocket expenses in connection with (a) failure
by the Company to borrow any LIBOR Advance after having given notice of its
intention to borrow in accordance with Section 2.2 hereof (whether by reason of
the Company's election not to proceed or the non-fulfillment of any of the
conditions set forth in Article IV hereof), (b) failure by the Company to prepay
any LIBOR Advance after having given notice of its intention to prepay in
accordance with Section 2.6 hereof, or (c) any prepayment for any reason of any
LIBOR Advance in whole or in part (including a prepayment pursuant to Sections
2.6, 7.2 and 9.3(b) hereof), the Company agrees to pay to any such Lender, upon
its demand, an amount sufficient to compensate such Lender for all such losses,
costs and out-of-pocket expenses, subject to Section 10.9 hereof. Such Lender's
good faith determination of the amount of such losses, costs or out-of-pocket
expenses, calculated in its usual fashion, absent manifest error, shall be
binding and conclusive. Such losses shall include, without limiting the
generality of the foregoing, lost profits and reasonable expenses incurred by
such Lender in connection with the re-employment of funds prepaid, repaid,
converted or not borrowed, converted or paid, as the case may be. Upon request
of the Company, such Lender shall provide a certificate setting forth the amount
to be paid to it by the Company hereunder and calculations therefor.
Section 2.10. LIBOR Lending Offices. Each Lender's initial LIBOR
Lending Office is set forth opposite its name on the signature pages hereto.
Each Lender shall have the right at any time and from time to time to designate
a different office of itself or of any Affiliate as such Lender's LIBOR Lending
Office, and to transfer any outstanding LIBOR Advance to such LIBOR Lending
Office. No such designation or transfer shall result in any liability on the
part of the Company for increased costs or expenses resulting solely from such
designation or transfer (except any such transfer which is made by a Lender
pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose of complying
with Applicable Law). Increased costs for expenses resulting from a change in
law occurring subsequent to any such designation or transfer shall be deemed not
to result solely from such designation or transfer.
Section 2.11. Calculation of LIBOR Rate. The provisions of this
Agreement relating to calculation of the LIBOR Rate are included only for the
purpose of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate, it being understood that each Lender
shall be entitled to fund and maintain its funding of all or any part of a LIBOR
Advance as it sees fit.
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ARTICLE III
LETTERS OF CREDIT
Section 3.1. Letter of Credit Commitment; Reimbursement.
(a) Subject to the terms and conditions hereof, and in reliance upon
subsection (b) below, the Issuing Bank agrees, from time to time until the
Maturity Date, to issue one or more Letters of Credit for the account of the
Company. The aggregate amount of outstanding Letters of Credit shall not exceed
at any time outstanding, the lesser of (i) the Letter of Credit Commitment and
(ii) an amount equal to the sum of the Commitment minus the aggregate
Reimbursement Obligations and Advances then outstanding. Letters of Credit may
be issued for activities and payments relating to the ordinary course of
business of the Company and its Subsidiaries. No Letter of Credit shall be
issued if issuance, in the Administrative Lender's or the Issuing Bank's sole
judgment, would violate any Applicable Law or any internal policy or standard of
the Issuing Bank.
(b) No Letter of Credit shall have an expiration date (including all
rights of renewal) later than the earlier of (i) the Maturity Date or (ii) the
date which is eighteen months after the issuance thereof. The Company shall be
liable for the repayment of any Reimbursement Obligations. If on the Maturity
Date there are any Letters of Credit outstanding, the Company shall deposit with
the Administrative Lender on the Maturity Date Cash Collateral in an amount not
less than the maximum amount then available to be drawn under such outstanding
Letters of Credit.
(c) Promptly upon issuance of a Letter of Credit, the Issuing Bank
shall notify the Administrative Lender and each Lender of the date of issuance,
amount, and expiration date of such Letter of Credit, and shall deliver a copy
to any Lender upon request. Upon issuance, each Lender shall thereupon have
purchased and received from the Issuing Bank a participation in such Letter of
Credit and the Company's reimbursement obligations relating thereto under the
applicable letter of credit application and agreement, to the extent of such
Lender's Specified Percentage of the maximum amount available to be drawn under
such Letter of Credit (assuming compliance with all conditions to drawing).
(d) The payment by the Issuing Bank of a draft drawn under any Letter
of Credit shall constitute for all purposes of this Agreement the making by the
Issuing Bank of an Advance, which shall bear interest at the Base Rate, in the
amount of such draft (but without any requirement for compliance with the
conditions set forth in Article 4 hereof). In the event that a payment under any
Letter of Credit is not reimbursed by the Company by 11:00 a.m. (Dallas time) on
the first Business Day after notice of such drawing has been given by the
Issuing Bank to the Company, the Issuing Bank shall promptly notify
Administrative Lender and each other Lender. Each such Lender shall, on the
first Business Day following such notification, make an Advance, which shall
bear interest at the Base Rate, and shall be used to repay the applicable
portion of the Issuing Bank's Advance with respect to such Letter of Credit, in
an amount equal to the amount of its Specified Percentage in such drawing for
application to reimburse the Issuing Bank (but without any requirement for
compliance with the applicable conditions set forth in Article 4 hereof) and
shall make available to the Administrative Lender for the account of the Issuing
Bank, by deposit at the Administrative Lender's
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office, in same day funds, the amount of such Advance. In the event that any
Lender fails to make available to the Administrative Lender for the account of
the Issuing Bank the amount of such Advance on the date specified in the notice
from the Issuing Bank to such Lender, the Issuing Bank shall be entitled to
recover such amount on demand from such Lender together with interest thereon
from such date until paid at a rate per annum equal to the lesser of (i) the
Highest Lawful Rate or (ii) the Federal Funds Rate.
Section 3.2. Standard of Care.
(a) The Issuing Bank agrees that it shall give the same care and
attention to each Letter of Credit as it gives to its other letters of credit.
The Lenders and the Company agree that, in paying any draw under any Letter of
Credit, the Issuing Bank shall not have any responsibility to obtain any
document (other than any sight draft or other document required by the Letter of
Credit), or to ascertain or inquire as to the validity or accuracy of any
document or the authority of the Person delivering any document.
(b) None of the Issuing Bank and its representatives, directors,
officers, employees, or agents shall be liable to any Lender, the Company, or
any other Person for (i) any action taken or omitted in connection with this
Article or any Letters of Credit at the request or with the approval of Majority
Lenders, (ii) any action taken or omitted in the absence of gross negligence and
willful misconduct, (iii) any recitals, statements, representations, or
warranties contained in any document distributed to any Lender, (iv) the
creditworthiness of the Company or any of its Subsidiaries, (v) the execution,
effectiveness, genuineness, validity, or enforceability of any Loan Papers, (vi)
the value, sufficiency, perfection, or priority of any security for any
obligations under the Loan Papers, or (vii) any circumstances beyond the control
of the Issuing Bank with respect to any Letter of Credit. The Issuing Bank shall
not incur any liability by acting in reasonable reliance upon any advice of
counsel, or any notice, consent, certificate, statement, or other writing (which
may be a bank wire, telecopy, telex, or similar writing) believed in good faith
by it to be genuine or to be signed by the proper parties.
Section 3.3. Expenses of the Issuing Bank. In order to induce the
Issuing Bank to maintain Letters of Credit and to induce the Lenders to
participate therein, the Company agrees to reimburse the Issuing Bank,
Administrative Lender, and Lenders, upon demand, for any Taxes, (other than
Taxes on the overall net income of the Administrative Lender, the Issuing Bank
or any Lender), fees, charges, or other costs or expenses whatsoever, including
attorneys' fees, incurred by the Issuing Bank, the Administrative Lender, or any
Lender in connection with issuance of, maintenance of, participation in, or
payment under any Letter of Credit.
Section 3.4. Obligations of the Company Absolute. The obligations of
the Company under this Article shall be absolute and unconditional under all
circumstances and irrespective of any set-off, counterclaim, or defense to
payment which the Company may have or have had against the Issuing Bank, the
Administrative Lender, any Lender, or the beneficiary of any Letter of Credit.
The Company agrees with the Administrative Lender, Issuing Bank, and Lenders
that they shall not be responsible for, and the Company's obligations shall not
be affected by, any matter or event whatsoever pertaining to any Letter of
Credit, including without limitation the validity or genuineness of documents or
of any endorsements thereof, even if such documents should in fact prove to be
in
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any respect invalid, fraudulent, or forged, or any claims or disputes by or
among the Company, beneficiary of any Letter of Credit, or any other Person,
including any Person to whom any Letter of Credit may be transferred. The
Company agrees to indemnify and hold harmless the Issuing Bank, the Lenders and
their representatives, directors, officers, employees, and agents from and
against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, and/or disbursements of any kind or nature
whatsoever that may be imposed on, asserted against, or incurred by the Issuing
Bank or any Lender in any way with respect to any Letter of Credit issued for
the account of the Company, or any action taken or omitted by the Issuing Bank
with respect to any such Letter of Credit, including any negligence of the
Issuing Bank; provided, however, that the Issuing Bank shall not be so
indemnified and held harmless for, and shall be liable to the Company only to
the extent of, any direct (as opposed to consequential) damages suffered by the
Company which the Company proves were caused by the Issuing Bank's willful
misconduct or gross negligence. The Issuing Bank shall not be liable for error,
omission, interruption, or delay in transmission, dispatch, or delivery of any
message or advice, however transmitted, in connection with any Letter of Credit.
The Company agrees that any action taken or omitted by the Issuing Bank, the
Administrative Lender, or any Lender with respect to any Letter of Credit or
related draws, drafts, or documents, if done in good faith and in accordance
with the standards of care specified in applicable state Laws or the Uniform
Customs and Practices for Documentary Credits as most recently published by the
International Chamber of Commerce (which publication shall control in the event
of any conflict between such publication and any such Applicable Law) shall be
binding on the Company and shall not put the Issuing Bank, the Administrative
Lender, or any Lender under any liability to the Company.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1. Conditions Precedent to Effectiveness. The effectiveness
of this Agreement is subject to fulfillment of the following conditions
precedent:
(a) The making of the Commitment, the making of the initial Advance and
issuance of the initial Letter of Credit shall not contravene any Applicable Law
applicable to the Administrative Lender, any Lender, or the Issuing Bank.
(b) No Material Adverse Change, as determined by the Administrative
Lender, shall have occurred and be continuing since January 31, 1999.
(c) The Company shall have delivered to the Administrative Lender a
Certificate, dated the effective date, executed by a duly authorized officer,
certifying that (i) no Default or Event of Default has occurred and is
continuing, (ii) the representations and warranties set forth in Article V
hereof are true and correct, and (iii) it has complied with all agreements and
conditions to be complied with by it under the Loan Papers by such date.
(d) The Company shall have delivered to the Administrative Lender a
Secretary's Certificate, dated the effective date, certifying (i) that copies of
its certificate of incorporation and
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bylaws previously delivered to the Administrative Lender are true and complete,
and in full force and effect, without amendment except as shown, (ii) that a
copy of its resolutions authorizing execution and delivery of this Agreement and
any other Loan Papers attached thereto is true and complete, and that such
resolutions are in full force and effect, were duly adopted, have not been
amended, modified, or revoked, and constitute all resolutions adopted with
respect to this loan transaction, and (iii) to the incumbency, name, and
signature of each officer authorized to sign this Agreement and any other Loan
Papers on its behalf. The Administrative Lender, Lenders, and Issuing Bank may
conclusively rely on the certificate delivered pursuant to this subsection until
they receive notice in writing to the contrary.
(e) Each Domestic Subsidiary shall have delivered to the Administrative
Lender a Secretary's Certificate, dated the effective date, certifying (i) that
copies of its certificate of incorporation and bylaws previously delivered to
the Administrative Lender are true and complete, and in full force and effect,
without amendment except as shown, (ii) that a copy of its resolutions
authorizing execution and delivery of the Loan Papers to which it is party are
true and complete, and that such resolutions are in full force and effect, were
duly adopted, have not been amended, modified, or revoked, and constitute all
resolutions adopted with respect to this loan transaction, and (iii) to the
incumbency, name, and signature of each officer authorized to sign the Loan
Papers to which it is party. The Administrative Lender, Lenders, and Issuing
Bank may conclusively rely on the certificate delivered pursuant to this
subsection until they receive notice in writing to the contrary.
(f) The Administrative Lender shall have received opinions of counsel
to the Company, dated the effective date, which counsel shall be acceptable to
the Administrative Lender, (i) to the effect that the Company has full power and
authority to execute, deliver, and perform this Agreement and all other Loan
Papers to be executed and delivered by it; (ii) to the effect that all such Loan
Papers constitute the legal, valid, and binding obligations of the Company,
enforceable in accordance with their respective terms (subject as to enforcement
of remedies to any applicable bankruptcy, reorganization, moratorium, fraudulent
conveyance, or similar Applicable Laws or principles of equity affecting the
enforcement of creditors' rights generally); and (iii) as to such other matters,
and otherwise in form and substance, satisfactory to the Administrative Lender.
(g) The Administrative Lender shall have received, in form and
substance satisfactory to it, (i) certificates from the Secretary of State and
other appropriate officials of the state of organization certifying that the
Company is a corporation duly organized, validly existing, and in good standing
in said state as of the respective dates thereof, and (ii) certificates of
appropriate authorities in Texas and Arizona, to the effect that it is in good
standing and duly qualified to transact business in such jurisdictions.
(h) The Administrative Lender shall have received, in form and
substance satisfactory to it, certificates from the Secretary of State and other
appropriate officials of the states of organization of each Domestic Subsidiary,
certifying that such Domestic Subsidiary is a corporation duly organized,
validly existing and in good standing in said state as of the respective date
thereof.
(i) The Administrative Lender shall have received the fees required
pursuant to Section 2.3(b) hereof.
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(j) Each Lender shall have received its Note, duly executed by the
Company, in the amount of such Lender's Commitment.
(k) The Administrative Lender shall have received a Subsidiary
Guaranty, duly executed by each Domestic Subsidiary of the Company.
(l) The Administrative Lender shall have received a Subsidiary
Guaranty, duly executed by 3003300 Nova Scotia Company.
(m) The Administrative Lender shall have received a Pledge Agreement,
duly executed by the Company or any Domestic Subsidiary which has a direct
Foreign Subsidiary, together with the pledged stock covered thereby and
appropriate UCC-1 financing statements and undated blank stock powers related
thereto.
(n) The Administrative Lender shall have received an opinion of counsel
from the state of organization (other than Delaware) of each Person executing a
Subsidiary Guaranty or a Pledge Agreement, addressed to the Lenders, in form and
substance satisfactory to the Lenders; provided, however, that, except for the
Company, if such an opinion was delivered with respect to the Prior Credit
Agreement and such opinion may be relied upon by Lenders with respect to this
Agreement, no new opinion is required.
(o) All proceedings of the Company and its Subsidiaries taken in
connection with the transactions contemplated hereby, and all documents
incidental thereto, shall be satisfactory in form and substance to the
Administrative Lender. The Administrative Lender shall have received copies of
all documents or other evidence that it may reasonably request in connection
with such transactions.
Section 4.2. Conditions Precedent to All Advances. The obligation of
each Lender to make each Advance (including the initial Advance) shall be
subject to the further conditions precedent that on the date of such Advance (a)
the following statements shall be true (and each request for an Advance under
Section 2.2 hereof shall constitute a representation that on the disbursement
date they are true):
(i) with respect to each Advance (other than a Refinancing
Advance), the representations and warranties contained in Article V
hereof are true and correct on such date, as though made on and as of
such date, and
(ii) With respect to each Advance (other than a Refinancing
Advance), there shall not exist a Default, and with respect to a
Refinancing Advance, there shall not exist an Event of Default;
and (b) the Administrative Lender shall have received, in form and substance
acceptable to it, such other approvals, documents, certificates, opinions, and
information as it may deem necessary or appropriate.
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Section 4.3. Conditions Precedent to Issuance of Letters of Credit. The
obligation of the Issuing Bank to issue any Letter of Credit shall be subject to
the further conditions precedent that (a) the Issuing Bank shall have received,
in form and substance satisfactory to it, an application and agreement for such
Letter of Credit executed by the Company, on or before 1:00 p.m. (Dallas time)
at least five Business Days prior to the date of issuance, setting forth (among
other matters) the purpose of the Letter of Credit; (b) on the date of issuance
the following statements shall be true (and the delivery of such application and
agreement shall constitute a representation that on the date of issuance such
statements are true):
(i) The representations and warranties contained in Article V
hereof are true and correct on such date, as though made on and as of
such date, and
(ii) No event has occurred and is continuing, or would result
from issuance of such Letter of Credit, that does or could constitute a
Default or Event of Default;
and (c) the Issuing Bank shall have received, in form and substance acceptable
to it, such other approvals (including internal approvals), documents,
certificates, opinions, and information as it may deem necessary or appropriate.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that the following are true and
correct:
Section 5.1. Organization and Qualification. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the Applicable Laws of its state of organization. Each of the
Company and its Subsidiaries is qualified to do business in all jurisdictions
where the nature of its business or Properties require such qualification. Set
forth on Schedule I attached hereto is a complete and accurate listing of each
Subsidiary of the Company, showing (a) the jurisdiction of its organization and
its mailing address, which is the principal place of business and executive
offices of such Subsidiary unless otherwise indicated, (b) the classes of
capital stock, and the numbers of shares authorized and outstanding, and (c)
each owner of outstanding shares on the date hereof, indicating the ownership
percentage. All outstanding shares of capital stock of the Company and its
Subsidiaries are validly issued, fully paid, and nonassessable and, to the
extent owned by the Company or its Subsidiaries, are owned free and clear of all
Liens, including any restrictions on hypothecation or transfer.
Section 5.2. Due Authorization; Validity. The Boards of Directors of
the Company and its Subsidiaries have duly authorized the execution, delivery,
and performance of the Loan Papers to be executed by each. No consent of the
stockholders of the Company and its Subsidiaries (except any consent already
obtained) is required as a prerequisite to the validity and enforceability of
any Loan Papers or any other document contemplated hereby. Each of the Company
and its Subsidiaries has full legal right, power, and authority to execute,
deliver, and perform under the Loan Papers to be executed and delivered by it.
The Loan Papers have been duly executed and delivered by the
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Company and each Subsidiary and constitute the legal, valid, and binding
respective obligations of the Company and its Subsidiaries, enforceable in
accordance with their respective terms (subject as to enforcement of remedies to
any applicable bankruptcy, reorganization, moratorium, or similar Applicable
Laws or principles of equity affecting the enforcement of creditors' rights
generally).
Section 5.3. Conflicting Agreements and Other Matters. The execution
and delivery of any Loan Papers, and performance thereunder, does not conflict
with, or result in a breach of the terms, conditions, or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any Properties of the Company or its Subsidiaries
under, or require any consent (other than consents already obtained), approval,
or other action by, notice to, or filing with any Tribunal or Person pursuant
to, the articles of incorporation or bylaws of the Company or any of its
Subsidiaries, any award of any arbitrator, or any agreement, instrument, or
Applicable Law to which the Company, any Subsidiary, or any of their Properties
is subject.
Section 5.4. Financial Statements. The financial statements of the
Company and its Subsidiaries delivered to the Administrative Lender and Lenders
fairly present their financial condition and the results of operations as of the
dates and for the periods shown, all in accordance with GAAP. The latest of such
financial statements reflects all material liabilities, direct and contingent,
of the Company and its Subsidiaries that are required to be disclosed in
accordance with GAAP. As of the date of the latest of such financial statements,
there were no Contingent Liabilities, liabilities for Taxes, forward or
long-term commitments, or unrealized or anticipated losses from any unfavorable
commitments that are substantial in amount and that are not reflected on such
financial statements or otherwise disclosed in writing to the Administrative
Lender. Since January 31, 1999, there has been no Material Adverse Change. The
Company and each of its Subsidiaries is Solvent.
Section 5.5. Litigation. Shown on Schedule III attached hereto is all
Litigation that is pending or, to the best of the Company's knowledge,
threatened against the Company or its Subsidiaries on the date hereof, and that
involves a claim for damages or reasonably expected potential liability of
$500,000 or more. There is no pending or, to the best of the Company's
knowledge, threatened Litigation against the Company or its Subsidiaries that
could constitute a Material Adverse Change.
Section 5.6. Compliance With Applicable Laws Regulating the Incurrence
of Indebtedness. No proceeds of any Advance will be used directly or indirectly
to acquire any security in any transaction which is subject to Sections 12, 13
and 14 of the Securities Exchange Act of 1934, as amended. The Company and its
Subsidiaries are not engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U
issued by the Board of Governors of the Federal Reserve System), and no proceeds
of any Advance will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock.
Following the Company's intended use of the proceeds of each Advance, not more
than 25% of the value of the assets of the Company, both individually and on a
consolidated basis with its Subsidiaries, will be "margin stock" within the
meaning of Regulation U. The Company and its Subsidiaries are not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940, the Interstate Commerce Act (as
any of the preceding acts have been amended), or any other Applicable Law that
the incurring of Indebtedness by the Company or its Subsidiaries would violate
in any material
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respect, including without limitation Applicable Laws relating to common or
contract carriers or the sale of electricity, gas, steam, water, or other public
utility services.
Section 5.7. Licenses, Title to Properties, and Related Matters. The
Company and its Subsidiaries possess all material Licenses and are not in
violation thereof in any material respect. The Company and each of its
Subsidiaries has full power, authority, and legal right to own and operate its
Properties, and to conduct its business. Each has good and indefeasible title
(fee or leasehold, as applicable) to its Properties, subject to no Lien of any
kind, except as permitted hereunder. None of the Company and its Subsidiaries is
in violation of its respective articles of incorporation or bylaws (other than
immaterial violations of the bylaws of such Subsidiaries), or any Applicable
Law, or material agreement or instrument binding on or affecting it or any of
its Properties. No business or Properties of the Company and its Subsidiaries is
affected by any strike, lock-out, or other labor dispute, drought, storm,
earthquake, embargo, act of God or public enemy, or other casualty that could
constitute a Material Adverse Change.
Section 5.8. Outstanding Indebtedness. The Company and its Subsidiaries
have no outstanding Indebtedness, Contingent Liabilities, or Liens, except as
shown on Schedule II attached hereto.
Section 5.9. Taxes. The Company and its Subsidiaries have filed all
federal, state, and other Tax returns (or extensions related thereto) which are
required to be filed, and have paid all Taxes as shown on said returns, as well
as all other Taxes, to the extent due and payable. All Tax liabilities of the
Company and its Subsidiaries are adequately provided for on their books,
including interest and penalties, and adequate reserves have been established
therefor in accordance with GAAP. No income Tax liability of a material nature
has been asserted by taxing authorities for Taxes in excess of those already
paid, and no taxing authority has notified the Company or any of its
Subsidiaries of any material deficiency in any Tax return.
Section 5.10. ERISA. Each Plan has satisfied the minimum funding
standards under all Applicable Laws applicable thereto, and no Plan has an
accumulated funding deficiency thereunder. The Company and its Subsidiaries have
not incurred any material liability to the PBGC with respect to any Plan. No
ERISA Event has occurred with respect to any Plan. The Company has not
participated in any Prohibited Transaction with respect to any Plan or trust
created thereunder, and the consummation of the transactions contemplated hereby
will not involve any Prohibited Transaction. None of the Company, its
Subsidiaries, or any ERISA Affiliate has incurred any Withdrawal Liability to
any Multiemployer Plan. None of the Company, its Subsidiaries, or any ERISA
Affiliate has been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA.
Section 5.11. Environmental Laws. Except as set forth on Schedule V
hereto, the real Properties (whether leased or owned) of the Company or any of
its Subsidiaries, and the operations conducted thereon by any of them or, to the
best of the Company's knowledge, any current or prior owner or operator thereof,
(a) do not violate and have not violated any applicable Environmental Law, the
violation of which would constitute a Material Adverse Change or result in
penalties, fines, or damages in an aggregate amount of $100,000 or more, and (b)
are not subject to any pending or threatened investigation or proceeding by any
Tribunal or to any remedial obligations under any
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Environmental Law. All Licenses have been obtained or filed that are required
under any Environmental Law in connection with the use of such Property and
assets (including without limitation past or present treatment, storage,
disposal, or release of any Hazardous Materials into the environment), except
where the failure to obtain any such License would not constitute a Material
Adverse Change. No Hazardous Materials are generated or produced at or in
connection with the Properties and operations of the Company and its
Subsidiaries, except in compliance with Environmental Laws. The Company and its
Subsidiaries have no material potential liability with respect to any release of
any Hazardous Materials into the environment. The use which the Company and its
Subsidiaries make or intend to make of the real Property (whether leased or
owned) on which any of their operations is conducted will not result in the
unlawful or unauthorized disposal or other release of any Hazardous Materials,
except in compliance with applicable Environmental Laws.
Section 5.12. Disclosure. None of the Company and its Subsidiaries has
made a material misstatement of fact, or failed to disclose any fact necessary
to make the facts disclosed not misleading, to the Administrative Lender, any
Lender, or the Issuing Bank during the course of application for and negotiation
of any Loan Papers or otherwise in connection with any Advances or Letters of
Credit. There is no fact known to the Company that materially adversely affects
any of the Company's and its Subsidiaries' Properties or businesses, or that
would constitute a Material Adverse Change, and that has not been set forth in
the Loan Papers or in other documents furnished to the Administrative Lender,
Lenders, and Issuing Bank.
Section 5.13. Year 2000. The Company has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (and has made appropriate inquiry regarding those affected by
suppliers and vendors) that could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by the Company or
any of its Subsidiaries (or its suppliers and vendors) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a plan for
addressing the Year 2000 Problem on a timely basis, and (iii) to date, operated
in accordance with such plan. The Company reasonably believes that all computer
applications (including those of its suppliers and vendors) that are material to
its or any of its Subsidiaries' business and operations on January 1, 2000 will,
on a timely basis, be able to perform properly date-sensitive functions for all
dates before and after January 1, 2000 (that is, be "Year 2000 compliant"),
except to the extent that a failure to do so could not reasonably be expected to
cause a Material Adverse Change.
ARTICLE VI
COVENANTS
So long as the Commitment, any Advance, or any Letter of Credit is
outstanding, or the Company owes any other amount hereunder:
Section 6.1. Financial Covenants. The Company and its Subsidiaries
shall comply with the following covenants, calculated on a consolidated basis:
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(a) Net Worth. Net Worth shall at no time be less than an amount equal
to the sum of (i) $290,000,000, plus (ii) 50% of cumulative Net Income for the
period from, but not including, February 27, 1997, through the date of
calculation (without deduction for any fiscal quarter in which Net Income is a
negative number), plus (iii) 75% of any Net Issuance Proceeds received after the
date hereof.
(b) Fixed Charges Coverage Ratio. The Fixed Charges Coverage Ratio
shall not be less than (i) 1.25 to 1 at the end of any fiscal quarter of the
Company during fiscal year 1999, (ii) 1.35 to 1 at the end of any fiscal quarter
of the Company during fiscal year 2000, and (iii) 1.40 to 1 at the end of any
fiscal quarter of the Company thereafter.
(c) Total Debt to Capitalization. The ratio of Total Debt to
Capitalization shall at no time be greater than .50 to 1.
(d) Capital Expenditures. Capital Expenditures (excluding any Capital
Expenditures in respect of any (i) Capital Leases and (ii) Acquisitions,
permitted pursuant to Section 6.8 hereof) paid or incurred during any fiscal
year of the Company set forth below shall not exceed $85,000,000.
(e) Debt Ratio. The Debt Ratio shall not be more than 6.00 to 1 at the
end of any fiscal quarter of the Company ending during the term hereof.
(f) Borrowing Base. Notwithstanding any of the terms of this Agreement,
until the Company has achieved a Fixed Charges Coverage Ratio in excess of 1.40
to 1 for two consecutive fiscal quarters after the conclusion of the third
fiscal quarter of 1997, no Advance shall be made to the Company and the Company
shall not request any Advance hereunder to the extent that such Advance would
cause (i) the sum of (A) Advances hereunder, plus (B) Reimbursement Obligations,
plus (C) outstanding Advances under the Amended and Restated Credit Agreement
dated as of April 18, 1997 among Arizona Funding Corporation and certain
lenders, including Administrative Lender, to exceed (ii) 50% of Working Capital.
Section 6.2. Indebtedness. The Company shall not, and shall not permit
any of its Subsidiaries to, create, incur, assume, become or be liable in any
manner in respect of, or suffer to exist, any Indebtedness, except (a)
Indebtedness under the Loan Papers, (b) Indebtedness shown on Schedule II
attached hereto, (c) trade payables incurred and paid in the ordinary course of
business, (d) Capital Lease obligations, (e) Indebtedness with respect to
surety, appeal, indemnity, performance or other similar bonds in the ordinary
course of business, (f) Subordinated Debt owing by the Company to any of its
Subsidiaries, (g) Indebtedness owing by any of the Company's Subsidiaries to the
Company or any of the Company's Domestic Subsidiaries to the extent the
Investment giving rise to such Indebtedness is permitted by Section 6.7 hereof,
(h) Contingent Liabilities resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business, (i) other
Indebtedness not to exceed, together with the Investments permitted under
Sections 6.7(d) and 6.7(e), $25,000,000 in aggregate principal amount, (j)
Indebtedness of Foreign Subsidiaries not in excess of $25,000,000 in the
aggregate, (k) Indebtedness in respect of the Convertible Subordinated Notes,
and (l) subordinated Indebtedness issued at all times under terms acceptable to
Majority Lenders, provided that (i) no Default or Event of Default exists
immediately prior to or after incurring
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such Indebtedness, and (ii) the Company is in compliance with all covenants
under this Agreement on an actual and a pro forma basis.
Section 6.3. Liens. The Company shall not, and shall not permit any of
its Subsidiaries to, create or suffer to exist any Lien upon any of their
Properties, except (a) Liens shown on Schedule II attached hereto, (b) Liens
securing Indebtedness permitted under (i) Section 6.2(d) hereof, encumbering
only the assets purchased or financed with such Indebtedness and (ii) Section
6.2(i) hereof provided that the value of the collateral secured by such Liens
does not exceed the aggregate principal amount of such Indebtedness, and (c)
Tax, mechanics', materialmen's, and landlord Liens relating to amounts that are
not yet due and payable, or that are being contested in good faith by
appropriate proceedings, for which adequate reserves have been established. It
is specifically acknowledged and agreed that the Company shall not, and shall
not permit its Subsidiaries to, hereafter agree with any Person (other than the
Lenders) not to xxxxx x Xxxx on any of their assets or not to pledge any of
their capital stock. The Company shall not, and shall not permit any Subsidiary
to, enter into, or be subject to, a Negative Pledge (other than a Negative
Pledge in favor of (a) Arizona Funding Corporation, (b) Winthrop Resources
pursuant to the Company's guaranty of the obligations of Medical Management
International, Inc. under an equipment financing lease, and (c) First Security
Bank, N.A., as Owner Trustee under the Pet Stores Trust 1995-1, Pet Stores Trust
1996-1 and Pet Stores Trust 1997-1).
Section 6.4. Licenses and Material Agreements. The Company shall, and
shall cause its Subsidiaries to, obtain and comply in all material respects with
all Licenses. The Company shall, and shall cause all its Subsidiaries to,
maintain and comply in all material respects with all agreements necessary or
appropriate for any of them to own, maintain, or operate any of their businesses
or Properties.
Section 6.5. Liquidation, Dispositions of Assets, Merger,
Consolidation. The Company shall not, and shall not permit any of its
Subsidiaries to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up; or sell, lease, abandon, assign, or otherwise
dispose of all or any part of its assets, properties or business, except (i)
immaterial sales or dispositions of assets in the ordinary course of business,
including dispositions of obsolete or useless assets, (ii) disposition of
assets, including capital stock, of the Company or any Subsidiary, provided that
(A) the aggregate value of the assets disposed of from October 29, 1997, through
the date of any such disposition, including the value of assets to be disposed
of by such disposition, shall not exceed, as of the date of such disposition,
10% of the consolidated value of the assets of the Company and the Subsidiaries
calculated as the greater of book value and fair market value of such
consolidated assets, (B) the disposition of such assets does not result in the
release or disposition of collateral or guaranties securing the Company's
obligations hereunder, and (C) 100% of the proceeds of such disposition shall be
applied to prepay Advances hereunder, and (iii) sale-leaseback transactions in
which the consideration received is at least equal to the fair market value of
the asset sold. Notwithstanding the foregoing, a wholly owned Subsidiary of the
Company may be dissolved or liquidated, so long as such Subsidiary owns no
assets and conducts no business; or
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(b) enter into any merger or consolidation, except that (i) any of the
Company's Subsidiaries may merge with the Company provided that the Company is
the continuing or surviving entity, (ii) any of the Company's Domestic
Subsidiaries may merge with another of the Company's Domestic Subsidiaries,
(iii) any of the Company's Foreign Subsidiaries may merge with any of the
Company's Domestic Subsidiaries provided that the Domestic Subsidiary is the
continuing or surviving entity, (iv) any of the Company's Foreign Subsidiaries
may merge with any of the Company's other Foreign Subsidiaries, provided that
the surviving entity is a direct Foreign Subsidiary of the Company or of a
Domestic Subsidiary, and (v) the Company or any of its Subsidiaries may enter
into any merger or consolidation constituting an Acquisition permitted under
Section 6.8 hereof.
Section 6.6. Dividends. The Company shall not, and shall not permit any
of its Subsidiaries to, declare or pay Dividends, except the declaration and
payment of a Dividend by a wholly owned Subsidiary of the Company to the Company
or any of its Domestic Subsidiaries.
Section 6.7. Investments. The Company shall not, and shall not permit
any of its Subsidiaries to, make any Investments except for: (a) Investments
shown on Schedule IV hereto, (b) Investments in Cash Equivalents, (c)
Investments pursuant to the Investment Policy, (d) provided no Default or Event
of Default exists immediately prior to or after giving effect to any such
Investment, working capital advances to veterinarians who are tenants of
Properties owned by or leased by the Company which amounts do not exceed,
together with Indebtedness permitted under Section 6.2(i) and Investments
permitted under Section 6.7(e), $25,000,000 in aggregate amount, (e) provided no
Default or Event of Default exists immediately prior to or after giving effect
to any such Investment, loans to, or guarantees of obligations of, officers of
the Company to exercise incentive stock options of the Company and to pay
alternative minimum tax obligations of such officers not to exceed, together
with Indebtedness permitted under Section 6.2(i) and Investments permitted under
Section 6.7(d), $25,000,000 in aggregate amount, (f) provided no Default or
Event of Default exists immediately prior to or after giving effect to any such
Investment, Investments in one or more Domestic Subsidiaries (i) that are
subject to the provisions hereof, (ii) that concurrently with the initial
Investment, execute a Subsidiary Guaranty and deliver corporate resolutions,
articles of incorporation, by-laws, a certificate of incumbency and, if
requested by the Administrative Lender, an attorneys' opinion, each in form and
substance satisfactory to the Administrative Lender, and (iii) to the extent
such Investment is a loan or advance, the obligation to repay such loan or
advance is recorded on the books and records of such Subsidiary, (g) Investments
in Foreign Subsidiaries which have not executed a Subsidiary Guaranty not to
exceed $18,500,000 in aggregate amount (excluding Investments in Foreign
Subsidiaries shown on Schedule IV hereto) provided that (A) no Default or Event
of Default shall have occurred and be continuing or would occur after giving
effect thereto and (B) the Administrative Lender has been granted a first
priority security interest in 65% of the capital stock of such Foreign
Subsidiary pursuant to a Pledge Agreement; provided, however, this Section
6.7(g) will be automatically deleted from this Agreement upon the consummation
of the sale of Pet City Holdings, plc, (h) provided no Default or Event of
Default shall have occurred and be continuing or would occur after giving effect
to such Investment, Investments in Foreign Subsidiaries which have, concurrently
with such Investment, executed a Subsidiary Guaranty and delivered to the
Administrative Lender corporate resolutions, articles of incorporation, bylaws,
certificate of incumbency and an attorney's opinion, each in form and substance
satisfactory to the Administrative Lender, and (i) Investments in stock of the
Company, whether through stock repurchases, or otherwise, not to exceed
$25,000,000 in aggregate amount, provided, however that
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no such investment may be made unless the Company is in compliance with Section
6.1(b) hereof after taking into account such capital stock repurchases by
including the aggregate amount of such capital stock repurchases in the
denominator of the calculation of the Fixed Charges Coverage Ratio.
Section 6.8. Acquisitions. The Company shall not, and shall not permit
any of its Subsidiaries to, make, in one or more transactions:
(a) any Acquisition of Domestic Subsidiaries unless (i) no Default or
Event of Default shall have occurred and be continuing or would occur after
giving effect to such Acquisition, (ii) the sum of (A) the aggregate Acquisition
Consideration (other than capital stock of the Company) (including, without
limitation, costs associated with Pooling Acquisitions) for such Acquisitions,
plus (B) the Capital Expenditures paid or incurred in connection with such
Acquisitions, shall not exceed in aggregate amount during each fiscal year, 15%
of Tangible Net Worth of the Company immediately prior to any such Acquisition,
and (iii) such Domestic Subsidiary (other than Acquisition Subsidiaries),
concurrently with its being acquired, executes a Subsidiary Guaranty and
delivers to the Administrative Lender corporate resolutions, articles of
incorporation, bylaws, a certificate of incumbency and, if requested by the
Administrative Lender, an attorney's opinion, each in form and substance
satisfactory to the Administrative Lender; and
(b) any Acquisitions of Foreign Subsidiaries (i) which do not
concurrently with such Acquisition execute a Subsidiary Guaranty provided that
(A) no Default or Event of Default shall have occurred and be continuing or
would occur after giving effect to such Acquisition, (B) the aggregate
Acquisition Consideration (other than capital stock of the Company) for such
Acquisitions shall not exceed $18,500,000 in aggregate amount during the term
hereof, together with Investments in Foreign Subsidiaries permitted under
Section 6.7(g), $18,500,000, and (C) concurrently with such Acquisition, the
Company causes the Administrative Lender to be granted a first and prior
security interest in 65% of the capital stock of such Foreign Subsidiary
pursuant to a Pledge Agreement, or (ii) which concurrently therewith execute a
Subsidiary Guaranty provided that (A) no Default or Event of Default shall have
occurred and be continuing or would occur after giving effect to such
Acquisition, and (B) concurrently with such Acquisition, the Company delivers to
the Administrative Lender corporate resolutions, articles of incorporation,
bylaws, a certificate of incumbency, and an attorney's opinion, each in form and
substance satisfactory to the Administrative Lender.
Section 6.9. Business. The Company shall not, and shall not permit any
of its Subsidiaries to, change the nature of its business as now conducted. The
Company and each of its Subsidiaries shall not conduct any business except a
Related Business.
Section 6.10. Compliance with Applicable Laws. The Company shall, and
shall cause its Subsidiaries to, comply in all material respects with all
Applicable Laws, including without limitation compliance with ERISA and payment
of all Taxes before they become delinquent.
Section 6.11. Insurance. The Company shall, and shall cause its
Subsidiaries to, (a) keep its insurable Properties adequately insured at all
times by financially sound and reputable insurers to such extent and against
such risks, including fire and other risks insured against by extended coverage,
as is customary with companies similarly situated and in the same or similar
businesses, (b) maintain in full force and effect public liability and workers
compensation insurance (except that the Company
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shall not be required to maintain workers compensation in the State of Texas
where it is permitted to be a non-subscriber), in amounts customary for such
similar companies to cover normal risks, by insurers satisfactory to the
Administrative Lender, and (c) maintain such other insurance as may be required
by Applicable Law or requested by the Administrative Lender. The Company shall
deliver evidence of renewal of each insurance policy on or before the date of
its expiration, and from time to time shall deliver to the Administrative
Lender, upon demand, evidence of the maintenance of such insurance.
Section 6.12. Inspection Rights. The Company shall, and shall cause its
Subsidiaries to, permit the Administrative Lender or any Lender, upon reasonable
notice and during normal business hours, to examine and make copies of and
abstracts from their records and books of account, to visit and inspect their
Properties and to discuss their affairs, finances, and accounts with any of
their directors, officers, or accountants, all as the Administrative Lender or
any Lender may reasonably request.
Section 6.13. Records and Books of Account; Changes in GAAP. The
Company shall, and shall cause its Subsidiaries to, keep adequate records and
books of account in conformity with GAAP. The Company and its Subsidiaries shall
not change their fiscal year, nor change their method of financial accounting
except in accordance with GAAP. In connection with any such change in GAAP after
the date hereof, the Company and Lenders shall negotiate in good faith to make
appropriate alterations to the covenants set forth in Section 6.1 hereof,
reflecting such change.
Section 6.14. Reporting Requirements. The Company shall furnish to each
Lender and the Administrative Lender:
(a) As soon as available and in any event within 45 days after the end
of each of the Company's fiscal quarters which is not the last fiscal quarter in
a fiscal year, consolidated and consolidating balance sheets of the Company and
its Subsidiaries as of the end of such quarter, and consolidated and
consolidating statements of income, and a consolidated statement of changes in
cash flow of the Company and its Subsidiaries for such quarter and for the
portion of the fiscal year ending with such quarter, setting forth, in
comparative form, results for the corresponding periods in the previous fiscal
year, all in reasonable detail, and certified by an officer of the Company
acceptable to the Administrative Lender as prepared in accordance with GAAP, and
fairly presenting the financial condition and results of operations of the
Company and its Subsidiaries;
(b) As soon as available and in any event within 90 days after the end
of each fiscal year of the Company, a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such fiscal year, and consolidated
statements of income and changes in cash flow of the Company and its
Subsidiaries for such fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an unqualified opinion of the Auditor,
which opinion shall state that said financial statements were prepared in
accordance with GAAP, that the examination by the Auditor in connection with
such financial statements was made in accordance with generally accepted
auditing standards, and that said financial statements present fairly the
financial condition and results of operations of the Company and its
Subsidiaries;
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(c) Promptly upon receipt thereof, copies of all material reports or
letters submitted to the Company or any of its Subsidiaries by the Auditor or
any other accountants in connection with any annual, interim, or special audit,
including without limitation the comment letter submitted to management in
connection with any such audit;
(d) Together with each set of financial statements delivered pursuant
to subsections (a) and (b) above, a Quarterly Compliance Certificate;
(e) As soon as available and in any event prior to the beginning of
each fiscal year of the Company, the annual operating budget and cash flow
statement of the Company and its Subsidiaries for such year;
(f) As soon as possible and in any event within five days after
knowledge by a corporate officer of the Company of the occurrence of any Default
or Event of Default, a notice from an officer of the Company acceptable to the
Administrative Lender, setting forth the details of such Default or Event of
Default, and the action being taken or proposed to be taken with respect
thereto;
(g) As soon possible and in any event within five days after knowledge
thereof by a corporate officer of the Company, notice of any Litigation pending
or threatened against the Company or any of its Subsidiaries which, if
determined adversely, would be reasonably likely to result in judgment,
penalties, or damages in excess of $500,000, together with a statement of an
officer of the Company acceptable to the Administrative Lender, describing the
allegations of such Litigation, and the action being taken or proposed to be
taken with respect thereto;
(h) Promptly following notice or knowledge thereof by a corporate
officer of the Company, notice of any actual or threatened loss or termination
of any material License of the Company or any of its Subsidiaries, together with
a statement of an officer of the Company acceptable to the Administrative
Lender, describing the circumstances surrounding the same, and the action being
taken or proposed to be taken with respect thereto;
(i) Promptly after filing or receipt thereof by a corporate officer of
the Company, copies of all reports and notices that the Company or any of its
Subsidiaries (i) files or receives in respect of any Plan with or from the
Internal Revenue Service, the PBGC, or the United States Department of Labor, or
(ii) furnishes to or receives from any holders of any Indebtedness or Contingent
Liability, if in the case of clauses (i) and (ii), any information or dispute
referred to therein could result in a Default or an Event of Default;
(j) Within 30 days after renewal or issuance of any hazard, public
liability, or other insurance policy maintained by the Company, a summary of
such policy in form and substance satisfactory to the Administrative Lender;
(k) As soon as possible and in any event within five days after
knowledge thereof by a corporate officer of the Company, notice of any act,
event or circumstance which is reasonably likely to cause or result in a
Material Adverse Change, together with a statement of an officer of the Company
acceptable to the Administrative Lender, describing the circumstances
surrounding the same, and the action being taken or proposed to be taken with
respect thereto; and
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(l) Promptly upon written request, such other information concerning
the condition or operations of any of the Company, its Subsidiaries, and its
Affiliates, financial or otherwise, as the Administrative Lender, any Lender, or
the Issuing Bank may from time to time reasonably request.
Section 6.15. Use of Proceeds. The Company shall use the proceeds of
Advances for (a) working capital needs and other general corporate purposes, (b)
to repay draws under Letters of Credit, and (c) to repay certain expenses and
costs incurred in connection with Acquisitions.
Section 6.16. Transactions with Affiliates. Except as permitted herein,
the Company shall not, and shall not permit any of its Subsidiaries to, enter
into or be party to a transaction with any Affiliate, except on terms no less
favorable than could be obtained on an arm's-length basis with a Person that is
not an Affiliate.
Section 6.17. Environmental Law Compliance. The use which the Company
or any Subsidiary intends to make of any real property owned by it will not
result in the disposal or other release of any Hazardous Substance or solid
waste on or to such real property in any manner or quantities which would be
deemed a violation of the any Environmental Laws. As used herein, the term
"release" as used in this Section shall have the meaning specified in CERCLA (as
defined in the definition of Hazardous Substances), and the terms "solid waste"
and "disposal" shall have the meanings specified in RCRA (as defined in the
definition of Hazardous Substances); provided, however, that if CERCLA or RCRA
is amended so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such amendment;
and provided further, to the extent that any other law applicable to the
Company, any Subsidiary or any of their properties establishes a meaning for
"release," "solid waste," or "disposal" which is broader than that specified in
either CERCLA or RCRA, such broader meaning shall apply. The Company agrees to
indemnify and hold the Administrative Lender and each Lender harmless from and
against, and to reimburse them with respect to, any and all claims, demands,
causes of action, loss, damage, liabilities, costs and expenses (including
attorneys' fees and courts costs) of any kind or character, known or unknown,
fixed or contingent, asserted against or incurred by any of them at any time and
from time to time by reason of or arising out of (a) the failure of the Company
or any Subsidiary to perform any obligation hereunder regarding asbestos or
Environmental Laws, (b) any violation on or before the Release Date of any
Environmental Law in effect on or before the Release Date, and (c) any act,
omission, event or circumstance existing or occurring on or prior to the Release
Date (including without limitation the presence on such real property or release
from such real property of hazardous substances or solid wastes disposed of or
otherwise released on or prior to the Release Date), resulting from or in
connection with the ownership of the real property, regardless of whether the
act, omission, event or circumstance constituted a violation of any
Environmental Law at the time of its existence or occurrence, or whether the
act, omission, event or circumstance is caused by or relates to the negligence
of any indemnified Person; provided that, the Company shall not be under any
obligation to indemnify the Administrative Lender or any Lender to the extent
that any such liability arises as the result of the gross negligence or willful
misconduct of such Person, as finally judicially determined by a court of
competent jurisdiction. The provisions of this paragraph shall survive the
Release Date and shall continue thereafter in full force and effect.
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Section 6.18. Indirect Foreign Subsidiaries. Notwithstanding the
foregoing Sections 6.7 and 6.8, in no event shall the aggregate Investments
(including Acquisition Consideration) in any single Foreign Subsidiary of a
Foreign Subsidiary exceed $50,000.
Section 6.19. Year 2000. The Company will promptly notify the
Administrative Lender in the event the Company discovers or determines that any
computer application (including those of its suppliers and vendors) that is
material to its or any of its Subsidiaries' business and operations will not be
Year 2000 compliant on a timely basis, except to the extent that such failure
could not reasonably be expected to cause a Material Adverse Change.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1. Events of Default. Any one or more of the following shall
be an "Event of Default" hereunder, if the same shall occur for any reason
whatsoever, whether voluntary or involuntary, by operation of Applicable Law, or
otherwise:
(a) The Company shall fail to pay any principal, interest, fees, or
other amounts payable under any Loan Papers when due;
(b) Any representation or warranty made or deemed made by the Company
or any of its Subsidiaries (or any of their officers or representatives) under
or in connection with any Loan Papers shall prove to have been incorrect or
misleading in any material respect when made or deemed made;
(c) The Company shall fail to perform or observe any term or covenant
contained in Section 6.1, 6.2, 6.3, 6.5, 6.6, 6.7, 6.8, 6.9, 6.15, 6.16, or 6.18
hereof;
(d) The Company or any of its Subsidiaries shall fail to perform or
observe any other term or covenant contained in any Loan Papers, other than
those described in subsections (a) and (c) above, and such failure shall not be
remedied within 30 Business Days following the earlier of knowledge thereof by
an officer of the Company or Subsidiary, or of written notice by the
Administrative Lender to the Company;
(e) Any Loan Papers or material provision thereof shall, for any
reason, not be valid and binding on the Company or any of its Subsidiaries
signatory thereto, or not be in full force and effect, or shall be declared to
be null and void; the validity or enforceability of any Loan Papers shall be
contested by the Company or any Subsidiary; the Company or any Subsidiary shall
deny that it has any or further liability or obligation under its respective
Loan Papers; or any default or breach under any provision of any Loan Papers
shall continue after the applicable grace period, if any, specified in such Loan
Paper;
(f) Any of the following shall occur: (i) the Company or any of its
Subsidiaries shall make an assignment for the benefit of creditors or be unable
to pay its debts generally as they become due; (ii) the Company or any of its
Subsidiaries shall petition or apply to any Tribunal for the appointment
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of a trustee, receiver, or liquidator of it, or of any substantial part of its
assets, or shall commence any proceedings relating to the Company or any of its
Subsidiaries under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debts, conservatorship, moratorium, dissolution,
liquidation, or other debtor relief Laws of any jurisdiction, whether now or
hereafter in effect; (iii) any such petition or application shall be filed, or
any such proceedings shall be commenced, against the Company or any of its
Subsidiaries and the same is not dismissed or otherwise discharged within 60
days, or an order, judgment or decree shall be entered appointing any such
trustee, receiver, or liquidator, or approving the petition in any such
proceedings; (iv) any final order, judgment, or decree shall be entered in any
proceedings against the Company or any of its Subsidiaries decreeing its
dissolution; or (v) any final order, judgment, or decree shall be entered in any
proceedings against the Company or any of its Subsidiaries decreeing its
split-up which requires the divestiture of a substantial part of its assets;
(g) The Company or any of its Subsidiaries shall fail to pay any
Indebtedness or Contingent Liability of $500,000 or more when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise),
and such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness or
Contingent Liability; the Company or any of its Subsidiaries shall fail to
perform or observe any term or covenant contained in any agreement or instrument
relating to any such Indebtedness or Contingent Liability (or an event shall
occur with respect to such Indebtedness or Contingent Liability), and such
failure (or event) shall continue after the applicable grace period, if any,
specified in such agreement or instrument, and can result in acceleration of the
maturity or prepayment or purchase of such Indebtedness or Contingent Liability;
or any such Indebtedness or Contingent Liability shall be declared to be due and
payable, or required to be prepaid or purchased (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;
(h) The Company or any of its Subsidiaries shall have any final
judgment(s) outstanding against any of them for the payment of $500,000 or more,
and such judgment(s) shall remain unstayed, in effect, and unpaid for more than
30 days;
(i) Any License of the Company or any of its Subsidiaries shall lapse,
terminate, or be suspended;
(j) Any ERISA Event shall have occurred with respect to a Plan, and the
sum of the Insufficiency of such Plan and liabilities relating thereto, added to
the Insufficiency of and liabilities relating to all other Plans with respect to
which an ERISA Event has occurred, is equal to or greater than $1,000,000; or
the Company, any of its Subsidiaries, or any ERISA Affiliate shall have
committed a failure described in Section 302(f)(l) of ERISA, and the amount
determined under Section 302(f)(3) of ERISA is equal to or greater than $50,000;
(k) The Company, any of its Subsidiaries, or any ERISA Affiliate shall
have been notified by the sponsor of a Multiemployer Plan that (i) it has
incurred Withdrawal Liability to such Plan in an amount that, when aggregated
with all other amounts required to be paid to Multiemployer Plans in connection
with Withdrawal Liabilities, exceeds $50,000 or requires payments exceeding
$10,000 per annum, or (ii) such Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, if as a result thereof the
aggregate annual contributions to all Multiemployer Plans in
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reorganization or being terminated is increased over the amounts contributed to
such Plans for the preceding Plan year by an amount exceeding $10,000;
(l) The Company or any of its Subsidiaries shall be required under any
Environmental Law (i) to implement any remedial, neutralization, or
stabilization process or program, the cost of which would constitute a Material
Adverse Change, or (ii) to pay any penalty, fine, or damages in an aggregate
amount of $500,000 or more;
(m) Any Property (whether leased or owned) of the Company or any of its
Subsidiaries, or the operations conducted thereon by any of them or any current
or prior owner or operator thereof (in the case of real Property), shall violate
or have violated any applicable Environmental Law, if such violation would
constitute a Material Adverse Change; or the Company or any of its Subsidiaries
shall not obtain or maintain any License required to be obtained or filed under
any Environmental Law in connection with the use of such Property and assets,
including without limitation past or present treatment, storage, disposal, or
release of Hazardous Materials into the environment, if the failure to obtain or
maintain the same would constitute a Material Adverse Change;
(n) A Change of Control shall have occurred;
(o) An event of default shall occur under that certain Lease Agreement
(Tax Retention Operating Lease), dated as of July 6, 1995, between First
Security Bank of Utah, N.A., not individually, but solely as Owner Trustee under
the Pet Stores Trust 1995-1, as Lessor, and the Company, as Lessee;
(p) An event of default shall occur under that certain Lease Agreement
(Tax Retention Operating Lease), dated as of September 5, 1996, between First
Security Bank of Utah, N.A., not individually, but solely as Owner Trustee under
the Pet Stores Trust 1996-1, as Lessor, and the Company, as Lessee;
(q) An event of default shall occur under that certain Lease Agreement
(Tax Retention Operating Lease), dated as of April 18, 1997, between First
Security Bank of Utah, N.A., not individually, but solely as Owner Trustee under
the Pet Stores Trust 1997-1, as Lessor, and the Company, as Lessee; or
(r) An event of default shall occur under that certain Amended and
Restated Lease, dated as of April 18, 1997, between Arizona Funding Corporation,
as Landlord, and the Company, as Tenant.
Section 7.2. Remedies Upon Default. If an Event of Default shall have
occurred and be continuing:
(a) With the exception of an Event of Default specified in Section
7.1(f) hereof, the Administrative Lender may at its election, and shall upon the
request of the Majority Lenders, declare the entire unpaid balance of all
Advances immediately due and payable and terminate the Commitment, whereupon it
shall be due and payable without diligence, presentment, demand, protest, notice
of protest or intent to accelerate, or notice of any other kind (except notices
specifically
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provided for under Section 7.1 hereof), all of which are hereby expressly waived
(except to the extent waiver of the foregoing is not permitted by Applicable
Law);
(b) Upon the occurrence of an Event of Default described in Section
7.1(f) hereof, the aggregate unpaid principal balance of and accrued interest on
all Advances shall automatically thereupon become due and payable concurrently
therewith and the Commitment shall automatically terminate, all without any
action by the Administrative Lender or any Lender, and without diligence,
presentment, demand, protest, notice of protest or intent to accelerate, or
notice of any other kind, all of which are hereby expressly waived;
(c) The Administrative Lender may, and shall upon the request of the
Majority Lenders, demand payment of an amount equal to the maximum amount
available to be drawn under all Letters of Credit; demand presentation of draws
on the Letters of Credit by the beneficiaries thereof, to the extent permitted
thereunder; require the Company to deposit with the Administrative Lender cash
or Cash Equivalents in an amount equal to the maximum amount available to be
drawn under all Letters of Credit; and/or retain, as collateral for the
reimbursement obligations of the Company with respect thereto, any amounts
received upon foreclosure, or in lieu of foreclosure, through offset, as
proceeds of any collateral or otherwise; and
(d) The Administrative Lender and the Lenders may exercise any Rights
afforded them under any Loan Papers, by Applicable Law, including but not
limited to the UCC, at equity, or otherwise.
Section 7.3. Cumulative Rights. All Rights available to the
Administrative Lender, Lenders, and Issuing Bank under the Loan Papers shall be
cumulative of and in addition to all other Rights granted thereto at Applicable
Law or in equity, whether or not amounts owing thereunder shall be due and
payable, and whether or not the Administrative Lender, any Lender, or the
Issuing Bank shall have instituted any suit for collection or other action in
connection with the Loan Papers.
Section 7.4. Waivers. The acceptance by the Administrative Lender, any
Lender, or the Issuing Bank at any time and from time to time of partial payment
of any amount owing under any Loan Papers shall not be deemed to be a waiver of
any Event of Default then existing. No waiver by the Administrative Lender, any
Lender, or the Issuing Bank of any Event of Default shall be deemed to be a
waiver of any Event of Default other than such Event of Default. No delay or
omission by the Administrative Lender, any Lender, or the Issuing Bank in
exercising any Right under the Loan Papers shall impair such Right or be
construed as a waiver thereof or an acquiescence therein, nor shall any single
or partial exercise of any such Right preclude other or further exercise
thereof, or the exercise of any other Right under the Loan Papers or otherwise.
Section 7.5. Expenditures. The Company agrees to reimburse the
Administrative Lender, Lenders, and Issuing Bank for any sums spent by any of
them in connection with the exercise of any Right provided herein. Such sums
shall bear interest at the (i) lesser of the Base Rate in effect from time to
time, plus 3.0% or (ii) the Highest Lawful Rate, from the date spent until the
date of repayment by the Company.
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Section 7.6. Control. None of the covenants or other provisions
contained in this Agreement shall, or shall be deemed to, give the
Administrative Lender, Lenders, or Issuing Bank any Rights to exercise control
over the affairs and/or management of the Company or any of its Subsidiaries,
the power of the Administrative Lender, Lenders, and Issuing Bank being limited
to the Rights to exercise the remedies provided in this Article; provided,
however, that if the Administrative Lender, any Lender, or the Issuing Bank
becomes the owner of any stock or other equity interest in any Person, whether
through foreclosure or otherwise, it shall be entitled to exercise such legal
Rights as it may have by being an owner of such stock or other equity interest
in such Person.
ARTICLE VIII
THE ADMINISTRATIVE LENDER
Section 8.1. Authorization and Action. Each of the Lenders and Issuing
Bank hereby appoints and authorizes the Administrative Lender to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Loan Papers as are delegated to the Administrative Lender by the
terms hereof, together with such powers as are reasonably incidental thereto. As
to any matters not expressly provided for by this Agreement and the other Loan
Papers (including without limitation enforcement or collection of the Notes),
the Administrative Lender shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders (or all Lenders, if required under Section
9.1 hereof), and such instructions shall be binding upon all Lenders; provided,
however, that the Administrative Lender shall not be required to take any action
which exposes the Administrative Lender to personal liability or which is
contrary to any Loan Papers or Applicable Law. The Administrative Lender agrees
to give to each Lender prompt notice of each notice given to it by the Company
pursuant to the terms of this Agreement, and to distribute promptly to each
applicable Lender in like funds all amounts delivered to the Administrative
Lender by the Company for the ratable or individual account of any Lender. The
Administrative Lender shall have no trustee or other fiduciary relationship in
respect of any Lender by reason of this Agreement or any other Loan Paper. The
duties of the Administrative Lender under this Agreement and the other Loan
Papers are mechanical and administrative in nature.
Section 8.2. Administrative Lender's Reliance, Etc. Neither the
Administrative Lender, nor any of its directors, officers, agents, employees, or
representatives shall be liable for any action taken or omitted to be taken by
it or them under or in connection with this Agreement or any other Loan Papers,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Administrative Lender (a) may
treat the payee of any Note as the holder thereof until the Administrative
Lender receives written notice of the assignment or transfer thereof signed by
such payee and in form satisfactory to the Administrative Lender; (b) may
consult with legal counsel (including counsel for the Company or any of its
Subsidiaries), independent public accountants, and other experts selected by it,
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants, or
experts; (c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties, or representations
made in or in connection with this Agreement or any other Loan Papers; (d) shall
not have any duty to ascertain or to inquire as to the performance or
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observance of any of the terms, covenants, or conditions of this Agreement or
any other Loan Papers on the part of the Company or its Subsidiaries or to
inspect the Property (including the books and records) of the Company or its
Subsidiaries; (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency, or value of this
Agreement, any other Loan Papers, or any other instrument or document furnished
pursuant hereto; and (f) shall incur no liability under or in respect of this
Agreement or any other Loan Papers by acting upon any notice, consent,
certificate, or other instrument or writing (which may be by telegram, cable,
telex, or telecopy) believed by it to be genuine and signed or sent by the
proper party or parties.
Section 8.3. NationsBank, N.A. and Affiliates. With respect to its
Commitment, its Advances, and any Loan Papers, NationsBank, N.A. shall have the
same Rights under this Agreement as any other Lender and may exercise the same
as though it were not the Administrative Lender. NationsBank, N.A., and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Company,
any Affiliate thereof, and any Person who may do business therewith, all as if
NationsBank, N.A. were not the Administrative Lender and without any duty to
account therefor to any Lender.
Section 8.4. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Lender or any
other Lender, and based on the financial statements referred to in Sections 5.4
and 6.14 hereof and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Papers.
Section 8.5. Indemnification by Lenders. Lenders agree to indemnify the
Administrative Lender, pro rata according to their Specified Percentages from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Administrative Lender in any way relating to or arising out of any Loan Papers
or any action taken or omitted by the Administrative Lender thereunder,
including any negligence of the Administrative Lender; provided, however, that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from the Administrative Lender's gross negligence or
willful misconduct. Without limitation of the foregoing, Lenders agree to
reimburse the Administrative Lender, pro rata according to their Specified
Percentages, promptly upon demand for any out-of-pocket expenses (including
attorneys' fees) incurred by the Administrative Lender in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiation, legal proceedings or otherwise) of, or
legal advice in respect of rights or responsibilities under, the Loan Papers.
Section 8.6. Successor Administrative Lender. The Administrative Lender
may resign at any time by giving written notice thereof to the Lenders and
Company, and may be removed at any time with or without cause by the action of
all Lenders (other than the Administrative Lender, if it is a Lender), or by the
Company upon thirty (30) days prior written notice from the Company to the
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Administrative Lender if, at any time, the Administrative Lender's Specified
Percentage is less than eight percent (8.0%); provided, however, that if a
successor Administrative Lender is appointed without the consent of the Majority
Lenders pursuant to the third sentence of this Section, such successor
Administrative Lender may be removed by the Majority Lenders and Company. Upon
any such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Administrative Lender, with the consent of the Company so
long as no Event of Default has occurred and is continuing (which shall not be
unreasonably withheld). If no successor Administrative Lender shall have been so
appointed and shall have accepted such appointment within 30 days after the
retiring Administrative Lender's giving of notice of resignation or the Lenders'
removal of the retiring Administrative Lender, then the retiring Administrative
Lender may, on behalf of the Lenders, appoint a successor Administrative Lender,
which shall be a commercial bank organized under the Applicable Laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $50,000,000. Upon the acceptance of any appointment as
the Administrative Lender hereunder by a successor Administrative Lender, such
successor Administrative Lender shall thereupon succeed to and become vested
with all the Rights and duties of the retiring Administrative Lender, and the
retiring Administrative Lender shall be discharged from its duties and
obligations under the Loan Papers. Notwithstanding any Administrative Lender's
resignation or removal hereunder, the provisions of this Article shall continue
to inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Administrative Lender under this Agreement.
ARTICLE IX
Changes in Circumstances
Section 9.1. LIBOR Basis Determination Inadequate. If with respect to
any proposed LIBOR Advance for any Interest Period, any Lender determines that
(i) deposits in dollars (in the applicable amount) are not being offered to that
Lender in the relevant market for such Interest Period or (ii) the LIBOR Basis
for such proposed LIBOR Advance does not adequately cover the cost to such
Lender of making and maintaining such proposed LIBOR Advance for such Interest
Period, such Lender shall forthwith give notice thereof to the Company,
whereupon until such Lender notifies the Company that the circumstances giving
rise to such situation no longer exist, the obligation of such Lender to make
LIBOR Advances shall be suspended.
Section 9.2. Illegality. If any applicable law, rule or regulation, or
any change therein or adoption thereof, or interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its LIBOR Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency, shall make it unlawful or impossible for such Lender (or its LIBOR
Lending Office) to make, maintain or fund its LIBOR Advances, such Lender shall
so notify the Company and the Administrative Lender. Before giving any notice to
the Company pursuant to this Section, the notifying Lender shall designate a
different LIBOR Lending Office or other lending office if such designation will
avoid the need for giving such notice and will not, in the sole judgment of the
Lender, be materially disadvantageous to the Lender. Upon receipt of such
notice, notwithstanding anything contained in Article II hereof, the Company
shall repay in full the then outstanding principal amount of each LIBOR Advance
owing to the
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notifying Lender, together with accrued interest thereon, on either (a) the last
day of the Interest Period applicable to such Advance, if the Lender may
lawfully continue to maintain and fund such Advance to such day, or (b)
immediately, if the Lender may not lawfully continue to fund and maintain such
Advance to such day. Concurrently with repaying each affected LIBOR Advance
owing to such Lender, notwithstanding anything contained in Article II hereof,
the Company shall borrow a Base Rate Advance from such Lender, and such Lender
shall make such Base Rate Advance, in an amount such that the outstanding
principal amount of the Advances owing to such Lender shall equal the
outstanding principal amount of the Advances owing immediately prior to such
repayment, and such Base Rate Advance shall be payable on the same date or dates
as the affected LIBOR Advances of such Lender would have otherwise been due and
payable but for this Section 9.2.
Section 9.3. Increased Costs.
(a) If any applicable law, rule or regulation, or any change in or
adoption of any law, rule or regulation, or any interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof or compliance by any Lender
(or its LIBOR Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or compatible
agency:
(i) shall subject a Lender (or its LIBOR Lending Office) to
any tax (net of any tax benefit engendered thereby) with respect to its
LIBOR Advances or its obligation to make such Advances, or shall change
the basis of taxation of payments to a Lender (or to its LIBOR Lending
Office) of the principal of or interest on its LIBOR Advances or in
respect of any other amounts due under this Agreement, as the case may
be, or its obligation to make such Advances (except for changes in the
rate of tax on the overall net income, net worth or capital of the
Lender and franchise taxes, doing business taxes or minimum taxes
imposed upon such Lender); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, a Lender's LIBOR Lending Office or shall impose on the
Lender (or its LIBOR Lending Office) or on the United States market for
certificates of deposit or the London interbank market any other
condition affecting its LIBOR Advances or its obligation to make such
Advances;
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, by an amount deemed by a Lender to be
material, then, within 15 days after demand by a Lender, the Company agrees to
pay to such Lender such additional amount as will compensate such Lender for
such increased costs or reduced amounts, subject to Section 10.9 hereof. The
affected Lender will as soon as practicable notify the Company of any event of
which it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section and will designate a different
LIBOR Lending Office or other lending office if such designation will avoid the
need for, or reduce
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the amount of, such compensation and will not, in the sole judgment of the
affected Lender made in good faith, be disadvantageous to such Lender.
(b) A certificate of any Lender claiming compensation under this
Section and setting forth the additional amounts to be paid to it hereunder and
calculations therefor shall be conclusive in the absence of manifest error. In
determining such amount, a Lender may use any reasonable averaging and
attribution methods. If a Lender demands compensation under this Section, the
Company may at any time, upon at least five Business Days' prior notice to the
Lender, after reimbursement to the Lender by the Company in accordance with this
Section of all costs incurred, prepay in full the then outstanding LIBOR
Advances of the Lender, together with accrued interest thereon to the date of
prepayment, along with any reimbursement required under Section 2.9 hereof.
Concurrently with prepaying such LIBOR Advances, the Company shall borrow a Base
Rate Advance from the Lender, and the Lender shall make such Base Rate Advance,
in an amount such that the outstanding principal amount of the Advances owing to
such Lender shall equal the outstanding principal amount of the Advances owing
immediately prior to such prepayment, and such Base Rate Advance shall be
payable on the same date or dates as the LIBOR Advances of such Lender would
have otherwise been due and payable but for this Section 9.3.
Section 9.4. Base Rate Advances Rather than LIBOR Advances. If notice
has been given pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the
obligation of a Lender to make LIBOR Advances, or requiring LIBOR Advances of a
Lender to be repaid or prepaid, then, unless and until the Lender notifies the
Company that the circumstances giving rise to such repayment no longer apply,
all Advances which would otherwise be made by such Lender as LIBOR Advances
shall be made instead as Base Rate Advances, which shall be payable on the same
date or dates as the LIBOR Advances made by the other Lenders.
ARTICLE X
MISCELLANEOUS
Section 10.1. Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Papers, nor consent to any
departure by the Company or any of its Subsidiaries therefrom, shall be
effective unless the same shall be in writing and signed by the Administrative
Lender with the consent of the Majority Lenders, and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver, or
consent shall, unless in writing and signed by all of the Lenders, (a) increase
the Commitment, (b) reduce any principal, interest, fees, or other amounts
payable hereunder, or waive any Event of Default under Section 7.1(a) hereof,
(c) postpone any date fixed for any payment of principal, interest, fees, or
other amounts payable hereunder, (d) release any collateral or guaranties
securing the Company's obligations hereunder, other than releases contemplated
by the Loan Papers, (e) change the meaning of Specified Percentage or the number
of Lenders required to take any action hereunder, or (f) amend this Section. No
amendment, waiver, or consent shall affect the Rights or duties of the
Administrative Lender under any Loan Papers, unless it is in writing and signed
by the Administrative Lender in addition to the requisite number of Lenders.
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Section 10.2. Notices. Unless otherwise provided herein, all notices,
requests, consents, demands, and other communications under the Loan Papers
shall be in writing and shall be personally delivered, sent by telecopy or telex
(answerback received), or mailed, by certified mail, postage prepaid, to the
following addresses:
(a) If to the Company:
PETsMART, Inc.
00000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxx
with a copy to:
Cooley Godward L.L.P.
0 Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
(b) If to the Administrative Lender:
NationsBank, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
(c) If to any Lender, to its address shown on the signature pages
hereto
(d) If to the Issuing Bank:
NationsBank, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
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54
with a copy to:
NationsBank, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx
or to such other address as any party may designate in written notice to the
other parties. All notices, requests, consents, demands, and other
communications hereunder will be effective when so personally delivered or sent
by telecopy or telex, or five days after being so mailed; provided, however,
that notices to the Administrative Lender pursuant to Article II hereof shall be
effective when received. The Company agrees that the Administrative Lender shall
have no duty or obligation to verify or otherwise confirm telephonic notices
given pursuant to Article II hereof, and agrees to indemnify and hold harmless
the Administrative Lender and Lenders for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, and
expenses resulting, directly or indirectly, from acting upon any such notice.
Section 10.3. Parties in Interest. All covenants and agreements
contained in this Agreement and all other Loan Papers shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto. The
Lenders may from time to time assign or transfer their interests hereunder
pursuant to Section 10.4 hereof. The Company may not assign or transfer its
Rights or obligations hereunder without the prior written consent of all
Lenders.
Section 10.4. Assignments and Participations.
(a) Each Lender may assign its Rights and obligations as a Lender under
the Loan Papers to one or more Eligible Assignees, pursuant to an assignment
substantially in the form of Exhibit "F" hereto, so long as (i) each assignment
shall be of a constant, and not a varying, percentage of all Rights and
obligations thereunder, (ii) the Eligible Assignee or the Lender entering into
such assignment, as determined between such Persons, shall deliver to the
Administrative Lender a processing fee of $3,500, and (iii) the amount of the
Commitment, Advances and Reimbursement Obligations being assigned pursuant to
each such assignment (determined as of the date of the assignment with respect
to such assignment) shall in no event be less the lesser of (A) than $5,000,000
and which is an integral multiple of $1,000,000, or (B) the aggregate amount of
the Commitment, Advances and Reimbursement Obligations owned by the Lender
entering into such Assignment. Within five Business Days after notice of any
such assignment, the Company shall execute and deliver to the Administrative
Lender, in exchange for the Note issued to such Lender, new Notes to the order
of such Lender and its assignee in amounts equal to their respective Specified
Percentages of the Commitment. Such new Notes shall be dated the effective date
of the assignment. It is specifically acknowledged and agreed that on and after
the effective date of each assignment, the assignee shall be a party hereto and
shall have the Rights and obligations of a Lender under the Loan Papers.
(b) Each Lender may sell participations to one or more banks or other
entities in all or any of its Rights and obligations under the Loan Papers;
provided, however, that (i) such Lender's
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obligations under the Loan Papers shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Lender shall remain the holder of its Note for all
purposes of the Loan Papers, (iv) the participant shall be granted the Right to
vote on or consent to only those matters described in subsections (a) through
(d) of Section 10.1 hereof, and (v) the Company, Administrative Lender, and
other Lenders shall continue to deal solely and directly with such Lender in
connection with its Rights and obligations under the Loan Papers.
(c) Any Lender may, in connection with any assignment or participation,
or proposed assignment or participation, disclose to the assignee or
participant, or proposed assignee or participant, any information relating to
the Company or any of its Subsidiaries furnished to such Lender by or on behalf
of the Company or its Subsidiaries; provided, however, that, prior to any such
disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any confidential information
received by it from such Lender.
(d) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its Rights under this Agreement (including, without limitation, the Advances
owing to it and the Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
(e) If the Company receives notice from any Lender requesting increased
costs or additional amounts under Section 2.8 or 10.7, the Company shall have
the right, unless such Lender has removed or cured the conditions which resulted
in the obligation to pay such increased costs or additional amounts or agreed to
waive and otherwise forego any right it may have to any payments therein
provided, to replace in its entirety such Lender (the "Replaced Lender"), upon
prior written notice to Administrative Lender and such Replaced Lender, with one
or more Eligible Assignees acceptable to the Administrative Lender (which
acceptance shall not be unreasonably withheld), pursuant to the provisions of
this Section 10.4; provided, however, that nothing herein contained shall
relieve the Company of its obligation to pay any such increased costs or
additional amounts to the extent incurred prior to the replacement of the
applicable Lender and not reduced or omitted by the replacement of the
applicable Lender.
Section 10.5. Sharing of Payments. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any Right of
set-off, or otherwise) on account of its Advances in excess of its Specified
Percentage of all payments made by the Company, such Lender shall forthwith
purchase participations in Advances made by the other Lenders as shall be
necessary to share the excess payment pro rata according to Specified
Percentages with each of them; provided, however, that if any of such excess
payment is thereafter recovered from the purchasing Lender, its purchase from
each Lender shall be rescinded and each Lender shall repay the purchase price to
the extent of such recovery together with any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered
according to Specified Percentages. The Company agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by Applicable Law, exercise all its Rights of
payment (including the Right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Company in the amount of
such participation.
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56
Section 10.6. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by Applicable Law,
to set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of the Company against any
and all of the obligations of the Company now or hereafter existing under this
Agreement and the other Loan Papers, whether or not such Lender shall have made
any demand under this Agreement or the other Loan Papers, and even if such
obligations are unmatured. Each Lender shall promptly notify the Company after
any such set-off and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The Rights of
each Lender under this Section are in addition to other Rights (including,
without limitation, other Rights of set-off) which each Lender may have.
Section 10.7. Costs, Expenses, and Taxes.
(a) The Company agrees to pay on demand (i) all costs and expenses of
the Administrative Lender in connection with the preparation, negotiation, and
administration of any Loan Papers, including without limitation the reasonable
fees and out-of-pocket expenses of counsel for the Administrative Lender, (ii)
all reasonable costs and expenses (including reasonable attorneys' fees and
expenses) of the Administrative Lender in connection with modification,
amendment, waiver, or release of any Loan Papers, and (iii) all costs and
expenses (including reasonable attorneys' fees and expenses) of the
Administrative Lender, Lenders, and Issuing Bank in connection with enforcement
of any Loan Papers.
(b) In addition, the Company shall pay any and all stamp, debt, and
other Taxes payable or determined to be payable in connection with any payment
hereunder (other than Taxes on the overall net income of the Administrative
Lender, any Lender, or the Issuing Bank or Taxes imposed by foreign Laws or as a
result of any Lender being organized under the laws of a jurisdiction outside of
the United States), or the execution, delivery, or recordation of any Loan
Papers, and agrees to save the Administrative Lender, Lenders, and Issuing Bank
harmless from and against any and all liabilities with respect to, or resulting
from any delay in paying or omission to pay any Taxes in accordance with this
Section, including any penalty, interest, and expenses relating thereto. All
payments by the Company or any Subsidiary under any Loan Papers shall be made
free and clear of and without deduction for any present or future Taxes (other
than Taxes on the overall net income of the Administrative Lender, any Lender,
or the Issuing Bank) of any nature now or hereafter existing, levied, or
withheld, including all interest, penalties, or similar liabilities relating
thereto. If the Company or any Subsidiary shall be required by Applicable Law to
deduct or to withhold any Taxes from or in respect of any amount payable
hereunder, (i) the amount so payable shall be increased to the extent necessary
so that, after making all required deductions and withholdings (including Taxes
on amounts payable to the Administrative Lender, any Lender, or the Issuing Bank
pursuant to this sentence), the payee receives an amount equal to the sum it
would have received had no such deductions or withholdings been made, (ii) the
Company or such Subsidiary shall make such deductions or withholdings, and (iii)
the Company or such Subsidiary shall pay the full amount deducted or withheld to
the relevant taxing authority in accordance with Applicable Law. Any Lender
claiming any additional amounts payable pursuant to this Section 10.7 shall use
reasonable commercial efforts to change the jurisdiction of its lending office
if the making of such change would avoid the need for or materially reduce the
amount of any such additional amounts which may
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57
thereafter accrue and if, in the reasonable opinion of such Lender, such change
in lending office would not be contrary to such Lender's normal banking
practices or be disadvantageous to such Lender.
(c) Each Lender which is not a United States Person hereby agrees that:
(i) it shall, no later than the date hereof (or, in the case
of a Lender which becomes a party hereto pursuant to Section 11.6 after
the date hereof, the date upon which such Lender becomes a party
hereto) deliver to the Company:
(A) if any lending office is located in the United States
of America, two (2) accurate and complete signed
originals of Internal Revenue Service Form 4224 or
any successor thereto ("Form 4224"),
(B) if any lending office is located outside the United
States of America, two (2) accurate and complete
signed originals of Internal Revenue Service Form
1001 or any successor thereto ("Form 1001").
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such lending office or lending offices under this
Agreement free from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office or
lending offices or selects an additional lending office it shall, at
the same time or reasonably promptly thereafter but only to the extent
the forms previously delivered by it hereunder are no longer effective,
deliver to the Company, in replacement for the forms previously
delivered by it hereunder:
(A) if such changed or additional lending office is
located in the United States of America, two (2)
accurate and complete signed originals of Form 4224;
or
(B) otherwise, two (2) accurate and complete signed
originals of Form 1001,
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such changed or additional lending office under this
Agreement free from withholding of United States Federal income tax;
(iii) it shall, before or promptly after the occurrence of any
event (including the passing of time but excluding any event mentioned
in clause (ii) above) requiring a change in the most recent Form 4224
or Form 1001 previously delivered by such Lender and if the delivery of
the same be lawful, deliver to the Company, two (2) accurate and
complete original signed copies of Form 4224 or Form 1001 in
replacement for the forms previously delivered by such Lender;
(iv) it shall, promptly upon the request of the Company,
deliver to the Company such other forms or similar documentation as may
be required from time to time by any applicable law, treaty, rule or
regulation in order to establish such Lender's tax status for
withholding purposes; and
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58
(v) it shall notify the Company, within 30 days after any
event (including an amendment to, or a change in any applicable law or
regulation or in the written interpretation thereof by any regulatory
authority or any judicial authority, or by ruling applicable to such
Lender of any governmental authority charged with the interpretation or
administration of any law) shall occur that results in such Lender no
longer being capable of receiving payments without any deduction or
withholding of United States federal income tax.
SECTION 10.8. INDEMNIFICATION BY COMPANY. THE COMPANY AGREES TO
INDEMNIFY, DEFEND, AND HOLD HARMLESS THE ADMINISTRATIVE LENDER, THE LENDERS, THE
ISSUING BANK, AND THEIR AFFILIATES, DIRECTORS, OFFICERS, AGENTS, EMPLOYEES, AND
REPRESENTATIVES, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES, AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED
BY OR ASSERTED AGAINST ANY OF THEM IN ANY WAY RELATING TO OR ARISING OUT OF ANY
LOAN PAPERS (INCLUDING IN CONNECTION WITH OR AS A RESULT, IN WHOLE OR IN PART,
OF THE NEGLIGENCE OF ANY OF THEM), ANY TRANSACTION RELATED HERETO OR THERETO, OR
ANY ACT, OMISSION, OR TRANSACTION OF THE COMPANY AND ITS AFFILIATES, OR ANY OF
THEIR DIRECTORS, OFFICERS, AGENTS, EMPLOYEES, OR REPRESENTATIVES; PROVIDED,
HOWEVER, THAT THE ADMINISTRATIVE LENDER, LENDERS, AND ISSUING BANK SHALL NOT BE
INDEMNIFIED, DEFENDED, AND HELD HARMLESS PURSUANT TO THIS SECTION FOR ANY LOSSES
OR DAMAGES WHICH THE COMPANY PROVES WERE CAUSED BY THE INDEMNIFIED PARTY'S
WILLFUL MISCONDUCT OR GROSS NEGLIGENCE.
Section 10.9. Rate Provision. It is not the intention of any party to
any Loan Papers to make an agreement violative of the Applicable Laws of any
applicable jurisdiction relating to usury. In no event shall the Company or any
of its Subsidiaries be obligated to pay any amount in excess of the Maximum
Amount. If any Lender ever receives, collects or applies, as interest, any such
excess, such amount which would be excessive interest shall be deemed a partial
repayment of principal and treated hereunder as such; and if principal is paid
in full, any remaining excess shall be paid to the Company. In determining
whether or not the interest paid or payable, under any specific contingency,
exceeds the Maximum Amount, the Company and Lenders shall, to the maximum extent
permitted under Applicable Laws, (i) characterize any nonprincipal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effect thereof, and (iii) amortize, prorate, allocate and
spread in equal parts, the total amount of interest throughout the entire
contemplated term of the Obligation so that the interest rate is uniform
throughout the entire term of the Obligation; provided that if the Obligation is
paid and performed in full prior to the end of the full contemplated term
thereof, and if the interest received for the actual period of existence thereof
exceeds the Maximum Amount, Lenders shall refund to the Company the amount of
such excess or credit the amount of such excess against the total principal
amount owing, and, in such event, no Lender shall be subject to any penalties
provided by any Applicable Laws for contracting for, charging or receiving
interest in excess of the Maximum Amount. This Section 10.9 shall control every
other
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provision of all agreements among the parties to this Agreement pertaining to
the transactions contemplated by or contained in the Loan Papers.
Section 10.10. Severability. If any provision of any Loan Papers is
held to be illegal, invalid, or unenforceable under present or future Applicable
Laws during the term thereof, such provision shall be fully severable, the
appropriate Loan Paper shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part thereof, and the
remaining provisions thereof shall remain in full force and effect and shall not
be affected by the illegal, invalid, or unenforceable provision or by its
severance therefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part of such
Loan Paper a legal, valid, and enforceable provision as similar in terms to the
illegal, invalid, or unenforceable provision as may be possible.
Section 10.11. Exceptions to Covenants. Neither the Company nor any of
its Subsidiaries shall be deemed to be permitted to take any action or to fail
to take any action that is permitted as an exception to any covenant in any Loan
Papers, or that is within the permissible limits of any covenant, if such action
or omission would result in a violation of any other covenant in any Loan
Papers.
Section 10.12. Counterparts. This Agreement and the other Loan Papers
may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such agreement,
it shall not be necessary to produce or account for any counterpart other than
one signed by the party against which enforcement is sought.
Section 10.13. No Novation. Except for Liens expressly released in
connection herewith, the execution, delivery and effectiveness of this Agreement
shall not extinguish the obligations for the payment of money outstanding under
the Prior Credit Agreement (as defined in the recitals hereof) or discharge or
release the Lien or priority of any security agreement, any pledge agreement or
any other security therefor. Nothing herein contained shall be construed as a
substitution or novation of the Obligations outstanding under the Prior Credit
Agreement or instruments securing the same, which shall remain in full force and
effect, except as modified hereby or by instruments executed concurrently
herewith. Nothing expressed or implied in this Agreement, or any other document
contemplated hereby shall be construed as a release or other discharge of the
Company under the Prior Credit Agreement or any guarantor or pledgor under any
Loan Paper (as such term is defined in the Prior Credit Agreement) from any of
its obligations and liabilities thereunder. The Prior Credit Agreement and such
Loan Papers shall remain in full force and effect, until and except as modified
hereby or in connection herewith.
Section 10.14. Purchase by Lenders. Simultaneously with the
satisfaction of the conditions precedent to effectiveness set forth in Section
4.1 hereof, each Lender a party hereto and not a Prior Lender shall be deemed to
have purchased without recourse an amount of each of the Prior Lender's
outstanding Advances and Reimbursement Obligations under the prior Credit
Agreement such that after giving effect to this Agreement, the percentage of
each Lender's Commitment hereunder which has been utilized will be ratable in
accordance with their Specified Percentage. Each Prior Lender warrants that its
portion of the outstanding Advances and
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60
Reimbursement Obligations under the Prior Credit Agreement being sold pursuant
to this Section 10.14 is being sold free and clear of any adverse claims.
SECTION 10.15. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND ALL OTHER LOAN PAPERS SHALL BE DEEMED TO BE
CONTRACTS MADE IN DALLAS, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS) AND THE UNITED STATES OF AMERICA. WITHOUT EXCLUDING ANY OTHER
JURISDICTION, THE COMPANY AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS
LOCATED IN DALLAS, TEXAS, WILL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION
HEREWITH. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE COMPANY HEREBY WAIVES ANY
RIGHT THAT THEY MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN
TORT, CONTRACT, EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS
AGREEMENT, THE OTHER LOAN PAPERS, OR ANY RELATED MATTERS, AND AGREES THAT ANY
SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
(b) THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY LEGAL PROCESS
UPON IT. UNDER THE LOAN PAPERS, IN ADDITION, THE COMPANY AGREES THAT SERVICE OF
PROCESS MAY BE MADE UPON IT BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO THE COMPANY AT ITS ADDRESS DESIGNATED FOR NOTICE UNDER THIS
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER
DEPOSIT IN THE UNITED STATES MAIL. NOTHING IN THIS SECTION SHALL AFFECT THE
RIGHT OF THE ADMINISTRATIVE LENDER OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.
SECTION 10.16. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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61
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date
first set forth above.
COMPANY: PETsMART, INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Executive Vice President, CFO
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62
ADMINISTRATIVE LENDER: NATIONSBANK, N.A., as Administrative
Lender
By: /s/ Xxxxxxxxx X. Xxxx
--------------------------------
Name: Xxxxxxxxx X. Xxxx
------------------------------
Title: Vice President
------------------------------
ISSUING BANK: NATIONSBANK, N.A., as Issuing Bank
By: /s/ Xxxxxxxxx X. Xxxx
--------------------------------
Name: Xxxxxxxxx X. Xxxx
------------------------------
Title: Vice President
------------------------------
Address:
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxxxx Xxxxxxx
LENDERS: NATIONSBANK, N.A., Individually
Specified Percentage: 36.02%
Commitment: $21,610,000
By: /s/ Xxxxxxxxx X. Xxxx
--------------------------------
Name: Xxxxxxxxx X. Xxxx
------------------------------
Title: Vice President
------------------------------
Address:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxxxx Xxxxxxx
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63
XXXXX FARGO BANK, N.A.
Specified Percentage: 15.58%
Commitment: $9,350,000.00
By: /s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
------------------------------
Title: Vice President
-----------------------------
Address:
000 Xxxx Xxxxxxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Corporate Lending Division #929
/s/ Felynn X. Xxxxx
-----------------------------------
Felynn X. Xxxxx
Assistant Vice President
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64
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
Specified Percentage: 13.33%
Commitment: $8,000,000.00
By: /s/ Xxxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxxx X. Xxxxx
------------------------------
Title: Vice President
-----------------------------
By: /s/ W. Xxxxxx X. Xxxxx
--------------------------------
Name: W. Xxxxxx X. Xxxxx
------------------------------
Title: Vice President
-----------------------------
Address:
0 Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
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65
CALIFORNIA BANK & TRUST
Specified Percentage: 8.33%
Commitment: $5,000,000.00
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
------------------------------
Title: V.P.
-----------------------------
Address:
00000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
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66
FLEET NATIONAL BANK
Specified Percentage: 4.67%
Commitment: $2,800,000.00
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
------------------------------
Title: Vice President
-----------------------------
Address:
Mail Stop: MA OF 0000
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: National Retail Group
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67
THE BANK OF NOVA SCOTIA
Specified Percentage: 11.17%
Commitment: $6,666,666.67
By: /s/ X. Xxx Xxxxxxxx
--------------------------------
Name: X. Xxx Xxxxxxxx
------------------------------
Title: Senior Relationship Manager
-----------------------------
Address:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
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68
CREDIT LYONNAIS LOS ANGELES BRANCH
Specified Percentage: 4.67%
Commitment: $2,800,000.00
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
------------------------------
Title: First Vice President and
Manager
-----------------------------
Address:
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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69
FIRST UNION NATIONAL BANK
Specified Percentage: 6.23%
Commitment: $3,733,334.00
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
------------------------------
Title: V.P.
-----------------------------
Address:
IC: PA 4821
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
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