Exhibit 10.21
$175,000,000
CREDIT AGREEMENT
Dated as of November 30, 2001
Among
SMART & FINAL INC.,
as Borrower
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THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Initial Lenders
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BNP PARIBAS,
as Administrative Agent and Lead Arranger,
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XXXXXX TRUST & SAVINGS BANK,
as Syndication Agent
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and
COOPERATIVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH,
as Documentation Agent
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS..................................................... 1
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Section 1.01 Certain Defined Terms........................................................ 1
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Section 1.02 Computation of Time Periods.................................................. 24
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Section 1.03 Accounting Terms............................................................. 24
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Section 1.04 Other Definitional Provisions................................................ 24
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Section 1.05 Exhibits and Schedules....................................................... 24
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Section 1.06 Ownership of Synthetic Lease Properties...................................... 24
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ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES................................................... 24
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Section 2.01 The Advances................................................................. 24
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Section 2.02 Making the Advances.......................................................... 26
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Section 2.03 Repayment.................................................................... 29
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Section 2.04 Reduction of the Revolving Commitments and Swing Line Commitments............ 30
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Section 2.05 Prepayments.................................................................. 31
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Section 2.06 Interest..................................................................... 33
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Section 2.07 Fees......................................................................... 36
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Section 2.08 Increased Costs, Etc......................................................... 37
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Section 2.09 Payments and Computations.................................................... 38
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Section 2.10 Taxes........................................................................ 41
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Section 2.11 Sharing of Payments, Etc..................................................... 45
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Section 2.12 Use of Proceeds.............................................................. 45
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Section 2.13 Evidence of Debt............................................................. 46
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Section 2.14 Conversion of Advances....................................................... 46
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ARTICLE III AMOUNTS AND TERMS OF LETTERS OF CREDIT............................................. 47
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Section 3.01 The Letter of Credit Subfacility............................................. 47
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Section 3.02 Issuance of Letters of Credit................................................ 47
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Section 3.03 Drawing and Reimbursement.................................................... 48
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Section 3.04 Obligations Absolute......................................................... 48
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Section 3.05 Letter of Credit Compensation................................................ 49
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Section 3.06 Use of Letters of Credit..................................................... 50
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ARTICLE IV CONDITIONS OF LENDING............................................................... 50
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Section 4.01 Conditions Precedent to Initial Borrowing.................................... 50
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Section 4.02 Conditions Precedent to Each Borrowing and Issuance.......................... 56
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Section 4.03 Determinations Under Section 4.01............................................ 57
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ARTICLE V REPRESENTATIONS AND WARRANTIES....................................................... 57
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Section 5.01 Representations and Warranties of the Borrower............................... 57
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ARTICLE VI COVENANTS OF THE BORROWER........................................................... 68
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Section 6.01 Affirmative Covenants........................................................ 68
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Section 6.02 Negative Covenants........................................................... 75
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Section 6.03 Reporting Requirements....................................................... 82
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Section 6.04 Financial Covenants.......................................................... 86
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ARTICLE VII EVENTS OF DEFAULT.................................................................. 88
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Section 7.01 Events of Default............................................................ 88
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Section 7.02 Actions in Respect of the Letters of Credit Upon Default..................... 90
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ARTICLE VIII THE CREDIT AGENTS................................................................. 91
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Section 8.01 Authorization and Action..................................................... 91
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Section 8.02 Credit Agents' Reliance, Etc................................................. 92
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Section 8.03 Credit Agents and Affiliates................................................. 92
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Section 8.04 Lender Party Credit Decision................................................. 93
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Section 8.05 Indemnification.............................................................. 93
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Section 8.06 Successor Agents............................................................. 94
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Section 8.07 Syndication Agent and Documentation Agent.................................... 94
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Section 8.08 Secured Hedge Agreements..................................................... 94
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ARTICLE IX MISCELLANEOUS....................................................................... 95
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Section 9.01 Amendments, Etc.; Release of Collateral; Termination......................... 95
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Section 9.02 Notices, Etc................................................................. 96
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Section 9.03 No Waiver; Remedies.......................................................... 96
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Section 9.04 Costs and Expenses........................................................... 97
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Section 9.05 Right of Set-off............................................................. 99
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Section 9.06 Binding Effect............................................................... 99
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Section 9.07 Assignments and Participations............................................... 99
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Section 9.08 Governing Law................................................................ 102
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Section 9.09 Execution in Counterparts.................................................... 102
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Section 9.10 No Liability of the L/C Bank................................................. 103
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Section 9.11 Confidentiality.............................................................. 103
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Section 9.12 Waiver of Jury Trial......................................................... 103
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Section 9.13 Marshalling; Payments Set Aside.............................................. 104
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Section 9.14 Agreement to Enter Into New Intercreditor Agreement.......................... 104
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ii
SCHEDULES AND EXHIBITS
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Schedules
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Schedule I Commitments, Etc.
Schedule 4.01(h)(v) Jurisdictions
Schedule 5.01(b) Capital Stock of Loan Parties
Schedule 5.01(d) Approvals and Consents
Schedule 5.01(h) Litigation
Schedule 5.01(j) Pension Plans
Schedule 5.01(l)(ii) Superfund Site
Schedule 5.01(n) Open Years
Schedule 5.01(q)(i) Surviving Debt
Schedule 5.01(r)(i) Owned Real Property
Schedule 5.01(r)(ii) Leased Real Property
Schedule 5.01(s) Existing Investments
Schedule 5.01(t) Intellectual Property
Schedule 5.01(u) Certain Agreements, Etc.
Schedule 5.01(y) Insurance
Schedule 6.02(a) Existing Liens
Exhibits
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Exhibit A Form of Assignment and Acceptance
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Swing Line Borrowing
Exhibit C Form of Notice of Issuance
Exhibit D-1 Form of Revolving Note
Exhibit D-2 Form of Swing Line Note
Exhibit E-1 Form of Security Agreement
Exhibit E-2 Form of Pledge Agreement
Exhibit E-3 Form of Subordinate Security Agreement
Exhibit F-1 Form of Deed of Trust
Exhibit F-2 Form of Leasehold Deed of Trust
Exhibit G Form of Guaranty
Exhibit H Form of Intercompany Note
Exhibit I Form of Solvency Certificate
Exhibit J-1 Form of Opinion of Borrower's Special California Counsel
Exhibit J-2 Form of Opinion of Borrower's In-House Counsel
Exhibit K Form of Borrowing Base Certificate
Exhibit L Form of Amendment to Guaranty
Exhibit M-1 Form of Amendment to Security Agreement
Exhibit M-2 Form of Amendment to Pledge Agreement
Exhibit N-1 Form of Second Deed of Trust on Fee Interest in Synthetic Lease
Properties
Exhibit N-2 Form of Second Deed of Trust on Leasehold Interest in Synthetic
Lease Properties
Exhibit O Form of Landlord's Waiver and Consent Agreement
iii
Exhibit P Form of Environmental Indemnity Agreement
Exhibit Q-1 Form of Intercreditor Agreement (Owned Property)
Exhibit Q-2 Form of Intercreditor Agreement (Leased Property)
iv
SASM&F 11/29/01 DRAFT
CREDIT AGREEMENT, dated as of November 30, 2001 among SMART & FINAL
INC., a Delaware corporation (the "Borrower"), the financial institutions and
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other entities listed on the signature pages hereof as Lenders (the "Initial
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Lenders"), BNP PARIBAS, as Administrative Agent (in such capacity, together with
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any successor in such capacity appointed pursuant to Article VIII, the
"Administrative Agent"), and as Lead Arranger (in such capacity, the "Lead
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Arranger"), and BNP PARIBAS, as L/C Bank (as hereinafter defined).
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PRELIMINARY STATEMENTS
(1) The Borrower has requested, on the terms and conditions set forth
herein, (a) that the Lenders make Revolving Advances (as hereinafter defined) to
the Borrower from time to time in an aggregate principal amount not to exceed at
any time outstanding the aggregate Revolving Commitments (as hereinafter
defined) of the Lenders less the sum of (i) the aggregate amount of Letter of
Credit Obligations (as hereinafter defined) outstanding at such time, and (ii)
Swing Line Advances (as hereinafter defined) outstanding from time to time, (b)
that the Swing Line Lender (as hereinafter defined) make Swing Line Advances to
the Borrower from time to time in an aggregate principal amount not to exceed at
any time outstanding Ten Million Dollars ($10,000,000) and (c) that the L/C Bank
issue Letters of Credit (as hereinafter defined) for the account of the Borrower
from time to time in an aggregate Available Amount (as hereinafter defined) not
to exceed at any time outstanding the L/C Sublimit (as hereinafter defined).
(2) Subject to the terms and conditions set forth in this Agreement,
(a) the Lenders have agreed severally to make such Revolving Advances to the
Borrower, (b) the Swing Line Lender has agreed to make such Swing Line Advances
to the Borrower, and (c) the L/C Bank has agreed to issue such Letters of Credit
for the account of the Borrower.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Accounts Receivable" means all "accounts" as defined in the Uniform
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Commercial Code in effect from time to time in the State of California.
"Additional Costs" means any amount payable by Borrower to any Lender
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Party pursuant to Section 2.08 hereof.
"Additional Mortgages" has the meaning set forth in Section 6.01(1).
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"Adjusted EBITDA" means, for any period, determined for the Borrower
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and its Subsidiaries on a Consolidated basis, EBITDA plus the interest component
of all amounts paid as rent under the Synthetic Lease.
"Adjusted Leverage Ratio" means, as of any date of determination, the
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ratio of (i) the sum of (A) Consolidated Total Debt as of the end of the most
recently ended fiscal quarter of the Borrower plus (B) the product of (1) rent
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expense (including amounts paid as rent under the Synthetic Lease) for the
Borrower and its Subsidiaries on a Consolidated basis for the period of four
fiscal quarters ending as of the end of the most recently ended fiscal quarter
of the Borrower multiplied by (2) 8 to (ii) the sum of (A) EBITDA for the
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Borrower and its Subsidiaries on a Consolidated basis for the period of four
fiscal quarters ending as of the end of the most recently ended fiscal quarter
of the Borrower plus, (B) rent expense (including amounts paid as rent under the
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Synthetic Lease) for the Borrower and its Subsidiaries on a Consolidated basis
for the period of four fiscal quarters ending as of the end of the most recently
ended fiscal quarter of the Borrower.
"Administrative Agent's Account" means the account of the
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Administrative Agent as the Administrative Agent shall specify in writing to the
Lender Parties.
"Advance" means a Revolving Advance, a Swing Line Advance or an L/C
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Advance.
"Affiliate" means, as to any Person, any other Person that, directly
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or indirectly, controls, is controlled by or is under common control with such
Person. For purposes of this definition, the term "control" (including the terms
"controlling", "controlled by" and "under common control with") of a Person
means the possession, direct or indirect, of the power to vote 10% or more of
the Voting Interests of such Person or direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Interests, by contract or otherwise.
"Agreement" means this Credit Agreement, including the Schedules and
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Exhibits hereto, as it may be amended, restated, extended, supplemented or
otherwise modified from time to time.
"Applicable Lending Office" means, with respect to each Lender, such
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Lender's Domestic Lending Office in the case of a Base Rate Advance and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
2
"Applicable Margin" means, for any fiscal quarter for each Interest
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Type of Advance set forth below, the applicable rate per annum set forth in the
table below opposite the Adjusted Leverage Ratio determined as of the last day
of the immediately preceding fiscal quarter and beneath such Interest Type of
Advance:
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Applicable Margin for Applicable Margin
Adjusted Leverage Ratio Eurodollar Rate for Base Rate
Tier Advances Advances
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I *4.25 2.50% 1.50%
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II *3.75 but **4.25 2.25% 1.25%
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III *3.25 but **3.75 2.00% 1.00%
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IV **3.25 1.75% 0.75%
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provided, however, that, notwithstanding the foregoing, (i) on the Closing Date
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and until the six month anniversary thereof, the Applicable Margin shall be 2.5%
for Eurodollar Rate Advances and 1.5% for Base Rate Advances, and (ii) for
purposes of determining the Applicable Margin at any time following the six
month anniversary of the Closing Date, the Adjusted Leverage Ratio shall be
deemed to be greater than or equal to 4.25 to 1.0 at all times when a Default
has occurred and is continuing based on the Borrower's failure to deliver any
financial statement, compliance certificate or Borrowing Base Certificate as and
when required pursuant to Sections 6.03(a), 6.03(c) or 6.03(d), as applicable.
For purposes of this Agreement, any change in the Applicable Margin based on a
change in the Adjusted Leverage Ratio shall be effective three Business Days
after the date of receipt by the Administrative Agent of the financial
statements, compliance certificate and Borrowing Base Certificate required by
Sections 6.03(a), 6.03(c) and 6.03(d), as applicable, reflecting such change.
"Assignment and Acceptance" means an assignment and acceptance entered
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into by a Lender Party and an Eligible Assignee, and accepted by the Borrower
(if required hereunder) and the Administrative Agent, in accordance with Section
9.07 and in substantially the form of Exhibit A hereto.
"Available Amount" of any Letter of Credit means, at any time, the
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maximum amount available to be drawn under such Letter of Credit at such time
(assuming compliance at such time with all conditions to drawing).
"Bank Hedge Agreement" means a Hedge Agreement between the Borrower
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and a Hedge Bank (or Hedge Banks) or a Secured Hedge Bank (or Secured Hedge
Banks).
"Base Rate" means a fluctuating interest rate per annum in effect from
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time to time, which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest established by BNP Paribas as its "base rate," with
each change in such rate to be effective for purposes of this Agreement and the
transactions contemplated hereby without necessity of any action on the part of
any Person, on the day on which such change is effective, it being understood
that such rate does not and shall not necessarily reflect the best or lowest
rate of interest available to BNP Paribas' best or preferred
* = more than equals to
** = less than
3
commercial customers and (b) 1/2 of one percent per annum above the Federal
Funds Rate.
"Base Rate Advance" means an Advance that bears interest as provided
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in Section 2.06(a).
"Borrower" has the meaning set forth in the recital of parties to this
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Agreement.
"Borrower's Account" means the account of the Borrower which the
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Borrower designates to the Administrative Agent in writing from time to time.
"Borrowing" means a Revolving Borrowing or a Swing Line Borrowing.
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"Borrowing Base Amount" means, at any time of determination, the
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lesser of (i) the aggregate Revolving Commitments in effect at such time, and
(ii) the sum of the following amounts for each category of Eligible Collateral
(as reflected in the then most recently delivered Borrowing Base Certificate):
(a) with respect to Eligible Inventory, 60% of the value thereof, and
(b) with respect to Eligible Accounts Receivable, 80% of the value
thereof;
provided, however, that in the event a Default has occurred and is continuing
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based on the Borrower's failure to deliver any financial statement, compliance
certificate or Borrowing Base Certificate as and when required pursuant to
Sections 6.03(a), 6.03(c), or 6.03(d), as applicable, the Borrowing Base Amount
shall be such amount as may be determined from time to time by the
Administrative Agent and the Required Lenders in their sole discretion.
"Borrowing Base Availability" means, at any time, an amount equal to
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the Borrowing Base Amount minus the sum of (i) the then outstanding aggregate
principal amount of the Revolving Advances and the Swing Line Advances and (ii)
the aggregate Letters of Credit Obligations then outstanding.
"Borrowing Base Certificate" means a certificate of the Borrower
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concerning the Borrowing Base Amount of the Borrower substantially in the form
of Exhibit K.
"Borrowing Base Deficiency" means, at any time, the amount by which
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the then outstanding aggregate principal amount of the Revolving Advances and
the Swing Line Advances plus (ii) the aggregate Letters of Credit Obligations
then outstanding exceeds the Borrowing Base Amount.
"Business Day" means a day of the year on which banks are not required
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or authorized by law to close in Los Angeles, California or New York, New York
and, if
4
the applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
"Capital Expenditures" means, for any period, the sum of (a) all
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expenditures during such period for equipment, fixed assets, real property or
improvements, or for replacements or substitutions therefor or additions
thereto, that have a useful life of more than one year plus (b) the aggregate
principal amount of all Debt (including obligations under Capitalized Leases)
assumed or incurred in connection with any such expenditures.
"Capitalized Leases" means leases that have been or should be, in
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accordance with GAAP, recorded as capital leases.
"Cash Equivalents" means any of the following, to the extent owned by
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the Borrower free and clear of all Liens and having a maturity of not greater
than 180 days from the date of acquisition thereof: (a) readily marketable
direct obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b) insured
certificates of deposit of or time deposits with any commercial bank that (i) is
a Lender or a member of the Federal Reserve System, (ii) issues (or the parent
of which issues) commercial paper rated as described in clause (c), (iii) is
organized under the laws of the United States or any State thereof and (iv) has
combined capital and surplus of at least $1 billion or (c) commercial paper
(other than commercial paper issued by or on behalf of the Borrower or any of
its Affiliates) in an aggregate amount of no more than $500,000 per issuer
outstanding at any time, issued by any corporation organized under the laws of
any State of the United States and rated at least "Prime-1" (or the then
equivalent grade) by Xxxxx'x Investors Services or "A-1" (or the then equivalent
grade) by Standard & Poor's Ratings Group.
"Casino" means Casino USA, Inc. and its Affiliates.
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"Casino Note" means the promissory note dated as of June 11, 1999
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issued by the Borrower in favor of Casino in the principal amount of
$15,964,606.25.
"Casino Tax Sharing Documents" means the Tax Allocation Agreement by
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and between Smart & Final Iris Corporation and Casino, dated November 5, 1984,
and the Tax Termination Agreement by and between the Borrower and Casino, dated
August 6, 1991, both as amended January 3, 1993.
"CERCLA" means the Comprehensive Environmental Response, Compensation
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and Liability Act of 1980, as amended or supplemented from time to time, and the
regulations promulgated pursuant thereto.
"Closing Date" means the date on which each of the conditions in
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Section 4.01 is satisfied or waived.
5
"Collateral" means all "Collateral" referred to in the Collateral
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Documents and all other property that is subject to any Lien in favor of the
Administrative Agent, the Lenders or any L/C Bank.
"Collateral Documents" means the Security Agreement, the Pledge
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Agreement, the Mortgages and any Additional Mortgages, and all exhibits and
schedules to (and any documents executed in connection with) the foregoing, and
any other agreement that creates or purports to create a Lien in favor of the
Administrative Agent for the benefit of the Secured Parties.
"Commitment" means a Revolving Commitment or a Swing Line Commitment.
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"Commitment Fee Percentage" means a fee per annum on the undrawn
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amount of the Facility as set forth below payable quarterly in arrears (and on
the Commitment Termination Date) following the Closing:
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Tier Adjusted Leverage Ratio Commitment Fee Percentage
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I *4.25 0.50%
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II *3.75 but **4.25 0.40%
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III *3.25 but **3.75 0.35%
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IV **3.25 0.30%
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provided, however, that, notwithstanding the foregoing, (i) on the Closing Date
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and until the six month anniversary thereof, the Commitment Fee Percentage shall
be 0.50%, and (ii) for purposes of determining the Commitment Fee Percentage
thereafter, the Adjusted Leverage Ratio shall be deemed to be greater than or
equal to 4.25 to 1.0 at all times when a Default has occurred and is continuing
based on the Borrower's failure to deliver any financial statement, compliance
certificate or Borrowing Base Certificate as and when required pursuant to
Sections 6.03(a), 6.03(c) or 6.03(d), as applicable. For purposes of this
Agreement, any change in the Commitment Fee Percentage based on a change in the
Adjusted Leverage Ratio shall be effective three Business Days after the date of
receipt by the Administrative Agent of the financial statements, compliance
certificate and Borrowing Base Certificate required by Sections 6.03(a), 6.03(c)
and 6.03(d), as applicable, reflecting such change.
"Commitment Termination Date" means November 30, 2004, on which date
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the Facilities shall terminate and all amounts outstanding thereunder shall be
due and payable, subject to early termination and acceleration upon the
occurrence of an Event of Default.
"Confidential Information" means information that the Borrower
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furnishes to the Administrative Agent or any Lender in a writing designated as
confidential but does not include any such information that is or becomes
generally available to the public or that is or becomes available to the
Administrative Agent or such Lender from a source other than the Borrower that
is not, to the best of the
* = more than equals to
** = less than
6
Administrative Agent's or such Lender's knowledge, acting in violation of a
confidentiality agreement with the Borrower.
"Consolidated" refers to the consolidation of accounts in accordance
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with GAAP.
"Consolidated Interest Expense" means, for any period, total interest
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expense (including the interest component of Capitalized Leases) of the Borrower
and its Subsidiaries on a Consolidated basis for such period in conformity with
GAAP, including, without limitation, all commissions, discounts and other fees
and charges owed with respect to any financings or letters of credit, but
excluding charges in such period for the amortization or write-off of
capitalized (i) amounts payable pursuant to Section 2.07, (ii) other non-cash
charges for amortization or write-off of debt issuance expenses incurred prior
to the date hereof, and (iii) other expenses relating to the negotiation and
preparation of this Agreement.
"Consolidated Net Income" means, for any period, the net earnings (or
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loss) after taxes of the Borrower and its Subsidiaries on a Consolidated basis
determined for such period in conformity with GAAP.
"Consolidated Net Worth" means the excess of (i) the total assets of
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the Borrower and its Subsidiaries determined on a Consolidated basis in
accordance with GAAP, over (ii) all liabilities of the Borrower and its
Subsidiaries determined on a Consolidated basis in accordance with GAAP.
"Consolidated Total Debt" means, as of any time of determination,
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determined for the Borrower and its Subsidiaries on a consolidated basis, (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) non-contingent obligations
to pay the deferred purchase price of property or services other than trade
payables incurred in the ordinary course of business, (iv) Capitalized Leases,
(v) all Obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities and (vi) all indebtedness of others
referred to in clauses (i) through (v) above guaranteed directly or indirectly
in any manner by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (w) to pay or purchase such indebtedness or to
advance or supply funds for the payment or purchase of such indebtedness, (x) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such indebtedness or to assure the holder of such indebtedness against loss, (y)
to supply funds to or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of whether such property
is received or such services are rendered) or (z) otherwise to assure a creditor
against loss; provided, that Consolidated Total Debt shall not include any
indebtedness in respect of the Synthetic Lease.
"Conversion," "Convert" and "Converted" each refer to a conversion of
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Advances of one Interest Type into Advances of the other Interest Type pursuant
to Section 2.06.
7
"Credit Agents" means, collectively, the Administrative Agent, the
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Syndication Agent, the Documentation Agent, and BNP Paribas in its capacity as
Collateral Agent (as defined in each of the Collateral Documents) for each of
the Secured Parties under the Collateral Documents.
"Debt" of any Person means, without duplication, (a) all indebtedness
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of such Person for borrowed money, (b) all Obligations of such Person for the
deferred purchase price of property or services (other than trade payables not
overdue by more than 60 days incurred in the ordinary course of such Person's
business), (c) all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all Obligations of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all Capitalized
Leases, (f) all Obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (g) all Obligations of such
Person to purchase, redeem, retire, defease or otherwise make any payment in
respect of any capital stock of or other ownership or profit interest in such
Person or any other Person or any warrants, rights or options to acquire such
capital stock, valued, in the case of Redeemable Preferred Stock, at the greater
of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (h) all Obligations of such Person in respect of Hedge Agreements,
(i) all Debt of others referred to in clauses (a) through (h) above guaranteed
directly or indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (i) to pay or
purchase such Debt or to advance or supply funds for the payment or purchase of
such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling the debtor to
make payment of such Debt or to assure the holder of such Debt against loss,
(iii) to supply funds to or in any other manner invest in the debtor (including
any agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (iv) otherwise to assure
a creditor against loss, and (j) all Debt referred to in clauses (a) through (h)
above secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt.
"Default" means any Event of Default or any event that would
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constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
"Default Rate" has the meaning specified in Section 2.06(d).
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"Disclosed Litigation" has the meaning specified in Section 5.01(h).
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"Domestic Lending Office" means, with respect to any Lender, the
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office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, or
8
such other office of such Lender as such Lender may from time to time specify to
the Borrower and the Administrative Agent.
"Domestic Subsidiary" means a direct or indirect Subsidiary of the
-------------------
Borrower that is not a Foreign Subsidiary.
"EBITDA" means, for any period, net income (or net loss) excluding all
------
non-cash extraordinary items of gain or loss, plus, to the extent deducted in
determining such net income (or net loss), the sum of (a) interest expense, (b)
income tax expense, (c) depreciation expense and (d) amortization expense, in
each case determined in accordance with GAAP for such period.
"Eligible Accounts Receivable" means Accounts Receivable of the
----------------------------
Borrower and its Domestic Subsidiaries. The value of such Accounts Receivable
shall be their book value determined in accordance with GAAP (after taking into
account the amount of any allowance for doubtful accounts), as reflected on the
most recent Borrowing Base Certificate received by the Administrative Agent
pursuant to Section 4.02(a)(iii) or Section 6.03(a); provided, however, that the
following shall not constitute Eligible Accounts Receivable:
(i) Accounts Receivable in respect of which the Security Agreement,
after giving effect to the related filings of financing statements that have
then been made, if any, does not create or has ceased to create a valid and
perfected first priority Lien in favor of the Administrative Agent and the
Lender Parties securing the Secured Obligations; and
(ii) Accounts Receivable owing from any Person that is an Affiliate of
the Borrower.
"Eligible Assignee" means (a) any commercial bank, savings and loan
-----------------
association, savings bank, finance company, insurance company, mutual fund or
other financial institution, fund or investor which has been approved in writing
(or, in the case of the Borrower, deemed approved as provided below) by the
Borrower and the Administrative Agent as an Eligible Assignee for purposes of
this Agreement, provided that in each such case such approval shall not be
--------
unreasonably withheld, provided, further, that if the Borrower is requested at
-------- -------
any time to approve any Person as an Eligible Assignee hereunder and the
Administrative Agent has not received written notice from the Borrower, within
ten Business Days of such request, that the Borrower does not approve such
Person as an Eligible Assignee, the Borrower shall be deemed to have approved
such Person as an Eligible Assignee, and provided, further, that approval of the
-------- -------
Borrower shall not be required if an Event of Default has occurred and is
continuing, and (b) any Lender Party and any Affiliate of any Lender Party,
provided that, in the case of Affiliates of such Lender Party, written notice to
--------
the Administrative Agent shall have been provided.
"Eligible Collateral" means, collectively, Eligible Inventory and
-------------------
Eligible Accounts Receivable.
9
"Eligible Inventory" means Inventory of the Borrower and its Domestic
------------------
Subsidiaries. The value of such Inventory shall be the book value of such
Inventory determined in accordance with GAAP as reflected on the most recent
Borrowing Base Certificate received by the Administrative Agent pursuant to
Section 4.02(a)(iii) or Section 6.03(a); provided, however, that Eligible
-------- -------
Inventory shall not include any Inventory in respect of which the Security
Agreement, after giving effect to the related filings of financing statements
that have then been made, if any, does not create or has ceased to create a
valid and perfected first priority Lien in favor of the Administrative Agent and
the Lender Parties securing the Secured Obligations.
"Employee Benefit Plan" means any "employee benefit plan" as defined
---------------------
in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to
by, or required to be contributed to by, the Borrower or any of its
Subsidiaries.
"Environmental Action" means any administrative, regulatory or
--------------------
judicial action, suit, demand, demand letter, directive, claim, lien, notice,
investigation, proceeding, order or consent agreement relating in any way to any
Environmental Law or any Environmental Permit including (a) any claim by any
governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any Environmental Law
and (b) any claim by any Person seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Materials, claiming non-compliance or violation of any Environmental Law, or
arising from alleged injury or threat of injury to health, safety or the
environment.
"Environmental Indemnity Agreement" has the meaning specified in
---------------------------------
Section 4.01(h)(xvi).
"Environmental Law" means any federal, state or local law, rule,
-----------------
regulation, order, writ, judgment, injunction, decree, determination, ordinance,
code, guideline, policy and any and all common law requirements, rules and bases
of liability relating to the environment, health, safety or Hazardous Materials,
now or hereafter in effect and any judicial or administrative interpretation
thereof, including, without limitation, CERCLA, the Resource Conservation and
Recovery Act, the Hazardous Materials Transportation Act, the Clean Water Act,
the Toxic Substances Control Act, the Clean Air Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide
Act and the Occupational Safety and Health Act, the Oil Pollution Act, the
Emergency Planning and the Community Right-to-Know Act, and any state and local
or foreign counterparts or equivalents, in each case as amended from time to
time.
"Environmental Permit" means any permit, approval, identification
--------------------
number, license or other authorization required under any Environmental Law.
"Equity Interests" means, with respect to any Person, shares of
----------------
capital stock of (or other ownership or profit interests in) such Person,
warrants, options or other rights for the purchase or other acquisition from
such Person of shares of capital stock of
10
(or other ownership or profit interests in) such Person, securities convertible
into or exchangeable for shares of capital stock of (or other ownership or
profit interests in) such Person or warrants, rights or options for the purchase
or other acquisition from such Person of such shares (or such other interests),
and other ownership or profit interests in such Person (including, without
limitation, partnership, member or trust interests therein), whether voting or
nonvoting, and whether or not such shares, warrants, options, rights or other
interests are authorized or otherwise existing on any date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
---------------
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Sections 414(m)
or 414(o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of the Borrower or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of the Borrower
or any such Subsidiary within the meaning of this definition with respect to the
period such entity was an ERISA Affiliate of the Borrower or such Subsidiary and
with respect to liabilities arising after such period for which the Borrower or
such Subsidiary could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of
-----------
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by the Borrower, any of its Subsidiaries or any of their respective
ERISA Affiliates from any Pension Plan or the termination of any such Pension
Plan resulting in liability to Borrower, any of its Subsidiaries or any of their
respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which constitutes grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on the Borrower,
any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to
Section 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA; (vii) the
11
withdrawal of the Borrower, any of its Subsidiaries or any of their respective
ERISA Affiliates in a complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan resulting in
liability therefor to Borrower, any of its Subsidiaries or any of their
respective ERISA Affiliates (regardless of when notice of such liability is
received), or the receipt by the Borrower, any of its Subsidiaries or any of
their respective ERISA Affiliates of notice from any Multiemployer Plan that it
is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or
that it intends to terminate or has terminated under Section 4041A or 4042 of
ERISA; (viii) the occurrence of an act or omission which is reasonably likely to
give rise to the imposition on the Borrower, any of its Subsidiaries or any of
their respective ERISA Affiliates of fines, penalties, taxes or related charges
under Chapter 43 of the Internal Revenue Code or under Section 409, Section
502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit
Plan; (ix) the receipt by the Borrower, any of its Subsidiaries or any of their
respective ERISA Affiliates of notice of the assertion of a material claim
(other than routine claims for benefits) against any Employee Benefit Plan other
than a Multiemployer Plan or the assets thereof, or against the Borrower, any of
its Subsidiaries or any of their respective ERISA Affiliates with respect to any
Employee Benefit Plan; or (x) the receipt by the Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates of notice of the
imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Escondido Property" means the property located in the City of
------------------
Escondido, California and subject to a ground lease as identified on Schedule
5.01(r)(i).
"Eurocurrency Liabilities" has the meaning specified in Regulation D
------------------------
of the Board of Governors of the Federal Reserve System, as in effect from time
to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
-------------------------
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any such Eurodollar Rate Advances for any
---------------
such Interest Period therefor, an interest rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the rate per annum obtained by
dividing (i) the rate per annum appearing on Reuters Screen LIBO Page as the
London interbank offered rate for deposits in U.S. 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 (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) by (ii) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such
Interest Period. If for any reason the rate described in the foregoing clause
(a) is not available at the time of determination of the Eurodollar Rate for any
Eurodollar Rate Advances for any Interest Period, the term "Eurodollar Rate"
shall mean, for any Eurodollar Rate Advance for any Interest Period therefor, an
interest rate per annum (rounded upwards, if
12
necessary, to the nearest 1/100 of 1%) equal to the rate per annum obtained by
dividing (a) the rate per annum appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in U.S.
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
by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest as
-----------------------
provided in Section 2.06(c).
"Eurodollar Rate Reserve Percentage" means, for any Interest Period
----------------------------------
for any Eurodollar Rate Advance, the reserve percentage applicable two Business
Days before the first day of such Interest Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities (or
with respect to any other category of liabilities that includes deposits by
reference to which the interest rate on Eurodollar Rate Advances is determined)
having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 7.01.
----------------
"Excluded Taxes" has the meaning specified in Section 2.10(c).
--------------
"Existing Credit Agreement" means that certain Credit Agreement dated
-------------------------
as of November 13, 1998 by and among the Borrower, Credit Lyonnais Los Angeles
Branch, as Administrative Agent and Co-Lead Arranger, Nationsbanc Xxxxxxxxxx
Securities LLC as Syndication Agent and Co-Lead Arranger, and the financial
institutions listed therein as "Initial Lenders," as amended, supplemented or
modified to the date hereof.
"Existing Hedge Agreements" has the meaning specified in Section
-------------------------
4.01(b).
"Existing Liens" has the meaning specified in Section 5.01(q)(iii).
--------------
"Extraordinary Receipt" means any cash received by or paid to or for
---------------------
the account of any Person not in the ordinary course of business, including tax
refunds, pension plan reversions, proceeds of insurance (including any key man
life insurance but excluding proceeds of business interruption insurance to the
extent such proceeds constitute compensation for lost earnings), condemnation
awards (and payments in lieu thereof), indemnity payments and any purchase price
adjustment received in connection with any purchase agreement; provided that an
--------
Extraordinary Receipt shall not include cash receipts received from proceeds of
insurance, condemnation awards (or payments in lieu thereof) or indemnity
payments to the extent that such proceeds, awards or payments (A) in respect of
loss or damage to equipment, fixed assets or real property are applied (or in
respect of which expenditures were previously incurred) to replace or repair the
13
equipment, fixed assets or real property in respect of which such proceeds were
received in accordance with the terms of the Loan Documents, so long as such
application is made within six months after the occurrence of such damage or
loss or (B) are received by any Person in respect of any third party claim
against such Person and applied to pay (or to reimburse such Person for its
prior payment of) such claim and the costs and expenses of such Person with
respect thereto.
"Facility" means the Revolving Facility or the Swing Line Facility.
--------
"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 that is a Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fiscal Year" means the fiscal year of the Borrower and its
-----------
Subsidiaries, which ends on the Sunday closest to December 31. In 52-week years,
the first, second and fourth quarters are 12-week periods and the third quarter
is a 16-week period. In 53-week years, the first and second quarters are 12-week
periods, the third quarter is a 16-week period and the fourth quarter is a
13-week period.
"Fixed Charge Coverage Ratio" means, as of any date of determination,
---------------------------
determined for the period of four consecutive fiscal quarters ending as of the
last day of each fiscal quarter of the Borrower, the ratio of (a) the sum of (i)
Consolidated EBITDA of the Borrower and its Subsidiaries and (ii) rent expense
(including amounts paid as rent under the Synthetic Lease) for the Borrower and
its Subsidiaries on a Consolidated basis for the period of four fiscal quarters
ending as of the end of the most recently ended fiscal quarter of the Borrower
to (b) the sum of (i) Consolidated Interest Expense of the Borrower and its
Subsidiaries and (ii) rent expense (including amounts paid as rent under the
Synthetic Lease) for the Borrower and its Subsidiaries on a Consolidated basis
for the period of four fiscal quarters ending as of the end of the most recently
ended fiscal quarter of the Borrower.
"Foreign Subsidiary" means any "controlled foreign corporation" within
------------------
the meaning of Section 957(a) of the Internal Revenue Code as to which the
Borrower or any of its Subsidiaries is a "United States shareholder" as defined
in Section 951(b) of the Internal Revenue Code.
"GAAP" has the meaning specified in Section 1.03.
----
"Guarantors" means each present and future direct or indirect
----------
Subsidiary of the Borrower that is a party to the Guaranty.
"Guaranty" has the meaning specified in Section 4.01(h)(x), and
--------
includes any amendment to Guaranty delivered hereunder.
14
"Hazardous Materials" means (a) petroleum or petroleum products,
-------------------
natural or synthetic gas, radioactive materials, asbestos in any form, urea
formaldehyde foam insulation, polychlorinated biphenyls, lead or lead-based
paint, and radon gas, (b) any substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "medical waste," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," "contaminants" or "pollutants," or words
of similar import, under any Environmental Law and (c) any other substance the
release of or exposure to which is injurious to human health or the environment
or governed or regulated under any Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
----------------
interest rate future or option contracts and other similar agreements.
"Hedge Bank" means any Lender Party or an Affiliate of a Lender Party
----------
in its capacity as a party to a Bank Hedge Agreement.
"Indemnified Party" has the meaning specified in Section 9.04(b).
-----------------
"Indemnified Taxes" has the meaning specified in Section 2.10(a).
-----------------
"Initial Lenders" has the meaning specified in the recital of parties
---------------
to this Agreement.
"Insufficiency" means, with respect to any Plan, the amount, if any,
-------------
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"Intercompany Notes" has the meaning specified in Section
------------------
4.01(h)(xiv).
"Intercreditor Agreements" has the meaning specified in Section
------------------------
4.01(h)(xvii).
"Interest Period" has the meaning specified in Section 2.06(b).
---------------
"Interest Type" refers to the distinction between Advances bearing
-------------
interest at the Base Rate and Advances bearing interest at the Eurodollar Rate.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Inventory" means all Inventory referred to in Section 2(a)(i) of the
---------
Security Agreement.
"Investment" in any Person means any loan or advance to such Person,
----------
any purchase or other acquisition of any capital stock, warrants, rights,
options, obligations or other securities of such Person, any capital
contribution to such Person or any other investment in such Person, including,
without limitation, any arrangement
15
pursuant to which the investor incurs Debt of the types referred to in clauses
(i) and (j) of the definition of "Debt" in respect of such Person. For the
----
avoidance of doubt, Investments shall not include Capital Expenditures.
"Issue" means, with respect to any Letter of Credit, either issue such
-----
Letter of Credit, extend the expiry of such Letter of Credit (other than any
such extension occurring pursuant to the terms of such Letter of Credit), renew
such Letter of Credit (other than any such renewal occurring pursuant to the
terms of such Letter of Credit), or increase the amount of such Letter of
Credit, and the terms "Issued", "Issuing", and "Issuance" shall have
------ ------- --------
corresponding meanings.
"Landlord's Lien Rights" means any "landlord's lien" rights or other
----------------------
rights, claims or demands of any of the lessors of the real property described
in Section 5.01(r)(ii) with respect to the Collateral whether created by
statute, contract or otherwise.
"L/C Advance" means a payment made by an L/C Bank under a Letter of
-----------
Credit.
"L/C Bank" means BNP Paribas in its capacity as an issuer of a Letter
--------
of Credit or any assignee acting in such capacity.
"L/C Cash Collateral Account" has the meaning specified in Section
---------------------------
7.02.
"L/C Related Documents" has the meaning specified in Section 3.04(a).
---------------------
"L/C Sublimit" means Fifteen Million Dollars ($15,000,000) as such
------------
amount may be reduced pursuant to Section 2.04.
"Lender Party" means any Lender or any L/C Bank.
------------
"Lenders" means the Initial Lenders and each Eligible Assignee that
-------
shall become a party hereto pursuant to Section 9.07.
"Letter of Credit" means any letter of credit issued hereunder.
----------------
"Letter of Credit Agreement" has the meaning specified in Section
--------------------------
3.02(a).
"Letter of Credit Obligations" means, as of any date of determination
----------------------------
with respect to any Letter of Credit, the sum of (a) the then outstanding
Available Amount of such Letter of Credit, and (b) the aggregate amount of the
Unreimbursed Letter of Credit Liability thereunder.
"Letter of Credit Subfacility" has the meaning specified in Section
----------------------------
3.01.
"Lien" means any lien, security interest or other charge or
----
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation,
16
the lien or retained security title of a conditional vendor and any easement,
right of way or other encumbrance on title to real property.
"Loan Documents" means this Agreement, the Notes, the Guaranty, the
--------------
Collateral Documents, each Letter of Credit Agreement, each Secured Hedge
Agreement, the Intercompany Notes and any other instrument or agreement executed
by the Borrower and the Administrative Agent that states that it is a Loan
Document.
"Loan Parties" means the Borrower and the Guarantors.
------------
"Margin Stock" has the meaning specified in Regulation U.
------------
"Material Adverse Change" means any material adverse change in the
performance, prospects, business, assets, nature of assets, condition (financial
or otherwise) or properties of the Borrower, or of the Borrower and its
Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
performance, prospects, business, assets, nature of assets, condition (financial
or otherwise) or properties of the Borrower, or the Borrower and its
Subsidiaries taken as a whole, (b) the rights and remedies of the Administrative
Agent or any Lender Party under any Loan Document or (c) the ability of any Loan
Party to perform its Obligations under any Loan Document to which it is or is to
be a party.
"Maximum Expenditure Amount" has the meaning specified in Section
--------------------------
6.04(e).
"Mortgage" has the meaning specified in Section 4.01(h)(ix).
--------
"Mortgage Policy" has the meaning specified in Section 4.01(h)(ix)(A).
---------------
"Multiemployer Plan" means any Employee Benefit Plan which is a
------------------
"multiemployer plan" as defined in Section 3(37) of ERISA.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
-----------------
or other disposition of any asset or the sale or issuance of any Debt or capital
stock, any securities convertible into or exchangeable for capital stock or any
warrants, rights or options to acquire capital stock by any Person, the
aggregate amount of cash received from time to time by or on behalf of such
Person in connection with such transaction after deducting therefrom only (a)
reasonable and customary brokerage commissions, underwriting fees and discounts,
legal fees, finder's fees and other similar fees and commissions and (b) the
amount of taxes payable in connection with or as a direct result of such
transaction in the taxable year of such transaction or in the immediately
succeeding taxable year, the computation of which shall take into account the
reduction in tax liability resulting from any available operating losses and net
operating loss carryovers, tax credits and tax credit carryforwards, and similar
tax attributes, and (c) the amount of any Debt secured by a Lien on such asset
that, by the terms of such transaction, is required to be repaid upon such
disposition, in each case with respect to
17
the foregoing clauses (a) and (c) to the extent, but only to the extent, that
the amounts so deducted are, at the time of receipt of such cash, actually paid
to a Person that is not an Affiliate and are properly attributable to such
transaction or to the asset that is the subject thereof.
"Note" means a Revolving Note or a Swing Line Note.
----
"Notice of Borrowing" means either (a) a notice in substantially the
-------------------
form of Exhibit B-1, or (b) telephonic notice (confirmed immediately in writing)
of the information required by Exhibit B-1.
"Notice of Issuance" means a notice in substantially the form of
------------------
Exhibit C.
"Notice of Swing Line Borrowing" means either (a) a notice
------------------------------
substantially in the form of Exhibit B-2, or (b) telephonic notice (confirmed
immediately in writing) of the information required by Exhibit B-2.
"Obligation" means, with respect to any Person, any payment,
----------
performance or other obligation of such Person of any kind, including, without
limitation, post-petition interest in any proceeding under the United States
Bankruptcy Code or other applicable bankruptcy laws and including any liability
of such Person on any claim, whether or not the right of any creditor to payment
in respect of such claim is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any proceeding referred to in Section 7.01(f). Without limiting the
generality of the foregoing, the Obligations of the Loan Parties under the Loan
Documents include (a) the obligation to pay principal, interest, Letter of
Credit commissions, charges, expenses, fees, attorneys' fees and disbursements,
indemnities and other amounts payable by any Loan Party under any Loan Document
and (b) the obligation to reimburse any amount in respect of any of the
foregoing that any Lender Party, in its sole discretion, may elect to pay or
advance on behalf of such Loan Party.
"Offering Memorandum" means the offering memorandum dated October,
-------------------
2001 used by the Syndication Agent in connection with the syndication of the
Commitments.
"Open Year" has the meaning specified in Section 4.01(n)(ii).
---------
"Other Indemnified Taxes" has the meaning specified in Section
-----------------------
2.10(b).
"Owned Real Property" has the meaning specified in Section 5.01(r)(i).
-------------------
"Owner Trustee" means Xxxxx Fargo Bank Northwest, National Association
-------------
(formerly known as First Security Bank, National Association) not individually,
except as expressly stated in any applicable document to which it may be a
party, but solely as the Owner Trustee under the S&F Trust 1998-1.
18
"Participation Agreement" means that certain Participation Agreement
-----------------------
dated as of November 30, 2001 among Smart & Final Inc., as the Lessee, the
various parties hereto from time to time, as the Guarantors, the Owner Trustee,
the various banks and other lending institutions identified therein, as the
Holders and Lenders, and Fleet Capital Corporation, as the Administrative Agent
for the Lenders and respecting the Security Documents (as defined therein), as
the Administrative Agent for the Lenders and the Holders, to the extent of their
interests.
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Pension Plan" means any Employee Benefit Plan, other than a
------------
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"Permitted Encumbrances" means, with respect to any property subject
----------------------
to a Mortgage or an Additional Mortgage, the matters listed on Schedule B to the
policy of title insurance in favor of the Administrative Agent with respect to
such property.
"Permitted Liens" means such of the following as to which no
---------------
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Liens for taxes, assessments and governmental charges or
levies not yet due and payable or being contested in good faith by Borrower by
appropriate proceedings and for which adequate reserves have been established by
Borrower as reflected in Borrower's financial statements; (b) Liens imposed by
law, such as materialmen's, mechanics', carriers', workmen's and repairmen's
Liens and other similar Liens arising in the ordinary course of business
securing obligations that are not overdue for a period of more than 30 days or
being contested in good faith by Borrower by appropriate proceedings and for
which adequate reserves have been established by Borrower as reflected in
Borrower's financial statements; (c) Liens (other than Liens imposed on any
property of Borrower pursuant to ERISA or Section 412 of the Code) incurred or
deposits or pledges made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social security
and other statutory obligations; (d) Liens incurred or deposits and pledges made
in the ordinary course to secure performance of tenders, surety and appeal
bonds, bids, leases (other than Capitalized Leases), performance bonds, sales
contracts and other similar obligations, in each case, not incurred in
connection with the obtaining of credit or the payment of a deferred purchase
price and which do not, in the aggregate, exceed $5,000,000; and (e) Permitted
Encumbrances.
"Person" means an individual, partnership, limited liability company,
------
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Pledge Agreement" has the meaning specified in Section 4.01(h)(viii).
----------------
19
"Preferred Stock" means, with respect to any corporation, capital
---------------
stock issued by such corporation that is entitled to a preference or priority
over any other capital stock issued by such corporation upon any distribution of
such corporation's assets, whether by dividend or upon liquidation.
"Pro Rata Share" of any amount means, with respect to any Lender at
--------------
any time, the product of (a) a fraction the numerator of which is such Lender's
Revolving Commitment at such time and the denominator of which is the sum of the
Revolving Facility (in each case without giving effect to any termination of
Commitments pursuant to Section 2.04 or Section 7.01) at such time times (b)
-----
such amount.
"Redeemable" means, with respect to any capital stock, Debt or other
----------
right or Obligation, any such right or Obligation that (a) the issuer has
undertaken to redeem at a fixed or determinable date or dates, whether by
operation of a sinking fund or otherwise, or upon the occurrence of a condition
not solely within the control of the issuer or (b) is redeemable at the option
of the holder.
"Register" has the meaning specified in Section 9.07(c).
--------
"Regulation U" means Regulation U of the Board of Governors of the
------------
Federal Reserve System, as in effect from time to time.
"Required Lenders" means at any time Lender Parties owed or holding
----------------
more than 50% of the sum of (a) the aggregate principal amount of the Advances
outstanding at such time, (b) the aggregate Available Amount of all Letters of
Credit outstanding at such time, and (c) the aggregate Unused Revolving
Commitments at such time. For purposes of this definition, the Available Amount
of each Letter of Credit and the aggregate principal amount of all outstanding
Swing Line Advances shall be considered to be owed to the Lenders ratably in
accordance with their respective Revolving Commitments.
"Responsible Officer" means the President, Chief Executive Officer,
-------------------
any Vice President, the Chief Financial Officer, the Controller, or the
Treasurer of the Borrower.
"Revolving Advance" has the meaning specified in Section 2.01(a).
-----------------
"Revolving Borrowing" means a borrowing consisting of simultaneous
-------------------
Revolving Advances of the same Interest Type made by the Lenders.
"Revolving Commitment" means, (i) with respect to any Lender listed on
--------------------
Schedule I, the amount set forth opposite such Lender's name on Schedule I under
the caption "Revolving Commitment," (ii) with respect to any Lender not listed
on Schedule I hereto, the amount set forth in the Assignment and Acceptance
pursuant to which such Person became a Lender hereunder, or (iii) if any of such
Lenders has entered into one or more Assignments and Acceptances, the amount set
forth for such Lender in the Register maintained by the Administrative Agent
pursuant to Section 9.07(c) as such Lender's
20
"Revolving Commitment", in the case of each of the foregoing clauses (i), (ii)
and (iii), as such amount may be reduced at or prior to such time pursuant to
Section 2.04.
"Revolving Facility" means, at any time, the aggregate amount of the
------------------
Lenders' Revolving Commitments at such time.
"Revolving Note" means a promissory note of the Borrower payable to
--------------
the order of any Lender, in substantially the form of Exhibit D-1 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender resulting
from the Revolving Advances made by such Lender.
"Second Mortgages" has the meaning specified in Section 4.01(h)(xv).
----------------
"Secured Hedge Agreement" means a Hedge Agreement between the Borrower
-----------------------
and a Secured Hedge Bank or Secured Hedge Banks.
"Secured Hedge Bank" means any Lender Party or an Affiliate of a
------------------
Lender Party in its capacity as a party to a Secured Hedge Agreement.
"Secured Obligations" has the meaning specified in the Security
-------------------
Agreement.
"Secured Parties" means the Administrative Agent, the Lender Parties
---------------
and the Secured Hedge Banks.
"Security Agreement" has the meaning specified in Section
------------------
4.01(h)(viii).
"Senior Leverage Ratio" means, as of any date of determination, the
---------------------
ratio of (i) all Debt of the Borrower and its Subsidiaries under the Loan
Documents, the Synthetic Lease Documents, Capitalized Leases and any other Debt
secured by Liens permitted under Section 6.02(a) as of the end of the most
recently ended fiscal quarter of the Borrower to (ii) Adjusted EBITDA for the
period of four fiscal quarters ending as of the end of the most recently ended
fiscal quarter of the Borrower.
"Solvent" and "Solvency" mean, with respect to any Person on a
------- --------
particular date, 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. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
21
"Store #405" means that certain Smart & Final store located at 2431
----------
28th St., Sacramento, California and subject to a ground lease as identified on
Schedule 5.01(r)(i).
"Subsidiary" of any Person means any corporation, partnership, limited
----------
liability company, joint venture, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary 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,
limited liability company or joint venture or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries; provided, however, that Smart &
Final Scholarship Foundation, a California corporation, shall not be considered
a "Subsidiary" of the Borrower or any other Loan Party for purposes of this
Agreement and the other Loan Documents.
"Supermajority Lenders" means at any time Lender Parties owed or
---------------------
holding more than 66 2/3% of the sum of (a) the aggregate principal amount of
the Advances outstanding at such time, (b) the aggregate Available Amount of all
Letters of Credit outstanding at such time, and (c) the aggregate Unused
Revolving Commitments at such time. For purposes of this definition, the
Available Amount of each Letter of Credit and the aggregate principal amount of
all outstanding Swing Line Advances shall be considered to be owed to the
Lenders ratably in accordance with their respective Revolving Commitments.
"Surviving Debt" has the meaning specified in Section 5.01(q)(i).
--------------
"Surviving Debt Agreement" means any agreement or instrument setting
------------------------
forth the terms and conditions of any Surviving Debt.
"Swing Line Advance" means an advance by the Swing Line Lender to the
------------------
Borrower pursuant to Section 2.01(b).
"Swing Line Borrowing" means a borrowing consisting of a Swing Line
--------------------
Advance made by the Swing Line Lender.
"Swing Line Commitment" means, with respect to the Swing Line Lender,
---------------------
$10,000,000, or, if such Lender has entered into one or more Assignments and
Acceptances with respect to the Swing Line Commitment, the amount set forth for
the Swing Line Lender in the Register maintained by the Administrative Agent
pursuant to Section 9.07(c) as such Lender's "Swing Line Commitment", in each
case as such amount may be reduced at or prior to such time pursuant to Section
2.04.
"Swing Line Commitment Commencement Date" means the Closing Date.
---------------------------------------
22
"Swing Line Facility" means, at any time, the aggregate amount of the
-------------------
Swing Line Lender's Swing Line Commitment at such time.
"Swing Line Lender" means BNP Paribas and any assignee of the Swing
-----------------
Line Commitment which assumes such Swing Line Commitment in accordance with the
terms of Section 9.07.
"Swing Line Note" means a promissory note of the Borrower payable to
---------------
the order of the Swing Line Lender, in substantially the form of Exhibit D-2
hereto, evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Swing Line Advances made by such Lender.
"Swing Line Reserve Amount" means, (i) at all times prior to the Swing
-------------------------
Line Commitment Commencement Date, zero, and (ii) at any time of determination
thereafter, the greater of (A) the aggregate Swing Line Commitment in effect at
such time, and (B) the aggregate principal amount of all outstanding Swing Line
Advances at such time.
"Synthetic Lease Documents" means the Operative Agreements as defined
-------------------------
in the Participation Agreement.
"Synthetic Lease" means the Lease as defined in the Participation
---------------
Agreement.
"Synthetic Lease Properties" means the real properties that are
--------------------------
subject to the Synthetic Lease.
"Tax Indemnitee" has the meaning specified in Section 2.10(c).
--------------
"Taxes" has the meaning specified in Section 2.10(a).
-----
"Transfer Date" has the meaning specified in Section 2.08(e).
-------------
"Transferee" has the meaning specified in Section 2.08(e).
----------
"Unreimbursed Letter of Credit Liability" means, as of any date of
---------------------------------------
determination with respect to any Letter of Credit, the aggregate amount of all
L/C Advances which have been made by, and not reimbursed to, the L/C Bank under
such Letter of Credit.
"Unused Revolving Commitment" means, with respect to any Lender at any
---------------------------
time, (a) such Lender's Revolving Commitment at such time, minus (b) the sum of
-----
(i) the aggregate principal amount of all Revolving Advances of such Lender
outstanding at such time, plus (ii) such Lender's Pro Rata Share of the
aggregate Letter of Credit Obligations outstanding at such time, plus (iii) such
Lender's Pro Rata Share of the Swing Line Advances then outstanding.
23
"Unused Swing Line Commitment" means, with respect to the Swing Line
----------------------------
Lender at any time, the remainder of (a) such Lender's Swing Line Commitment at
such time, minus (b) the aggregate principal amount of all Swing Line Advances
-----
made by such Lender and outstanding at such time.
"Voting Interests" means, with respect to any Person, shares of
----------------
capital stock issued by a corporation, or equivalent Equity Interests in any
other Person, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even if the right so to vote has
been suspended by the happening of such a contingency.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle
--------------------
E of Title IV of ERISA.
Section 1.02 Computation of Time Periods. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
Section 1.03 Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(g) ("GAAP").
Section 1.04 Other Definitional Provisions. References to Sections and
-----------------------------
subsections shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specified. The term "including" means including
without limitation. Any of the terms defined herein may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
Section 1.05 Exhibits and Schedules. Each of the exhibits and schedules
----------------------
attached hereto is hereby incorporated into and shall constitute part of these
Articles.
Section 1.06 Ownership of Synthetic Lease Properties. For all purposes
---------------------------------------
under the Loan Documents other than the calculation of the financial covenants
set forth in Section 6.04 and the grant of the Liens by the Owner Trustee in the
Collateral Documents, the Borrower shall be deemed to be the owner of the
Synthetic Lease Properties.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
Section 2.01 The Advances.
------------
(a) Revolving Advances. Each Lender severally agrees, on the
------------------
terms and conditions hereinafter set forth, to make advances (each a "Revolving
---------
Advance") to the Borrower from time to time on any Business Day during the
-------
period
24
from the Closing Date until the Commitment Termination Date in an amount for
each such Advance not to exceed the lesser of (i) such Lender's Unused Revolving
Commitment on such Business Day (after giving effect to any repayment of Swing
Line Advances made or to be made with the proceeds thereof pursuant to a
designation therefor set forth by the Borrower in a Notice of Borrowing for such
Borrowing or pursuant to a Notice of Borrowing given by the Administrative Agent
in accordance with Section 2.02(f)) and (ii) such Lender's Pro Rata Share of the
Borrowing Base Availability; provided, however, that (1) the foregoing clause
-------- -------
(ii) shall not limit any Lender's obligations under Section 2.02(f), and (2)
except with respect to a Borrowing the proceeds of which will be applied to
repay outstanding Swing Line Advances pursuant to a designation therefor set
forth by the Borrower in a Notice of Borrowing for such Borrowing or pursuant to
a Notice of Borrowing given by the Administrative Agent pursuant to Section
2.02(f), the Borrower shall not request, and no Lender shall be required to make
Revolving Advances in respect of any Borrowing if a Borrowing Base Deficiency
would result after giving effect thereto. Each Revolving Borrowing shall be in
an aggregate amount of Five Million Dollars ($5,000,000) or (except in the case
of the initial Advance) an integral multiple of One Million Dollars ($1,000,000)
in excess thereof and shall consist of Revolving Advances made by the Lenders
ratably according to their respective Revolving Commitments. Within the
foregoing limits, the Borrower may borrow under this Section 2.01(a), prepay
pursuant to Section 2.05 and reborrow under this Section 2.01(a).
(b) Swing Line Advances. The Swing Line Lender agrees, on the
-------------------
terms and conditions hereinafter set forth, to make advances (each a "Swing Line
----------
Advance") to the Borrower from time to time on any Business Day during the
-------
period from the Swing Line Commitment Commencement Date until the Commitment
Termination Date in an amount not to exceed the Swing Line Lender's Unused Swing
Line Commitment on such Business Day; provided, however, that the Swing Line
-------- -------
Lender shall not make any Swing Line Advance if, after giving effect to such
Swing Line Advance, a Borrowing Base Deficiency would result. Each Swing Line
Borrowing shall consist of Swing Line Advances made by the Swing Line Lender and
shall be in an amount equal to $1,000,000 or an integral multiple of $100,000 in
excess thereof. Immediately upon the making of each Swing Line Advance by the
Swing Line Lender, the Swing Line Lender shall be deemed to have sold and
transferred to each Lender, and each Lender shall be deemed to have purchased
and received from the Swing Line Lender, in each case irrevocably and without
any further action by any party, an undivided interest and participation in such
Swing Line Advance and the Obligations of the Borrower under this Agreement in
respect thereof in an amount equal to such Lender's Pro Rata Share of such Swing
Line Advance, provided, however, that (i) no Lender shall be required to fund
-------- -------
its participation in any such Swing Line Advance until demand therefor is made
by the Administrative Agent pursuant to Section 2.02(f)(ii) hereof, and (ii) no
Lender shall be entitled to share in any payments of principal or interest in
respect of its participation in any such Swing Line Advance except to the extent
set forth in Section 2.02(f)(ii) hereof with respect to any such participation
which has been funded by such Lender as provided therein. Within the limits of
the Swing Line Lender's Unused Swing Line Commitment in effect from time to
time, the Borrower may
25
borrow under this Section 2.01(b), prepay pursuant to Section 2.05 and reborrow
under this Section 2.01(b).
Section 2.02 Making the Advances.
-------------------
(a) Initial Borrowings. The initial Borrowings hereunder shall be
------------------
made on the Closing Date and shall be made on notice received by the
Administrative Agent from the Borrower (pursuant to a Notice of Borrowing) not
later than 9:00 a.m. (Los Angeles, California time) (or such later time as the
Administrative Agent may agree) on the Business Day immediately preceding the
Closing Date. Such Notice of Borrowing shall be irrevocable upon receipt by the
Administrative Agent. Upon receipt of such notice, the Administrative Agent
shall promptly give notice to each Lender (but in no event later than 10:30 a.m.
Los Angeles, California time on the Closing Date). Each Lender shall, before
11:30 a.m. (Los Angeles, California time) on the Closing Date, make available
for the account of its Applicable Lending Office to the Administrative Agent
such Lender's ratable share of such Borrowings by depositing same day funds in
the Administrative Agent's Account. Notwithstanding any contrary provision
hereof, the initial Borrowings may consist only of Base Rate Advances.
(b) Subsequent Revolving Borrowings. Each Revolving Borrowing
-------------------------------
occurring after the Closing Date shall be made on notice received by the
Administrative Agent from the Borrower (pursuant to a Notice of Borrowing) not
later than 9:00 a.m. (Los Angeles, California time) (a) on the Business Day
prior to the date of such Borrowing if such Borrowing consists of Base Rate
Advances, and (b) on the third Business Day prior to the date of such Borrowing
if such Borrowing consists of Eurodollar Rate Advances. Each such Notice of
Borrowing shall be irrevocable upon receipt by the Administrative Agent and, in
the case of any Notice of Borrowing for Eurodollar Rate Advances, the Borrower
shall indemnify each Lender against any loss, cost or expense incurred by such
Lender as a result of any failure to fulfill on or before the date specified by
such Notice of Borrowing the applicable conditions set forth in this Section
2.02 or Article IV, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Advance to be made by such Lender as a part of such Borrowing when such Advance,
as a result of such failure, is not made on such date.
(c) Revolving Advances by Lenders. If the Administrative Agent
-----------------------------
receives a Notice of Borrowing (or if the Administrative Agent gives a Notice of
Borrowing pursuant to Section 2.02(f)), the Administrative Agent shall promptly
(and in any event not later than 3:00 p.m. (Los Angeles, California time) on the
Business Day prior to the date of such Borrowing or, if such Borrowing consists
of Eurodollar Rate Advances, the third Business Day prior to the date of such
Borrowing) give each Lender notice of such Notice of Borrowing. Each Lender
shall, before 11:30 a.m. (Los Angeles, California time) on the date of such
Borrowing in the case of any Revolving Borrowing to be made on such date, make
available for the account of its Applicable Lending Office to the Administrative
Agent such Lender's ratable portion of such Borrowing by depositing same day
funds in the Administrative Agent's Account.
26
Unless the Administrative Agent shall have received written notice from a Lender
prior to the date of any Revolving Borrowing hereunder that such Lender will not
make available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
ratable portion available to the Administrative Agent on the date of such
Borrowing in accordance with the terms hereof and the Administrative Agent may,
in reliance upon such assumption, but shall not be required to, make available
to or for the account of the Borrower on such date a corresponding amount. If
and to the extent that such Lender shall not have so made such ratable portion
available to the Administrative Agent and the Administrative Agent makes such
ratable portion available to the Borrower, such Lender and the Borrower, without
prejudice to any rights or remedies that the Borrower may have against such
Lender, severally agree to repay to the Administrative Agent forthwith on demand
such corresponding amount together with interest thereon, for each day from the
date such amount is made available to or for the account of the Borrower until
the date such amount is repaid to the Administrative Agent, at (A) in the case
of the Borrower, the interest rate applicable at the time to the Advances
comprising such Borrowing, and (B) in the case of such Lender, the Federal Funds
Rate with respect to the three-day period commencing from the date such amount
is made available to or for the account of the Borrower and the interest rate
applicable at the time to the Advances comprising such Borrowing thereafter. If
such Lender shall pay to the Administrative Agent such amount, such amount so
paid shall constitute such Lender's Advance as part of the relevant Borrowing
for purposes of this Agreement and, to the extent that the Borrower previously
paid such amount to the Administrative Agent, the Administrative Agent will
refund to the Borrower such amount so paid, but without interest.
(d) Disbursement of Revolving Advances. Upon fulfillment of the
----------------------------------
applicable conditions set forth in Article IV (which fulfillment the
Administrative Agent may assume in the absence of actual knowledge, or notice
received from the Borrower or the Required Lenders, to the contrary), the
Administrative Agent will make funds for any Borrowing available to the Borrower
by crediting the Borrower's Account, subject to the Administrative Agent's
receipt of funds from the Lenders, and provided that the Administrative Agent
shall first make a portion of such funds equal to any outstanding L/C Advance
under any Letter of Credit, and any interest accrued and unpaid thereon to and
as of such date, available to the applicable L/C Bank for reimbursement of such
L/C Advance and payment of such interest.
(e) Swing Line Borrowings. Each Swing Line Borrowing shall be
---------------------
made on notice received by the Administrative Agent and the Swing Line Lender
from the Borrower (pursuant to a Notice of Swing Line Borrowing) not later than
9:00 A.M. (Los Angeles, California time) on the date of such Borrowing. Each
such Notice of Swing Line Borrowing shall be irrevocable upon receipt by the
Administrative Agent and the Swing Line Lender. If (i) the Administrative Agent
and the Swing Line Lender receive a Notice of Swing Line Borrowing and (ii) the
applicable conditions set forth in Article IV have been fulfilled (which
fulfillment the Administrative Agent and the Swing Line Lender may assume in the
absence of actual knowledge, or notice received from the Borrower, the
Administrative Agent or the Required Lenders, to the contrary), then the Swing
Line Lender will make funds for any Swing Line Borrowing available to the
27
Borrower by wire transfer to the Borrower on or before 3:00 p.m. (Los Angeles,
California time) on the date of such Swing Line Borrowing.
(f) Settlement of Swing Line Advances. (i) The Administrative
---------------------------------
Agent may, and upon request by the Swing Line Lender in the Swing Line Lender's
sole and absolute discretion, the Administrative Agent shall, at any time and
from time to time, give to the Lenders and the Borrower a Notice of Borrowing
for a Borrowing of Revolving Advances which are Base Rate Advances on behalf of
the Borrower, in each case in an amount equal to the aggregate amount of Swing
Line Advances then owing by the Borrower (or such lesser amount as the
Administrative Agent or the Swing Line Lender shall specify), and the proceeds
of which are to be used to prepay such Swing Line Advances on the date of such
Borrowing. Upon receipt of any such Notice of Borrowing, each Lender (other than
the Swing Line Lender) shall, before 11:30 a.m. (Los Angeles, California time)
on the Business Day following the date on which such Notice of Borrowing is
given), make available for the account of its Applicable Lending Office to the
Administrative Agent such Lender's Pro Rata Share of such Borrowing by
depositing same day funds in the Administrative Agent's Account. Notwithstanding
any contrary provision of this Agreement, (A) the proceeds of any such Borrowing
shall be distributed by the Administrative Agent to the Swing Line Lender) as a
prepayment of all or a portion of the then outstanding Swing Line Advances, and
(B) the outstanding Swing Line Advances of the Swing Line Lender, in an amount
equal to the aggregate amount of the Swing Line Advances to be prepaid on such
date, shall be deemed to be prepaid with the proceeds of a Revolving Advance
made by the Swing Line Lender and such portion of the Swing Line Advances deemed
to be so prepaid shall no longer be outstanding as Swing Line Advances but shall
be outstanding as Revolving Advances made by the Swing Line Lender.
(ii) In addition to the right of the Swing Line Lender to require a
Borrowing under Section 2.02(f)(i), the Swing Line Lender may at any time and
from time to time and in its sole and absolute discretion request (by notice to
the Administrative Agent and the Borrower) the Administrative Agent to, and upon
receipt of such request the Administrative Agent shall, make demand on each
Lender for payment of its participation in each Swing Line Advance then
outstanding, and upon receipt of any such demand each Lender shall promptly fund
such participation by paying to the Administrative Agent, for the account of the
Swing Line Lender, the amount of such participation in same day funds on the
date such request is given by the Administrative Agent to the Lenders. With
respect to each such participation in any Swing Line Advance which is funded by
any Lender, the Swing Line Lender shall promptly pay to the Administrative
Agent, and the Administrative Agent shall promptly pay to such Lender, in lawful
money of the United States and in the kind of funds so received, an amount equal
to such Lender's ratable share of all payments received by the Swing Line Lender
in respect of (A) the principal of such Swing Line Advance, and (B) interest on
such Swing Line Advance for the period from and after the date on which such
participation was funded. If any payment received by the Swing Line Lender on
account of any Swing Line Advance and distributed to any Lender as a participant
under the preceding sentence is thereafter recovered from the Swing Line Lender
in connection with any bankruptcy or insolvency proceeding relating to the
Borrower or otherwise,
28
each Lender which received such distribution shall, upon demand by the Swing
Line Lender through the Administrative Agent, repay to the Swing Line Lender
such Lender's ratable share of the amount so recovered together with such
Lender's ratable share (according to the proportion of (1) the amount of such
Lender's required prepayment to (2) the total amount so recovered) of any
interest or other amount paid or payable by the Swing Line Lender in respect of
the total amount so recovered. The Borrower agrees that any Lender purchasing a
participation in any Swing Line Advance from the Swing Line Lender hereunder
may, to the fullest extent permitted by law, exercise all its rights of payment
with respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
(iii) Anything contained herein to the contrary notwithstanding, the
obligation of each Lender to make any Revolving Advance pursuant to Section
2.02(f)(i) or to fund its participation in any Swing Line Advances pursuant to
Section 2.02(f)(ii) shall be absolute and unconditional and shall not be subject
to any conditions set forth in Article IV hereof or otherwise affected by any
circumstance including, without limitation, (A) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against the Swing
Line Lender or any Loan Party; (B) the occurrence or continuance of a Default;
(C) any adverse change in the business, condition (financial or otherwise),
operations, performance, properties or prospects of any Loan Party; (D) any
breach of any Loan Document by the Borrower, any other Loan Party or any other
Lender Party; or (E) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
(iv) The Borrower irrevocably authorizes (A) the Administrative Agent
to give any Notice of Borrowing pursuant to Section 2.02(f)(i) (with a copy to
the Borrower), (B) the Lenders to make the Revolving Advances pursuant to such
Notice of Borrowing, and (C) the Administrative Agent to distribute the proceeds
thereof as provided herein.
(g) Nature of Lenders' Obligations. The failure of any Lender to
------------------------------
make the Advance to be made by it as part of any Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Advance on the
date of such Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender on the date
of any Borrowing.
(h) Reports by Swing Line Lender. If requested by the
----------------------------
Administrative Agent, the Swing Line Lender shall furnish to the Administrative
Agent prior to the fifth Business Day of each month (and at such other times as
the Administrative Agent may request) a written report summarizing all Swing
Line Borrowings and payments in respect thereof during the preceding month and
the aggregate outstanding principal amount of all Swing Line Advances as of the
last day of such month (or as of such other date as the Administrative Agent may
request).
Section 2.03 Repayment.
---------
29
(a) Revolving Advances. The Borrower shall repay to each Lender
------------------
(in accordance with the provisions of Section 2.09(a)) on the Commitment
Termination Date the aggregate principal amount of all Revolving Advances owing
to such Lender outstanding on the Commitment Termination Date.
(b) L/C Advances. The Borrower shall repay each L/C Advance as
------------
provided in Section 3.03.
(c) Swing Line Advances. The Borrower shall repay to the Swing
-------------------
Line Lender the aggregate principal amount of all Swing Line Advances then
outstanding on the Commitment Termination Date.
Section 2.04 Reduction of the Revolving Commitments and Swing Line
-----------------------------------------------------
Commitments.
-----------
(a) Optional Reductions. The Borrower shall have the right, upon
-------------------
at least three Business Days' notice to the Administrative Agent, to terminate
in whole or reduce ratably in part the Unused Revolving Commitments of the
Lenders; provided, however, that (i) each partial reduction shall be in an
-------- -------
amount of Three Million Dollars ($3,000,000) or any multiple of One Million
Dollars ($1,000,000) in excess thereof, and (ii) the aggregate amount of the
Revolving Commitments shall not be reduced pursuant to this Section 2.04 to an
amount less than the sum of (A) the aggregate principal amount of all Revolving
Advances then outstanding, (B) the aggregate amount of all Letter of Credit
Obligations then outstanding, and (C) the aggregate principal amount of all
Swing Line Advances then outstanding.
(b) Mandatory Reductions. The Revolving Facility shall be
--------------------
automatically and permanently reduced, on a pro rata basis, on each date on
which prepayment thereof is required to be made pursuant to Section 2.05(b)(iii)
in an amount equal to the Net Cash Proceeds received by the Borrower or any of
its Subsidiaries in the transaction giving rise to such required prepayment.
Each such reduction of the Revolving Facility shall be made ratably among the
Lenders in accordance with their Revolving Commitments.
(c) Reduction of Swing Line Commitment. The Swing Line Commitment
----------------------------------
of the Swing Line Lender shall be (i) terminated automatically and
simultaneously upon any termination in whole of the Revolving Commitments, and
(ii) reduced ratably in an aggregate amount equal to the product of (i) the
amount by which, as a result of any partial reduction of the Revolving
Commitments of the Lenders, the aggregate Revolving Commitments of the Lenders
are reduced below $20,000,000 multiplied by (ii) 0.50 (any such reduction of the
----------
Swing Line Commitment to be effective automatically and simultaneously with any
such reduction of the Revolving Commitments).
(d) Reduction of the Letter of Credit Subfacility. The Letter of
---------------------------------------------
Credit Subfacility shall be (i) terminated automatically and simultaneously upon
any termination in whole of the Revolving Commitments, and (ii) reduced by an
amount
30
equal to product of (i) the amount by which, as a result of any partial
reduction of the Revolving Commitments of the Lenders, the aggregate Revolving
Commitments of the Lenders are reduced below $30,000,000 multiplied by (ii) 0.50
----------
(any such reduction of the Letter of Credit Subfacility to be effective
automatically and simultaneously with any such reduction of the Revolving
Commitments).
Section 2.05 Prepayments.
-----------
(a) Optional Prepayments. The Borrower may, upon (i) prior notice
--------------------
to the Administrative Agent (which shall be given not later than 11:00 a.m. on
the day of prepayment in the case of prepayment of Revolving Advances which
consist of Base Rate Advances and three Business Days in advance in the case of
prepayment of Revolving Advances which are Eurodollar Rate Advances) or (ii)
prior notice to the Swing Line Lender (which may be given on the date of
prepayment in the case of prepayment of Swing Line Advances), in either case
stating the proposed date and aggregate principal amount of the prepayment and,
in the case of Revolving Advances, the Interest Type of Advances to be prepaid
(and if such notice is given the Borrower shall), prepay in whole or in part the
outstanding principal of Advances of such Interest Type, together with, in the
case of any prepayment of Eurodollar Rate Advances, interest thereon to the date
of such prepayment on the principal amounts prepaid (plus, in the case of
prepayment of Eurodollar Rate Advances prior to the end of the applicable
Interest Period, any additional amount for which the Borrower shall be obligated
pursuant to Section 9.04(c)); provided, however, that each partial prepayment of
Revolving Advances shall be in an aggregate principal amount of not less than
Three Million Dollars ($3,000,000) or an integral multiple of $1,000,000 in
excess thereof, and each partial prepayment of Swing Line Advances shall be in
an aggregate principal amount of not less than One Million Dollars ($1,000,000).
(b) Mandatory Prepayments.
---------------------
(i) Excess Advances. If, at any time, the then outstanding
---------------
aggregate principal amount of all Revolving Advances shall exceed
either the aggregate amount of the Revolving Commitments of the
Lenders at such time or the Borrowing Base Amount at such time, in
each case minus the sum of (i) the aggregate amount of the Letter of
Credit Obligations then outstanding and (ii) the aggregate principal
amount of the Swing Line Advances then outstanding, the Borrower shall
immediately prepay, for the ratable account of the Lenders, the
outstanding principal amount of Revolving Advances in an aggregate
amount equal to such excess. If, at any time, the then outstanding
aggregate amount of all Swing Line Advances shall exceed either (i)
the Swing Line Commitment of the Swing Line Lender, or (ii) the
Borrowing Base Amount then in effect minus the sum of (A) the
aggregate amount of the Letter of Credit Obligations then outstanding,
and (B) the aggregate principal amount of the Revolving Advances then
outstanding, the Borrower shall thereupon prepay, for the account of
the Swing Line Lender, the outstanding principal amount of Swing Line
Advances in an aggregate amount equal to such excess.
31
(ii) Incomplete Settlement. If any Lender shall for any
---------------------
reason fail to pay any amount payable by it (including the funding of
any participation in any Swing Line Advances), or fail to make any
Revolving Advance to be made by it, pursuant to Section 2.02(f), the
Borrower shall, on demand by the Administrative Agent, prepay the
Swing Line Advances then outstanding in an amount equal to such
amount.
(iii) Net Cash Proceeds. The Borrower shall, on the date of
-----------------
receipt by the Borrower or any other Loan Party of the Net Cash
Proceeds from (A) the sale, lease, transfer or other disposition of
any assets of the Borrower or any other Loan Party (including the sale
by the Borrower or any other Loan Party of the capital stock of any of
their respective Subsidiaries but excluding (1) sales of inventory in
the ordinary course of business, (2) sales of damaged, worn or
obsolete equipment to the extent the proceeds thereof are intended to
be (and are) used to purchase replacements for such equipment within
180 days or sales of damaged, worn or obsolete equipment made after
the purchase of replacements for such equipment, (3) sales of the
Synthetic Lease Properties permitted under Section 6.02(d)(v)
(provided, that any proceeds from such sales which are not used to
purchase replacement properties or applied to repay Obligations under
the Synthetic Lease shall not be excluded from the prepayment
requirements of this section), and (4) sales, leases, transfers and
other dispositions of assets other than those contemplated by clauses
(1), (2) and (3) above, which are sold, leased, transferred or
otherwise disposed of for amounts that do not exceed $2,500,000 in any
Fiscal Year), (B) the incurrence or issuance by the Borrower or any of
its Subsidiaries of any Debt not permitted under Section 6.02(b) (it
being understood that the provisions of this Section 2.05(b)(iii)
shall not be construed to permit the incurrence of Debt otherwise
prohibited by Section 6.02(b)), including any refinancing of any Debt
(other than the Existing Credit Agreement which is being refinanced
with proceeds of the initial Borrowing), (C) the sale or issuance by
the Borrower or any of its Subsidiaries of any Equity Interests
(including receipt of any capital contribution), and (D) any
Extraordinary Receipt received by or paid to or for the account of the
Borrower or any of its Subsidiaries and not otherwise included in
clause (A), (B) or (C) above, prepay outstanding Advances as provided
in Section 2.05(c), except that, in the case of sales of assets
contemplated by clause (4) above, the amount of such Net Cash Proceeds
in excess of $2,500,000 in any Fiscal Year shall be so applied.
(iv) L/C Cash Collateral. If, at any time, the aggregate
-------------------
Available Amount of all Letters of Credit then outstanding exceeds the
L/C Sublimit in effect at such time, the Borrower shall immediately
pay to the Administrative Agent for deposit in the L/C Cash Collateral
Account an amount sufficient to cause the aggregate amount on deposit
in such account to equal the amount of such excess.
(v) Interest Payable on Amounts Prepaid. All prepayments
-----------------------------------
under this Section 2.05 shall be made together with accrued interest
to the date of such prepayment on the principal amount prepaid.
32
(c) Application of Prepayments. Prepayments of the Revolving
--------------------------
Facility made pursuant to this Section 2.05 shall be first applied to prepay L/C
-----
Advances then outstanding until such Advances are paid in full, second applied
------
to prepay Swing Line Advances then outstanding until such Advances are paid in
full, third applied to prepay Revolving Advances then outstanding comprising
-----
part of the same Borrowings until such Advances are paid in full and fourth
------
deposited in the L/C Cash Collateral Account to cash collateralize 100% of the
Available Amount of the Letters of Credit then outstanding. The amount remaining
(if any) after the prepayment in full of the Advances then outstanding and the
100% cash collateralization of the aggregate Available Amount of Letters of
Credit then outstanding may, provided no Default shall have occurred and be
continuing, be returned to the Borrower and the Revolving Facility shall be
permanently reduced as set forth in Section 2.04(b).
Section 2.06 Interest. The Borrower shall pay interest on the unpaid
--------
principal amount of each Advance from the date of such Advance until such
principal is paid in full at the applicable rate set forth below.
(a) Interest on Base Rate and Swing Line Advances. Except to the
---------------------------------------------
extent that the Borrower shall elect to pay interest on all or any part of any
Revolving Advance made or to be made to the Borrower under Section 2.01 for any
Interest Period pursuant to subsections (b) and (c) of this Section 2.06 and
except as otherwise provided in this Agreement, the Borrower shall pay interest
on the unpaid principal amount of each Advance, from the date of such Advance
until such principal amount is paid in full, payable quarterly in arrears on the
last Business Day of each March, June, September and December commencing
December 31, 2001 and on the date such Advance shall be paid in full, at a
fluctuating interest rate per annum equal, subject to Section 2.06(d), to the
sum of the Base Rate in effect from time to time and the Applicable Margin for
Base Rate Advances in effect from time to time.
(b) Interest Periods for Eurodollar Rate Advances. The Borrower
---------------------------------------------
may, pursuant to Section 2.06(c), elect to have the interest on the principal
amount of all or any portion of any Revolving Advances made or to be made to the
Borrower under Section 2.01, in each case ratably according to the respective
outstanding principal amounts of Revolving Advances owing to each Lender (each
such principal amount owing to a Lender as to which such election has been made
being a "Eurodollar Rate Advance" owing to such Lender) determined and payable
-----------------------
for a specified period (an "Interest Period" for such Eurodollar Rate Advance)
---------------
in accordance with subsection (c) below, provided, however, that the Borrower
-------- -------
may not (i) make any such election with respect to any Swing Line Advances or
L/C Advances, or (ii) have more than five (5) Eurodollar Rate Advances owing to
any Lender outstanding at any one time. Each Interest Period shall be one, two,
three, or six months, at the Borrower's election pursuant to subsection (c)
below, provided, however, that:
-------- -------
(i) the first day of an Interest Period for any Eurodollar
Rate Advance shall be either the last day of any then current Interest
Period for such Advance or, if there shall be no then current Interest
Period for such Advance, any Business Day;
33
(ii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day; provided, however, that if such extension would cause
-------- -------
the last day of such Interest Period to occur in the next following
month, the last day of such Interest Period shall occur on the next
preceding Business Day;
(iii) whenever the first day of any Interest Period occurs
on a day of the month for which there is no numerically corresponding
day in the calendar month that succeeds such initial calendar month by
the number of months equal to the number of months of such Interest
Period, such Interest Period shall end on the last Business Day of
such succeeding calendar month; and
(iv) Interest Periods of longer than one week shall not be
available until the earlier of (a) the Administrative Agent's
determination that syndication is completed or (b) three months
following the Closing Date, in each case unless the Administrative
Agent in its sole discretion determines otherwise.
(c) Interest on Eurodollar Rate Advances. The Borrower may from
------------------------------------
time to time, on the condition that no Event of Default has occurred and is
continuing, and subject to the provisions of Sections 2.06(b) and 2.06(e), elect
to pay interest on all or any portion of any Revolving Advances during any
Interest Period therefor at a rate per annum equal to the sum of the Eurodollar
Rate for such Interest Period for such Advances plus the Applicable Margin for
Eurodollar Rate Advances in effect from time to time, by notice, specifying the
amount of the Advances as to which such election is made (which amount shall
aggregate at least Five Million Dollars ($5,000,000) or any multiple of One
Million Dollars ($1,000,000) in excess thereof) and the first day and duration
of such Interest Period, received by the Administrative Agent before 9:00 a.m.
(Los Angeles, California time) three Business Days prior to the first day of
such Interest Period. If the Borrower has made such election for Eurodollar Rate
Advances for any Interest Period, the Borrower shall pay interest on the unpaid
principal amount of such Eurodollar Rate Advances during such Interest Period,
payable in arrears on the last day of such Interest Period and, in the case of
any Interest Period which is longer than three months, on each three month
anniversary of the first day of such Interest Period, in each case at a rate
equal, subject to Section 2.06(d), to the sum of the Eurodollar Rate for such
Interest Period for such Eurodollar Rate Advances plus the Applicable Margin for
Eurodollar Rate Advances in effect from time to time during such Interest
Period. On the last day of each Interest Period for any Eurodollar Rate Advance,
the unpaid principal balance thereof shall automatically become and bear
interest as a Base Rate Advance, except to the extent that the Borrower has
elected to pay interest on all or any portion of such amount for a new Interest
Period commencing on such day in accordance with this Section 2.06(c). Each
notice by the Borrower under this Section 2.06(c) shall be irrevocable upon
receipt by the Administrative Agent, and the Borrower shall indemnify each
Lender against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified by such notice the
applicable conditions set forth in this Section 2.06(c) or Article IV,
including, without limitation, any loss (including loss of anticipated profits),
cost or expense incurred by
34
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund any such Eurodollar Rate Advance when such Eurodollar Rate
Advance, as a result of such failure, is not made or does not become effective.
(d) Default Interest. Upon the occurrence and during the
----------------
continuance of an Event of Default, interest shall accrue (i) on any Advance
then outstanding at a rate that is 2% per annum in excess of the interest rate
otherwise payable under this Agreement with respect to such Advance (which, for
the avoidance of doubt, shall include the Applicable Margin) (the "Default
-------
Rate"); provided that, in the case of any Eurodollar Rate Advance, upon the
----
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Advance shall thereupon become a
Base Rate Advance and shall thereafter bear interest at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Advances (which, for the avoidance of doubt, shall include the
Applicable Margin), and (ii) to the fullest extent permitted by law, on any
overdue principal, interest or other amounts payable hereunder at a rate that is
2% per annum in excess of the interest rate otherwise payable under this
Agreement with respect to Base Rate Advances (which, for the avoidance of doubt,
shall include the Applicable Margin). Such interest shall be payable upon
demand. Payment or acceptance of the increased rates of interest provided for in
this Section 2.06(d) is not a permitted alternative to timely payment and shall
not constitute a waiver of any Event of Default or otherwise prejudice or limit
any rights or remedies of the Administrative Agent or any Lender.
(e) Suspension of Eurodollar Rate Advances.
--------------------------------------
(i) Illegality. Notwithstanding any other provision of this
----------
Agreement, if the introduction of or any change in or in the
interpretation of any law or regulation shall make it unlawful, or any
central bank or other governmental authority shall assert that it is
unlawful, for any Lender or its Eurodollar Lending Office to perform
its obligations hereunder to make Eurodollar Rate Advances or to
continue to fund or maintain Eurodollar Rate Advances hereunder, then,
on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance
will automatically, upon such demand, Convert into a Base Rate Advance
and (ii) the obligation of the Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower that such Lender has
determined that the circumstances causing such suspension no longer
exist; provided, however, that, before making any such demand, such
-------- -------
Lender agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to designate a different
Eurodollar Lending Office if the making of such a designation would
allow such Lender or its Eurodollar Lending Office to continue to
perform its obligations to make Eurodollar Rate Advances or to
continue to fund or maintain Eurodollar Rate Advances and would not,
in the judgment of such Lender, be otherwise disadvantageous to such
Lender.
35
(ii) Other Circumstances. If, with respect to any
-------------------
Eurodollar Rate Advances, (A) the Administrative Agent shall determine
in good faith (which determination shall be conclusive) that the
Eurodollar Rate cannot be determined in accordance with the definition
thereof, or (B) Lenders owed at least 50% of the then aggregate unpaid
principal amount thereof notify the Administrative Agent that the
Eurodollar Rate for any Interest Period for such Advances will not
adequately reflect the cost to such Lenders of making, funding or
maintaining their Eurodollar Rate Advances for such Interest Period,
the Administrative Agent shall forthwith so notify the Borrower and
the Lenders, whereupon (i) each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance and (ii) the obligation of
the Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall
notify the Borrower that such Lenders have determined that the
circumstances causing such suspension no longer exist.
(iii) Suspension on Event of Default. Upon the occurrence
------------------------------
and during the continuance of any Event of Default, (i) each
Eurodollar Rate Advance will automatically, on the last day of the
then existing Interest Period therefor, convert into a Base Rate
Advance and (ii) the obligation of the Lenders to make, or to convert
Advances into, Eurodollar Rate Advances shall be suspended.
Section 2.07 Fees.
----
(a) Commitment Fees. The Borrower agrees to pay to the
---------------
Administrative Agent a commitment fee on the average daily amount of each
Lender's Revolving Commitment less the sum of (i) Revolving Advances made by
such Lender and outstanding from time to time, (ii) such Lender's Pro Rata Share
of the aggregate Letter of Credit Obligations outstanding from time to time, and
(iii) in the case of the Swing Line Lender only, the outstanding amount of any
Swing Line Advances, for the account of such Lender, from the Closing Date in
the case of each Initial Lender and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Lender in the case of
each other Lender until the Commitment Termination Date, at the rate per annum
equal to the Commitment Fee Percentage in effect from time to time, payable in
arrears on the last Business Day of each March, June, September and December,
commencing December 31, 2001 and, and on the Commitment Termination Date.
(b) Agent's Fees. The Borrower agrees to pay to the Agent (i) the
------------
fees in the amounts and at the times set forth in the letter dated October 16,
2001 from the Agent to the Borrower, and agreed to and accepted by the Borrower
on October 19, 2001, and (ii) such other fees as may from time to time be agreed
between the Borrower and the Agent.
(c) Absolute Obligation. The Borrower's obligation hereunder to
-------------------
pay the fees referred to in this Section 2.07 shall be absolute and
36
unconditional and shall survive the making and repayment of Advances, the
termination of all Letter of Credit Obligations and the termination of this
Agreement. All fees which are due or become due pursuant to this Section 2.07
are nonrefundable.
Section 2.08 Increased Costs, Etc.
--------------------
(a) Increased Costs. If, due to either (i) the introduction of or
---------------
any change in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost (including Taxes, other than Excluded Taxes) to any
Lender Party of agreeing to make or of making, funding or maintaining Eurodollar
Rate Advances or of agreeing to issue or of issuing or maintaining Letters of
Credit (or of agreeing to purchase or purchasing participations therein) or of
agreeing to make or of making or maintaining L/C Advances (or of agreeing to
purchase or purchasing participations therein), then the Borrower shall from
time to time, upon demand by such Lender Party (with a copy of such demand to
the Administrative Agent), pay to the Administrative Agent for the account of
such Lender Party additional amounts sufficient to compensate such Lender Party
for such increased cost.
(b) Capital Requirements. If, due to either (i) the introduction
--------------------
of or any change in or in the interpretation of any law or regulation or (ii)
the compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the amount of capital required or expected to be maintained by
any Lender Party or any corporation controlling such Lender Party as a result of
or based upon the existence of such Lender Party's commitment to lend or to
issue or purchase participations in Letters of Credit hereunder and other
commitments of such type or the issuance or maintenance of or participation in
the Letters of Credit (or similar contingent obligations), then, upon demand by
such Lender Party (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to the Administrative Agent for the account of such Lender
Party, from time to time as specified by such Lender Party, additional amounts
sufficient to compensate such Lender Party for the increase in costs incurred by
such Lender Party as a result of maintaining such increased capital to the
extent that such Lender Party reasonably determines such increase in capital to
be attributable in whole or in part to the existence of such Lender Party's
commitment to lend or to issue or participate in Letters of Credit hereunder or
to the issuance or maintenance of or participation in any Letters of Credit (or
similar contingent obligations).
(c) Mitigation. If any Lender Party desires to make a claim
----------
against Borrower under this Section 2.08, such Lender Party shall notify
Borrower of any event occurring after the date of this Agreement entitling such
Lender Party to compensation under paragraph (a) or (b) of this Section 2.08 as
promptly as practicable, but in any event within 90 days after such Lender Party
obtains actual knowledge thereof; provided that (i) such Lender Party shall only
--------
be entitled to payment from Borrower for any Additional Costs under this Section
2.08 incurred from and after the date that is 90 days prior to the date on which
such Lender Party gives such notice, and (ii) each Lender
37
Party will use commercially reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to mitigate the amount of the
Additional Costs associated with such event, including designating a different
Applicable Lending Office if the making of such designation would avoid the need
for, or reduce the amount of, such increased cost and would not, in the
reasonable judgment of such Lender Party, result in any economic, legal or
regulatory disadvantage to such Lender Party (other than economic disadvantages
for which the Borrower agrees to indemnify such Lender Party). Any Lender Party
making a claim under this Section 2.08 shall provide to Borrower an officer's
certificate setting forth in reasonable detail (i) the events giving rise to
such Additional Costs and (ii) the amount of such Lender Party's request for
compensation under paragraph (a) or (b) of this Section 2.08, together with a
statement that the determinations and allocations made in respect of the
Additional Costs comply with the provisions of this Section 2.08. Determinations
and allocations by any Lender Party for purposes of this Section 2.08 of any
change in law or regulation under paragraph (a) or any change in capital
requirements under paragraph (b) on it costs or rate of return of maintaining
its Commitment or its funding or on amounts receivable by it in respect of
Advances made by it, and of the amounts required to compensate such Lender Party
under this Section 2.08 shall be conclusive absent manifest error.
(d) Exceptions to Compensation Requirement. Borrower shall not be
--------------------------------------
required to make any payments under this Section 2.08 to any Lender Party if (i)
a claim hereunder arises through circumstances specific to such Lender Party and
which do not affect commercial lenders in the same jurisdiction as such Lender
Party generally, or (ii) such Lender Party is required by Section 2.08(e) to
assign its Commitment to a designated assignee but fails to do so (other than as
a result of such designated institution failing to execute an Assignment and
Acceptance and consummating the transaction contemplated thereby), or (iii) the
claim arises out of, and immediately upon, a voluntary relocation by such Lender
Party of its Applicable Lending Office.
(e) Replacement of Lender Party. If any Lender Party gives notice
---------------------------
of a claim against Borrower under this Section 2.08, Borrower shall have the
right by notice to such Lender Party to request such Lender Party to transfer
its Commitment and its interests under the Loan Documents, without
representation or warranty (except for the absence of such Liens on such
interests arising by, through or under such Lender Party) and in accordance with
Section 9.07, on a Business Day not fewer than ten Business Days after the
giving of such notice (the "Transfer Date") to an Eligible Assignee designated
-------------
by Borrower (the "Transferee") for consideration equal to the sum of (i) such
----------
Lender Party's share of the principal of the Advances outstanding, plus (ii)
accrued interest to the Transfer Date on such share of the Advances, plus (iii)
all other amounts, if any, owing to such Lender Party under the Loan Documents.
Section 2.09 Payments and Computations.
-------------------------
(a) Payments by Borrower. The Borrower shall make each payment
--------------------
hereunder and under any other Loan Document to which it is a party, irrespective
of and without condition or deduction for any counterclaim, defense,
38
recoupment or setoff, in lawful money of the United States and in same day funds
delivered to the Administrative Agent not later than 10:00 a.m. (Los Angeles,
California time) on the day when due by deposit of such funds to the
Administrative Agent's Account. Any payment so delivered to the Administrative
Agent after 10:00 a.m. (Los Angeles, California time) on any Business Day, or on
any day which is not a Business Day, shall be deemed received by the
Administrative Agent on the next succeeding Business Day. The Administrative
Agent will promptly after receipt of each payment cause to be distributed like
funds relating to the payment of principal, interest, commitment fees or letter
of credit fees ratably to each Lender for the account of its Applicable Lending
Office, and like funds relating to the payment of any other amount payable to
any Lender or any L/C Bank (including payments with respect to Letters of Credit
and payments for the account of any Lender under Sections 2.08, 2.10 or 9.04(c))
to such Lender for the account of its Applicable Lending Office or to such L/C
Bank, in each case to be applied in accordance with, and subject to, the terms
of this Agreement, including Section 2.09(e) below. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 9.07(c), from and after the effective date
specified in such Assignment and Acceptance, the Administrative Agent shall make
all payments hereunder and under any other Loan Document in respect of the
interest assigned thereby to the Lender assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) Computations. All computations of interest in respect of Base
------------
Rate Advances based on BNP Paribas' "base rate" shall be made by the
Administrative Agent on the basis of a year of 365/366 days and all other
computations of interest in respect of any other amounts payable hereunder,
including fees, shall be made by the Administrative Agent on the basis of a year
of 360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest is
being computed; provided that if any Advance is repaid on the same day on which
it is made, one day's interest shall be paid on such Advance. Each determination
by the Administrative Agent of an interest rate, fee, commission or discount
rate hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(c) Payments Assumed. Unless the Administrative Agent shall have
----------------
received notice from the Borrower prior to the date on which any payment is due
to the Lenders or any L/C Bank hereunder that the Borrower will not make such
payment in full, the Administrative Agent may assume that the Borrower has made
such payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance upon such assumption, but shall not be
required to, cause to be distributed to each Lender or such L/C Bank on such due
date an amount equal to the amount then due to such Lender or such L/C Bank. If
and to the extent that the Borrower shall not have so made such payment in full
to the Administrative Agent, each Lender and L/C Bank shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
or L/C Bank together with interest thereon, for each day from the date such
amount is distributed to such Lender or L/C Bank until the date such Lender
39
or L/C Bank repays such amount to the Administrative Agent, at the Federal Funds
Rate with respect to the three-day period commencing from the date such amount
is distributed to such Lender Party and at the interest rate applicable to Base
Rate Advances at such time thereafter.
(d) Application of Payments Specified by the Borrower. Except as
-------------------------------------------------
otherwise specified herein, so long as no Event of Default has occurred and is
continuing, all payments shall be applied as instructed by the Borrower if such
instructions are received by the Administrative Agent prior to or
contemporaneously with receipt of funds therefor.
(e) Application of Payments Not Otherwise Specified. If the
-----------------------------------------------
Administrative Agent receives funds for application to the Advances or any
Letter of Credit Obligations or other Obligations of the Borrower under the Loan
Documents under circumstances for which the Loan Documents do not specify the
Advances or the Facility or the Obligations to which, or the manner in which,
such funds are to be applied, the Administrative Agent may elect to distribute
such funds first, to the L/C Banks ratably in payment of the principal of and
-----
interest on any outstanding L/C Advances, second, to the payment of the
------
outstanding Swing Line Advances and interest thereon, third, to each Lender
-----
ratably in accordance with such Lender's proportionate share of all Advances
(other than Swing Line Advances) then outstanding, in repayment or prepayment of
such of the outstanding Advances (other than Swing Line Advances), and for
application to such principal installments, as the Administrative Agent may
direct, and thereafter ratably to the Lenders in repayment or prepayment of any
other Obligations of the Borrower then outstanding under the Loan Documents as
the Administrative Agent shall direct, provided that if an Event of Default has
--------
occurred and is continuing and the Revolving Commitments of the Lenders and the
Swing Line Commitments of the Swing Line Lender have been terminated in full,
the Administrative Agent shall distribute any payments and any proceeds of any
collection, sale or other realization or liquidation of any Collateral first, to
-----
the payment of all costs and expenses of the Administrative Agent under the Loan
Documents, second, to the L/C Banks ratably in payment of the principal of and
------
interest on any outstanding L/C Advances, third, to the payment of the
-----
outstanding Swing Line Advances and interest thereon, and fourth, to each Lender
------
ratably in accordance with such Lender's proportionate share of the principal
amount of all Advances (other than Swing Line Advances) and Letter of Credit
Obligations then outstanding, in payment or prepayment of such Obligations owed
to such Lender under the Loan Documents, and for application to such principal
installments (if applicable) as the Administrative Agent shall direct.
(f) Payments on Business Days. Whenever any payment hereunder or
-------------------------
under any other Loan Document 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,
and such extension of time shall in such case be included in the computation of
payment of interest and commitment and other fees; provided, however, if such
-------- -------
extension would cause payment of interest on or principal of any Eurodollar Rate
Advance to be made in the next following month, such payment shall be made on
the immediately preceding Business Day.
40
(g) Payments From Borrower's Accounts. The Borrower hereby
---------------------------------
authorizes each Lender Party and each of its Affiliates, if and to the extent
payment owed to such Lender Party is not made when due hereunder or, in the case
of a Lender Party, under the Notes held by such Lender Party, to charge from
time to time, to the fullest extent permitted by law but subject to Sections
2.11 and 9.05, against any or all of the Borrower's accounts with such Lender
Party or such Affiliate any amount so due.
Section 2.10 Taxes.
-----
(a) Withholding Taxes. Any and all payments by the Borrower
-----------------
hereunder or under the Notes or any other Loan Document shall be made, in
accordance with Section 2.09, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto ("Taxes"), except to the
-----
extent required by applicable law. If the Borrower shall be required by
applicable law to deduct or withhold any Tax (other than an Excluded Tax) from
or in respect of any sum payable by the Borrower or under this Agreement, the
Notes or any other Loan Documents to any Lender Party or the Administrative
Agent, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions or withholdings (including deductions or
withholdings applicable to the additional sum payable pursuant to this clause
(i)) such Lender Party or the Administrative Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions or
withholdings been made, (ii) the Borrower shall make such deductions or
withholdings, and (iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxation authority or other authority in accordance
with applicable law. The Taxes for which the Borrower is required to make
additional payments pursuant to this Section 2.10(a) are called herein
"Indemnified Taxes".
-----------------
(b) Other Taxes. In addition, the Borrower shall pay any present
-----------
or future stamp, documentary, excise, property or similar taxes, charges or
levies (other than Excluded Taxes) that arise from any payment made hereunder or
under the Notes or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or the Notes (hereinafter referred to as "Other
-----
Indemnified Taxes").
-----------------
(c) Excluded Taxes. For the purposes of this Section 2.10,
--------------
"Excluded Taxes" means, with respect to any Lender Party, the Administrative
--------------
Agent and any other Person entitled to receive a payment to be made by or on
account of any obligation of the Borrower hereunder or under the Notes (each of
which is called herein a "Tax Indemnitee"), (i) any Taxes which are imposed on
--------------
or with respect to, or measured by, the net income of such Tax Indemnitee and
which are imposed by the United States of America, or by any government or other
taxation authority in the jurisdiction under the laws of which such Tax
Indemnitee is organized or in which its principal office is located or, in the
case of any Lender Party, in which any of its Applicable Lending Offices is
located or, in the case of the Administrative Agent, in which it has an office
location at which it performs its duties as Administrative Agent, (ii) in the
case of any Lender Party or Administrative Agent that is organized under the
laws of a jurisdiction outside the
00
Xxxxxx Xxxxxx xx Xxxxxxx, any withholding tax that (A) is in effect and applies
to amounts payable by the Borrower under this Agreement, the Notes or any other
Loan Document to or for the benefit of such Lender Party at the time such Lender
Party becomes a party to this Agreement (or designates a new Applicable Lending
Office) except, in the case of any Lender Party that becomes a party to this
Agreement or designates a new Applicable Lending Office after the Closing Date,
to the extent that such Lender Party is entitled at the time it designates a new
Applicable Lending Office, or to the extent that such Lender Party's assignor
was entitled at the time such Lender Party becomes a party to this Agreement, as
the case may be, to receive additional amounts from the Borrower with respect to
any withholding tax pursuant to Section 2.10(a), or (B) is attributable to such
Lender Party's failure to comply with Section 2.10(f) or such Administrative
Agent's failure to comply with Section 2.10(f) or 9.07(d), other than by reason
of not being eligible for any exception from, or reduced rate of, withholding
upon completion of the Internal Revenue Service Form at the time required, (iii)
any Tax that is imposed in connection with any sale, assignment, transfer or
other disposition by any Tax Indemnitee of all or any part of its interest in
this Agreement, the Notes or any other Loan Documents other than during the
continuance of an Event of Default, and (iv) any Tax imposed by any government
or other taxation authority in any jurisdiction to the extent such Tax is
attributable to a connection between such jurisdiction and such Tax Indemnitee
other than a connection arising from the transactions contemplated by this
Agreement and the other Loan Documents.
(d) Indemnification. The Borrower shall indemnify each Lender
---------------
Party and the Administrative Agent for the full amount of Indemnified Taxes and
Other Indemnified Taxes, and for the full amount of taxes imposed by any
jurisdiction on amounts payable under this Section 2.10, paid by such Lender
Party or the Administrative Agent (as the case may be) and any liability
(including penalties, additions to tax, interest and expenses) arising therefrom
or with respect thereto. This indemnification shall be made within 30 days from
the date such Lender Party or the Administrative Agent (as the case may be)
makes written demand therefor, provided that such written demand includes a
description in reasonable detail of the Indemnified Tax or Other Indemnified Tax
for which indemnification is being demanded and the calculation in reasonable
detail of the amount of such indemnity. So long as no Default shall have
occurred and be continuing, and the Administrative Agent or Lender Party shall
have determined that no adverse tax consequences could reasonably be expected to
result therefrom, at the request and expense of the Borrower and after receipt
of an opinion from recognized counsel (reasonably satisfactory to the
Administrative Agent or the applicable Lender Party, as the case may be) stating
that there is a substantial basis to contest the imposition or assertion of an
Indemnified Tax or Other Indemnified Tax or Tax for which the Borrower is or
would be required to indemnify the Administrative Agent or applicable Lender
Party pursuant to Section 2.08 (a "Tax Opinion"), the Administrative Agent or
-----------
such Lender Party, as applicable, shall contest the imposition or assertion of
such Indemnified Tax or Other Indemnified Tax or Tax in good faith in accordance
with applicable law; provided, that such imposition or assertion of an
Indemnified Tax or Other Indemnified Tax or Tax exceeds $100,000. The Borrower
hereby agrees to reimburse the Administrative Agent or such Lender Party for all
costs of such contest upon demand. The Administrative Agent or such Lender
Party, as
42
applicable, shall have responsibility for the conduct of any contest conducted
pursuant to this Section 2.10(d).
(e) Evidence of Payment. Within 30 days after the date of any
-------------------
payment by the Borrower of an Indemnified Tax pursuant to Section 2.10 (a) or
any Other Indemnified Tax pursuant to Section 2.10(b), the Borrower shall
furnish to the Administrative Agent, at its address referred to in Section 9.02,
the original receipt of payment thereof or a certified copy of such receipt or,
if the relevant taxation authority does not provide a receipt for such payment,
such evidence of such payment as may be reasonably obtainable by the Borrower
and reasonably satisfactory to the Administrative Agent. In the case of any
payment hereunder or under the Notes by the Borrower through an account or
branch outside the United States or on behalf of the Borrower by a payor that is
not a United States person, if the Borrower determines that no Taxes are payable
in respect thereof, the Borrower shall furnish, or shall cause such payor to
furnish, to the Administrative Agent, at such address, an opinion of counsel
acceptable to the Administrative Agent stating that such payment is exempt from
Indemnified Taxes. Notwithstanding such opinion, if any Lender Party or the
Administrative Agent receives notice from the relevant taxing authority that any
Indemnified Tax is due with respect to such payment, the Borrower shall
indemnify such Lender Party or the Administrative Agent, as the case may be, to
the extent required by Section 2.10(d). For purposes of this subsection (e) and
subsection (f), the terms "United States" and "United States person" shall have
the meanings specified in Section 7701 of the Internal Revenue Code.
(f) Foreign Lenders and L/C Banks. Each Lender Party organized
-----------------------------
under the laws of a jurisdiction outside the United States shall, on or prior to
the date of its execution and delivery of this Agreement in the case of each
Initial Lender, and on the date of the Assignment and Acceptance pursuant to
which it became a Lender Party in the case of each other Lender Party, and from
time to time thereafter upon the reasonable request in writing by the Borrower
or the Administrative Agent (but only so long thereafter as such Lender Party
remains lawfully able to do so), provide the Administrative Agent and the
Borrower with a properly completed and signed Internal Revenue Service Form
W-8BEN or W-8ECI, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender Party is exempt from or is
entitled to a reduced rate of United States withholding tax on payments under
this Agreement or the Notes. If the form provided by a Lender Party at the time
such Lender Party first becomes a party to this Agreement indicates a United
States interest withholding tax rate in excess of zero, withholding tax at such
rate shall be considered an Excluded Tax unless and until such Lender Party
provides the appropriate form certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered an Excluded Tax for
periods governed by such form; provided, however, that if, at the date of the
-------- -------
Assignment and Acceptance pursuant to which a Lender Party assignee becomes a
party to this Agreement, the Lender Party assignor was entitled to indemnity
payments under Section 2.10(a) in respect of United States withholding tax with
respect to interest paid at such date, then, to such extent, the term
Indemnified Taxes shall include (in addition to withholding taxes, other than
Excluded Taxes, that may be imposed in the future or other amounts otherwise
included in Indemnified Taxes) United States withholding tax, if any, applicable
with respect to the Lender Party assignee on
43
such date. If any form or document referred to in this Section 2.10(f) requires
the disclosure of information, other than information necessary to compute the
tax payable and information required on the date hereof by Internal Revenue
Service Form W-8BEN or W-8ECI, that the Lender Party reasonably considers to be
confidential, the Lender Party shall give notice thereof to the Borrower and
shall not be obligated to include in such form or document such confidential
information.
The Administrative Agent, and any successor Administrative Agent, that
is organized under the laws of a jurisdiction outside the United States shall,
on or prior to the date it becomes a party to this Agreement, and from time to
time thereafter upon the reasonable request in writing by the Borrower, provide
the Borrower with a properly completed and signed Internal Revenue Service Form
W-8IMY (including all required attachments and supplements).
(g) Mitigation of Withholding Taxes. Any Lender Party claiming
-------------------------------
any additional amounts payable pursuant to this Section 2.10 shall use
commercially reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to change the jurisdiction of its Eurodollar
Lending Office if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts that may thereafter accrue and
would not, in the reasonable judgment of such Lender Party, be otherwise
disadvantageous to such Lender Party.
If the Borrower is required by applicable law to withhold any
Indemnified Tax with respect to any amount payable to or for the benefit of any
Lender Party pursuant to this Agreement or the Notes, the Borrower may, at any
time upon at least ten (10) Business Days prior written notice to the
Administrative Agent, arrange to have any other Lender or any Eligible Assignee
purchase from the affected Lender in accordance with Section 9.07 all of its
Notes and/or Revolving Commitments for an amount equal to the aggregate
outstanding principal amount thereof plus interest thereon accrued to (but not
including) the date of purchase.
(h) Refunds. If, in the case of any Indemnified Tax, Other
-------
Indemnified Tax, or Tax in respect of which the Borrower has paid an indemnity
to or for the account of any Tax Indemnitee pursuant to this Section 2.10 or
Section 2.08, as the case may be, the Tax Indemnitee has received a refund of
such Indemnified Tax, Other Indemnified Tax or Tax pursuant to Section 2.08,
then the Tax Indemnitee shall remit to the Borrower the portion of such refund
(net of any expenses incurred in connection therewith) that is attributable to
the payment of such Indemnified Tax, Other Indemnified Tax, or Tax as determined
in the sole discretion of the Tax Indemnitee which determination shall be final,
provided that if an Event of Default shall have occurred the Tax Indemnitee
shall cease to have any obligation under this Section 2.10(h).
(i) Survival. Without prejudice to the survival of any other
--------
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower, each Lender Party and the Administrative Agent contained in this
Section 2.10 shall survive the payment in full of principal and interest
hereunder and under the Notes.
44
Section 2.11 Sharing of Payments, Etc. If any Lender Party shall obtain at
------------------------
any time any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise, other than as a result of an assignment
pursuant to Section 9.07) (a) on account of Obligations due and payable to such
Lender Party hereunder and under the Notes at such time in excess of its ratable
share (according to the proportion of (i) the amount of such Obligations due and
payable to such Lender Party at such time to (ii) the aggregate amount of the
Obligations due and payable to all Lender Parties hereunder and under the Notes
at such time) of payments on account of the Obligations due and payable to all
Lender Parties hereunder and under the Notes at such time obtained by all the
Lender Parties at such time or (b) on account of Obligations owing (but not due
and payable) to such Lender Party hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations owing to such Lender Party at such time to (ii) the aggregate
amount of the Obligations owing (but not due and payable) to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations owing (but not due and payable) to all Lender Parties hereunder and
under the Notes at such time obtained by all the Lender Parties at such time,
such Lender Party shall forthwith purchase from the other Lender Parties such
interests or participating interests in the Obligations due and payable or owing
to them, as the case may be, as shall be necessary to cause such purchasing
Lender Party to share the excess payment ratably with each of them; provided,
--------
however that if all or any portion of such excess payment is thereafter
-------
recovered from such purchasing Lender Party, such purchase from each other
Lender Party shall be rescinded and such other Lender Party shall repay to the
purchasing Lender Party the purchase price to the extent of such other Lender
Party's ratable share (according to the proportion of (i) the purchase price
paid to such Lender Party to (ii) the aggregate purchase price paid to all
Lender Parties) of such recovery together with an amount equal to such Lender
Party's ratable share (according to the proportion of (i) the amount of such
other Lender Party's required repayment to (ii) the total amount so recovered
from the purchasing Lender Party) of any interest or other amount paid or
payable by the purchasing Lender Party in respect of the total amount so
recovered. The Borrower agrees that any Lender Party so purchasing an interest
or participating interest from another Lender Party pursuant to this Section
2.11 may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such interest or
participating interest as fully as if such Lender Party were the direct creditor
of the Borrower in the amount of such interest or participating interest.
Section 2.12 Use of Proceeds. The proceeds of the Advances and drawings
---------------
under the Letters of Credit shall be available (and the Borrower agrees that it
shall use such proceeds): (a) to repay in full all amounts outstanding under the
Existing Credit Agreement, (b) to repay in full all amounts outstanding under
the Casino Note, (c) to pay transaction fees and expenses, and (d) to provide
working capital for the Borrower and its Subsidiaries and, subject to the
provisions of this Agreement and the other Loan Documents, for other general
corporate purposes of the Borrower and its Subsidiaries. No portion of the
proceeds of any borrowing under this Agreement shall be used by the Borrower or
any of its Subsidiaries in any manner that might cause the borrowing or the
application of such proceeds to violate Regulation U, Regulation T or Regulation
X of the Board of Governors of the Federal Reserve System or any other
regulation of such
45
Board or to violate the Securities Exchange Act of 1934, as amended from time to
time, and any successor statute, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.
Section 2.13 Evidence of Debt.
----------------
(a) Maintenance of Accounts by Lenders. Each Lender shall
----------------------------------
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender resulting from each Advance
owing to such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.
(b) Maintenance of Accounts by Agent. The Register maintained by
--------------------------------
the Administrative Agent pursuant to Section 9.07(c) shall include a control
account, and a subsidiary account for each Lender Party, in which accounts
(taken together) shall be recorded (i) the date and amount of each Borrowing
made hereunder, the Interest Type of the Advances comprising such Borrowing and
any Interest Period applicable thereto, (ii) the terms of each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender Party hereunder, and (iv) the amount of any sum received by the
Administrative Agent from the Borrower hereunder and each Lender Party's share
thereof. The entries made in the Register shall be conclusive and binding for
all purposes, absent manifest error.
Section 2.14 Conversion of Advances.
----------------------
(a) Optional. The Borrower may on any Business Day, upon notice
--------
given to the Administrative Agent not later than 9:00 a.m. (Los Angeles,
California time) on the third Business Day prior to the date of the proposed
Conversion, Convert all or any portion of the Advances of one Interest Type
comprising the same Borrowing into Advances of the other Interest Type;
provided, however, that (i) any Conversion of Eurodollar Rate Advances into Base
-------- -------
Rate Advances shall be made only on the last day of an Interest Period for such
Eurodollar Rate Advances, (ii) any Conversion of Base Rate Advances into
Eurodollar Rate Advances shall be in an amount not less than $3,000,000 and
integral multiples of $1,000,000 thereafter, (iii) no Conversion of any Advances
shall result in more separate Borrowings than permitted under Section 2.06(b)
and (iv) each Conversion of Advances comprising part of the same Borrowing under
the Revolving Facility shall be made ratably among the Lenders in accordance
with their Commitments under the Revolving Facility. Each such notice of
Conversion shall, within the restrictions specified above, specify (i) the date
of such Conversion, (ii) the Advances to be Converted and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for such Advances. Each notice of Conversion shall be
irrevocable and binding on the Borrower and shall be subject to Section 9.04(c).
(b) Mandatory. On the date on which the aggregate unpaid
---------
principal amount of Eurodollar Rate Advances comprising any Borrowing shall
46
be reduced, by payment or prepayment or otherwise, to less than $3,000,000, such
Advances shall automatically Convert into Base Rate Advances.
ARTICLE III
AMOUNTS AND TERMS OF LETTERS OF CREDIT
Section 3.01 The Letter of Credit Subfacility. The Borrower may request
--------------------------------
that the L/C Bank Issue Letters of Credit for the account of the Borrower from
time to time on any Business Day during the period after the Closing Date until
the Commitment Termination Date (a) in an aggregate Available Amount for all
Letters of Credit not to exceed at any time Fifteen Million Dollars
($15,000,000) (the "Letter of Credit Subfacility"), and (b) in an Available
----------------------------
Amount for each such Letter of Credit not to exceed the Unused Revolving
Commitments of the Lenders on such Business Day. The L/C Bank shall not be
obligated to issue a Letter of Credit if such Issuance would cause the sum of
the Revolving Advances, the Swing Line Reserve Amount and the Letter of Credit
Obligations then outstanding to exceed the Borrowing Base Amount. No Letter of
Credit shall (i) have a face amount of less than $500,000, or (ii) have an
expiration date (including all rights of the Borrower or the beneficiary to
require renewal) later than the earlier of five (5) Business Days before the
Commitment Termination Date and one year after the date of issuance thereof;
provided, however, any Letter of Credit may by its terms be renewable on terms
satisfactory to the L/C Bank, but shall not have an expiration date later than
five Business Days before the Commitment Termination Date unless the Borrower
and the applicable L/C Bank enter into an agreement satisfactory to such L/C
Bank in its sole discretion with respect to the acceleration and replacement of
such Letter of Credit, which agreement may require the Borrower to cash
collateralize such Letter of Credit or enter into such other collateral
arrangements as determined by the L/C Bank in its sole discretion. Within the
limits of the Letter of Credit Subfacility, and subject to the limits referred
to above, the Borrower may request the Issuance of one or more Letters of Credit
under this Section 3.01, repay amounts due resulting from L/C Advances
thereunder pursuant to Section 3.03, and request the Issuance of one or more
additional Letters of Credit under this Section 3.01.
Section 3.02 Issuance of Letters of Credit.
-----------------------------
(a) Notice of Issuance. Each Letter of Credit shall be Issued
------------------
pursuant to a Notice of Issuance, which must be received by the Administrative
Agent and the L/C Bank not later than 9:00 a.m. (Los Angeles, California time)
on the third Business Day prior to the date of the proposed Issuance of such
Letter of Credit (or such shorter period as may be acceptable to the applicable
L/C Bank). Each such Notice of Issuance shall specify the requested (i) date of
such Issuance (which shall be a Business Day), (ii) Available Amount of such
Letter of Credit, (iii) expiration date of such Letter of Credit, (iv) name and
address of the beneficiary of such Letter of Credit, and (v) form of such Letter
of Credit, and shall be accompanied by such customary application and agreement
for letter of credit of the L/C Bank (a "Letter of Credit Agreement") as the L/C
--------------------------
Bank may specify to the Borrower for use in connection with such requested
Letter of Credit.
47
(b) Conditions to Issuance. If (i) the requested form of such
----------------------
Letter of Credit is acceptable to the Administrative Agent and the L/C Bank in
the reasonable discretion of each, and (ii) such L/C Bank has not received
notice from the Administrative Agent or the Required Lenders that the Issuance
of such Letter of Credit is not authorized because such Issuance would not
comply with the requirements of clause (a) or (b) of Section 3.01 or one or more
of the conditions set forth in Section 4.02 has not been satisfied, then such
L/C Bank will, upon fulfillment of the applicable conditions set forth in
Section 4.02 (which fulfillment such L/C Bank may assume in the absence of
actual knowledge, or notice received from the Borrower, the Administrative Agent
or the Required Lenders, to the contrary) and subject to the provisions of this
Article III, make such Letter of Credit available to the Borrower at the
Administrative Agent's office referred to in Section 9.02 or as otherwise agreed
upon with the Borrower in connection with such Issuance. In the event and to the
extent that the provisions of any Letter of Credit Agreement shall conflict with
this Agreement, the provisions of this Agreement shall govern.
Section 3.03 Drawing and Reimbursement. The Borrower agrees to reimburse
-------------------------
the L/C Bank under each Letter of Credit, within one Business Day after it has
notice of any L/C Advance by such L/C Bank thereunder, for the principal amount
of such L/C Advance, and shall pay to such L/C Bank, on demand, interest on the
unreimbursed principal of such L/C Advance at a rate per annum equal to (a) from
the date of such L/C Advance to the first Business Day after notice thereof has
been given to the Borrower, the rate applicable to Base Rate Advances in effect
from time to time, and (b) from and after such first Business Day, the Default
Rate. If the Borrower shall fail to so reimburse the L/C Bank within one
Business Day after the Borrower receives notice that any such L/C Advance has
been made, then upon demand by the L/C Bank, and whether or not a Default has
occurred and is continuing or any conditions set forth in Section 4.02 are
satisfied, each Lender shall purchase from such L/C Bank, and such L/C Bank
shall sell and assign to each Lender, such Lender's Pro Rata Share of such
outstanding L/C Advance as of the date of such purchase, by making available for
the account of such L/C Bank, by deposit to the Administrative Agent's Account,
in same day funds, an amount equal to the portion of the outstanding principal
amount of such L/C Advance to be purchased by such Lender. Each Lender agrees to
purchase its Pro Rata Share of an outstanding L/C Advance on (A) the Business
Day on which demand therefor is made by the L/C Bank which made such L/C
Advance, provided notice of such demand is given not later than 12:00 noon (Los
Angeles, California time) on such Business Day, or (B) the first Business Day
next succeeding such demand if notice of such demand is given after such time.
Upon any such assignment by an L/C Bank to any Lender of a portion of an L/C
Advance, such L/C Bank represents and warrants to such Lender that such L/C Bank
is the legal and beneficial owner of such interest being assigned by it, but
makes no other representation or warranty and assumes no responsibility with
respect to such L/C Advance, the Loan Documents or any Loan Party.
Section 3.04 Obligations Absolute. The Obligations of the Borrower under
--------------------
this Agreement, any Letter of Credit Agreement and any other agreement or
instrument relating to any Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement
48
and such other agreement or instrument under all circumstances, including,
without limitation, the following circumstances (it being understood that any
such payment by the Borrower is without prejudice to, and does not constitute a
waiver of, any rights the Borrower might have or might acquire as a result of
the payment by any L/C Bank of any draft or the reimbursement by the Borrower
thereof):
(a) any lack of validity or enforceability of this Agreement, any
Letter of Credit Agreement, any Letter of Credit or any other agreement or
instrument relating thereto (this Agreement and all of the other foregoing being
collectively referred to herein as the "L/C Related Documents");
---------------------
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of the Borrower in respect of
any L/C Related Document or any other amendment or waiver of or any consent to
departure from all or any of the L/C Related Documents;
(c) the existence of any claim, set-off, defense or other right
that the Borrower or any of its Subsidiaries may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), any L/C Bank or any
other Person, whether in connection with the transactions contemplated by the
L/C Related Documents or any unrelated transaction;
(d) any statement or any other document presented under a Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(e) payment by any L/C Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit, or payment by the L/C Bank under a Letter of
Credit in any other circumstances in which conditions to payment are not met;
(f) any exchange, release or non-perfection of any Collateral or
other collateral, or any release or amendment or waiver of or consent to
departure from the Guaranty or any other guarantee, for all or any of the
Obligations of the Borrower in respect of the L/C Related Documents; or
(g) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a Guarantor or any other guarantor.
Section 3.05 Letter of Credit Compensation.
-----------------------------
(a) The Borrower shall pay to the Administrative Agent for the
account of each Lender, a letter of credit fee with respect to each Letter of
Credit, in an amount equal to a rate per annum equal to the Applicable Margin
for Eurodollar Rate
49
Advances in effect from time to time on such Lender's Pro Rata Share of the
average daily Available Amount of such Letter of Credit outstanding from time to
time;
The letter of credit fees payable under this Section 3.05(a) shall be payable
quarterly in arrears on the last Business Day of each March, June, September and
December, commencing December 31, 2001, and on the Commitment Termination Date.
For purposes of computing any fees under this Section 3.05(a), the determination
of the maximum amount available to be drawn under a Letter of Credit at any time
shall assume strict compliance with all conditions for drawing. Any fees paid
pursuant to this Section 3.05(a) are nonrefundable.
(b) The Borrower shall pay to each L/C Bank, for its own account
and on demand, such other commissions, issuance fees, fronting fees, transfer
fees and other fees, charges and expenses in connection with the Issuance,
amendment, transfer, cancellation or administration of each Letter of Credit as
the Borrower and such L/C Bank shall agree.
Section 3.06 Use of Letters of Credit. Any Letters of Credit Issued
------------------------
hereunder shall be used solely to support Obligations of the Borrower and its
Subsidiaries not prohibited hereunder.
ARTICLE IV
CONDITIONS OF LENDING
Section 4.01 Conditions Precedent to Initial Borrowing. The obligation of
-----------------------------------------
each Lender Party to make an Advance and the obligation of an L/C Bank to Issue
a Letter of Credit on the occasion of the initial Borrowing is subject to the
following conditions precedent:
(a) The Lender Parties shall be satisfied with the corporate and
legal structure and capitalization of each Loan Party, including the terms and
conditions of the charter, bylaws and each class of Equity Interests of each
Loan Party and of each agreement or instrument relating to such structure or
capitalization.
(b) The Lender Parties (i) shall be satisfied, and shall have
received satisfactory evidence, that the Existing Credit Agreement, the Casino
Note and the hedge agreements (x) between the Borrower and Bank of America, N.A.
and (y) between the Borrower and Credit Lyonnais Los Angeles Branch
(collectively, the "Existing Hedge Agreements") shall be prepaid, redeemed or
-------------------------
defeased in full or otherwise satisfied and extinguished contemporaneously with
the initial Borrowing and any agreement, instrument or document relating to the
Existing Credit Agreement, the Casino Note and the Existing Hedge Agreements
shall be cancelled on the Closing Date, (ii) shall be satisfied with, and shall
have received, all instruments or other documents required to terminate any and
all liens and security interests granted pursuant to, or in connection with, the
Existing Credit Agreement, the
50
Casino Note and the Existing Hedge Agreements or to release any collateral
relating to the Existing Credit Agreement, the Casino Note and the Existing
Hedge Agreements (including, without limitation, a payoff letter, UCC
termination statements, real property releases and reconveyances, and releases
of liens recorded in the U.S. Patent and Trademark Office), all of which shall
have been duly executed by the appropriate party thereto and, where so required,
shall have been positioned for filing with the appropriate authorities promptly
following the initial Borrowing, (iii) shall be satisfied, and shall have
received satisfactory evidence, that the Lien securing the hedge agreement
between the Borrower and Union Bank of California, N.A. is pari passu with the
Liens granted to the Administrative Agent pursuant to the Collateral Documents,
and (iv) shall be satisfied in all respects with the Surviving Debt and all
terms and conditions of any Surviving Debt Agreement;
(c) Since December 31, 2000 nothing shall have occurred (and the
Lenders shall have become aware of no facts or conditions not previously known)
which the Lenders shall determine could reasonably be expected to have a
Material Adverse Effect.
(d) There shall exist no action, suit, investigation, litigation
or proceeding pending or threatened before any court, governmental agency or
arbitrator affecting any Loan Party or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect or which purports to
affect the legality, validity or enforceability of this Agreement, any Note, any
other Loan Document or the consummation of the transactions contemplated hereby.
(e) The Borrower shall have paid all accrued costs, fees and
expenses of, or other compensation payable to, the Administrative Agent, the
Syndication Agent, the Lead Arranger and the Lender Parties (including the
accrued fees and expenses of counsel to the Administrative Agent, the
Syndication Agent and the Lead Arranger).
(f) The Borrower shall have entered into the Synthetic Lease with
respect to the Properties (as defined in the Participation Agreement), and shall
have terminated and satisfied all obligations with respect to any synthetic
leases of the Borrower existing before the Closing Date, in each case on terms
and conditions satisfactory to the Administrative Agent, and the Administrative
Agent (and any Lender Party so requesting copies) shall have received copies of
all of the Synthetic Lease Documents and shall be satisfied in all respects with
the terms and conditions therein.
(g) The Administrative Agent shall have received, and shall be
satisfied in all respects with, (i) the Consolidated financial statements of the
Borrower and its Subsidiaries for the Fiscal Years ended January 2, 2000 and
December 31, 2000, including balance sheets and income and cash flow statements
audited by independent public accountants of recognized national standing and
prepared in conformity with GAAP, (ii) the most recent interim quarterly
financial statements of the Borrower and its Subsidiaries, and (iii) unaudited
year-to-date financial statements of the Borrower and its Subsidiaries for the
period ending October 7, 2001.
51
(h) The Administrative Agent shall have received on or before the
day of the initial Borrowing the following, each dated such day (unless
otherwise specified), in form and substance satisfactory to the Administrative
Agent (unless otherwise specified) and (except for the Notes) in sufficient
copies for each Lender Party:
(i) Fully executed counterparts of this Agreement.
(ii) The Notes to the order of each Lender, as appropriate.
(iii) Certified copies of the resolutions of the Board of
Directors of the Borrower and each other Loan Party approving this
Agreement, the Notes, and each other Loan Document to which it is or
is to be a party, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to
this Agreement, the Notes, and each other Loan Document.
(iv) With respect to each Loan Party, a copy of a
certificate of the Secretary of State of the State of such Loan
Party's organization, dated reasonably near the date of the initial
Borrowing, listing the charter of such Loan Party and each amendment
thereto on file in such office and certifying (A) as to a true and
correct copy of the charter of such Loan Party and each amendment
thereto on file in such Secretary's office, and (B) that (1) such
amendments are the only amendments to such Loan Party's charter on
file in such office, (2) such Loan Party has paid all franchise taxes
to the date of such certificate, and (3) such Loan Party is duly
incorporated and in good standing or presently subsisting under the
laws of the State of such Loan Party's organization.
(v) With respect to each Loan Party, a copy of a
certificate of the Secretary of State of each jurisdiction in which
such Loan Party is qualified to do business, as listed on Schedule
4.01(h)(v), dated reasonably near the date of the initial Borrowing,
stating that such Loan Party is duly qualified and in good standing as
a foreign corporation in such State and has filed all annual reports
required to be filed to the date of such certificate.
(vi) A certificate of each Loan Party, signed on behalf of
such Loan Party by its President or a Vice President and its Secretary
or any Assistant Secretary, dated the date of the initial Borrowing
(the statements made in which certificate shall be true on and as of
the date of the initial Borrowing), certifying as to (A) the absence
of any amendments to the charter of such Loan Party since the date of
the Secretary of State's certificate referred to in Section
4.01(h)(iv), (B) a true and correct copy of the bylaws of such Loan
Party as in effect on the date of the initial Borrowing, (C) the due
incorporation and good standing of such Loan Party as a corporation
organized under the laws of the State of its jurisdiction of
incorporation, and the absence of any proceeding for the
52
dissolution or liquidation of such Loan Party, (D) the truth of the
representations and warranties contained in the Loan Documents as
though made on and as of the date of the initial Borrowing and (E) the
absence of any event occurring and continuing, or resulting from the
initial Borrowing, that constitutes a Default.
(vii) A certificate of the Secretary or an Assistant
Secretary of each Loan Party certifying the names and true signatures
of the officers of such Loan Party authorized to sign this Agreement,
the Notes, and each other Loan Document to which they are or are to be
parties and the other documents to be delivered hereunder and
thereunder.
(viii) A security agreement in substantially the form of
Exhibit E-1 (as amended from time to time in accordance with its
terms, the "Security Agreement"), duly executed by each Loan Party,
------------------
and a pledge agreement in substantially the form of Exhibit E-2 (as
amended from time to time in accordance with its terms, the "Pledge
------
Agreement"), duly executed by each Subsidiary of the Borrower (other
---------
than any Foreign Subsidiary), together with:
(A) certificates representing the Pledged Shares (as
defined in the Pledge Agreement) accompanied by undated stock powers
executed in blank and instruments evidencing the Pledged Debt (as defined
in the Security Agreement) endorsed in blank,
(B) duly executed financing statements in appropriate
form for filing under the Uniform Commercial Code in all jurisdictions that
the Administrative Agent may deem necessary or desirable in order to
perfect and protect the Liens created by the Security Agreement and the
Pledge Agreement covering the Collateral described in the Security
Agreement and the Pledge Agreement and completed requests for information
dated on or before the date of the initial Borrowing listing all effective
financing statements filed in such jurisdictions that name any Subsidiary
of the Borrower (other than any Foreign Subsidiary) as debtor, together
with copies of such other financing statements,
(C) evidence of the insurance required by the terms of
the Security Agreement (subject to such exceptions as may be acceptable to
the Administrative Agent), and
(D) evidence that all other action that the
Administrative Agent may deem necessary or desirable in order to perfect
and protect the Liens created under the Security Agreement, the Pledge
Agreement or covering any Collateral, or the priority thereof, has been
taken (including receipt of duly executed payoff letters and UCC
termination statements).
(ix) Deeds of trust, trust deeds and mortgages in
substantially the form of Exhibit F and covering the properties listed on
53
Schedule 5.01(r)(i) other than the Escondido Property, Store #405 and
the properties located in Mexico (as amended from time to time in
accordance with their terms, the "Mortgages"), duly executed by the
---------
Borrower in appropriate form for filing in all filing or recording
offices that the Administrative Agent may deem necessary or desirable
in order to create a valid and subsisting Lien subject only to
Permitted Liens on the property described therein in favor of the
Administrative Agent for the benefit of the Secured Parties, together
with:
(A) American Land Title Association Lender's Extended
Coverage title insurance policies (the " Mortgage Policies")
-----------------
issued by Chicago Title Insurance Company in form and
substance, with endorsements and in amounts acceptable to
the Administrative Agent, insuring the Mortgages to be valid
first and subsisting Liens on the property described
therein, free and clear of all defects (including, but not
limited to, mechanics' and materialmen's Liens) and
encumbrances, excepting only Permitted Encumbrances, and
providing for such other affirmative insurance (including
endorsements for future advances under the Loan Documents
and for mechanics' and materialmen's Liens) as the
Administrative Agent may deem necessary or desirable,
(B) an appraisal of each of the properties described in
the Mortgages to the extent required by, and complying with,
the requirements of the Federal Financial Institutions
Reform, Recovery and Enforcement Act of 1989,
(C) such consents and agreements of lessors and other
third parties, and such estoppel letters and other
confirmations, as the Administrative Agent may deem
necessary or desirable and the Borrower is able to obtain
using commercially reasonable efforts (which shall not
include the payment of any amounts to such lessors or third
parties as an inducement to such lessors and third parties
to execute such consents, agreements, estoppel letters or
confirmations),
(D) evidence of the insurance required by the terms of
each Mortgage (subject to such exceptions as may be
acceptable to the Administrative Agent),
(E) favorable opinions of local counsel with respect to
the Mortgages in form and substance satisfactory to the
Administrative Agent, and
(F) evidence that all other action that the
Administrative Agent may deem necessary or desirable in
order to create valid first and subsisting Liens on the
property described in the Mortgages has been taken.
54
(x) A guaranty in substantially the form of Exhibit G (as
amended from time to time in accordance with its terms, the
"Guaranty"), duly executed by each of the Borrower's
--------
direct and indirect Subsidiaries (other than any Foreign Subsidiary).
(xi) Such financial, business and other information
regarding the Borrower and its Subsidiaries as the Lender Parties
shall have requested, including, without limitation, information as to
possible contingent liabilities, tax matters, environmental matters,
obligations under ERISA and Employee Benefit Plans, collective
bargaining agreements and other arrangements with employees, interim
financial statements dated the end of the most recent fiscal quarter
for which financial statements are available (or, in the event the
Lender Parties' due diligence review reveals material changes since
such financial statements, as of a later date within 45 days of the
day of the initial Borrowing), pro forma financial statements as to
the Borrower and forecasts prepared by management of the Borrower, in
form and substance satisfactory to the Lender Parties, of balance
sheets, income statements and cash flow statements on a monthly basis
for the first year following the day of the initial Borrowing and on
an annual basis for each year thereafter until the Commitment
Termination Date.
(xii) A certificate, in the form of Exhibit I hereto,
attesting to the Solvency of each Loan Party before and after giving
effect to the transactions contemplated hereby, from the Borrower's
chief financial officer.
(xiii) Favorable opinions of (i) Holland & Knight LLP,
special California counsel for the Borrower and the other Loan
Parties, in substantially the form of Exhibit J-1 hereto and (ii)
Xxxxxx X. Xxxxxxxx, general counsel of the Borrower, in substantially
the form of Exhibit J-2 hereto and, in each case, as to such other
matters as any Lender Party through the Agent may reasonably request.
(xiv) an Intercompany Note in substantially the form of
Exhibit H (as amended from time to time, each an "Intercompany Note")
-----------------
from each Guarantor in favor of the Borrower, accompanied by an
endorsement by the Borrower in favor of the Administrative Agent.
(xv) (A) Deeds of trust, trust deeds and mortgages in
substantially the form of Exhibit N-1 and covering the Synthetic Lease
Properties duly executed by the Owner Trustee and (B) deeds of trust,
trust deeds and mortgages in substantially the form of Exhibit N-2 and
covering the Borrower's leasehold interest in the Synthetic Lease
Properties duly executed by the Borrower (collectively, the "Second
------
Mortgages"), in each case in appropriate form for filing in all filing
---------
or recording offices that the Administrative Agent may deem necessary
or desirable in order to create a valid and subsisting Lien in favor
of the Administrative Agent for the benefit of the Secured Parties,
subordinate
55
only to the Lien created by the Synthetic Lease Documents to the
extent provided in the Intercreditor Agreement (Leased Property).
(xvi) A security agreement in substantially the form of
Exhibit E-3 (as amended from time to time in accordance with its
terms, the "Subordinate Security Agreement"), duly executed by the
------------------------------
Owner Trustee and the Borrower, in order to create a valid and
subsisting Lien in favor of the Administrative Agent for the benefit
of the Secured Parties in all of the personal property financed under
the Synthetic Lease Documents, subordinate only to the Lien created by
the Synthetic Lease Documents to the extent provided in the
Intercreditor Agreement (Leased Property), together with duly executed
financing statements in appropriate form for filing under the Uniform
Commercial Code in all jurisdictions that the Administrative Agent may
deem necessary or desirable in order to perfect and protect the Liens
created by the Subordinate Security Agreement covering the Collateral
described in the Subordinate Security Agreement .
(xvii) An environmental indemnity agreement in the form of
Exhibit P duly executed by Borrower (the "Environmental Indemnity
-----------------------
Agreement").
---------
(xviii) Intercreditor agreements in the form of Exhibit Q-1
and Q-2 (as amended from time to time in accordance with their
respective terms, the "Intercreditor Agreements") duly executed by
------------------------
each party thereto.
(xix) Evidence of insurance naming the Administrative
Agent as additional insured and/or loss payee with such responsible
and reputable insurance companies or associations, and in such amounts
and covering such risks, as is reasonably satisfactory to the Initial
Lenders.
(xx) A Notice of Borrowing, Notice of Swing Line
Borrowing or Notice of Issuance, as applicable, relating to the
initial Borrowing.
(xxi) A report from Xxxxxx Xxxxxxxx satisfactory in form
and substance to the Administrative Agent with respect to the Loan
Parties' Eligible Collateral.
Section 4.02 Conditions Precedent to Each Borrowing and Issuance. The
---------------------------------------------------
obligation of each Lender to make an Advance and the obligation of an L/C Bank
to Issue a Letter of Credit (including the initial issuance), and the right of
the Borrower to request a Swing Line Borrowing, shall be subject to the further
conditions precedent that on the date of such Borrowing or Issuance:
(a) the following statements shall be true (and each of the
giving of the applicable Notice of Borrowing, Notice of Swing Line Borrowing or
Notice
56
of Issuance and the acceptance by the Borrower of the proceeds of such Borrowing
or of such Letter of Credit shall constitute a representation and warranty by
the Borrower that both on the date of such notice and on the date of such
Borrowing or Issuance such statements are true):
(i) the representations and warranties contained in each
Loan Document are correct on and as of the date of such Borrowing or
issuance, before and after giving effect to such Borrowing or Issuance
and to the application of the proceeds therefrom, as though made on
and as of such date (other than any such representations or warranties
that, by their terms, are specifically made as of a date other than
the date of such Borrowing or Issuance, in which case such
representations and warranties shall have been true and correct as of
such other date), and
(ii) no Default, has occurred and is continuing, or would
result from such Borrowing or Issuance or from the application of the
proceeds therefrom;
(b) no Borrowing Base Deficiency shall result after giving effect
to such Borrowing or Issuance and the Borrower shall have delivered a Borrowing
Base Certificate as required by Section 6.03(a)evidencing the same; and
(c) the Administrative Agent shall have received a Notice of
Borrowing, Notice of Swing Line Borrowing or Notice of Issuance, and such other
approvals, opinions or documents as any Lender or such L/C Bank through the
Administrative Agent may reasonably request.
Section 4.03 Determinations Under Section 4.01. For purposes of determining
---------------------------------
compliance with the conditions specified in Section 4.01, each Lender Party has
reviewed all documents which it has deemed reasonable to review and shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to the Lender Parties unless an officer of the
Administrative Agent responsible for the transactions contemplated by the Loan
Documents shall have received notice from such Lender Party prior to the initial
Borrowing specifying its objection thereto and such Lender Party shall not have
made available to the Administrative Agent such Lender Party's ratable portion
of such Borrowing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01 Representations and Warranties of the Borrower. The Borrower
----------------------------------------------
represents and warrants as follows:
(a) Incorporation, Qualification, Corporate Power and Authority.
-----------------------------------------------------------
Each Loan Party (i) is a corporation duly organized, validly existing and in
57
good standing under the laws of the jurisdiction of its incorporation, (ii) is
duly qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so
qualify or be licensed would not be likely to have a Material Adverse Effect and
(iii) has all requisite corporate power and authority (including all
governmental licenses, permits and other approvals) to own or lease and operate
its properties and to carry on its business as now conducted and as proposed to
be conducted. All of the outstanding Equity Interests in the Borrower have been
validly issued and are fully paid and non-assessable.
(b) Capital Stock. Set forth on Schedule 5.01(b) hereto is a
-------------
complete and accurate list of all Subsidiaries of the Borrower and each Loan
Party, showing (as to each such Subsidiary) as of the date hereof, the
jurisdiction of its incorporation, the number of shares of each class of its
Equity Interests authorized and the number outstanding, the percentage of each
such class of its Equity Interests owned (directly or indirectly) by the
Borrower or such Loan Party and the number of shares covered by all outstanding
options, warrants, rights of conversion or purchase and similar rights. All of
the outstanding Equity Interests of all of such Subsidiaries have been validly
issued, are fully paid and non-assessable and are owned by the Borrower or such
Loan Party or one or more of its Subsidiaries free and clear of all Liens,
except those created by the Collateral Documents. Each such Subsidiary (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which it owns or
leases property or in which the conduct of its business requires it to so
qualify or be licensed except where the failure to so qualify or be licensed
would not be likely to have a Material Adverse Effect and (iii) has all
requisite corporate power and authority (including all governmental licenses,
permits and other approvals) to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be conducted.
(c) Authorization; No Conflict or Violation; Compliance with
--------------------------------------------------------
Laws. The execution, delivery and performance by each Loan Party of this
----
Agreement, the Notes, and each other Loan Document to which it is or is to be a
party, and the consummation of the other transactions contemplated hereby and
thereby, are within such Loan Party's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene such
Loan Party's charter or by-laws, (ii) violate any law, rule, regulation
(including, without limitation, Regulation X of the Board of Governors of the
Federal Reserve System), order, writ, judgment, injunction, decree,
determination or award, (iii) conflict with or result in the breach of, or
constitute a default or require any payment to be made under, any contract, loan
agreement, indenture, mortgage, deed of trust, lease or other instrument binding
on or affecting any Loan Party, any of its Subsidiaries or any of their
properties or (iv) except for the Liens created by the Collateral Documents,
result in or require the creation or imposition of any Lien upon or with respect
to any of the properties of any Loan Party or any of its Subsidiaries. No Loan
Party or any of its Subsidiaries is in violation of any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award or
in breach of any such contract, loan agreement, indenture, mortgage, deed of
58
trust, lease or other instrument, the violation or breach of which could
have a Material Adverse Effect.
(d) Approvals and Consents. No authorization or approval or other
----------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by any Loan Party of this
Agreement, the Notes, or any other Loan Document to which it is or is to be a
party, or for the consummation of the other transactions contemplated hereby and
thereby, (ii) the grant by any Loan Party of the Liens granted by it pursuant to
the Collateral Documents, (iii) the perfection or maintenance of the Liens
created by the Collateral Documents (including the first priority nature
thereof, except to the extent provided in the Intercreditor Agreement (Leased
Property)) or (iv) the exercise by the Administrative Agent or any Lender Party
of its rights under the Loan Documents or the remedies in respect of the
Collateral pursuant to the Collateral Documents, except for the authorizations,
approvals, actions, notices, consents and filings listed on Schedule 5.01(d)
hereto, all of which have been duly obtained, taken, given or made and are in
full force and effect.
(e) Enforceability. This Agreement has been, and each of the
--------------
Notes, and each other Loan Document when delivered hereunder will have been,
duly executed and delivered by each Loan Party thereto. This Agreement is, and
each of the Notes, and each other Loan Document when delivered hereunder will
be, the legal, valid and binding obligation of each Loan Party thereto,
enforceable against such Loan Party in accordance with its terms.
(f) Financial Statements.
--------------------
(i) The Consolidated and consolidating balance sheets of
the Borrower and its Subsidiaries as at December 31, 2000, and the
related Consolidated and consolidating statements of income and cash
flows of the Borrower and its Subsidiaries for the Fiscal Year then
ended, accompanied by an unqualified opinion of Xxxxxx Xxxxxxxx LLP,
independent public accountants, and the Consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at October 7,
2001, and the related Consolidated and consolidating statements of
income and cash flows of the Borrower and its Subsidiaries for the 40
weeks then ended, duly certified by the chief financial officer of the
Borrower, copies of which have been furnished to each Lender, fairly
present, subject, in the case of said balance sheets as at October 7,
2001 and said statements of income and cash flows for the 40 weeks
then ended, to year-end audit adjustments, the Consolidated and
consolidating financial condition of the Borrower and its Subsidiaries
as at such dates and the Consolidated and consolidating results of the
operations of the Borrower and its Subsidiaries for the periods ended
on such dates, all in accordance with GAAP applied on a consistent
basis, and since December 31, 2000, there has been no Material Adverse
Change.
(ii) The Consolidated forecasted balance sheets, income
statements and cash flow statements of the Borrower and its
Subsidiaries
59
delivered to the Lenders pursuant to Section 4.01(h)(xi) and 6.03(l)
were prepared in good faith on the basis of the assumptions stated
therein, which assumptions were fair in the light of conditions
existing at the time of delivery of such forecasts, and represented,
at the time of delivery, the Borrower's best estimate of its future
financial performance.
(iii) Except as fully disclosed in the financial statements
delivered pursuant to Section 4.01(f), there were as of the date of
the delivery of such financial statements and as of the Closing Date
no liabilities or obligations with respect to the Borrowers or its
Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either
individually or in aggregate, could reasonably be expected to have a
Material Adverse Effect, and no Loan Party knows of any basis for the
assertion against any Loan Party of any liability or obligation of any
nature whatsoever that is not fully disclosed in such financial
statements which, either individually or in the aggregate, could have
a Material Adverse Effect.
(g) Disclosure. Neither the Offering Memorandum nor any other
----------
information, exhibit or report furnished by or on behalf of any Loan Party to
the Administrative Agent or any Lender Party in connection with the negotiation
and syndication of the Loan Documents or pursuant to the terms of the Loan
Documents contained any untrue statement of a material fact or omitted to state
a material fact necessary to make the statements made therein not misleading.
(h) Litigation. There is no action, suit, investigation,
----------
litigation or proceeding affecting any Loan Party, including any Environmental
Action, pending or, to the knowledge of Borrower, threatened before any court,
governmental agency or arbitrator that (i) could reasonably be expected to have
a Material Adverse Effect or (ii) purports to affect the legality, validity or
enforceability of this Agreement, any Note, or any other Loan Document or the
consummation of the transactions contemplated hereby or thereby. For purposes of
disclosure, the Loan Parties have disclosed the litigation set forth on Schedule
5.01(h).
(i) Use of Proceeds.
---------------
(i) No proceeds of any Advance will be used to acquire any
equity security of a class that is registered pursuant to Section 12
of the Securities Exchange Act of 1934.
(ii) The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying Margin
Stock, and no proceeds of any Advance or drawings under any Letter of
Credit 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.
(iii) Following application of the proceeds of each Advance,
not more than 25 percent of the value of the assets (either of the
60
Borrower only or of the Borrower and its Subsidiaries on a
Consolidated basis) subject to the provisions of Section 6.02(a) or
6.02(e) or subject to any restriction contained in any agreement or
instrument between the Borrower and any Lender Party or any Affiliate
of any Lender Party relating to Debt will be Margin Stock.
(j) Employee Benefit Plans.
----------------------
(i) Set forth on Schedule 5.01(j) is a complete and
accurate list of all Pension Plans and Multiemployer Plans with
respect to any employees of Borrower, any Subsidiary of Borrower or
any of their respective ERISA Affiliates.
(ii) Except as set forth on Schedule 5.01(j), the Borrower,
each of its Subsidiaries and each of their respective ERISA Affiliates
are in compliance with all applicable provisions and requirements of
ERISA and the Internal Revenue Code and the regulations and published
interpretations thereunder with respect to each Employee Benefit Plan,
and have performed all their obligations under each Employee Benefit
Plan.
(iii) The Borrower has received, with respect to each
Employee Benefit Plan which is intended to qualify under Section
401(a) of the Internal Revenue Code, a favorable determination letter
from the Internal Revenue Service indicating that such Employee
Benefit Plan is so qualified and nothing has occurred subsequent to
the issuance of such determination letter which would cause such
Employee Benefit Plan to lose its qualified status.
(iv) No liability to the PBGC (other than required premium
payments), the Internal Revenue Service, any Employee Benefit Plan or
any trust established under Title IV of ERISA (other than required
contributions) has been or is expected to be incurred by Borrower, any
of its Subsidiaries or any of their ERISA Affiliates.
(v) No ERISA Event has occurred or is reasonably expected
to occur that (a) would be reasonably expected to have a Material
Adverse Effect, or (b) has resulted in or could reasonably be expected
to result in a material liability of the Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates.
(vi) Except to the extent set forth on Schedule 5.01(j), no
Employee Benefit Plan provides health or welfare benefits (through the
purchase of insurance or otherwise) for any retired or former employee
of the Borrower, any of its Subsidiaries or any of their respective
ERISA Affiliates.
(vii) The present value of the aggregate accrued benefit
liabilities under each Pension Plan sponsored, maintained or
contributed to by the Borrower, any of its Subsidiaries or any of
their ERISA Affiliates (determined as of the end of the most recent
plan year on the basis of the actuarial
61
assumptions specified for funding purposes in the most recent
actuarial valuation for such Pension Plan) did not exceed the
aggregate current value of the assets of such Pension Plan.
(viii) As of the most recent valuation date for each
Multiemployer Plan for which the actuarial report is available, the
potential liability of the Borrower, its Subsidiaries and their
respective ERISA Affiliates for a complete withdrawal from such
Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with the potential liability of the Borrower, its
Subsidiaries and their respective ERISA Affiliates for a complete
withdrawal from all other Multiemployer Plans, based on information
available pursuant to Section 4221(e) of ERISA, is zero.
(ix) The Borrower, each of its Subsidiaries and each of
their ERISA Affiliates have complied with the requirements of Section
515 of ERISA with respect to each Multiemployer Plan and are not in
material "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan.
(k) No Adverse Conditions. Neither the business nor the
---------------------
properties of any Loan Party are affected by any fire, explosion, accident,
strike, lockout, slowdown, stoppage, unfair labor practice or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance) that could have a
Material Adverse Effect and there has been no Material Adverse Change affecting
the value of the Collateral or the ability of the Borrower or any other Loan
Party to perform its obligations under the Loan Documents.
(l) Compliance with Environmental Laws.
----------------------------------
(i) The operations and properties of each Loan Party and
each of its Subsidiaries comply in all respects with all Environmental
Laws, all necessary Environmental Permits have been obtained and are
in effect for the operations and properties of the Borrower and its
Subsidiaries, the Borrower and its Subsidiaries are in compliance in
all respects with all such Environmental Permits, and no circumstances
exist that could (A) form the basis of an Environmental Action against
any Loan Party or any of its Subsidiaries or any of their properties,
(B) cause any such property to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental
Law or (C) reasonably be expected to prevent or interfere with the
compliance by the Loan Parties and their Subsidiaries with
Environmental Laws in the future, in each case except to the extent
that any non-compliance, any failure to obtain such Environmental
Permits or the existence of such circumstances could not reasonably be
expected to have a Material Adverse Effect.
(ii) Except as set forth on Schedule 5.01(l)(ii), (A) as of
the Closing Date, none of the properties of any Loan Party or any of
its Subsidiaries is listed or, to the knowledge of the Borrower after
due inquiry,
62
proposed for listing on the National Priorities List under CERCLA or
on the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the Environmental
Protection Agency or any analogous state list of sites requiring
investigation or cleanup or, to the best of its knowledge and except
as could not reasonably be expected to have a Material Adverse Effect,
is adjacent to any such property, and except as disclosed in the
environmental reports delivered to the Administrative Agent prior to
the Closing Date, no underground storage tanks, as such term is
defined in 42 U.S.C. (S)6991, are located on any property of any Loan
Party or any of its Subsidiaries or, to the best of its knowledge and
except as could not reasonably be expected to have a Material Adverse
Effect, on any adjoining property; and (B) after the Closing Date,
except as could not reasonably be expected to have a Material Adverse
Effect, none of the properties of any Loan Party or any of its
Subsidiaries is listed or, to the knowledge of the Borrower after due
inquiry, proposed for listing on the National Priorities List under
CERCLA or on the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the Environmental
Protection Agency or any analogous state list of sites requiring
investigation or cleanup or is adjacent to any such property, and no
underground storage tanks, as such term is defined in 42 U.S.C. (S)
6991, are located on any property of any Loan Party or any of its
Subsidiaries or, to the best of its knowledge, on any adjoining
property.
(iii) (A) Except as could not reasonably be expected to have
a Material Adverse Effect, neither any Loan Party nor any of its
Subsidiaries has transported or arranged for the transportation of any
Hazardous Materials to any location that is listed or, to the
knowledge of the Borrower after due inquiry, proposed for listing on
the National Priorities List under CERCLA or on the Comprehensive
Environmental Response, Compensation and Liability Information System
maintained by the Environmental Protection Agency or any analogous
state list, and (B) except as could not reasonably be expected to have
a Material Adverse Effect, Hazardous Materials have not been
generated, used, treated, handled, managed, stored or disposed of on,
or released or transported to or from, any property of any Loan Party
or any of its Subsidiaries or any adjoining property, except in full
compliance with all Environmental Laws and Environmental Permits.
(iv) As of the Closing Date, none of the Loan Parties has
received any communication (written or oral), whether from a
governmental authority, citizens group, employee or any other Person,
that alleges that any Loan Party or any of its Subsidiaries is not in
compliance with any Environmental Laws in any manner which could
reasonably be expected to have a Material Adverse Effect.
(v) There is no Environmental Action pending or, to the
knowledge of the Borrower, threatened against any Loan Party or any of
its Subsidiaries, or against any Person for whom any Loan Party or any
of its Subsidiaries has retained or assumed environmental liability
either contractually
63
or by operation of law that could reasonably be expected to have a
Material Adverse Effect.
(vi) Except as could not reasonably be expected to have a
Material Adverse Effect, without in any way limiting the generality of
the foregoing, (A) there is no asbestos or lead-based materials
contained in or forming part of any building, building component,
structure or office space owned or leased by any Loan Party or any of
its Subsidiaries, and (B) no polychlorinated biphenyls (PCBs) or
PCB-containing items are used or stored at any property owned or
leased by any Loan Party or any of its Subsidiaries in any manner or
quantity.
(vii) The Borrower has conducted a diligent search of its
records and has provided to the Administrative Agent all assessments,
reports, data, results of investigations or audits, and other
information that it discovered as a result of such search regarding
environmental matters pertaining to or the environmental condition of
any property owned, leased, operated or used by any Loan Party or any
of its Subsidiaries, or the compliance (or noncompliance) by any Loan
Party or any of its Subsidiaries with any Environmental Laws.
(viii) No Loan Party, and none of their respective
Subsidiaries, is required by virtue of the transactions set forth
herein and contemplated hereby, or as a condition to the effectiveness
of any transactions contemplated hereby, (i) to perform a site
assessment for Hazardous Materials, (ii) to remove or remediate
Hazardous Materials, (iii) to give notice to or receive approval from
any governmental authority, or (iv) to record or deliver to any Person
any disclosure document or statement pertaining to environmental
matters.
(m) No Burdensome Agreements. None of the Loan Parties or any of
------------------------
its Subsidiaries is a party to any indenture, loan or credit agreement or any
lease, license or other agreement or instrument or subject to any charter or
corporate restriction that could reasonably be expected to have a Material
Adverse Effect.
(n) Tax Information.
---------------
(i) Each Loan Party has filed, has caused to be filed or
has been included in all material tax returns (Federal, state, local
and foreign) required to be filed and has paid all material taxes due,
together with any applicable interest and penalties.
(ii) Set forth on Schedule 5.01(n) is a complete and
accurate list, as of the date hereof, of each taxable year of each
Loan Party for which United States Federal income tax returns have
been filed and for which the expiration of the applicable statute of
limitations for assessment or collection has not occurred by reason of
extension or otherwise (an "Open Year").
---------
64
(iii) No issues have been raised by the Internal Revenue
Service in respect of Open Years that, in the aggregate, could have a
Material Adverse Effect.
(iv) No issues have been raised by any state, local or
foreign taxing authority with respect to tax periods for which the
expiration of the applicable statute of limitations for assessment or
collection has not occurred by reason of extension or otherwise that,
in the aggregate, could have a Material Adverse Effect.
(v) None of the Loan Parties has any liability under a tax
sharing or similar agreement, except pursuant to the Casino Tax
Sharing Documents.
(o) No Investment Company. None of the Loan Parties is an
---------------------
"investment company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended. Neither
the making of any Advances, nor the Issuance of any Letters of Credit, nor the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the other transactions contemplated hereby, will violate any
provision of Investment Company Act of 1940, as amended or any rule, regulation
or order of the Securities and Exchange Commission thereunder or the Public
Utility Holding Company Act of 1935, as amended.
(p) Solvency. Each Loan Party is, individually and together with
--------
its Subsidiaries, Solvent.
(q) Debt of the Borrower and its Subsidiaries.
-----------------------------------------
(i) Set forth on Schedule 5.01(q)(i) hereto is a complete
and accurate list of all Debt which shall remain outstanding on the
Closing Date (the "Surviving Debt"), showing as of the date hereof the
obligor and the principal amount outstanding thereunder and the
maturity date thereof.
(ii) Set forth on Schedule 6.02(a) hereto is a complete and
accurate list of all Liens on the property or assets of any Loan Party
or any of its Subsidiaries as of the date hereof (the "Existing
--------
Liens"), showing as of the date hereof the lienholder thereof, the
-----
principal amount outstanding thereunder and of the obligations secured
thereby and the property or assets of such Loan Party or such
Subsidiary subject thereto.
(r) Real Property.
-------------
(i) Set forth on Schedule 5.01(r)(i) hereto is a complete
and accurate list, as of the date hereof, of all real property owned
by any
65
Loan Party or leased to any Loan Party under a ground lease
(collectively, the "Owned Real Property"), showing as of the date
-------------------
hereof the street address, county or other relevant jurisdiction,
state, record owner and net book value thereof. Each Loan Party has
good, marketable and insurable fee simple title to the property
identified on Schedule 5.01(r)(i) as owned and a leasehold interest in
the property identified on Schedule 5.10(r)(i) as subject to a ground
lease, in each case free and clear of all Liens, other than Liens
created or permitted by the Loan Documents. With respect to the Owned
Real Property, (i) no Loan Party has entered into any contract for
construction on any such parcel that is still in effect (other than
contracts for (x) minor improvements which would not give rise to any
Lien (other than a Permitted Lien) on any Owned Real Property or (y)
maintenance), (ii) to the knowledge of the Loan Parties, the buildings
and improvements located on each such parcel are located within the
boundary lines of such parcel and are not in violation of applicable
setback requirements, local comprehensive plan provisions, zoning laws
and ordinances, building code requirements, permits, licenses or other
forms of approval, regulation or restrictions by any applicable
governmental authority, except to the extent that any such violation
could not reasonably be expected to have a Material Adverse Effect,
and do not encroach on any easement which may burden the land, (iii)
to the knowledge of the Loan Parties, the land does not serve any
adjoining property for any purpose inconsistent with the use of the
land, (iv) except as may be shown on the preliminary title reports
issued by Chicago Title Insurance Company with respect to the Owned
Real Property, no such parcel is located within any flood plain or
subject to any similar type restriction for which any permits or
licenses necessary to the use thereof have not been obtained, (v)
except as may be shown on the preliminary title reports issued by
Chicago Title Insurance Company with respect to the Owned Real
Property, there are no outstanding options or rights of first refusal
or similar rights to purchase any such parcel or any portion thereof
or interest therein; and (vi) all facilities located on each such
parcel are supplied with utilities and other services necessary for
their ownership, operation or use, all of which services are adequate
and in accordance with all applicable laws, ordinances, rules and
regulations. Chicago Title Insurance Company has provided the
Administrative Agent with (x) a preliminary title report with respect
to each Owned Real Property, and (y) a copy of each of the Schedule B
exceptions listed therein. Except as may be shown on the preliminary
title reports provided by Chicago Title Insurance Company, there are
no proceedings, claims, disputes or conditions affecting any of the
Owned Real Property that might curtail or interfere with the use,
operation or ownership of such property. Neither the whole nor any
portion of the Owned Real Property nor any other assets of any Loan
Party is subject to any governmental decree or order to be sold or is
being condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefore, nor has
any Loan Party received any notice of any such proposed condemnation,
expropriation or taking. Each Loan Party has obtained all applicable
permits required to use and operate all of the Owned Real Property in
the manner in which the Owned Real Property is currently being used
and operated.
66
(ii) Set forth on Schedule 5.01(r)(i) (with respect to
ground leases) and on Schedule 5.01(r)(ii) hereto is a complete and
accurate list, as of the date hereof, of all leases, subleases,
assignment of leases and occupancy agreements (together with all
amendments, modifications, renewals or extensions of any thereof) of
real property under which any Loan Party is the lessee, sublessee or
occupant, showing as of the date hereof the street address, county or
other relevant jurisdiction and state. Each agreement referenced in
this Section 5.01(r)(ii) is in full force and effect, and there are no
existing defaults under any such agreement by any Loan Party, or, to
the knowledge of Borrower, by any lessor thereunder, nor, to the
knowledge of Borrower, has any event occurred that (whether with or
without notice, lapse of time or the happening or occurrence of any
other event) would constitute a default under any such agreement. Each
such agreement constitutes the legal, valid and binding obligation of
each applicable Loan Party, enforceable against such Loan Party in
accordance with its terms, and each such agreement is, to the
knowledge of Borrower, the legal, valid and binding obligation of the
lessor thereof, enforceable in accordance with its terms.
(s) Investments. Set forth on Schedule 5.01(s) hereto is a
-----------
complete and accurate list of all Investments held by any Loan Party, showing as
of the date hereof the amount and the obligor or issuer thereof.
(t) Intellectual Property. Set forth on Schedule 5.01(t) hereto
---------------------
is a complete and accurate list of all patents, trademarks, trade names, service
marks and copyrights, and all applications therefor and licenses thereof, of
each Loan Party, showing as of the date hereof the jurisdiction in which
registered or applied, the registration or application number, the date of
registration or filing and the expiration date. All registrations listed on
Schedule 5.01(t) are in full force and effect and are valid and enforceable and
all applications and registrations listed on Schedule 5.01(t) are standing in
the name of the current owner, which owner is a Loan Party. The conduct of
business of the Loan Parties does not infringe upon or violate any intellectual
property rights of any third party in any manner which could reasonably be
expected to have a Material Adverse Effect. Each Loan Party owns or has the
valid right to use all patents, trademarks, trade names, service marks,
copyrights and trade secrets used in its business as currently conducted.
(u) Other Agreements. Schedule 5.01(u) sets forth a complete and
----------------
accurate list as of the date hereof of (i) all joint venture and partnership
agreements to which the Borrower or any of its Subsidiaries is a party, and (ii)
all covenants not to compete restricting the Borrower or any of its Subsidiaries
to which the Borrower or any of its Subsidiaries is a part or by which the
Borrower or any of its Subsidiaries is bound.
(v) Intentionally Omitted.
---------------------
(w) Mortgages. The execution and delivery of the Mortgages by the
---------
Loan Parties, together with the recordation thereof in the appropriate recording
offices of the applicable jurisdictions, shall be effective to create in favor
of the
67
Administrative Agent for the benefit of the Secured Parties a valid first
priority Lien on all of the Owned Real Property, free and clear of all other
Liens other than Permitted Liens. Regardless of whether the Synthetic Lease is
re-characterized as a financing mechanism, the execution and delivery of the
Second Mortgages by the Borrower and the Owner Trustee, respectively, together
with the recordation thereof in the appropriate recording offices of the
applicable jurisdictions, shall be effective to create in favor of the
Administrative Agent for the benefit of the Secured Parties, a valid second
priority (but only to the extent provided in the Intercreditor Agreement (Leased
Property)) Lien on all of the Synthetic Lease Properties, free and clear of all
other Liens other than Permitted Liens.
(x) First Priority Lien. All filings and other actions necessary
-------------------
or desirable to perfect and protect the security interest in the Collateral
created under the Collateral Documents have been duly made or taken, and the
Collateral Documents create in favor of the Administrative Agent for the benefit
of the Secured Parties a valid and, together with such filings and other
actions, perfected first priority security interest in the Collateral (other
than the Synthetic Lease Properties, in which the Administrative Agent, for the
benefit of the Secured Parties, shall have a second priority security interest,
but only to the extent provided in the Intercreditor Agreement (Leased
Property)), securing the payment of the Obligations under the Loan Documents,
and all filings and other actions necessary or desirable to perfect and protect
such security interest have been duly taken. The Loan Parties are the legal and
beneficial owners of the Collateral free and clear of any Lien, except for the
liens and security interests created or permitted under the Loan Documents and
the Synthetic Lease Documents and the Landlord's Lien Rights in respect of the
property listed on Schedule 5.01(r)(ii) located in the States of Washington,
Oregon and Florida.
(y) Insurance. Schedule 5.01(y) sets forth a true and complete
---------
listing of all insurance maintained by the Loan Parties as of the date hereof,
and with the amounts insured (and any deductibles) set forth therein. The
amounts of such insurance cover all risks as is commercially reasonable and
prudent with respect to the business and properties of the Borrower and its
Subsidiaries and which is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which the
Borrower or such Subsidiary operates.
(z) Broker's, Finder's or Similar Fees. Except for fees payable
----------------------------------
by the Borrower to the Administrative Agent, there are no brokerage commissions,
finder's fees or similar fees or commissions payable by any Loan Party pursuant
to any agreement entered into by any Loan Party or of which any Loan Party is
aware in connection with the transactions contemplated hereby or any Loan
Document.
ARTICLE VI
COVENANTS OF THE BORROWER
Section 6.01 Affirmative Covenants. So long as any Advance or any other
---------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter
68
of Credit shall be outstanding or any Lender Party shall have any Commitment
hereunder, the Borrower will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
-------------------------
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, including, without limitation, compliance with
ERISA and workers' compensation laws.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of
---------------------
its Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all material taxes, assessments and governmental charges or levies imposed
upon any of them or upon their respective property and (ii) all material lawful
claims that, if unpaid, might by law become a Lien upon their respective
property; provided, however, that neither the Borrower nor any of its
Subsidiaries shall be required to pay or discharge any such tax, assessment,
charge or claim that is being contested in good faith and by proper proceedings
and as to which appropriate reserves are being maintained, unless and until any
Lien (other than a Permitted Lien) resulting therefrom attaches to its property.
(c) Compliance with Environmental Laws. Comply, and cause each of
----------------------------------
its Subsidiaries and all lessees and other Persons occupying its properties to
comply, in all material respects, with all Environmental Laws and Environmental
Permits applicable to their respective operations and properties; obtain and
renew, and cause each of its Subsidiaries to obtain and renew, all Environmental
Permits necessary for their respective operations and properties; and to the
extent required by applicable Environmental Laws and in accordance with the
requirements thereof, conduct, and cause each of its Subsidiaries to conduct,
any investigation, study, sampling and testing, and undertake any cleanup,
removal, remedial or other action necessary to remove and clean up all Hazardous
Materials from any of their respective properties; provided, however, that
neither the Borrower nor any of its Subsidiaries shall be required to undertake
any such cleanup, removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by proper proceedings
diligently pursued, appropriate reserves are being maintained with respect to
such circumstances and the failure to take any such action could not reasonably
be expected to have a Material Adverse Effect.
(d) Maintenance of Insurance. Maintain, and cause each of its
------------------------
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is
commercially reasonable and prudent with respect to the business and properties
of the Borrower and its Subsidiaries and which is usually carried by companies
engaged in similar businesses and owning similar properties in the same general
areas in which the Borrower or such Subsidiary operates. Each such policy of
insurance shall (a) name Administrative Agent for the benefit of Lenders as an
additional insured thereunder as its interests may appear and (b) in the case of
each insurance policy pursuant to which proceeds are paid to the Borrower or any
other Loan Party, contain a loss payable clause or endorsement, reasonably
satisfactory in form and substance to Administrative Agent, that names
Administrative Agent for the benefit of Lenders as a loss payee thereunder and
provides for at least 30 days prior written notice to Administrative Agent of
any cancellation of
69
such policy. The insurance maintained by the Borrower and its Subsidiaries as of
the date hereof shall be deemed to satisfy the requirements of this Section
6.01(d) as of the date hereof.
(e) Preservation of Corporate Existence, Etc. Preserve and
----------------------------------------
maintain, and cause each of its Subsidiaries to preserve and maintain, their
respective corporate existence, rights (charter and statutory), permits,
licenses, approvals, privileges and franchises; provided, however, that the
-------- -------
Borrower and its Subsidiaries may consummate any merger or consolidation
permitted under Section 6.02(c) and provided, further, neither the Borrower nor
-------- -------
any of its Subsidiaries shall be required to preserve any right, permit,
license, approval, privilege or franchise if the Board of Directors of the
Borrower or such Subsidiary shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Borrower or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to the Borrower, such Subsidiary or the Lender Parties.
(f) Inspection Rights. At any reasonable time and from time to
-----------------
time and upon reasonable notice, permit the Administrative Agent or any of the
Lender Parties or any agents or representatives thereof, to examine and make
copies of and abstracts from the records and books of account of, and visit and
inspect the properties of, the Borrower and any of its Subsidiaries, and to
discuss the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their officers or directors and with their independent
certified public accountants (who are hereby directed by the Borrower to discuss
the affairs, finances and accounts of the Borrower and any of its Subsidiaries
with the Administrative Agent or any agent or representative thereof in
accordance with this Agreement).
(g) Preparation of Environmental Reports. At the written request
------------------------------------
of the Administrative Agent from time to time, provide to the Administrative
Agent within 60 days after such request, at the expense of the Borrower, an
environmental site assessment report for all of its and its Subsidiaries'
properties described in such request, prepared by an environmental consulting
firm reasonably acceptable to the Administrative Agent, indicating the presence
or absence of Hazardous Materials and the estimated cost of any compliance,
removal or remedial action in connection with any Hazardous Materials on such
properties; without limiting the generality of the foregoing, if the
Administrative Agent reasonably determines at any time that a material risk
exists that any such report will not be provided within the time referred to
above, the Administrative Agent may retain an environmental consulting firm to
prepare such report at the expense of the Borrower, and the Borrower hereby
grants and agrees to cause any Subsidiary which owns any property described in
such request to grant at the time of such request, to the Administrative Agent,
the Lender Parties, such firm and any agents or representatives thereof the
rights, upon reasonable notice and during normal business hours, to enter onto
their respective properties in order to perform such assessment; provided that
--------
any action taken by the Administrative Agent pursuant to this provision or
otherwise under this Agreement pertaining to the environmental activities of the
Borrower or any of its Subsidiaries shall not be construed to render the
Administrative Agent liable for the conditions of any such property or
responsible for any
70
obligations of the Borrower or any other Person as against any governmental
agency or any other Person. For the avoidance of doubt, the Borrower disclaims
any obligation to indemnify any Indemnified Party for claims of third parties
arising out of the gross negligence or willful misconduct of any of the Lender
Parties, any environmental consulting firm retained by any of them or their
respective agents or representatives in connection with any entry by any of them
onto the property of the Borrower or any Subsidiary pursuant to this Section
6.01(g).
(h) Keeping of Books. Keep, and cause each of its Subsidiaries to
----------------
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Borrower and each such Subsidiary in accordance with generally accepted
accounting principles in effect from time to time.
(i) Maintenance of Properties, Etc. Maintain and preserve, and
------------------------------
cause each of its Subsidiaries to maintain and preserve, all of their respective
properties that are used or useful in the conduct of their respective businesses
in good working order and condition, ordinary wear and tear excepted.
(j) Compliance with Terms of Leaseholds; New Leases. Make all
-----------------------------------------------
payments and otherwise perform and observe all obligations in respect of the
Synthetic Lease and all other leases of real property to which the Borrower or
any of its Subsidiaries is a party, keep such Synthetic Lease and all other
leases in full force and effect and not allow such Synthetic Lease or other
leases to lapse or be terminated or any rights to renew such leases to be
forfeited or canceled except, with respect to the Synthetic Lease, pursuant to
the terms thereof, enforce each Synthetic Lease Document and each other
agreement relating to the other leases in accordance with its terms, and take
all such action requested by the Administrative Agent or the Required Lenders to
such end, and notify the Administrative Agent of any default by any party with
respect to such Synthetic Lease and other leases and cooperate with the
Administrative Agent in all respects to cure any such default, and cause each of
its Subsidiaries to do each of the foregoing. The Borrower agrees, and agrees to
cause each other Loan Party, to exercise commercially reasonable efforts, in
connection with any lease, sublease, assignment of lease or other occupancy
agreement entered into after the date hereof in which the Borrower or such Loan
Party is the lessee, sublessee, assignee or occupant, (x) to obtain from the
applicable lessor a complete, fully executed Landlord's Waiver and Consent
Agreement in the form of Exhibit O or (y) to include the provisions of such
Landlord's Waiver and Consent Agreement in the applicable lease, sublease,
assignment of lease or other occupancy agreement, but in each case without
requiring the payment of any amounts to the applicable lessor as an inducement
for the execution of such Landlord Waiver and Consent Agreement or the inclusion
in the applicable lease, sublease, assignment of lease or other occupancy
agreement of such provision.
(k) Additional Loan Parties; Additional Collateral. Upon (x) the
----------------------------------------------
request of the Administrative Agent, (y) the formation or acquisition of any new
direct or indirect Subsidiaries by any Loan Party (provided that compliance
herewith
71
shall not constitute a waiver of Section 6.02(h)), or (z) the acquisition of any
property by any Loan Party, the Borrower shall, in each case at the Borrower's
expense:
(i) within 30 days after such request, formation or
acquisition, cause such Subsidiary (other than a Foreign Subsidiary)
to duly execute and deliver to the Administrative Agent an amendment
to the Guaranty in substantially the form of Exhibit L, whereby such
Subsidiary shall guarantee all Obligations of the Loan Parties under
the Loan Documents,
(ii) within 30 days after such request, formation or
acquisition, furnish to the Administrative Agent a description of the
real and personal properties of the Loan Parties and their respective
Subsidiaries in detail satisfactory to the Administrative Agent,
(iii) within 30 days after such request, formation or
acquisition,
(A) cause such Subsidiary (other than a Foreign
Subsidiary) to duly execute and deliver to the
Administrative Agent an amendment to the Security Agreement
in substantially the form of Exhibit M-1 hereto, and any
documents in connection therewith, whereby such Subsidiary
shall xxxxx x Xxxx on those of its assets described in the
Security Agreement to secure the Obligations under the Loan
Documents,
(B) cause such Subsidiary and each direct and indirect
parent of such Subsidiary to duly execute and deliver to the
Administrative Agent an amendment to the Pledge Agreement in
substantially the form of Exhibit M-2 hereto, and any
documents in connection therewith, whereby such Subsidiary
shall pledge or cause to be pledged to the Administrative
Agent all of the outstanding capital stock of such
Subsidiary (or, if such Subsidiary is a Foreign Subsidiary,
65% of such capital stock) owned by any Loan Party to secure
such Loan Party's Obligations under the Loan Documents, and
(C) with respect to any real property with a fair
market value of $750,000 or more in which such Subsidiary
(other than a Foreign Subsidiary) has an interest, cause
such Subsidiary to duly execute and deliver such deeds of
trust, trust deeds and mortgages ("Additional Mortgages") in
--------------------
appropriate form for filing in all filing or recording
offices that the Administrative Agent may deem necessary or
desirable to create a valid first and subsisting Lien on the
property described therein in favor of the Administrative
Agent for the benefit of the Secured Parties,
(iv) within 30 days after such request, formation or
acquisition, take (and cause such Subsidiary, each direct and indirect
parent of
72
such Subsidiary or any Loan Party to take) whatever action may be
necessary or desirable in the opinion of the Administrative Agent to
vest in the Administrative Agent, for the benefit of the Secured
Parties, valid and subsisting Liens on the properties purported to be
subject to the Collateral Documents, pursuant to subclause (iii)
above, enforceable against all third parties in accordance with their
terms (including the filing of Uniform Commercial Code financing
statements, the giving of notices and the endorsement of notices on
title documents and the recording of any Additional Mortgage),
(v) promptly take (and cause such Subsidiary or any Loan
Party to take) all action requested by the Administrative Agent or the
Required Lenders to provide Mortgage Policies, American Land Title
Association form surveys, appraisals, assignments of leases and rents,
consents and agreements of lessors and other third parties, estoppel
letters and other confirmations and evidence of insurance with respect
to any real property that becomes the subject of an Additional
Mortgage, in each case in form and substance satisfactory to the
Administrative Agent,
(vi) upon request of the Administrative Agent, deliver to
the Administrative Agent, a signed copy of a favorable opinion,
addressed to the Administrative Agent and the Lender Parties, of
counsel for the Loan Parties acceptable to the Administrative Agent
with respect to any of the foregoing (including any of the foregoing
guaranties, security agreements, pledges, mortgages and assignments
being legal, valid and binding obligations of each Loan Party party
thereto enforceable in accordance with their terms, and any of the
recordings, filings, notices, endorsements and other actions requested
by the Administrative Agent being sufficient to create valid perfected
Liens on such properties) and as to such other matters as the
Administrative Agent may reasonably request,
(vii) as promptly as practicable after such request,
formation or acquisition, deliver to the Administrative Agent upon
request of the Administrative Agent or the Required Lenders with
respect to each parcel of real property owned or held by the entity
that is the subject of such request, formation or acquisition, title
reports, surveys and engineering, soils and other reports, and
environmental assessment reports, each in scope, form and substance
satisfactory to the Administrative Agent; provided that to the extent
that any Loan Party or any of its Subsidiaries shall have otherwise
received any of the foregoing items with respect to such real
property, such items shall, promptly after the receipt thereof, be
delivered to the Administrative Agent, and
(viii) at any time and from time to time, promptly execute
and deliver any and all further instruments and documents and take all
such other action as the Administrative Agent may reasonably deem
necessary in obtaining the full benefits of, or in perfecting and
preserving the Liens of, such guaranties, mortgages, pledges,
assignments, security agreement supplements and security agreements.
73
(l) Further Assurances. (i) Promptly upon request by the
------------------
Administrative Agent, or any Lender Party through the Administrative Agent,
correct, and cause each of its Subsidiaries promptly to correct, any material
defect or error that may be discovered in any Loan Document or in the execution,
acknowledgment, filing or recordation thereof, and (ii) promptly upon request by
the Administrative Agent, or any Lender Party through the Administrative Agent,
do, execute, acknowledge, deliver, record, re-record, file, re-file, register
and re-register any and all such further acts, deeds, conveyances, pledge
agreements, mortgages, deeds of trust, trust deeds, assignments, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments as the
Administrative Agent, or any Lender Party through the Administrative Agent, may
reasonably require from time to time in order to (A) carry out more effectively
the purposes of the Loan Documents, (B) to the fullest extent permitted by
applicable law, subject any Loan Party's or any of its Subsidiaries' properties,
assets, rights or interests to the Liens now or hereafter intended to be covered
by any of the Collateral Documents, (C) perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and any of the
Liens intended to be created thereunder and (D) assure, convey, grant, assign,
transfer, preserve, protect and confirm more effectively unto the Lender Parties
the rights granted or now or hereafter intended to be granted to the Lender
Parties under any Loan Document or under any other instrument executed in
connection with any Loan Document to which any Loan Party or any of its
Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do
so. If a Default has occurred and is continuing, each Loan Party agrees that
upon the Administrative Agent's request, such Loan Party (x) shall grant, and
shall cause its Subsidiaries to grant, to the Collateral Agent (as defined in
the Collateral Documents) for the benefit of the Lender Parties a security
interest in all properties, assets, rights or interests of such Loan Party or
such Subsidiary in which a Lien has not previously been granted to the
Collateral Agent pursuant to the Collateral Documents and (y) shall take all
steps necessary to perfect the security interest granted to the Collateral Agent
on or after the Closing Date to the extent not previously perfected, regardless
of whether the Administrative Agent agreed either not to take a security
interest or not perfect any security interest in any such property, asset, right
or interest on the Closing Date and regardless of whether any such property,
asset, right or interest satisfies a threshold or other requirement for granting
such a lien otherwise set forth herein.
(m) Appraisals. At the request of the Administrative Agent from
----------
time to time after the Closing Date, provide to the Administrative Agent within
60 days after such request, at the expense of the Borrower, appraisals of the
properties of the Borrower and its Subsidiaries described in such request as the
Administrative Agent may reasonably determine are necessary to ensure compliance
with, and which appraisals comply with all applicable requirements of, the
Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989, as
amended.
(n) Consents and Agreements of Lessor. Use commercially
---------------------------------
reasonable efforts to provide to the Administrative Agent, at the expense of the
Borrower, such consents and agreements of lessors and other third parties and
such estoppel letters and other confirmations as the Administrative Agent
requested pursuant
74
to Section 4.01(h)(ix)(C) and which the Borrower was not able to provide prior
to the Closing Date, but without requiring the payment of any amounts to lessors
or other third parties as an inducement for the execution of such consents,
agreements, estoppel letters and confirmations.
(o) Flood Hazard Certification. Within 90 days after the Closing
--------------------------
Date, and from time to time thereafter as reasonably requested by the
Administrative Agent or the Required Lenders, at the Borrower's expense, deliver
such flood hazard certification as the Administrative Agent or the Required
Lenders may require with respect to the properties subject to the Mortgages.
(p) Escondido Property. Use commercially reasonable efforts to
------------------
obtain from the ground lessor on the Escondido Property such ground lessor's
consent for the Borrower to encumber the Borrower's leasehold interest in the
Escondido Property in favor the Administrative Agent. As promptly as practicable
upon obtaining such consent, the Borrower shall execute a Mortgage in respect of
its leasehold interest in the Escondido Property and cause Chicago Title
Insurance Company to issue a Mortgage Policy in respect of such Mortgage.
(q) Store #405. Use commercially reasonable efforts to obtain
----------
from the ground lessor of Store #405 all documents required by Chicago Title
Insurance Company (including, without limitation, a memorandum of lease and any
necessary consents) in order for Chicago Title Insurance Company to issue a
Mortgage Policy for Store #405, in form and substance consistent with the
Mortgage Policies to be issued on the Closing Date. Upon obtaining such
documents, the Borrower shall execute a Mortgage in favor of Administrative
Agent in respect of its leasehold interest in Store #405 and cause Chicago Title
Insurance Company to issue a Mortgage Policy in respect of such Mortgage.
Section 6.02 Negative Covenants. So long as any Advance or any other
------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will not, at any time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or
----------
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien on or with respect to any of its or their assets of any character (tangible
or intangible) whether now owned or hereafter acquired other than the Liens
specified below in this Section 6.02(a), or sign or file, or permit any of its
Subsidiaries to sign or file, under the Uniform Commercial Code of any
jurisdiction, a financing statement that names the Borrower or any of its
Subsidiaries as debtor, or sign, or permit any of its Subsidiaries to sign, any
security agreement authorizing any secured party thereunder to file such
financing statement, or assign, or permit any of its Subsidiaries to assign, any
accounts or other right to receive income other than in respect of any of the
following:
(i) Liens created by the Loan Documents;
75
(ii) Liens created by the Synthetic Lease Documents for the
purpose of securing the Borrower's obligations thereunder as in effect
on the date hereof to the extent that such Liens are subject to the
Intercreditor Agreements;
(iii) Permitted Liens;
(iv) Existing Liens securing Surviving Debt and any
replacement, extension or renewal of any such Lien; provided that (x)
no such replacement, extension or renewal shall encumber any
additional assets of the Borrower or any of its Subsidiaries and (y)
the amount of Debt secured by such Lien shall not be increased from
that existing on the Closing Date;
(v) purchase money Liens upon or in real property or
equipment acquired or held by the Borrower or any of its Subsidiaries
in the ordinary course of business to secure the purchase price of
such real property or equipment or to secure Debt incurred solely for
the purpose of financing the acquisition, construction or improvement
of any such real property or equipment to be subject to such Liens, or
Liens existing on any such real property or equipment at the time of
acquisition (other than any such Liens created in contemplation of
such acquisition that do not secure the purchase price), or
extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount; provided, however, that no such Lien shall
-------- -------
extend to or cover any property other than the real property or
equipment being acquired, constructed or improved, and no such
extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the Lien being extended, renewed
or replaced; and provided further that the aggregate principal amount
-------- -------
of the Debt secured by Liens permitted by this clause (v) shall not
exceed $7,500,000 at any time outstanding;
(vi) Liens arising in connection with Capitalized Leases
in an aggregate principal amount not to exceed $20,000,000 at any time
outstanding, provided that no such Lien shall extend to or cover any
Collateral or other assets (other than the assets subject to such
Capitalized Leases);
(vii) other Liens securing Debt outstanding in an aggregate
principal amount not to exceed $5,000,000 provided that no such Lien
shall extend to or cover any Collateral; and
(viii) Liens securing Secured Hedge Agreements permitted
under Section 6.02(b)(i)(B).
If the Borrower or any of its Subsidiaries shall create or assume any Lien upon
any of its properties or assets, whether now owned or hereafter acquired, other
than Liens permitted by the provisions of this Section 6.02(a), it shall make or
cause to be made effective provision whereby the Obligations will be secured by
such Lien equally and ratably with any and all other Debt secured thereby as
long as any such Debt shall be so secured;
76
provided that, notwithstanding the foregoing, this covenant shall not be
--------
construed as a consent by the Required Lenders to the creation or assumption of
any such Lien not permitted by the provisions of this Section 6.02(a).
(b) Debt. Create, incur, assume or suffer to exist, or permit any
----
of its Subsidiaries to create, incur, assume or suffer to exist, any Debt other
than:
(i) in the case of the Borrower,
(A) Debt under the Synthetic Lease Documents in a
principal amount outstanding not to exceed the principal
amount outstanding on the Closing Date,
(B) (x) the Secured Hedge Agreements between the
Borrower and BNP Paribas and between the Borrower and Union
Bank of California, N.A. and (y) other Hedge Agreements
whose purpose is to hedge against fluctuations in interest
rates and are entered into by the Borrower in the ordinary
course of business, consistent with prudent business
practice and not entered into for speculative purposes;
provided that the aggregate notional amount of such Secured
Hedge Agreements and other Hedge Agreements shall not exceed
$100,000,000 at any time outstanding, and
(C) Debt owed to a wholly-owned Domestic Subsidiary of
the Borrower that is a Loan Party; provided that such Debt
--------
is evidenced by a promissory note that has been pledged to
the Administrative Agent pursuant to the Security Agreement.
(ii) in the case of any wholly-owned Domestic Subsidiary of
the Borrower that is a Loan Party, Debt owed to the Borrower or to
another wholly-owned Domestic Subsidiary of the Borrower that is a
Loan Party so long as such Debt is evidenced by a promissory note that
has been pledged to the Administrative Agent pursuant to the Security
Agreement; and
(iii) in the case of the Borrower and any of its
Subsidiaries,
(A) Debt under the Loan Documents;
(B) Debt secured by Liens permitted by Section
6.02(a)(v) and (vi) not to exceed in the aggregate the
amounts set forth in such Sections,
(C) the Surviving Debt, and any Debt issued in exchange
for, or the net proceeds of which are used to refinance, all
or a part of the Surviving Debt; provided, however, that the
-------- -------
principal amount of such refinancing Debt does not exceed
the principal amount, plus accrued interest (if any), of the
Surviving Debt so refinanced,
77
(D) endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course
of business,
(E) unsecured Debt of the Borrower in respect of its
daily overdraft facility but only to the extent such Debt
(1) is incurred in the ordinary course of the Borrower's
business consistent with past practices (2) does not exceed
$7,500,000 in principal amount at any time outstanding, and
(3) is repaid in full within 3 Business Days of the
incurrence of such Debt, and
(F) other unsecured Debt (other than Debt owed to
Casino) of the Borrower and its Subsidiaries in an aggregate
principal amount at any time outstanding not to exceed
$10,000,000.
(c) Mergers, Corporate Changes, Etc. Merge into or consolidate
-------------------------------
with any Person or permit any Person to merge into it or liquidate or dissolve
itself (or suffer any liquidation or dissolution), or permit any of its
Subsidiaries to do (or suffer) any of the foregoing, except that (i) any
Subsidiary of the Borrower may merge into or consolidate with, any other
Subsidiary of the Borrower that is, or as a result of such merger or
consolidation shall become, a Loan Party, or that, in the case of any such
consolidation, the Person formed by such consolidation shall be a wholly-owned
Solvent Domestic Subsidiary of the Borrower; (ii) any of the Borrower's
Subsidiaries may merge into or consolidate with Borrower so long as the
surviving entity is Borrower; (iii) any of the Borrower's Subsidiaries may
liquidate or dissolve if all of the assets of such Subsidiary are acquired by
the Borrower or any other Loan Party; and (iv) each of the Borrower's Domestic
Subsidiaries may change its jurisdiction of formation by merger or otherwise so
long as such jurisdiction remains within the United States of America and the
Borrower or such Domestic Subsidiary provides notice of such change and
otherwise complies with the provisions of the Security Agreement and the Pledge
Agreement; provided, however, that in each case, immediately after giving effect
-------- -------
thereto, no Default shall have occurred and be continuing or would result
therefrom.
(d) Sales of Assets. Sell, lease, license, transfer or otherwise
---------------
dispose of, or permit any of its Subsidiaries to sell, lease, license, transfer
or otherwise dispose of, any assets, or grant any option or other right to
purchase, lease or otherwise acquire any assets other than:
(i) sales of Inventory in the ordinary course of its
business,
(ii) in a transaction authorized by subsection (c) of this
Section 6.02,
(iii) the sale of any asset by any Loan Party (other than
(x) a bulk sale of Inventory, (y) a sale of Accounts Receivable other
than delinquent accounts for collection purposes only and (z) sales of
assets permitted
78
under clause (v) below) so long as (A) the purchase price paid to the
Loan Party for such asset shall be no less than the fair market value
of such asset at the time of such sale, (B) the purchase price for
such asset shall be paid to the Loan Party solely in cash and (C) the
aggregate purchase price paid to all of the Loan Parties for such
asset and all other assets sold by the Loan Parties during the same
Fiscal Year pursuant to this clause (iii) shall not exceed $7,500,000
in any Fiscal Year and $15,000,000 during the term of this Agreement;
provided that the proceeds of such asset sales are applied in
accordance with Section 2.05(b)(iii),
(iv) the grant of any option or other right to purchase any
asset in a transaction which would be permitted under the provisions
of the immediately preceding clause (iii), and
(v) the sale of any of the Synthetic Lease Properties in
accordance with Section 11.2 of the Synthetic Lease as in effect on
the date hereof and subject to the $5,000,000 limitation set forth
therein, provided that the net proceeds of such sale are applied in
accordance with Section 2.05(b)(iii);
provided that in each case, immediately after giving effect thereto, no Default
--------
shall have occurred and be continuing or would result therefrom.
(e) Investments in Other Persons. Make or hold, or permit any of
----------------------------
its Subsidiaries to make or hold, any Investment in any Person other than:
(i) Investments by the Borrower and its Subsidiaries in
the Borrower or in Subsidiaries that are or become Loan Parties,
(ii) Investments by the Borrower and its Subsidiaries after
the Closing Date in Smart & Final de Mexico, S.A. de C.V. and in Smart
& Final del Noroeste, S.A. de C.V. in an aggregate amount not to
exceed $2,500,000,
(iii) loans and advances to officers and employees in the
ordinary course of the business of the Borrower and its Subsidiaries
as presently conducted in an aggregate principal amount not to exceed
$2,000,000 at any time outstanding,
(iv) Investments by the Borrower and its Subsidiaries in
Cash Equivalents,
(v) Investments existing on the Closing Date and set forth
on Schedule 5.01(s); and
(vi) other Investments in an aggregate amount invested not
to exceed $2,000,000; provided that with respect to Investments made
under this clause (v), immediately before and after giving effect
thereto, no Default shall have occurred and be continuing or would
result therefrom.
79
(f) Dividends, Etc. Declare or pay any dividends, purchase,
--------------
redeem, retire, defease or otherwise acquire for value any of its capital stock
or any warrants, rights or options to acquire such capital stock, now or
hereafter outstanding, return any capital to its stockholders, partners or
members (or the equivalent Persons thereof) as such, make any distribution of
assets, capital stock, warrants, rights, options, obligations or securities to
its stockholders, partners or members (or the equivalent Persons thereof) as
such or issue or sell any capital stock or any warrants, rights or options to
acquire such capital stock, or permit any of its Subsidiaries to do any of the
foregoing, or permit any of its Subsidiaries to purchase, redeem, retire,
defease or otherwise acquire for value any capital stock of the Borrower or any
warrants, rights or options to acquire such capital stock or to issue or sell
any capital stock or any warrants, rights or options to acquire such capital
stock, except that, so long as no Default shall have occurred and be continuing
or would result therefrom:
(i) the Borrower may declare and deliver dividends and
distributions payable only in (and to the holders of) common stock of
the Borrower,
(ii) the Borrower may declare and pay cash dividends to its
stockholders pursuant to any dividend plan approved in writing by the
Required Lenders;
(iii) except to the extent the Net Cash Proceeds thereof are
required to be applied to the prepayment of the Advances pursuant to
Section 2.05(b), the Borrower and any of its Subsidiaries may
purchase, redeem, retire, defease or otherwise acquire shares of such
Person's capital stock with the proceeds received from the issuance of
its capital stock with equal or inferior voting powers, designations,
preferences and rights;
(iv) the Borrower and any of its Subsidiaries may issue
equity securities upon the exercise of rights to acquire such equity
securities but only if the Net Cash Proceeds, if any, from the
exercise of such rights are applied to the repayment of Advances to
the extent required pursuant to Section 2.05(b); and
(v) any Subsidiary may declare and pay dividends to the
Borrower or to a Subsidiary of the Borrower that is a Loan Party.
(g) Change in Nature of Business. Make, or permit any of the
----------------------------
other Loan Parties to make, any material change in the nature of its business as
carried on at the date hereof.
(h) Charter Amendments; New Subsidiaries. Amend, or permit any of
------------------------------------
the other Loan Parties to amend, its or their certificate or articles of
incorporation, bylaws or other organizational or charter documents (including,
without limitation, by filing any certificate of designation with respect to any
preferred stock or otherwise creating any new preferred stock) or, create or
acquire, or permit any of the
80
other Loan Parties to directly or indirectly create or acquire, a Subsidiary not
in existence on the date hereof.
(i) Accounting Changes. Make or permit, or permit any of its
------------------
Subsidiaries to make or permit, any change in accounting policies or reporting
practices, except as required by generally accepted accounting principles.
(j) Prepayments, Etc. of Debt; Amendments to Agreements. (i)
---------------------------------------------------
Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled
payment or maturity thereof in any manner any Debt other than the prepayment of
(A) the Advances in accordance with the terms of this Agreement and (B)
Capitalized Leases in the ordinary course of business; (ii) make any payment in
violation of any subordination terms of any Debt; (iii) amend, modify or change
in any manner any term or condition of any Intercompany Note, any other
Surviving Debt or any Casino Tax Sharing Document; (iv) amend, modify or change
in any manner which is materially adverse to the Lender Parties any term or
condition of the Synthetic Lease Documents; or (v) permit any of the Loan
Parties to do any of the foregoing other than to prepay any Debt payable to the
Borrower.
(k) Negative Pledge. Enter into or suffer to exist, or permit any
---------------
of its Subsidiaries to enter into or suffer to exist, any agreement prohibiting
or conditioning the creation or assumption of any Lien upon any of their
respective property or assets other than (i) in favor of the Administrative
Agent and the Lender Parties or (ii) any Debt permitted by Section
6.02(b)(iii)(A) hereof, in each case so long as such prohibition or condition
extends only to the property subject to the Lien securing such Debt.
(l) Partnerships. Become a general partner in any general or
------------
limited partnership or joint venture, or permit any of its Subsidiaries to do
so, other than any Subsidiary the sole assets of which consist of its interest
in such partnership or joint venture.
(m) Affiliate Transactions. Enter into, or permit any of its
----------------------
Subsidiaries to enter into, directly or indirectly, any transaction with
(including, without limitation, the purchase, sale or exchange of property or
the rendering of any service to) any Affiliate of the Borrower, except pursuant
to (x) the reasonable requirements of the Borrower's or such Subsidiary's
business, as the case may be, and upon fair and reasonable terms no less
favorable to such Borrower or such Subsidiary than could be obtained in a
comparable arm's-length transaction with an unaffiliated Person, (y) the Casino
Tax Sharing Documents and (z) Capitalized Leases between any Loan Party and
Casino in existence on the Closing Date and set forth on Schedule 5.01(q)(i).
(n) Intentionally Omitted.
---------------------
(o) Payment Restrictions Affecting Subsidiaries; Document
-----------------------------------------------------
Amendment. Directly or indirectly, enter into or suffer to exist, or permit any
---------
of its Subsidiaries to enter into or suffer to exist, any agreement or
arrangement
81
(other than the Loan Documents) (i) limiting the ability of any such Subsidiary
to declare or pay dividends or other distributions in respect of its Equity
Interests or repay or prepay any Debt owed to, make loans or advances to, or
otherwise transfer assets to or invest in, the Borrower or any Subsidiary of the
Borrower (whether through a covenant restricting dividends, loans, asset
transfers or investments, a financial covenant or otherwise), or (2) limiting
the ability of any Loan Party to enter into amendments, modifications or waivers
of the Loan Documents.
(p) Speculative Transactions. Engage, or permit any of its
------------------------
Subsidiaries to engage, in any transaction involving commodity options or
futures contracts or any similar speculative transactions other than Hedge
Agreements permitted pursuant to Section 6.02(b)(i)(B).
Section 6.03 Reporting Requirements. So long as any Advance or any other
----------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower shall deliver to the Administrative Agent
(with a courtesy copy to each Lender; provided that the failure to provide any
such courtesy copy to any Lender shall not constitute a breach or violation of
this Section 6.03 and shall not give rise to any Default):
(a) Borrowing Base Certificate. Quarterly, within 10 Business
--------------------------
Days after the last Business day of each fiscal quarter of the Borrower and at
any other time requested by the Administrative Agent, a Borrowing Base
Certificate, which shall: (i) be completed substantially in the form of Exhibit
K, (A) detailing the Borrower's Eligible Accounts Receivable and Eligible
Inventory as of the last day of such quarter or as of such other date as the
Administrative Agent may request, and (B) verifying, as of the end of such
fiscal quarter of the Borrower, compliance with the covenants contained in
Sections 6.02(a), (b), (d), (e), (f), (g) and 6.04, and the computations (which
shall be set forth therein) used in determining such compliance; (ii) be
prepared by or under the supervision of the Borrower's chief executive officer,
chief financial officer, treasurer or controller and certified by such officer
subject only to adjustment upon completion of the normal year-end audit of
physical inventory; and (iii) include such additional schedules and other
information as the Administrative Agent may reasonably request.
(b) Default Notice. As soon as possible and in any event within
--------------
two Business Days after the occurrence of any Default and within two Business
Days after any Material Adverse Effect occurs or arises, a statement of the
chief executive officer, chief financial officer, treasurer or controller of the
Borrower setting forth details thereof and the action that the Borrower has
taken and proposes to take with respect thereto.
(c) Quarterly Financials. As soon as available and in any event
--------------------
within 45 days after the end of each of the first three quarters of each Fiscal
Year, Consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such quarter and Consolidated and consolidating
statements of income and
82
cash flows of the Borrower and its Subsidiaries for the period commencing at the
end of the previous Fiscal Year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures for such period
(on a quarterly and year-to-date basis from the forecast delivered pursuant to
Section 6.03(l)) and the corresponding figures for the corresponding period of
the preceding Fiscal Year, all in reasonable detail and duly certified (subject
to year-end audit adjustments) by the chief executive officer, chief financial
officer, treasurer or controller of the Borrower as having been prepared in
accordance with GAAP, together with (i) a certificate of said officer stating
that the representations and warranties in Section 5.01 are true and correct in
all material respects as of the date of such certificate and that no Default has
occurred and is continuing or, if a Default has occurred and is continuing, a
statement as to the nature thereof and the action that the Borrower has taken
and proposes to take with respect thereto, and (ii) a schedule in form
satisfactory to the Administrative Agent of the computations used by the
Borrower in determining compliance with the covenants contained in Sections
6.02(a), (b), (d), (e), (f) and 6.04; provided that in the event of any change
--------
in generally accepted accounting principles used in the preparation of such
financial statements, the Borrower shall also provide, if necessary for the
determination of compliance with Section 5.04, a statement of reconciliation
conforming such financial statements to GAAP. Notwithstanding the foregoing,
however, Borrower shall not be required to report consolidating numbers with
respect to Smart & Final de Mexico, S.A. de C.V.
(d) Annual Financials. As soon as available and in any event
-----------------
within 90 days after the end of each Fiscal Year, a copy of the annual audit
report for such year for the Borrower and its Subsidiaries, including therein
audited Consolidated and unaudited consolidating balance sheets of the Borrower
and its Subsidiaries as of the end of such Fiscal Year and audited Consolidated
and unaudited consolidating statements of income and cash flows of the Borrower
and its Subsidiaries for such Fiscal Year, in each case with respect to such
audited balance sheets and statements of income and cash flow accompanied by an
opinion acceptable to the Administrative Agent of Xxxxxx Xxxxxxxx LLP or other
independent public accountants of recognized standing acceptable to the
Administrative Agent, together with (i) a certificate of such accounting firm to
the Lenders stating that in the course of the regular audit of the business of
the Borrower and its Subsidiaries, which audit was conducted by such accounting
firm in accordance with generally accepted auditing standards, such accounting
firm has obtained no knowledge that a Default has occurred and is continuing, or
if, in the opinion of such accounting firm, a Default has occurred and is
continuing, a statement as to the nature thereof, (ii) a schedule in form
satisfactory to the Administrative Agent of the computations used by such
accountants in determining, as of the end of such Fiscal Year, compliance with
the covenants contained in Sections 6.02(a), (b), (d), (e), (f) and 6.04 and
including a comparison of the results for such Fiscal Year to the results for
such Fiscal Year set forth in the forecast delivered pursuant to Section
6.03(l), and (iii) a certificate of the chief executive officer, chief financial
officer, treasurer or controller of the Borrower (A) stating that the
representations and warranties in Section 5.01 are true and correct in all
material respects as of the date of such certificate and that no Default has
occurred and is continuing or, if a default has occurred and is continuing, a
statement as to the nature thereof and the action that the Borrower
83
has taken and proposes to take with respect thereto, and (B) verifying, as of
the end of such Fiscal Year, compliance with the covenants contained in Sections
6.02(a), (b), (d), (e), (f) and 6.04, and the computations (which shall be set
forth therein) used in determining such compliance. Notwithstanding the
foregoing, Borrower shall not be required to report consolidating numbers with
respect to Smart & Final de Mexico, S.A. de C.V.
(e) ERISA Events. Promptly and in any event within ten Business
------------
Days after the Borrower, any Subsidiary or any ERISA Affiliate knows or has
reason to know that any material ERISA Event with respect to any such Person has
occurred, a statement of the chief executive officer, chief financial officer,
treasurer or controller of the Borrower describing such ERISA Event and the
action, if any, that the applicable Person has taken and/or proposes to take
with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto.
(f) Plan Terminations. Promptly and in any event within 10
-----------------
Business Days after receipt thereof by the Borrower, any Subsidiary or any ERISA
Affiliate, copies of any notice from the PBGC stating its intention to terminate
any Employee Benefit Plan or to have a trustee appointed to administer any such
Employee Benefit Plan.
(g) Plan Annual Reports. Promptly and in any event within 30 days
-------------------
after the receipt of a request therefor by the Administrative Agent or the
Required Lenders, copies of each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) with respect to each Plan of the Borrower, each
Subsidiary or each ERISA Affiliate.
(h) Multiemployer Plan Notices. Promptly and in any event within
--------------------------
10 Business Days after receipt thereof by the Borrower, any Subsidiary or any
ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of each notice
concerning (i) the imposition of Withdrawal Liability by any such Multiemployer
Plan on the Borrower, any Subsidiary or any ERISA Affiliate, (ii) the
reorganization or termination, within the meaning of Title IV of ERISA, of any
such Multiemployer Plan or (iii) the amount of liability incurred, or that may
be incurred, by the Borrower, any Subsidiary or any ERISA Affiliate in
connection with any event described in clause (i) or (ii) above.
(i) Litigation. As promptly as practicable, notice of the
----------
commencement of, or any material adverse change in the status of or in the
financial effect on any Loan Party or any Subsidiary thereof, any material
actions, suits, investigations, litigation and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting any Loan Party or any of its Subsidiaries of the
type described in Section 4.01(d) that is not disclosed in any report filed by
the Borrower with the Securities Exchange Commission or any governmental
authority that may be substituted therefor.
84
(j) Press Releases; Securities Reports. Promptly after the
----------------------------------
sending or filing thereof, copies of all (i) press releases, (ii) proxy
statements, financial statements and reports that any Loan Party or any of its
Subsidiaries sends to its stockholders, and (iii) regular, periodic and special
reports, and all registration statements, that any Loan Party or any of its
Subsidiaries files with the Securities and Exchange Commission or any
governmental authority that may be substituted therefor, or with any national
securities exchange.
(k) Environmental Conditions. Promptly after the assertion or
------------------------
occurrence thereof, notice of any material Environmental Action against or of
any material noncompliance by any Loan Party or any of their respective
Subsidiaries with any Environmental Law or Environmental Permit, or any
condition or occurrence on any property of any Loan Party or any of their
respective Subsidiaries that results in or could (i) form the basis for such
material Environmental Action or material noncompliance, or (ii) cause any
property of any Loan Party or any of their respective Subsidiaries to be subject
to any material restrictions on ownership, occupancy, use or transferability
under any Environmental Law.
(l) Annual Forecasts. Together with the annual financial
----------------
statements required pursuant to Section 6.03(d), forecasts prepared by
management of the Borrower, in form satisfactory to the Administrative Agent, of
balance sheets, income statements and cash flow statements on a monthly basis
for the Fiscal Year following such Fiscal Year and on an annual basis for each
Fiscal Year thereafter until the Commitment Termination Date, together with an
explanation of the assumptions on which such forecasts are based.
(m) Creditor Reports. If requested by the Administrative Agent,
----------------
copies of any statement or report furnished to any holder of debt securities of
any Loan Party or of any of its Subsidiaries pursuant to the terms of any
indenture, loan or credit or similar agreement as to the occurrence of any
"default" thereunder.
(n) Synthetic Lease Notices. Promptly upon receipt thereof,
-----------------------
copies of (i) all notices, requests and other documents received by any Loan
Party or any of its Subsidiaries under or pursuant to any Synthetic Lease
Document regarding any event that could materially impair the value of the
interests or the rights of any Loan Party or otherwise have a Material Adverse
Effect, (ii) any amendment, modification or waiver of any provision of any
Synthetic Lease Document (provided that compliance herewith shall not constitute
a waiver of Section 6.02(j)), and (iii) from time to time upon request by the
Administrative Agent, such information and reports regarding the Synthetic Lease
Documents as the Administrative Agent may reasonably request; in each case, to
the extent not otherwise required to be delivered to the Administrative Agent
pursuant to any other clause of this Section 6.03.
(o) Real Property. Within 30 days following any request by the
-------------
Administrative Agent (which request shall not be made more than once in any
Fiscal Year unless a Default shall have occurred and be continuing), a report
supplementing Schedules 5.01(r)(i) and 5.01(r)(ii), including an identification
of all
85
Owned Real Property and leased real property, as applicable, disposed of by any
Loan Party or any of its Subsidiaries during the period from the Closing Date
until delivery of such report or, if any such report has previously been
provided, since the date of the most recent report, a list and description
(including, if the Administrative Agent so requests, the street address, county
or other relevant jurisdiction, state, record owner, book value thereof and, in
the case of leases of property, the lessor, lessee, expiration date and annual
rental cost thereof) of all real property acquired or leased during the period
from the Closing Date until delivery of such report or, if any such report has
previously been provided, since the date of the most recent report, and a
description of such other changes in the information included in such Schedules
as may be necessary for such Schedules to be accurate and complete.
(p) Insurance. Within 30 days following any request by the
---------
Administrative Agent (which request shall not be made more than once in any
Fiscal Year unless a Default shall have occurred and be continuing), a report
summarizing the insurance coverage (specifying type, amount and carrier) in
effect for the Borrower and its Subsidiaries and containing such additional
information as the Administrative Agent, or any Lender through the
Administrative Agent, may reasonably specify.
(q) Other Information. Such other information respecting the
-----------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party as Administrative Agent, or any Lender
Party through the Administrative Agent, may from time to time reasonably
request.
Section 6.04 Financial Covenants. So long as any Advance or any other
-------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will:
(a) Net Worth. Maintain at all times a Consolidated Net Worth of
---------
not less than the sum of (i) $270,000,000, plus (ii) 50% of positive cumulative
Consolidated Net Income for any fiscal quarter of the Borrower ending after the
fiscal quarter ending October 8, 2001 (but without any deduction for any period
in which Consolidated Net Income is a negative number) plus (iii) 100% of the
amount of all cash proceeds of any equity issuances by the Borrower or any of
its Subsidiaries after the date hereof.
(b) Senior Leverage Ratio. Not permit the Senior Leverage Ratio
---------------------
at the end of the fiscal quarters of the Borrower set forth below to exceed the
correlative ratio indicated:
86
--------------------------------------------------------
Fiscal Quarter Leverage Ratio
-------------- --------------
--------------------------------------------------------
Fourth Quarter 2001 3.25 to 1.0
--------------------------------------------------------
First Quarter 2002 3.25 to 1.0
--------------------------------------------------------
Second Quarter 2002 3.00 to 1.0
--------------------------------------------------------
Xxxxx Xxxxxxx 0000 3.00 to 1.0
--------------------------------------------------------
Fourth Quarter 2002 2.75 to 1.0
--------------------------------------------------------
First Quarter 2003 2.75 to 1.0
--------------------------------------------------------
Second Quarter 2003 2.75 to 1.0
--------------------------------------------------------
Xxxxx Xxxxxxx 0000 2.75 to 1.0
--------------------------------------------------------
Fourth Quarter 2003 2.50 to 1.0
--------------------------------------------------------
First Quarter 2004 2.50 to 1.0
--------------------------------------------------------
Second Quarter 2004 2.50 to 1.0
--------------------------------------------------------
Third Quarter 2004 2.25 to 1.0
--------------------------------------------------------
(c) Adjusted Leverage Ratio. Not permit the Adjusted Leverage
-----------------------
Ratio at the end of the fiscal quarters of the Borrower set forth below to
exceed the correlative ratio indicated:
--------------------------------------------------------
Fiscal Quarter Leverage Ratio
-------------- --------------
--------------------------------------------------------
Fourth Quarter 2001 4.5 to 1.0
--------------------------------------------------------
First Quarter 2002 4.5 to 1.0
--------------------------------------------------------
Second Quarter 2002 4.5 to 1.0
--------------------------------------------------------
Third Quarter 2002 4.5 to 1.0
--------------------------------------------------------
Fourth Quarter 2002 4.5 to 1.0
--------------------------------------------------------
First Quarter 2003 4.5 to 1.0
--------------------------------------------------------
Second Quarter 2003 4.5 to 1.0
--------------------------------------------------------
Third Quarter 2003 4.5 to 1.0
--------------------------------------------------------
Fourth Quarter 2003 4.25 to 1.0
--------------------------------------------------------
First Quarter 2004 4.25 to 1.0
--------------------------------------------------------
Second Quarter 2004 4.25 to 1.0
--------------------------------------------------------
Third Quarter 2004 4.25 to 1.0
--------------------------------------------------------
(d) Fixed Charge Coverage Ratio. Maintain at all times a Fixed
---------------------------
Charge Coverage Ratio of not less than 2.0 to 1.0.
(e) Capital Expenditures. Not make, or permit any of its
--------------------
Subsidiaries to make, any Capital Expenditures that would cause the aggregate of
all such Capital Expenditures made by the Borrower and its Subsidiaries to
exceed $50,000,000 during each of the Fiscal Years ending December 29, 2002 and
December 28, 2003, respectively, and $55,000,000 during the Fiscal Year ending
January 1, 2005 (such amount, for each such Fiscal Year, the "Maximum
-------
Expenditure Amount"), provided that the Maximum Expenditure Amount for any
------------------
Fiscal Year, beginning with the Fiscal Year ending December 28, 2003, shall be
increased by an amount equal to the excess, if any, of the Maximum Expenditure
Amount for the previous year (without giving effect to any previous adjustment
made in accordance with this proviso) over the actual amount of
87
Capital Expenditures made during such previous Fiscal Year, but in no event
shall such increase exceed $10,0000,000.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01 Events of Default. If any of the following events ("Events of
----------------- ---------
Default") shall occur and be continuing:
-------
(a) the Borrower shall fail to pay any principal of any Advance
when the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise); or any Loan Party shall fail to
make any interest or any other payment under any Loan Document within three
Business Days after such interest or other amount becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or any
of its officers) under or in connection with any Loan Document shall prove to
have been incorrect in any material respect when made or deemed made; or
(c) the Borrower shall fail to perform or observe any term,
covenant or agreement contained in Sections 2.12, 6.01(e), (f), (k), (1) or (m),
6.02 or 6.04; or
(d) (i) any Loan Party shall fail to perform or observe any term,
covenant or agreement contained in Section 6.03 if such failure shall remain
unremedied for 10 days after the earlier of the date on which (x) such Loan
Party (including any officer of such Loan Party) becomes aware of such failure,
or (y) written notice thereof shall have been given to the Borrower by the
Administrative Agent or (ii) any Loan Party shall fail to perform or observe any
other term, covenant or agreement contained in any Loan Document on its part to
be performed or observed if such failure shall remain unremedied for 30 days
after the earlier of the date on which (x) such Loan Party (including any
officer of such Loan Party) becomes aware of such failure, or (y) written notice
thereof shall have been given to the Borrower by the Administrative Agent; or
(e) any "Event of Default" (under and as defined in the
Participation Agreement) shall have occurred and be continuing; or any Loan
Party or any of its Subsidiaries shall fail to pay any principal of, premium or
interest on or any other amount payable in respect of any Debt of such Loan
Party or Subsidiary that is outstanding in a principal amount of at least
$5,000,000 in the aggregate (but excluding Debt outstanding hereunder) when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise); or any other event shall occur
or condition shall exist under any agreement or instrument relating to any such
Debt, if the effect of such event or condition is to accelerate, or to permit
the acceleration of, the maturity of such Debt or otherwise to cause, or to
permit the holder thereof to cause, such Debt to mature; or any such Debt shall
be declared to be
88
due and payable or required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased, or an offer
to prepay, redeem, purchase or defease such Debt shall be required to be made,
in each case prior to the stated maturity thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by any Loan Party or any of
its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property, or any such
proceeding shall have been commenced against any Loan Party or any of its
Subsidiaries and shall not have been withdrawn, dismissed, bonded or discharged
within 60 days thereafter or at any time an order for relief is granted in such
proceeding; or any Loan Party or any of its Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in this
subsection (f); or
(g) any judgments or orders in excess of $5,000,000 individually
or $10,000,000 in the aggregate for the payment of money shall be rendered
against any Loan Party or any of its Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 60 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(h) any non-monetary judgment or order shall be rendered against
any Loan Party or any of its Subsidiaries that could have a Material Adverse
Effect, and there shall be any period of 10 consecutive days during which a stay
of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(i) any provision of any Loan Document after delivery thereof
pursuant to Section 4.01 shall for any reason cease to be valid and binding on
or enforceable against any Loan Party party to it, or any such Loan Party shall
so state in writing; or
(j) any Collateral Document or financing statement after delivery
thereof pursuant to Sections 4.01 or 6.01 shall for any reason (other than
pursuant to the terms thereof or pursuant to the Intercreditor Agreement (Leased
Property)) cease to create a valid and perfected first priority Lien on the
Collateral purported to be covered thereby; or
(k) (i) if at any time when Casino is not the single largest
shareholder of the Borrower, any Person or two or more Persons acting in concert
(other than Casino) shall have acquired beneficial ownership (within the meaning
of Rule 13d-3
89
of the Securities and Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of Voting Interests of the Borrower representing
33-1/3% or more of the combined voting power of all Voting Interests of the
Borrower; or (ii) the majority of the seats (other than vacant seats) on the
board of directors of the Borrower cease to be occupied by Persons who either
(a) were members of the board of directors of the Borrower on the Closing Date
or (b) were nominated for election by the board of directors (or any committee
thereof) of the Borrower, a majority of whom were directors on the Closing Date
or whose election or nomination for election was previously approved by a
majority of such directors; or (iii) any Person or two or more Persons acting in
concert (other than Casino) shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of, the power to exercise, directly or
indirectly, a controlling influence over the management or policies of the
Borrower, other than any contract or arrangement with respect to acquisition of
Voting Interests of the Borrower (it being understood that such acquisition of
Voting Interests is governed by clause (i) of this paragraph); or
(l) there shall occur one or more ERISA Events which individually
or in the aggregate results in or reasonably could be expected to result in a
Material Adverse Effect; or there exists any fact or circumstance that
reasonably could be expected to result in the imposition of a Lien or security
interest under Section 412(n) of the Internal Revenue Code or under ERISA on the
assets of the Borrower and its Subsidiaries;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of each Lender Party and the obligation of each Lender
Party to make Advances and of any L/C Bank to issue Letters of Credit to be
terminated, whereupon the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrower, declare the Notes, all interest thereon and all other amounts payable
under this Agreement and the other Loan Documents to be forthwith due and
payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that in the event of an Event of Default described
-------- -------
in Section 7.01(f), (x) the Commitments of each Lender Party and the obligation
of each Lender Party to make Advances and of each L/C Bank to issue Letters of
Credit shall automatically be terminated and (y) the Notes, all such interest
and all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower. Nothing contained in this Section 7.01 is
intended to preclude or limit the Administrative Agent from exercising any of
the rights or remedies available to it under any of the Loan Documents or at
law.
Section 7.02 Actions in Respect of the Letters of Credit Upon Default. If
--------------------------------------------------------
any Event of Default shall have occurred and be continuing, the Administrative
Agent may from time to time, or shall at the request of the Required Lenders,
irrespective of
90
whether it is taking any of the actions described in Section 7.01 or otherwise,
make demand upon the Borrower to, and forthwith upon such demand the Borrower
will, pay to the Administrative Agent on behalf of the Lender Parties in same
day funds at the Administrative Agent's office designated in such demand, for
deposit to a non-interest bearing account established by the Administrative
Agent for such purposes or for purposes of Sections 2.05(b)(iv), 2.05(c) or 3.01
or (the "L/C Cash Collateral Account"), an amount equal to the aggregate
---------------------------
Available Amount of all Letters of Credit then outstanding (and the Borrower
hereby grants to the Administrative Agent, for the ratable benefit of the
Administrative Agent and each Lender Party, a continuing security interest in
all amounts at any time on deposit in the L/C Cash Collateral Account to secure
all Letter of Credit Obligations from time to time outstanding and all other
Obligations hereunder). If at any time the Administrative Agent determines that
any funds held in the L/C Cash Collateral Account are subject to any right or
claim of any Person other than the Administrative Agent and the Lender Parties
or that the total amount of such funds is less than the aggregate Available
Amount of all Letters of Credit, the Borrower will, forthwith upon demand by the
Administrative Agent, pay to the Administrative Agent, as additional funds to be
deposited and held in the L/C Cash Collateral Account, an amount equal to the
excess of (a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in the L/C Cash Collateral Account that the
Administrative Agent determines to be free and clear of any such right and
claim.
ARTICLE VIII
THE CREDIT AGENTS
Section 8.01 Authorization and Action. Each Lender Party (in its capacity
------------------------
as a Lender, the Swing Line Lender (if applicable), the L/C Bank (if applicable)
and on behalf of itself and its Affiliates) hereby appoints (a) BNP Paribas as
its Administrative Agent, Xxxxxx Trust & Savings Bank as its Syndication Agent
and Cooperative Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland",
New York Branch as its Documentation Agent under and for purposes of this
Agreement, the Notes and each other Loan Document, and (b) BNP Paribas as its
Administrative Agent under and for purposes of the Collateral Documents. Each
Lender Party (i) authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement and the other Loan Documents as are delegated to the Administrative
Agent by the terms hereof and thereof, together with such powers and discretion
as are reasonably incidental thereto and (ii) authorizes and instructs the
Administrative Agent to enter into each of the Loan Documents, including the
Intercreditor Agreements and any new intercreditor agreements required pursuant
to Section 9.14. As to any matters not expressly provided for by the Loan
Documents (including, without limitation, enforcement or collection of the
Notes), the Administrative Agent 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 Required Lenders, and such instructions shall be
binding upon all Lender Parties and all holders of Notes; provided, however,
-------- -------
that the Administrative Agent shall not be required to take any action that
91
exposes the Administrative Agent to personal liability or that is contrary to
this Agreement or applicable law. With respect to any action to be taken by the
Administrative Agent in its sole discretion pursuant to this Agreement, the
Administrative Agent may obtain the instructions of the Required Lenders and may
act or refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon such instructions, and such instructions shall be
binding upon all Lender Parties and all holders of Notes; provided that the
--------
Administrative Agent shall not be required to take any action that exposes the
Administrative Agent to personal liability or that is contrary to this Agreement
or applicable law. The Administrative Agent agrees to give to each Lender Party
prompt notice of each notice given to any of them by the Borrower pursuant to
the terms of this Agreement.
Section 8.02 Administrative Agent's Reliance, Etc. Neither the
-------------------------------------
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by any of them under
or in connection with the Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (i) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Lender that is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07;
(ii) may consult with legal counsel (including counsel for any Loan Party),
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; (iii) makes
no warranty or representation to any Lender Party and shall not be responsible
to any Lender Party for any statements, warranties or representations made in or
in connection with the Loan Documents; (iv) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of any Loan Document on the part of any Loan Party or to inspect
the property (including the books and records) of any Loan Party; (v) shall not
be responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (vi) shall
incur no liability under or in respect of any Loan Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopy or cable) believed by it to be genuine and signed or sent by
the proper party or parties; and (vii) shall incur no liability as a result of
any determination whether the transactions contemplated by the Loan Documents
constitute a "highly leveraged transaction" within the meaning of the
interpretations issued by the Comptroller of the Currency, the Federal Deposit
Insurance Corporation and the Board of Governors of the Federal Reserve System.
Section 8.03 Credit Agents and Affiliates. With respect to its Commitments
----------------------------
and the Advances made by it and the Notes issued to it, each Credit Agent shall
have the same rights and powers under the Loan Documents as any other Lender
Party and may exercise the same as though it were not a Credit Agent; and the
terms "Lender", "Lenders", "Lender Party" or "Lender Parties" shall, unless
otherwise expressly indicated, include each Credit Agent in its individual
capacity. Each Credit Agent and its
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respective Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, accept investment banking engagements from and generally
engage in any kind of business with, any Loan Party, any of their Subsidiaries
and any Person who may do business with or own securities of any Loan Party or
any such Subsidiary, all as if such Credit Agent were not a Credit Agent and
without any duty to account therefor to the Lender Parties.
Section 8.04 Lender Party Credit Decision. Each Lender Party acknowledges
----------------------------
that it has, independently and without reliance upon the Credit Agents or any
other Lender Party and based on the financial statements referred to in Section
5.01 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
Party also acknowledges that it will, independently and without reliance upon
the Credit Agents or any other Lender Party 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.
Section 8.05 Indemnification. Each Lender Party severally agrees to
---------------
indemnify each Credit Agent and the Lead Arranger and their respective
affiliates, officers, directors, employees, attorneys, agents and advisors (to
the extent not promptly reimbursed by the Borrower) from and against such Lender
Party's ratable share of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against any Credit Agent or the Lead Arranger in any way relating to or arising
out of the Loan Documents or any action taken or omitted by any Credit Agent or
the Lead Arranger under the Loan Documents; provided, however, that no Lender
-------- -------
Party shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of any Credit Agent or
the Lead Arranger. Without limitation of the foregoing, each Lender Party agrees
to reimburse the Credit Agents and the Lead Arranger promptly upon demand for
its ratable share of any costs and expenses payable by the Borrower under
Section 9.04, to the extent that the Credit Agents or the Lead Arranger are not
promptly reimbursed for such costs and expenses by the Borrower. For purposes of
this Section 8.05, the Lender Parties' respective ratable shares of any amount
shall be determined, at any time, according to the sum of (a) the aggregate
principal amount of the Advances (other than L/C Advances) outstanding at such
time and owing to the respective Lender Parties, plus (b) their respective Pro
Rata Shares of the aggregate Letter of Credit Obligations outstanding at such
time, plus (c) their respective Unused Revolving Commitments at such time. The
failure of any Lender Party to reimburse the Credit Agents and the Lead Arranger
promptly upon demand for its ratable share of any amount required to be paid by
the Lender Parties to the Credit Agents and the Lead Arranger as provided herein
shall not relieve any other Lender Party of its obligation hereunder to
reimburse the Credit Agents and the Lead Arranger for its ratable share of such
amount, but no Lender Party shall be responsible for the failure of any other
Lender Party to reimburse the Credit Agents and the Lead Arranger for such other
Lender Party's ratable share of such amount.
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Section 8.06 Successor Administrative Agent. The Administrative Agent may
------------------------------
resign at any time by giving written notice thereof to the Lender Parties and
the Borrower and may be removed at any time with or without cause by the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint a successor Administrative Agent, which shall
thereupon become the Administrative Agent hereunder. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Lender Parties, appoint a successor Administrative
Agent, which shall be a commercial bank organized under the laws of the United
States or of any State thereof and having a combined capital and surplus of at
least $250,000,000. If within 45 days after written notice is given of the
retiring Administrative Agent's resignation or removal under this Section 8.06
no successor Administrative Agent shall have been appointed and shall have
accepted such appointment, then on or after such 45th day, the retiring
Administrative Agent shall have the right to petition a court of competent
jurisdiction to appoint a successor Administrative Agent. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor Administrative
Agent and upon the execution and filing or recording of such financing
statements, or amendments thereto, and such amendments or supplements to the
Mortgages, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Administrative Agent shall succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under the Loan Documents. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
Section 8.07 Syndication Agent and Documentation Agent. The Syndication
-----------------------------------------
Agent and the Documentation Agent shall not have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such. Without limiting the foregoing, neither the
Syndication Agent nor the Documentation Agent shall have or be deemed to have
any fiduciary relationship with any Lender Party.
Section 8.08 Secured Hedge Agreements.
------------------------
(a) Each Lender proposing to enter into a Secured Hedge Agreement
hereby agrees to provide the Administrative Agent with notice of intent to enter
into such agreement; further, each Lender party to a Secured Hedge Agreement,
hereby agrees to promptly provide the Administrative Agent with an executed copy
of same.
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(b) Each Secured Hedge Bank hereby agrees to promptly provide
Administrative Agent notice of default under any Secured Hedge Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Amendments, Etc.; Release of Collateral; Termination.
----------------------------------------------------
(a) Amendments, Etc. No amendment or waiver of any provision of
----------------
this Agreement or the Notes or any other Loan Document, nor consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed (or, in the case of the Collateral
Documents, consented to) by the Required Lenders (and, in the case of any such
amendment, the Borrower), and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided that (a) no amendment, waiver or consent shall, unless in writing and
--------
signed by all of the Lender Parties, do any of the following at any time: (i)
waive any of the conditions specified in Sections 4.01 or 4.02, (ii) change the
percentage of the Commitments, the aggregate unpaid principal amount of the
Advances or the aggregate Available Amount of outstanding Letters of Credit that
shall be required for the Lender Parties or any of them to take any action
hereunder, (iii) release all of the Collateral or substantially all of the
Collateral in any transaction or series of related transactions (it being
understood that the Administrative Agent may release Collateral constituting
less than substantially all of the Collateral in accordance with Section
9.01(b)), (iv) release all or substantially all of the Guarantors from their
obligations under the Guaranty, (v) reduce or postpone the payment of principal
(but not any mandatory prepayment pursuant to Section 2.05(b)(iii)), interest,
fees or other amounts due hereunder, or (vi) amend this Section 9.01; (b) no
amendment, waiver or consent shall, unless in writing and signed by the Required
Lenders and each Lender that is directly affected by such amendment, waiver or
consent, (i) increase or extend the Commitments of such Lender, or (ii) change
the order of application of any prepayment set forth in Section 2.05 in any
manner that materially affects such Lender; and (c) no amendment, waiver or
consent shall, unless in writing and signed by the Supermajority Lenders, amend
the definition of "Borrowing Base Amount;" provided, further that no amendment,
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waiver or consent shall, unless in writing and signed by the Swing Line Lender
or the applicable L/C Bank, as the case may be, in addition to the Lenders
required above to take such action, affect the rights or obligations of the
Swing Line Lender or of any L/C Bank, as the case may be, under this Agreement;
and provided further that no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by the Administrative Agent in addition to the Lender Parties
required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or the other Loan Documents.
(b) Release of Collateral. Upon the written request of the
---------------------
Borrower, and without the consent of the Required Lenders or any other Lender
Party, the Administrative Agent is authorized to and, subject to the provisions
of this Section 9.01(b), shall release any item or items of Collateral
comprising less than substantially all
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of the Collateral at the time of such release (and is authorized to, and subject
to the provisions of this Section 9.01(b), shall, at the Borrower's expense,
execute any documents or instruments reasonably requested by the Borrower in
connection therewith) if (A) such release is requested in conjunction with the
consummation of any sale or other disposition of such Collateral that is not
prohibited by this Agreement, (B) arrangements satisfactory to the
Administrative Agent for the receipt by the Administrative Agent of any
prepayment required under Section 2.05(b) have been made, and (C) the Borrower
has delivered to the Administrative Agent a certificate signed by the Borrower's
chief executive officer, chief financial officer, treasurer or controller
certifying that such sale or other disposition is not prohibited by this
Agreement.
(c) Termination. Upon the payment in full of all Obligations
-----------
(other than Obligations which by their terms survive termination of this
Agreement) of the Loan Parties under the Loan Documents, the expiration or
termination of all Letters of Credit and the expiration or termination of all
Commitments hereunder, the Administrative Agent shall upon request provide a
payoff letter or similar document indicating that all Obligations of the Loan
Parties under the Loan Documents (other than any Obligations which survive
termination of the Loan Documents) have been discharged. On or after delivery of
such payoff letter or similar document, upon the written request of the
Borrower, the Administrative Agent is authorized by the Lender Parties to and
shall (i) release all of the Collateral (and is authorized by the Lender Parties
to and shall, at the Borrower's expense, execute any documents or instruments
reasonably requested by the Borrower in connection therewith) and (ii) deliver
any Collateral in the Administrative Agent's possession to the Agent (as defined
in the Participation Agreement) if the Synthetic Lease is outstanding at such
time.
Section 9.02 Notices, Etc. All notices and other communications provided
-------------
for hereunder shall be in writing (including telegraphic, telecopy or cable
communication) and mailed, telegraphed, telecopied, cabled or delivered, if to
the Borrower, at its address at Smart & Final Inc., 000 Xxxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000, Telecopier No. (000) 000-0000, Attn: Xxxxxx X. Xxxxxxxx; if to
any Initial Lender, at its Domestic Lending Office specified opposite its name
on Schedule I hereto; if to any other Lender, at its Domestic Lending Office
specified in the Assignment and Acceptance pursuant to which it became a Lender;
and if to the Administrative Agent, at its address at BNP Paribas, 000 Xxxxx
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Telecopier No. (213)
488-9602, Attn: Xxxx Xxxxxx or, as to each party, at such other address as shall
be designated by such party in a written notice to the other parties. All such
notices and communications shall, when mailed, telegraphed, telecopied or
cabled, be effective when deposited in the mails, delivered to the telegraph
company, transmitted by telecopier or delivered to the cable company,
respectively, except that notices and communications to the Administrative Agent
pursuant to Article II, III, IV or VIII shall not be effective until received by
the Administrative Agent.
Section 9.03 No Waiver; Remedies. No failure on the part of any Lender
-------------------
Party or the Administrative Agent to exercise, and no delay in exercising, any
right hereunder, under any Note or under any other Loan Document shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or
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further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 9.04 Costs and Expenses. (a) The Borrower agrees to pay on demand
------------------
(i) all costs and expenses of the Lead Arranger and the Administrative Agent in
connection with the negotiation, preparation, execution, delivery, syndication,
administration, modification and amendment of the Loan Documents, whether or not
the Loan Documents are executed or the Facility is closed, (including, without
limitation, (A) all due diligence, credit review, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
(whether employed by such Person or separately engaged) for the Lead Arranger
and the Administrative Agent with respect thereto) and (ii) all costs and
expenses of the Lead Arranger, the Administrative Agent, each Lender and each
L/C Bank in connection with the enforcement of the Loan Documents, whether in
any action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally or otherwise, including with
respect to advising such Person as to their rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under the Loan
Documents, with respect to negotiations with any Loan Party or with other
creditors of any Loan Party arising out of any Default or any events or
circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto and in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" (including, without limitation, the reasonable fees and
expenses of counsel (whether employed by such Person or separately engaged) for
the Lead Arranger, the Administrative Agent and each Lender Party with respect
thereto).
(b) The Borrower agrees to indemnify, defend and save and hold
harmless each Credit Agent, the Lead Arranger, each Lender, each L/C Bank and
each of their Affiliates and their officers, directors, employees, agents and
advisors (each, an "Indemnified Party") from and against, and shall pay on
-----------------
demand, any and all claims, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
(including, without limitation, reasonable fees and expenses of counsel but
excluding Taxes, it being understood and agreed that the obligations of the
Borrower to indemnify the Lender Parties and the Administrative Agent for Taxes
are set forth in Section 2.10) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or by reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with (i) this Agreement or any other Loan Document, the actual or
proposed use of the proceeds of any Advance or of any Letter of Credit issued
hereunder or any of the transactions contemplated hereby or by the other Loan
Documents, (ii) the actual or alleged presence of Hazardous Materials on any
property of any Loan Party or any Environmental Action relating in any way to
any Loan Party, (iii) any pollution or threat to human health or the environment
that is related in any way to any Loan Party or any of its Subsidiaries or any
other owner's or operator's management, use, control, ownership or operation of
the properties owned, leased,
97
operated or used by any Loan Party or any of its Subsidiaries, including all
on-site and off-site activities involving Hazardous Materials, (iv) any
Environmental Action against any Person whose liability for such Environmental
Action any Loan Party or any of its Subsidiaries has assumed or retained either
contractually or by operation of law, or (v) the breach of any environmental
representation or warranty set forth in Sections 5.01(h) and 5.01(l), in each
case whether or not such investigation, litigation or proceeding is brought by
any Loan Party, its directors, shareholders or creditors or an Indemnified Party
or any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. The Borrower also
agrees not to assert any claim against any Credit Agent, the Lead Arranger, any
Lender Party, any of their Affiliates, or any of their respective directors,
officers, employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or otherwise
relating to any of the transactions contemplated herein or in any other Loan
Document or the actual or proposed use of the proceeds of the Advances.
(c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by the Borrower to or for the account of a
Lender Party other than on the last day of the Interest Period for such Advance,
as a result of a payment or Conversion pursuant to Section 2.05 or 2.06,
acceleration of the maturity of the Notes pursuant to Section 7.01 or for any
other reason, the Borrower shall, upon demand by such Lender Party (with a copy
of such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender Party any amounts required to compensate such Lender
Party for any additional losses, costs or expenses that it may reasonably incur
as a result of such payment or Conversion or such failure to pay or prepay, as
the case may be, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender Party to fund or
maintain such Advance. In addition to the foregoing, if any losses, costs or
expenses are incurred by the Administrative Agent or any Lender with respect to
Eurodollar Rate Advances during the 180 day period following the Closing Date as
a result of or in connection with the syndication of the Facilities, the
Borrower shall, upon demand by the Administrative Agent or any Lender, pay to
the Administrative Agent or such Lender any amounts required to compensate the
Administrative Agent or such Lender for any such losses, costs or expenses.
(d) If any Loan Party fails to pay when due any costs, expenses
or other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by the Administrative Agent or any Lender
Party, in its sole discretion, and the Borrower shall reimburse the
Administrative Agent or such Lender Party on demand for any amounts so paid with
interest thereon at the Default Rate from the date of such payment until so
reimbursed.
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Section 9.05 Right of Set-off. Upon the occurrence and during the
----------------
continuance of any Event of Default, the Administrative Agent, each Lender Party
and each of their respective Affiliates is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and
otherwise 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 the Administrative Agent, such Lender Party or such Affiliate to or for the
credit or the account of the Borrower against any and all of the Obligations of
the Borrower now or hereafter existing under this Agreement and the Note or
Notes held by such Lender Party, irrespective of whether the Administrative
Agent, such Lender Party or such Affiliate shall have made any demand under this
Agreement or such Note or Notes and although such Obligations may be unmatured;
provided, however, that (a) any such set-off and application shall be subject to
-------- -------
the provisions of Section 2.11 and (b) each Lender Party shall give the
Administrative Agent at least two (2) Business Days' prior written notice of its
intent to set off, and each Lender Party shall cooperate with the Administrative
Agent in taking any such reasonable actions as may be necessary to minimize any
adverse effect of Sections 580 and 726 of the California Code of Civil
Procedure. The Administrative Agent and each Lender Party agrees promptly to
notify the Borrower 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 the Administrative Agent, each Lender Party and their
respective Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that the
Administrative Agent, such Lender Party and their respective Affiliates may
have.
Section 9.06 Binding Effect. This Agreement shall become effective when it
--------------
shall have been executed by the Borrower and the Administrative Agent and when
the Administrative Agent shall have been notified by each Initial Lender that
such Initial Lender has executed it and thereafter shall be binding upon and
inure to the benefit of the Borrower, the Administrative Agent and each Lender
Party and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Lender Parties.
Section 9.07 Assignments and Participations. (a) Each Lender Party may
------------------------------
assign to one or more banks or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment or Commitments, and the Advances owing to it and the
Note or Notes held by it); provided, however, that (i) each such assignment
-------- -------
shall be of a uniform, and not a varying, percentage of all rights and
obligations under and in respect of all of the Facilities, (ii) except in the
case of an assignment to a Person that, immediately prior to such assignment,
was a Lender Party or an assignment of all of a Lender Party's rights and
obligations under this Agreement, the amount of the Commitments and Advances of
the assigning Lender Party being assigned pursuant to each such assignment shall
(unless otherwise consented to by the Borrower and the Administrative Agent
(except that no consent of the Borrower shall be required if a Default has
occurred and is continuing)) be equal to $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, (iii) each such assignment shall be to an Eligible
Assignee, (iv) such Lender Party shall have
99
obtained the Administrative Agent's prior written consent to such assignment,
and (v) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,500. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in such Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender Party hereunder and (y) the Lender Party assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender Party's rights and obligations under this Agreement, such
Lender Party shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 5.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender Party or
any other Lender Party 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; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Documents as are delegated to the
Administrative Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of this Agreement are required to be performed by it as a Lender or
L/C Bank, as the case may be.
(c) The Administrative Agent shall maintain at its address
referred to in Section 9.02 a copy of each Assignment and Acceptance delivered
to and
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accepted by it and a register for the recordation of the names and addresses of
the Lender Parties and the Commitment of, and principal amount of the Advances
owing to, each Lender Party from time to time (the "Register"). The entries in
--------
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Administrative Agent and the Lender Parties shall
treat each Person whose name is recorded in the Register as a Lender Party
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender Party at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender Party and an assignee, together with any Note or Notes
subject to such assignment, the Administrative Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of Exhibit A
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register, (iii) give prompt notice thereof to the
Borrower, and (iv) deliver to the Borrower promptly a properly completed and
signed Internal Revenue Service Form W-8IMY reflecting such assignment. Within
five Business Days after its receipt of such notice, the Borrower, at its own
expense, shall execute and deliver to the Administrative Agent in exchange for
the surrendered Note or Notes a new Note to the order of such Eligible Assignee
in an amount equal to the Commitment assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Lender Party has retained a Commitment
hereunder, a new Note to the order of the assigning Lender Party in an amount
equal to the Commitment retained by it hereunder. Such new Note or Notes shall
be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit D-1 or D-2 hereto, as applicable.
(e) Each Lender Party may sell participations in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes held by it); provided, however, that (i) such Lender Party's
obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender Party shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the
other Lender Parties shall continue to deal solely and directly with such Lender
Party in connection with such Lender Party's rights and obligations under this
Agreement, (v) no participant under any such participation shall have any right
to approve any amendment or waiver of any provision of any Loan Document, or any
consent to any departure by any Loan Party therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, postpone any date fixed for any payment of
the principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation, or release
all or substantially all of the Collateral, and (vi) such Lender Party shall be
solely responsible for any and all Taxes on or with respect to
101
any participation or any amount payable by or for the account of such Lender
Party to or for the account of any participant of such Lender Party. The
Borrower agrees that any Person so purchasing a participation from a Lender
Party pursuant to this Section 9.07(e) shall be entitled to (i) exercise all its
rights of payment (including the right of set-off) with respect to such
participation to the fullest extent permitted by law and as fully as if such
Person were the direct creditor of the Borrower in the amount of such
participation, and (ii) the benefits of Sections 2.08 and 2.10.
(f) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; 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 Party.
(g) Notwithstanding any other provision set forth in this
Agreement or any other Loan Document to the contrary, any Lender Party may
assign all or any portion of the Advances or Notes held by it to any Federal
Reserve Bank or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve Bank, provided that any
--------
payment in respect of such assigned Notes or Advances made by the Borrower to or
for the account of the assigning and/or pledging Lender in accordance with the
terms of this Agreement shall satisfy the Borrower's obligations hereunder in
respect of such assigned Advances or Notes to the extent of such payment. No
such assignment shall release the assigning Lender Party from its obligations
hereunder.
Section 9.08 Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
-------------
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. THE
PARTIES (I) AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR ANY FEDERAL COURT SITTING IN
LOS ANGELES, CALIFORNIA AND (II) CONSENT TO THE NON-EXCLUSIVE JURISDICTION OF
SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE PARTIES
BY MAIL AT THE ADDRESSES SPECIFIED IN SECTION 9.02. THE PARTIES HEREBY WAIVE ANY
OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR
ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
Section 9.09 Execution in Counterparts. This Agreement may be executed in
-------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
102
Section 9.10 No Liability of the L/C Bank. The Borrower assumes all risks
----------------------------
of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither any L/C Bank
nor any of its officers or directors shall be liable or responsible for: (a) the
use that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (b) the validity, sufficiency
or genuineness of documents, or of any endorsement thereon, even if such
documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by such L/C Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, except that the Borrower shall have
------
a claim against such L/C Bank, and such L/C Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) such L/C Bank's
willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) such L/C Bank's willful failure to make lawful payment under a
Letter of Credit after the presentation to it of a draft and certificates
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, such L/C Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
Section 9.11 Confidentiality. The Administrative Agent and each Lender
---------------
Party agrees to keep confidential any Confidential Information furnished or made
available to it by the Borrower pursuant to this Agreement; provided that
--------
nothing herein shall prevent any Lender Party from disclosing such information
(i) to any other Lender Party or any Affiliate of any Lender Party or any
officer, director, employee, agent, or advisor of any Lender Party or Affiliate
of any Lender Party, (ii) to any other Person if incidental to the
administration of the credit facility provided herein, (iii) as required by any
law, rule, or regulation, (iv) upon the order of any court or administrative
agency, (v) upon the request or demand of any regulatory agency or authority,
(vi) that is or becomes available to the public or that is or becomes available
to any Lender Party other than as a result of a disclosure by any Lender Party
prohibited by this Agreement, (vii) in connection with any litigation to which
such Lender Party or any of its Affiliates may be a party, (viii) to the extent
necessary in connection with the exercise of any remedy under this Agreement or
any other Loan Document or (ix) to any Eligible Assignee or participant or
proposed Eligible Assignee or participant in accordance with Section 9.07(f).
Section 9.12 Waiver of Jury Trial. EACH OF THE BORROWER, THE ADMINISTRATIVE
--------------------
AGENT, THE L/C BANK AND THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE
ADVANCES, ANY LETTER OF CREDIT OR THE ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY
LENDER PARTY IN
103
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
Section 9.13 Marshalling; Payments Set Aside. Neither the Administrative
-------------------------------
Agent nor any Lender Party shall be under any obligation to marshal any assets
in favor of the Borrower or any other party or against or in payment of any or
all of the Obligations under the Loan Documents. To the extent that the Borrower
makes a payment or payments to the Administrative Agent or the Lender Parties
(or to the Administrative Agent for the benefit of the Lender Parties), or the
Administrative Agent or any Lender Party enforces any security interests or
exercise its rights of setoff, and such payment or payments or the proceeds of
such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or setoff had not occurred.
Section 9.14 Agreement to Enter Into New Intercreditor Agreement. If at any
---------------------------------------------------
time the Obligations under the Synthetic Lease are paid off and refinanced in
accordance with the terms of the Loan Documents, upon the Borrower's request,
the Administrative Agent shall enter into an intercreditor agreement with the
new agent or agents with respect to the Leased Collateral (as defined in the
Intercreditor Agreement attached as Exhibit Q-2 hereto), which intercreditor
agreement shall contain provisions substantially similar to the provisions of
the Intercreditor Agreement attached as Exhibit Q-2 hereto, including the
subordination provisions of Paragraph 2 thereof.
104
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SMART & FINAL INC.,
as Borrower
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President & Chief
Financial Officer
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President &
Secretary
105
BNP PARIBAS,
as Administrative Agent, L/C Bank,
Swingline Lender and a Lender
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Director
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Director
106
Initial Lenders:
XXXXXX TRUST & SAVINGS BANK
By: /s/ X. Xxxxx Place
----------------------------------------
Name: X. Xxxxx Place
Title: Vice President
107
COOPERATIVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH
By: /s/ Xxxx X. Xxxxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Vice President
By: /s/ Xxx Xxxxx
----------------------------------------
Name: Xxx Xxxxx
Title: Managing Director
108
CREDIT INDUSTRIEL ET COMMERCIAL
By: /s/ Xxxx Xxxxx
----------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
By: /s/ Xxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
109
COBANK, ACB
By: /s/ S. Xxxxxxx Xxxx
----------------------------------------
Name: S. Xxxxxxx Xxxx
Title: Vice President
000
XXXXX XXXX XX XXXXXXXXXX, N.A.
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
111
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
112
NATEXIS BANQUE-BFCE
By: /s/ Xxxxxx X. van Tulder
----------------------------------------
Name: Xxxxxx X. van Tulder
Title: Vice President and Manager -
Multinational Group
By: /s/ Xxxxxxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxxxxxx Xxxxxxxxx
Title: Vice President
113
TRANSAMERICA BUSINESS CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President
114
CITY NATIONAL BANK
By: /s/ Xxxxxxxxx Xxx
----------------------------------------
Name: Xxxxxxxxx Xxx
Title: Vice President
115
RZB FINANCE LLC
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx
Title: First Vice President
000
XXXXXX XXXXXXXXXX BANK
By: /s/ Xxxxx Xxxxxxxxxxxx, CFA
----------------------------------------
Name: Xxxxx Xxxxxxxxxxxx, CFA
Title: Vice President
117
PREFERRED BANK
By: /s/ Xxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxx
Title: Executive Vice President &
Chief Credit Officer
118
BANK LEUMI USA
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
119
